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What changed in QT IMAGING HOLDINGS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of QT IMAGING HOLDINGS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+723 added−799 removedSource: 10-K (2026-03-25) vs 10-K (2025-03-31)

Top changes in QT IMAGING HOLDINGS, INC.'s 2025 10-K

723 paragraphs added · 799 removed · 427 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

170 edited+193 added−194 removed117 unchanged
Biggest changeUse of the QT Breast Scanner Value it Adds QT Timeframe* Supplementary imaging Adjunct to screening mammography (not a replacement), particularly for women with dense breasts to identify masses missed by mammography or provide additional information on masses seen, with the potential to reduce unnecessary procedures Current Fibroglandular Tissue Volume & the Ratio of Fibroglandular Tissue Volume to Total Breast Volume Ability to quantify this ratio (a risk factor for breast cancer), without compression or radiation of mammography Current Mass Size and Growth Ability to measure response to treatment and assess mass stability Short term A.I.-Based Mass Diagnostics Reduce unnecessary procedures (biopsies, additional imaging) by identifying lesion type Short term Screening for High-Risk Young Women Provide young women a safe, comfortable, accurate method to screen for breast cancer, as an alternative for breast MRI Medium term Table 1 __________________ * Note: the foregoing is based on the Company’s current estimates and the timeframe is subject to change due to various factors, including those described in the “Risk Factors” section and elsewhere in this annual report.
Biggest changeMass Size and Growth Allows longitudinal monitoring of breast lesions, enabling assessment of treatment and assessment of lesion stability or progression A.I.-Based Mass Diagnostics Reduce unnecessary procedures (biopsies, additional imaging) by identifying lesion type Screening for High-Risk Young Women Provide young women a safe and comfortable method to screen for breast cancer, as an alternative for breast MRI Table 1 Cloud SaaS Platform QTI Precision Pathway creates value around each QT Breast Scanner by combining the hardware system with a SaaS-based subscription membership program.
Finally, system verification testing was conducted to ensure that the QT Breast Scanner met all design and other requirements including but not limited to that no new issues of safety or effectiveness compared to the predicate device, SoftVue System manufactured by Delphinus Medical Technologies, were raised.
Finally, system verification testing was conducted to ensure that the QT Breast Scanner met all design and other requirements including but not limited to that no new issues of safety or effectiveness compared to the predicate device, the SoftVue System manufactured by Delphinus Medical Technologies, were raised.
It is used in medical imaging to produce images of internal organs and tissues in the body, and it is used in various medical imaging techniques such as ultrasound, echocardiography and Doppler imaging.
It is used in medical imaging to produce images of internal organs and tissues in the body, and it is used in various medical imaging techniques such as ultrasound, echocardiography and Doppler imaging.
CMSC will also use QT Breast Scanners that it acquired to perform clinical trials towards the possibility of it pursuing the regulatory approval process in Japan. CMSC and QT Imaging have also discussed other potential terms between them. Feasibility Agreement with Canon Medical Systems Corporation On March 28, 2024, the Company entered into the Feasibility Study Agreement with CMSC.
CMSC will also use QT Breast Scanners that it acquired to perform clinical trials towards the possibility of it pursuing the regulatory approval process in Japan. CMSC and QT Imaging have also discussed other potential terms between them. Feasibility Study Agreement with Canon Medical Systems Corporation On March 28, 2024, the Company entered into the Feasibility Study Agreement with Canon.
Many patients may find QT Imaging modality preferable for dense breasts, implants, post therapy screening where breasts can be very sensitive to compression and where patients have concerns about the radiation dose.
Many patients may find the QT Imaging modality preferable for dense breasts, implants, post therapy screening where breasts can be very sensitive to compression and where patients have concerns about the radiation dose.
The Amended Distribution Agreement provides for the following modifications to the NXC Distribution Agreement, with the balance of terms (including those added by the First Amendment) remaining materially unchanged: Sale of Equipment Under terms of the Amended Distribution Agreement, in the event that CMSC enters into an OEM manufacturing agreement, then fulfillment by the parties to such manufacturing agreement of their respective obligations under such manufacturing agreement shall be a condition to NXC being the exclusive reseller to market, advertise, and resell the Equipment in the U.S. and U.S. territories.
The Amended NXC Distribution Agreement provides for the following modifications to the NXC Distribution Agreement, with the balance of terms (including those added by the First Amendment) remaining materially unchanged: Sale of Equipment Under terms of the Amended NXC Distribution Agreement, in the event that CMSC enters into an OEM manufacturing agreement, then fulfillment by the parties to such manufacturing agreement of their respective obligations under such manufacturing agreement shall be a condition to NXC being the exclusive reseller to market, advertise, and resell the Equipment in the U.S. and U.S. territories.
Minimum Order Quantities and Pricing The Amended Distribution Agreement provides that no later than five days prior to the end of each calendar quarter, NXC shall provide to us a forecast of the anticipated purchases of Equipment during the subsequent twelve-month period.
Minimum Order Quantities and Pricing The Amended NXC Distribution Agreement provides that no later than five days prior to the end of each calendar quarter, NXC shall provide to us a forecast of the anticipated purchases of Equipment during the subsequent twelve-month period.
Furthermore, all purchase orders from NXC shall be for no less than the MOQs, which NXC must order on the quarterly and annual basis as set forth in an exhibit to the Amended Distribution Agreement.
Furthermore, all purchase orders from NXC shall be for no less than the MOQs, which NXC must order on the quarterly and annual basis as set forth in an exhibit to the Amended NXC Distribution Agreement.
The Amended Distribution Agreement removed the cap on markup by NXC on its resale of the cost of the Equipment that was provided for by the NXC Distribution Agreement, such that NXC may set the resale price for customers at its sole discretion.
The Amended NXC Distribution Agreement removed the cap on markup by NXC on its resale of the cost of the Equipment that was provided for by the NXC Distribution Agreement, such that NXC may set the resale price for customers at its sole discretion.
The Amended Distribution Agreement also deleted a provision in the NXC Distribution Agreement that required NXC to request each of its customers to have a qualified or trained breast radiologist.
The Amended NXC Distribution Agreement also deleted a provision in the NXC Distribution Agreement that required NXC to request each of its customers to have a qualified or trained breast radiologist.
Non-Solicitation The Amended Distribution Agreement contains a non-solicitation provision stating that we agree, during the term thereof and for a period of three years after, we shall not, directly or indirectly: (a) interfere with or attempt to interfere with any relationship between NXC and any of its distributors, agents, employees, consultants, independent contractors, agents or representatives, (b) solicit the business or accounts of NXC, or (c) divert or attempt to direct from NXC any business or interfere with any relationship between the NXC or any of its clients, suppliers, customers or other business relations; provided, however, that we may engage with the end customers that have acquired the Equipment to the extent necessary to enable such end customers to utilize the Equipment.
Non-Solicitation The Amended NXC Distribution Agreement contains a non-solicitation provision stating that we agree, during the term thereof and for a period of three years after, we shall not, directly or indirectly: (a) interfere with or attempt to interfere with any relationship between NXC and any of its distributors, agents, employees, consultants, independent contractors, agents or representatives, (b) solicit the business or accounts of NXC, or (c) divert or attempt to direct from NXC any business or interfere with any relationship between the NXC or any of its clients, suppliers, customers or other business relations; provided, however, that we may engage with the end customers that have acquired the Equipment to the extent necessary to enable such end customers to utilize the Equipment.
On that date, QT Imaging, Inc. changed its name from QT Ultrasound LLC to QT Imaging, Inc. and revoked the limited liability company election status by the incorporation. QT Imaging Holdings, Inc. is headquartered in Novato, California. Overview A Novel Body Imaging Technology The Company—with the support of nearly $18 1 million in financial support from the U.S.
On that date, QT Ultrasound changed its name from QT Ultrasound LLC to QT Imaging, Inc. and revoked the limited liability company election status by the incorporation. QT Imaging is headquartered in Novato, California. Overview A Novel Body Imaging Technology The Company—with the support of nearly $18 1 million in financial support from the U.S.
Limited Warranty The Amended Distribution Agreement contains limited warranties with respect to the Equipment and relevant spare parts, to remain in effect (a) for Equipment for the shorter of fifteen months from the shipment of the Equipment or twelve months from the date of customer acceptance of installed Equipment, and (b) the relevant spare parts for the shorter of twelve months from the date of their shipment and six months from the date that their completion is installed.
Limited Warranty The Amended NXC Distribution Agreement contains limited warranties with respect to the Equipment and relevant spare parts, to remain in effect (a) for Equipment for the shorter of fifteen months from the shipment of the Equipment or twelve months from the date of customer acceptance of installed Equipment, and (b) the relevant spare parts for the shorter of twelve months from the date of their shipment and six months from the date that their completion is installed.
Item 1: Business The following discussion reflects the business of the Company. In this section, “we,” “our,” “the Company” or “QT Imaging” below generally refers to QT Imaging Holdings, Inc. and its subsidiaries. Background of the Business Combination On December 8, 2022, GigCapital5, Inc.
Item 1: Business The following discussion reflects the business of the Company. In this section, “we,” “us,” “our,” “the Company” or “QT Imaging” below generally refers to QT Imaging Holdings, Inc. and its subsidiaries. Background of the Business Combination On December 8, 2022, GigCapital5, Inc.
The QT Breast Scanner differs from the handheld ultrasound used in breast imaging in that it utilizes reflection and transmission data from low-frequency sound waves, providing a significant increase in diagnostic information using the speed of sound characteristics of the breast and acquiring in true 3D a very accurate rendering of the breast tissue.
The QT Breast Scanner differs from the handheld ultrasound used in breast imaging in that it utilizes reflection and transmission data from low-frequency sound waves, providing increase in diagnostic information using the speed of sound characteristics of the breast and acquiring in true 3D a very accurate rendering of the breast tissue.
On May 13, 2023, QT Imaging entered into the NXC Sales Agent Agreement with NXC, pursuant to which QT Imaging appointed NXC as the non-exclusive agent for the sale of the QT Breast Scanner and related services in non-exclusive territories: the U.S., U.S. territories, and U.S. Department of Defense installations.
On May 13, 2023, QT Imaging entered into the “ NXC Sales Agent Agreement ” with NXC, pursuant to which QT Imaging appointed NXC as the non-exclusive agent for the sale of the QT Breast Scanner and related services in non-exclusive territories: the U.S., U.S. territories, and U.S. Department of Defense installations.
Unless the Company is manufacturing QT Breast Scanners as Novato Manufacturing, any failure by CMSC, as a result of CMSC’s conduct, to manufacture and deliver QT Breast Scanners as specified in an accepted purchase order necessary to satisfy the Forecasts later than seventy-five days from the delivery date as specified in the accepted purchase order shall result in liquidated damages per missed or delayed QT Breast Scanner of $220,000, with NXC not being obligated to pay for the missed MOQ sale.
Unless the Company is manufacturing QT Breast Scanners as Novato Manufacturing, any failure by CMSC, as a result of CMSC’s conduct, to manufacture and deliver QT Breast Scanners as specified in an accepted purchase order necessary to satisfy the forecasts later than seventy-five days from the delivery date as specified in the accepted purchase order shall result in liquidated damages per missed or delayed QT Breast Scanner of $220 thousand, with NXC not being obligated to pay for the missed MOQ sale.
The American Cancer Society estimates that in 2022, 287,850 women in the United States have been diagnosed with invasive and in situ (early stage) breast cancer, and breast cancer has claimed the lives of 40,920 women. 13 The American Cancer Society further estimates that one out of every eight women will develop breast cancer at some point during her life and one in every 42 women who turns 50 today will have a diagnosis of breast cancer before she turns 60.
The American Cancer Society estimates that in 2022, 287,850 women in the United States have been diagnosed with invasive and in situ (early stage) breast cancer, and breast cancer has claimed the lives of 40,920 women. 24 The American Cancer Society further estimates that one out of every eight women will develop breast cancer at some point during her life and one in every 42 women who turns 50 today will have a diagnosis of breast cancer before she turns 60.
By way of example, in 2017, Congress enacted the Tax Cuts and Jobs Act (the “TCJA”), which eliminated the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a Texas U.S.
By way of example, in 2017, Congress enacted the Tax Cuts and Jobs Act (the “ TCJA ”), which eliminated the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a Texas U.S.
NXC’s purchases will be in accordance with an agreed upon product pricing schedule (subject to change upon 60 days’ prior written notice by us), provided that neither NXC nor its assigned sales agents may mark-up the cost of the QT Breast Scanners more than twenty percent (20%) unless otherwise mutually agreed to between NXC and us.
NXC’s purchases will be in accordance with an agreed upon product pricing schedule (subject to change upon 60 days’ prior written notice by the Company), provided that neither NXC nor its assigned sales agents may mark-up the cost of the QT Breast Scanners more than twenty percent (20%) unless otherwise mutually agreed to between NXC and the Company.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approvals for our products; or • criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: 29 Table of Contents • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approvals for our products; or • criminal prosecution.
See, e.g., ECG & ECHO Learning, The Ultrasound Transducer, available at https://ecgwaves.com/topic/the-ultrasound-transmitter-probe/ (last visited Apr. 4, 2023); see also, FDA, Ultrasound Imaging Sept. 28, 2022), https://www.fda.gov/radiation-emitting-products/medical-imaging/ultrasound-imaging. 11 Breast vasculature refers to the blood vessels that supply and drain blood from the breast tissue.
See, e.g., ECG & ECHO Learning, The Ultrasound Transducer, available at https://ecgwaves.com/topic/the-ultrasound-transmitter-probe/ (last visited Apr. 4, 2023); see also, FDA, Ultrasound Imaging Sept. 28, 2022), https://www.fda.gov/radiation-emitting-products/medical-imaging/ultrasound-imaging . 23 Breast vasculature refers to the blood vessels that supply and drain blood from the breast tissue.
Furthermore, in the event that prior to a QTI Bankruptcy, CMSC terminates this agreement because the Company has substantially failed to comply with any provision of the Canon Manufacturing Agreement and that such non-compliance has not been cured within thirty business days from the date of the Company’s receipt of the written notice from CMSC and there is a subsequent QTI 35 Table of Contents Bankruptcy, the usage by CMSC of the source code released to CMSC pursuant to this Article 9.3.2 shall be limited to subpart (B) set forth in the first sentence of this paragraph.
Furthermore, in the event that prior to a QTI Bankruptcy, CMSC terminates this agreement because the Company has substantially failed to comply with any provision of the Canon Manufacturing Agreement and that such non-compliance has not been cured within thirty business days from the date of the Company’s receipt of the written notice from CMSC and there is a subsequent QTI Bankruptcy, the usage by CMSC of the source code released to CMSC pursuant to this Article 9.3.2 shall be limited to subpart (B) set forth in the first sentence of this paragraph.
The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.
The discovery of previously unknown problems with any of the Company’s products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.
Although the law includes limited exceptions, including for PHI maintained by a covered entity or business associate, it may regulate or impact our expected processing of personal information depending on the context. In Europe, the GDPR went into effect in May 2018 and introduces strict requirements for processing the personal data of European Union data subjects.
Although the law includes limited exceptions, including for PHI maintained by a covered entity or business associate, it may regulate or impact the Company’s expected processing of personal information depending on the context. In Europe, the GDPR went into effect in May 2018 and introduces strict requirements for processing the personal data of European Union data subjects.
It provides, among other things, that we reserve the right to sell the Equipment directly to a third party as an exception, and any such direct sale by us shall occur after a prior written notification to NXC and shall count towards the MOQs, provided that if a third party is a competitor of NXC as defined in the First Amendment to A&R Distribution Agreement or an existing customer of NXC or NXC’s reseller or sales agent at the time when we seek to sell the Equipment directly to the third party, we may not sell the Equipment to such third party.
It provides, among other things, that the Company reserve the right to sell the Equipment directly to a third party as an exception, and any such direct sale by the Company shall occur after a prior written notification to NXC and shall count towards the MOQs, provided that if a third party is a competitor of NXC as defined in the First Amendment to A&R Distribution Agreement or an existing customer of NXC or NXC’s reseller or sales agent at the time when the Company seek to sell the Equipment directly to the third party, the Company may not sell the Equipment to such third party.
We also agreed to introduce at least one new product improvement per year to the Equipment, that we will also timely correct all Equipment bugs or other defects as necessary to address performance issues, and that any increases of the price of the Equipment shall be upon mutual agreement of the parties.
The Company also agreed to introduce at least one new product improvement per year to the Equipment, that the Company will also timely correct all Equipment bugs or other defects as necessary to address performance issues, and that any increases of the price of the Equipment shall be upon mutual agreement of the parties.
The Company is a medical device company founded in 2012 and engaged in the research, development, and commercialization of innovative body imaging systems using low energy sound. We believe that medical imaging is critical to the detection, diagnosis, and treatment of disease and that it should be safe, affordable and accessible.
The Company is a medical device company founded in 2012 and engaged in the research, development, and commercialization of innovative body imaging systems using low energy sound. We believe that medical imaging, and in particular 3D imaging, is critical to the detection, diagnosis, and treatment of disease and that it should be safe, affordable and accessible.
If there is a QTI Bankruptcy, CMSC may use its license in accordance with the following: in the event of a QTI Bankruptcy and rejection or termination of the Canon Manufacturing Agreement in a QTI Bankruptcy, all source code(s) will be released by the escrow agent to CMSC and CMSC may exercise its rights to amend, revise and modify such source code(s) (A) to enable CMSC to manufacture (x) up to 100 QT Breast Scanners to be sold to NXC or (y) in the event that 100 QT Breast Scanners have yet to be sold to NXC by December 31, 2026, QT Breast Scanners until December 31, 2026, whichever occurs earlier, and (B) to enable CMSC and the Approved Parties until the earlier of (i) the end of the five-year lifetime of the QT Breast Scanners sold to NXC pursuant to the Amended Distribution Agreement and (ii) December 31, 2031 (such earlier date, the “Maintenance Term”) to support the continuous workable operation, but not for upgrades or improvement of performance, of QT Breast Scanners that were distributed by NXC before, on, or after the Canon Manufacturing Agreement.
If there is a QTI Bankruptcy, CMSC may use its license in accordance with the following: in the event of a QTI Bankruptcy and rejection or termination of the Canon Manufacturing Agreement in a QTI Bankruptcy, all source code(s) will be released by the escrow agent to CMSC and CMSC may exercise its rights to amend, revise and modify such source code(s) (A) to enable CMSC to manufacture (x) up to 100 QT Breast Scanners to be sold to NXC or (y) in the event that 100 QT Breast Scanners have yet to be sold to NXC by December 31, 2026, QT Breast Scanners until December 31, 2026, whichever occurs earlier, and (B) to enable CMSC and the Approved Parties until the earlier of (i) the end of the five-year lifetime of the QT Breast Scanners sold to NXC pursuant to the Amended NXC Distribution Agreement and (ii) December 31, 2031 (such earlier date, the “ Maintenance Term ”) to support the continuous workable operation, but not for upgrades or improvement of performance, of QT Breast Scanners that were distributed by NXC before, on, or after the Canon Manufacturing Agreement.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured protected health information (“PHI”), a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured protected health information (“ PHI ”), a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
Our manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
The Company’s manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Also, in the event of an Equipment Recall (as such term is defined in the First Amendment to A&R Distribution Agreement), the First Amendment to A&R Distribution Agreement provides both parties shall promptly consult and cooperate with the other party, including with respect to the appropriate action to be taken in connection with such Equipment Recall, and mutually agree to 39 Table of Contents appropriately modify the MOQs for the respective quarter or until the Equipment Recall is corrected with mutual agreement with NXC.
Also, in the event of an Equipment Recall (as such term is defined in the First Amendment to A&R Distribution Agreement), the First Amendment to A&R Distribution Agreement provides both parties shall promptly consult and cooperate with the other party, including with respect to the appropriate action to be taken in connection with such Equipment Recall, and mutually agree to appropriately modify the MOQs for the respective quarter or until the Equipment Recall is corrected with mutual agreement with NXC.
No changes are made to the amount of the MOQs by the First Amendment to A&R Distribution Agreement, but the MOQs shall not be binding if at any time (a) we cannot fulfill the manufacturing and delivery volumes required for NXC to meet the quarterly MOQs, including due to (i) failures or other circumstances attributable to us including, but not limited to, issues relating to design or performance of the Equipment (e.g., failure of the Equipment to meet its published specifications), orders by the FDA or another governmental organization to temporarily or permanently suspend shipments, and to activities or operations of QTI, or (ii) a final non-appealable judgment that would impair our ability to fulfill such manufacturing and distribution volumes as a result of (A) intellectual property infringement made by a third party relating to the Equipment or (B) other legal proceedings against us; or (b) we engage with any competitor or existing customers of NXC or its reseller or sales agent to sell the Equipment in violation of the terms of the Amended Distribution Agreement, as amended.
No changes are made to the amount of the MOQs by the First Amendment to A&R Distribution Agreement, but the MOQs shall not be binding if at any time (a) the Company cannot fulfill the manufacturing and delivery volumes required for NXC to meet the quarterly MOQs, including due to (i) failures or other circumstances attributable to the Company including, but not limited to, issues relating to design or performance of the Equipment (e.g., failure of the Equipment to meet its published specifications), orders by the FDA or another governmental organization to temporarily or permanently suspend shipments, and to activities or operations of the Company, or (ii) a final non-appealable judgment that would impair the Company’s ability to fulfill such manufacturing and distribution volumes as a result of (A) intellectual property infringement made by a third party relating to the Equipment or (B) other legal proceedings against the Company; or (b) the Company engage with any competitor or existing customers of NXC or its reseller or sales agent to sell the Equipment in violation of the terms of the Amended NXC Distribution Agreement, as amended.
In addition, certain state and non-U.S. laws, such as the European Union’s General Data Protection Regulation (2016/679) (“GDPR”), govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
In addition, certain state and non-U.S. laws, such as the European Union’s General Data Protection Regulation (2016/679) (“ GDPR ”), govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
While the Company believes women will embrace its technology, the Company is focused on achieving clinical adoption through the medical community, which requires continuing research on the clinical efficacy of the images rendered by the QT Breast Scanner known as a QTscan® image and development of key opinion leaders (“KOLs”) who can speak to the clinical value of its machines in practice.
While the Company believes women will embrace its technology, the Company is focused on achieving clinical adoption through the medical community, which requires continuing research on the clinical efficacy of the images rendered by the QT Breast Scanner known as a QTscan® image and development of key opinion leaders (“ KOLs ”) who can speak to the clinical value of its machines in practice.
However, in the event that the we and CMSC do not enter into an OEM manufacturing agreement, then the MOQs shall be non-binding only in the event that we cannot fulfill the manufacture and delivery volumes required for NXC to meet the MOQs.
However, in the event that the Company and CMSC do not enter into an OEM manufacturing agreement, then the MOQs shall be non-binding only in the event that the Company cannot fulfill the manufacture and delivery volumes required for NXC to meet the MOQs.
It also provides that NXC shall provide us with the forecast of the anticipated purchases of Equipment during the subsequent twelve-month period no later than forty-five days prior to the end of each calendar quarter, rather than five days prior to the end of each calendar quarter.
It also provides that NXC shall provide the Company with the forecast of the anticipated purchases of Equipment during the subsequent twelve-month period no later than forty-five days prior to the end of each calendar quarter, rather than five days prior to the end of each calendar quarter.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of Quality System Regulation (“QSR”), facility registration and product listing, reporting of adverse medical events and truthful and non-misleading labeling, advertising and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of Quality System Regulation (“ QSR ”), facility registration and product listing, reporting of adverse medical events and truthful and non-misleading labeling, advertising and promotional materials.
It is possible that third-party payor coding, coverage and reimbursement policies will affect the need or prices for our products in the future, which could significantly affect our financial performance and our ability to conduct our business.
It is possible that third-party payor coding, coverage and reimbursement policies will affect the need or prices for the Company’s products in the future, which could significantly affect the Company’s financial performance and the Company’s ability to conduct the Company’s business.
All intellectual property rights, including but not limited to patents, copyrights, know‑how, and trade secrets (the “IPR”), which each party has owned before entry into the Canon Manufacturing Agreement or develops separately from the performance of the manufacture of the QT Breast Scanners under this agreement, shall remain the exclusive property of the Company or CMSC respectively.
All intellectual property rights, including but not limited to patents, copyrights, know-how, and trade secrets (the “ IPR ”), which each party has owned before entry into the Canon Manufacturing Agreement or develops separately from the performance of the manufacture of the QT Breast Scanners under this agreement, shall remain the exclusive property of the Company or CMSC respectively.
Healthcare Regulatory Laws Within the U.S., our products and our customers will be subject to extensive regulation by a wide range of federal and state agencies that govern business practices in the medical device industry. These laws include federal and state anti-kickback, fraud and abuse, false claims, transparency and anti-corruption statutes and regulations.
Healthcare Regulatory Laws Within the U.S., the Company’s products and its customers will be subject to extensive regulation by a wide range of federal and state agencies that govern business practices in the medical device industry. These laws include federal and state anti-kickback, fraud and abuse, false claims, transparency and anti-corruption statutes and regulations.
To the extent our customers will depend on third-party payors, unfavorable coding, coverage and reimbursement policies may constrict the profit margins of our provider customers, which may force us to lower our fees to attract and retain customers.
To the extent the Company’s customers will depend on third-party payors, unfavorable coding, coverage and reimbursement policies may constrict the profit margins of the Company’s provider customers, which may force us to lower the Company’s fees to attract and retain customers.
Beginning in 2020, payment is made to the furnishing professional for an applicable advanced diagnostic imaging service only if the claim indicates that the ordering professional consulted a qualified clinical decision support mechanism, as identified by the Department of Health and Human Services (“HHS”), as to whether the ordered service adheres to the applicable AUC.
Beginning in 2020, payment is made to the furnishing professional for an applicable advanced diagnostic imaging service only if the claim indicates that the ordering professional consulted a qualified clinical decision support mechanism, as identified by the Department of Health and Human Services (“ HHS ”), as to whether the ordered service adheres to the applicable AUC.
The American Cancer Society recommends that women of average risk have the option to begin mammography at age 40, get mammograms every year from age 45-54, and have mammography every other year starting at age 55. 14 Despite those recommendations, only 65% of women over 40 in the United States have had a mammogram in the previous two years, and only 58% of women between 40 and 49 had a mammogram in the previous two years, 15 even though screening mammography is 100% covered under the Affordable Care Act.
The American Cancer Society recommends that women of average risk have the option to begin mammography at age 40, get mammograms every year from age 45-54, and have mammography every other year starting at age 55. 25 Despite those recommendations, only 65% of women over 40 in the United States have had a mammogram in the previous two years, and only 58% of women between 40 and 49 had a mammogram in the previous two years, 26 even though screening mammography is 100% covered under the Affordable Care Act.
This application can display correlated Digital Imaging and Communications in Medicine (“DICOM®”) images in multiple orientations (coronal, sagittal, and axial). QTviewer can manipulate image views and analyze pixel data with various functions.
This application can display correlated Digital Imaging and Communications in Medicine (“ DICOM® ”) images in multiple orientations (coronal, sagittal, and axial). QTviewer can manipulate image views and analyze pixel data with various functions.
The outlier methodology used by CMS will be subject to future notice and comment rulemaking before the prior authorization component is implemented. We cannot predict the full impact of this project.
The outlier methodology used by CMS will be subject to future notice and comment rulemaking before the prior authorization component is implemented. The Company cannot predict the full impact of this project.
HIPAA and its respective implementing regulations, including the final omnibus rule published on January 25, 2013, imposes specified requirements relating to the privacy, security and transmission of individually identifiable health information. HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and if the breach is large enough, the media.
HIPAA and its respective implementing regulations, including the final omnibus rule published on January 25, 2013, imposes 31 Table of Contents specified requirements relating to the privacy, security and transmission of individually identifiable health information. HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and if the breach is large enough, the media.
The Company’s goal is to provide highly accurate, 100% safe, radiation-free and painless breast imaging that can be used to: 1) identify cancer early to minimize invasiveness and increase effectiveness of treatment; and 2) eliminate unnecessary intervention (additional imaging and biopsies) for women with benign breast conditions, most notably cysts.
The Company’s goal is to provide highly accurate, 100% safe, radiation-free and painless breast imaging that can be used to: 1) identify cancer early to minimize invasiveness and increase effectiveness of treatment; and 2) eliminate unnecessary intervention (additional imaging and biopsies) for women with benign breast conditions.
QT Imaging, Inc. was incorporated in Delaware on December 31, 2020 by converting from its predecessor, QT Ultrasound LLC (“QT Ultrasound”), which was a limited liability company formed in 2012 to focus on the research, development, and commercialization of innovative body imaging systems using low energy sound.
QT Imaging, Inc. was incorporated in Delaware on December 31, 2020 by converting from its predecessor, QT Ultrasound LLC (“ QT Ultrasound ”), which was a limited liability company formed in 2012 to focus on the research, development, and commercialization of innovative body imaging systems using low energy sound.
Even when HIPAA does not apply, according to the Federal Trade Commission (the “FTC”), failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C § 45(a).
Even when HIPAA does not apply, according to the Federal Trade Commission (the “ FTC ”), failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C § 45(a).
The first step will be to place machines with early adopters who see the benefits of the Company’s technology, are interested in using the 36 Table of Contents device in their practice, are willing to collect data on its use, and will publish results or speak to their peers about its clinical value.
The first step will be to place machines with early adopters who see the benefits of the Company’s technology, are interested in using the device in their practice, are willing to collect data on its use, and will publish results or speak to their peers about its clinical value.
The First Amendment to A&R Distribution Agreement amends certain provisions of the Amended Distribution Agreement.
The First Amendment to A&R Distribution Agreement amends certain provisions of the Amended NXC Distribution Agreement.
Penalties for Anti-Kickback Statute violations may include both criminal penalties such as imprisonment and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Exclusion would mean that diagnostic tests using our products would no longer be eligible for reimbursement under federal healthcare programs.
Penalties for Anti-Kickback Statute violations may include both criminal penalties such as imprisonment and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Exclusion would mean that diagnostic tests using the Company’s products would no longer be eligible for reimbursement under federal healthcare programs.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, California recently enacted legislation, the California Consumer Privacy Act (“CCPA”), which went into effect January 1, 2020.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, California recently enacted legislation, the California Consumer Privacy Act (“ CCPA ”), which went into effect January 1, 2020.
Under the FDCA, medical devices are classified into one of three classes-Class I, Class II or Class III-depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
Under the FDCA, medical 27 Table of Contents devices are classified into one of three classes-Class I, Class II or Class III-depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
To obtain 510(k) clearance, we must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market.
To obtain 510(k) clearance, the Company must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market.
CMSC shall, at its sole discretion, either (i) deliver additional QT Breast Scanners to 34 Table of Contents fulfil the required quantity or deliver replacement of the QT Breast Scanners, or (ii) offer an equitable reduction in the purchase price of the QT Breast Scanners delivered, subject to mutual agreement between the parties.
CMSC shall, at its sole discretion, either (i) deliver additional QT Breast Scanners to fulfil the required quantity or deliver replacement of the QT Breast Scanners, or (ii) offer an equitable reduction in the purchase price of the QT Breast Scanners delivered, subject to mutual agreement between the parties.
Some pre-amendment devices are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially distributed. 510(k) Clearance Marketing Pathway The current QT Breast Scanner is a Class II device, and we expect products under development such as the QT Infant Scanner and the QT Orthopedic Scanner will also be Class II devices subject to premarket notification and clearance under section 510(k) of the FDCA.
Some pre-amendment devices are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially distributed. 510(k) Clearance Marketing Pathway The current QT Breast Scanner is a Class II device, and the Company expects products under development such as the QT Infant Scanner and the QT Orthopedic Scanner will also be Class II devices subject to premarket notification and clearance under section 510(k) of the FDCA.
The Company may seek additional regulatory approvals outside of the U.S. but as of the date of this registration statement/prospectus, we do not have sufficient information to determine when, if ever, the Company will receive regulatory approval from any other jurisdictions.
The Company may seek additional regulatory approvals outside of the U.S. but as of the date of this registration statement/prospectus, the Company does not have sufficient information to determine when, if ever, the Company will receive regulatory approval from any other jurisdictions.
If the Company provides such notice to CMSC within the 40-day period, stating that the Company wishes to engage in Novato Manufacturing, the Company may purchase from CMSC (if the Company does not already have) any components held by CMSC necessary as determined by the Company for the Company to be able to manufacture the QT Breast Scanners via the Novato Manufacturing, at the same purchase price that CMSC paid to the Company to purchase such components.
If the Company provides such notice to CMSC within the 40-day period, stating that the Company wishes to engage in Novato Manufacturing, the Company may purchase from CMSC (if the Company does not already have) any components held by CMSC necessary as determined by the Company for the Company to be able to manufacture the QT Breast Scanners via the Novato Manufacturing, at the same purchase 22 Table of Contents price that CMSC paid to the Company to purchase such components.
Furthermore, to the extent not otherwise prohibited by law, each party agrees that, during the term of the Amended Distribution Agreement and for a period of three years after, each party shall not, directly or indirectly solicit for employment the employees of the other except to the extent that such solicitation is done through a general advertisement or solicitation that is not specifically targeting the employees of the other.
Furthermore, to the extent not otherwise prohibited by 9 Table of Contents law, each party agrees that, during the term of the Amended NXC Distribution Agreement and for a period of three years after, each party shall not, directly or indirectly solicit for employment the employees of the other except to the extent that such solicitation is done through a general advertisement or solicitation that is not specifically targeting the employees of the other.
Should NXC fail to submit a purchase order for no less than the MOQs in any quarterly or annual period, then we may invoice NXC and NXC shall pay us for the difference between the Equipment purchased and the MOQs for such period.
Should NXC fail to submit a purchase order for no less than the MOQs in any quarterly or annual period, then the Company may invoice NXC and NXC shall pay the Company for the difference between the Equipment purchased and the MOQs for such period.
Our failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products, which would have a material adverse effect on our business.
The Company’s failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, the Company’s manufacturing operations and the recall or seizure of its products, which would have a material adverse effect on the Company’s business.
On June 6, 2017, the FDA, in response to the Company’s Section 510(K) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device.
On June 6, 2017, the FDA, in response to the Company’s Section 510(k) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device under 510(k) Number K162372.
FDA Premarket Clearance and Approval Requirements Subject to certain exceptions, each medical device commercially distributed in the U.S. requires either FDA clearance of a 510(k) premarket notification, or approval of a pre-market approval application (“PMA”).
FDA Premarket Clearance and Approval Requirements Subject to certain exceptions, each medical device commercially distributed in the U.S. requires either FDA clearance of a 510(k) premarket notification, or approval of a pre-market approval application (“ PMA ”).
In addition, QT Ultrasound conducted, and Intertek witnessed, all applicable testing pertaining to the requirements for the safety of ultrasonic medical diagnostic and monitoring equipment and to demonstrate compliance with the “Acoustic Output Measurement Standard for Diagnostic Ultrasound Equipment”.
In addition, QT Ultrasound conducted, and Intertek witnessed, all applicable testing pertaining to the requirements for the safety of ultrasonic medical diagnostic and monitoring equipment and to demonstrate compliance with the Acoustic Output Measurement Standard for Diagnostic Ultrasound Equipment.
This is true for both institutions and radiologists, and neither have a great incentive to deviate from the current status quo. NXC Distribution Agreement We are supported by a strong distribution and business partnership with NXC.
This is true for both institutions and radiologists, and neither have a great incentive to deviate from the current status quo. NXC Distribution Agreement The Company is supported by a strong distribution and business partnership with NXC.
Furthermore, the First Amendment to A&R Distribution Agreement provides that in the event NXC is prevented from selling the Equipment due to actions of or attributable to us, we and NXC will discuss in good faith.
Furthermore, the First Amendment to A&R Distribution Agreement provides that in the event NXC is prevented from selling the Equipment due to actions of or attributable to the Company, the Company and NXC will discuss in good faith.
Such failure by CMSC shall also not provide any grounds for NXC to terminate the Amended Distribution Agreement or otherwise cancel the binding nature of the MOQs (as defined below) as provided in the Amended Distribution Agreement (as described below).
Such failure by CMSC shall also not provide any grounds for NXC to terminate the Amended NXC Distribution Agreement or otherwise cancel the binding nature of the MOQs as provided in the Amended NXC Distribution Agreement.
NXC’s purchases will be in accordance with a product pricing schedule attached to the Distribution Agreement as an exhibit (subject to change upon 60 days’ prior written notice by us).
NXC’s purchases will be in accordance with a product pricing schedule attached to the NXC Distribution Agreement as an exhibit (subject to change upon 60 days’ prior written notice by the Company).
Under the terms of the Feasibility Study Agreement, QT Imaging provided support for the Feasibility Study as agreed with CMSC from time to time during the term of the Feasibility Study Agreement and used its commercially reasonable efforts to facilitate the Feasibility Study.
Under the terms of the Feasibility Study Agreement, the Company provided support for the Feasibility Study as agreed with CMSC from time to time during the term of the Feasibility Study Agreement and used its commercially reasonable efforts to facilitate the feasibility study.
We believe the overall escalating cost of medical products and services being paid for by the government and private health insurance has led to, and will continue to lead to, increased pressures on the healthcare and medical device industry to reduce the costs of products and services.
The Company believes the overall escalating cost of medical products and services being paid for by the government and private health insurance has led to, and will continue to lead to, increased pressures on the healthcare and medical device industry to reduce the costs of products and services.
On October 29, 2024, we and NXC entered into Amendment No. 1 to the Distribution Agreement (the “First Amendment”) to expand Section 20 of the NXC Distribution Agreement to provide that NXC shall be obligated to inform its customers who purchase the QT Breast Scanner (the “Equipment”) that such customers shall not (i) use, copy, distribute, display, perform, or prepare derivative works of any materials accompanying or embodied in the Equipment (except to the extent expressly permitted by such customer’s license to such Equipment and its documentation) or (ii) use any Seller Marks (as defined in the NXC Distribution Agreement), in each case without our prior written consent.
On October 29, 2024, the Company and NXC entered into Amendment No. 1 to the Distribution Agreement (the “ First Amendment ”) to expand Section 20 of the NXC Distribution Agreement to provide that NXC shall be obligated to inform its customers who purchase the QT Breast Scanner (the “ Equipment ”) that such customers shall not (i) use, copy, distribute, display, perform, or prepare derivative works of any materials accompanying or embodied in the Equipment (except to the extent expressly permitted by such customer’s license to such Equipment and its documentation) or (ii) use any Seller Marks (as defined in the NXC Distribution Agreement), in each case without the Company’s prior written consent.
The Company hereby grants to CMSC a personal and exclusive license to use, utilize (including copy, amend, revise and modify) and exercise the IPR owned by the Company solely for enabling it to manufacture the QT Breast Scanners sold to NXC and provide maintenance support for them, provided that (i) such exclusive license may be sublicensed to NXC and other subsidiaries of CMSC and/or authorized maintenance companies (with such authorization to be provided in writing by the Company, but not to be unreasonably refused, withheld, or delayed) that provide maintenance services on an outsourced basis (the “Approved Parties”) solely for the QT Breast Scanners distributed by NXC pursuant to the Amended Distribution Agreement, whether or not the QT Breast Scanners are distributed before, on, or after the entry into the Canon Manufacturing Agreement; otherwise such license shall be non-exclusive, non‑sublicensable and non-transferable, and (ii) CMSC shall refrain from using its license to amend, revise and modify the QT Breast Scanners, including the source code(s) of software (which shall be held in escrow pursuant to the terms of a separate escrow agreement among the parties and an escrow agent (the “Escrow Agreement”)), unless the Company becomes party to an event of any bankruptcy or other insolvency proceeding (a “QTI Bankruptcy”).
The Company grants to CMSC a personal and exclusive license to use, utilize (including copy, amend, revise and modify) and exercise the IPR owned by the Company solely for enabling it to manufacture the QT Breast Scanners sold to NXC and provide maintenance support for them, provided that (i) such exclusive license may be sublicensed to NXC and other subsidiaries of CMSC and/or authorized maintenance companies (with such authorization to be provided in writing by the Company, but not to be unreasonably refused, withheld, or delayed) that provide maintenance services on an outsourced 23 Table of Contents basis (the “ Approved Parties ”) solely for the QT Breast Scanners distributed by NXC pursuant to the Amended NXC Distribution Agreement, whether or not the QT Breast Scanners are distributed before, on, or after the entry into the Canon Manufacturing Agreement; otherwise such license shall be nonexclusive, non-sublicensable and non-transferable, and (ii) CMSC shall refrain from using its license to amend, revise and modify the QT Breast Scanners, including the source code(s) of software (which shall be held in escrow pursuant to the terms of a separate escrow agreement among the parties and an escrow agent (the “ Escrow Agreement ”)), unless the Company becomes party to an event of any bankruptcy or other insolvency proceeding (a “ QTI Bankruptcy ”).
By reducing false positives, it holds the potential of sparing patients from undue emotional distress, limiting unnecessary biopsies and follow-up procedures, and ultimately decreasing healthcare costs for both individuals and society; • a lower price point than conventional high-energy imaging equipment; • the Company’s technology can be deployed to LREs because of its automation, small footprint, no shielding, no contrast-dye injection; • the Company’s technology is portable and can be used in POC settings such as LREs; • the Company’s technology is deployable in outdoor settings such as sports, military, and naval settings; • the Company’s technology reduces the barriers to testing and follow up-care for women, as there is no need for specialized training and the technology is well-suited for lowering health care costs by being affordable and easily accessed; • the Company’s technology provides optimized patient experience, as no radiation is involved, with the patient being able to be followed with no limitation to imaging frequency; • the Company’s technology is well-suited for traditional tertiary care hospitals and additionally for DTC and DTP applications, that are outside these institutions; • the Company’s technology is uniquely proprietary, disruptive and a one-of-a kind product that can address a variety of unmet medical needs in the medical marketplace; • the Company’s scanner features a uniquely simple design with a small number of components, which in turn significantly reduces the cost of the bill-of-materials (“BOM”), cost-of-good-sold (“COGS”), and the total-cost-of-ownership, and enables a lower average sales price (“ASP”) compared to other available systems, thus making it much more affordable to large mass deployments; and • the Company’s products have potential strong revenue growth, with capital purchase supporting substantial long-term gross margin.
By reducing false positives, it holds the potential of sparing patients from undue emotional distress, limiting unnecessary biopsies and follow-up procedures, and ultimately decreasing healthcare costs for both individuals and society; • a lower price point than conventional high-energy imaging equipment; • the Company’s technology can be deployed to low resources environments (“LREs”) because of its automation, small footprint, no shielding, no contrast-dye injection; • the Company’s technology is portable and can be used in point-of-care settings such as LREs; • the Company’s technology is deployable in outdoor settings such as sports, military, and naval settings; • the Company’s technology reduces the barriers to testing and follow up-care for women, as there is no need for specialized training and the technology is well-suited for lowering health care costs by being affordable and easily accessed; • the Company’s technology provides optimized patient experience, as no radiation is involved, with the patient being able to be followed with no limitation to imaging frequency; 4 Table of Contents • the Company’s technology is well-suited for traditional tertiary care hospitals and additionally for direct-to-consumer (“DTC”) and direct-to-practitioner (“DTP”) applications, that are outside these institutions; • the Company’s technology is uniquely proprietary, disruptive and a one-of-a kind product that can address a variety of unmet medical needs in the medical marketplace; • the Company’s scanner features a uniquely simple design with a small number of components, which in turn significantly reduces the cost of the bill of materials, cost of goods sold, and the total-cost-of-ownership, and enables a lower average selling price compared to other available systems, thus making it much more affordable to large mass deployments; and • the Company’s products have potential strong revenue growth, with capital purchase supporting substantial long-term gross margin.
The Amended Distribution Agreement further provides that the forecast for 2025 and 2026 shall be no less than the Minimum Order Quantities (the “MOQs”) set forth in an exhibit to the Amended Distribution Agreement, by quarter and by year.
The Amended NXC Distribution Agreement further provides that the forecast for 2025 and 2026 shall be no less than the minimum order quantities (“ MOQs ”) set forth in an exhibit to the Amended NXC Distribution Agreement, by quarter and by year.
Pursuant to the NXC Sales Agent Agreement, NXC was responsible for promotion and sale of the QT Breast Scanner and related services within the designated territory, as well as servicing the QT Breast Scanners sold by NXC.
Pursuant to the NXC Sales Agent Agreement, NXC was responsible for promotion and sale of the QT Breast Scanner and related services within the designated territory, as well as servicing the QT Breast Scanners sold by NXC. The initial term of the NXC Sales Agent Agreement was for three years.
If we are required to request new billing codes that more precisely identify and describe our imaging services, coverage is limited or reimbursement rates are inadequate, a healthcare provider might find it financially unattractive to own diagnostic imaging systems.
If the Company is required to request new billing codes that more precisely identify and describe the Company’s imaging services, coverage is limited or reimbursement rates are inadequate, a healthcare provider might find it financially unattractive to own diagnostic imaging systems.
When the transactions contemplated under the Business Combination Agreement closed on March 4, 2024 (the “Business Combination”), Merger Sub merged with and into QT Imaging, Inc., with QT Imaging, Inc. the surviving company in the Business Combination, and after giving effect to the Business Combination, QT Imaging, Inc. became a wholly owned subsidiary of GigCapital5, which was renamed as QT Imaging Holdings, Inc.
When the transactions contemplated by the Business Combination Agreement (the “ Business Combination ”) closed on March 4, 2024, Merger Sub merged with and into QT Imaging, Inc. with QT Imaging, Inc. the surviving company in such merger, and after giving effect to the Business Combination, QT Imaging, Inc. became a wholly owned subsidiary of GigCapital5, which was renamed as QT Imaging Holdings, Inc.
Each order will include information reasonably requested by us and is subject to our acceptance, after which it becomes an approved order. Any such approved orders are non-cancellable and not subject to rescheduling after acceptance by us. Any orders not accepted by us in writing are deemed rejected.
Each order will include information reasonably requested by the Company and is subject to the Company’s acceptance, after which it becomes an approved order. Any such approved orders are non-cancellable and not subject to rescheduling after acceptance by the Company. Any orders not accepted by the Company in writing are deemed rejected.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

173 edited+32 added−62 removed598 unchanged
Biggest changeAll shares issued as merger consideration in the Business Combination are freely tradable without registration under the Securities Act of 1933, as amended (the “Securities Act”) and without restriction by persons other than our “affiliates” (as defined under Rule 144), including our directors, executive officers and other affiliates, and certain other former QT Imaging stockholders. 90 Table of Contents The Company has registered in a resale registration statement on Form S-1 declared effective by the SEC on May 22, 2024, securities held by certain stockholders of the Company which have the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of a registration statement that we entered into with GigAcquisitions5 and certain other securityholders of GigCapital5 and QT Imaging (the “GigCapital5 Registration Rights Agreement”).
Biggest changeThe Company has registered in a resale registration statement on Form S-1 declared effective by the SEC on May 22, 2024, securities held by certain stockholders of the Company which have the right, subject to certain conditions, to require us to register the sale of their shares of common stock under the Securities Act, pursuant to the terms of a registration statement that we entered into with GigAcquisitions5 and certain other security holders of GigCapital5 and QT Imaging (the “ GigCapital5 Registration Rights Agreement ”).
Furthermore, all purchase orders from NXC shall be for no less than the MOQs, which NXC must order on the quarterly and annual basis as set forth in an exhibit to the Amended Distribution Agreement.
Furthermore, all purchase orders from NXC shall be for no less than the MOQs, which NXC must order on the quarterly and annual basis as set forth in an exhibit to the Amended NXC Distribution Agreement.
We have entered into certain key distribution and manufacturing agreements, and expect to enter into additional, key supplier and distribution agreements with respect to the research, development, manufacture and commercialization of our technology with different relevant industry participants, including, among others, manufacturers of sub-assemblies and boards, cloud storage providers, distribution partners engaged in selling, marketing and servicing our products in their respective countries, and others as we develop our products including integrators, radiologists, cloud storage and third-party payors.
We have entered into certain key distribution agreements, and expect to enter into additional, key supplier and distribution agreements with respect to the research, development, manufacture and commercialization of our technology with different relevant industry participants, including, among others, manufacturers of sub-assemblies and boards, cloud storage providers, distribution partners engaged in selling, marketing and servicing our products in their respective countries, and others as we develop our products including integrators, radiologists, cloud storage and third-party payors.
We may not be successful in achieving these goals for various reasons, including: • the process of manufacturing and deploying the QT Breast Scanner and our products under development is a complex, multi-step process that depends on factors outside our control, and could cause us to expend significant time and resources prior to earning associated revenues; • the manufacturing cost of the QT Breast Scanner and our products under development may be higher than we expect, may increase significantly, or may increase at a higher rate than anticipated; • the manufacturing of the QT Breast Scanner and our future products may take longer than we expected, and we may have insufficient manufacturing capacity and experience delays in manufacturing and deployment, which would have a negative impact on the timing of our revenues; • deployment and full utilization of the QT Breast Scanner may not be achieved if insurance and other reimbursements and patient co-pays are not sufficient to defray costs incurred in providing and interpreting scans by hospital imaging centers, cancer centers or other women’s health-care centers that purchase our devices and services, and we may not be able to sustain these relationships unless our devices can be profitable to these providers; 51 Table of Contents • a QT Breast Scanner device may perform fewer scans per day than our estimates due to a number of factors, including low market acceptance rate, technical failures and downtime, service disruptions, outages or other performance problems, which would have a negative impact on our revenues and our ability to recover costs; and • our customers may not be able to find or retain a sufficient number of radiologists to review the images generated by the QT Breast Scanner device especially as we deploy additional systems and the volume of scans increases.
We may not be successful in achieving these goals for various reasons, including: • the process of manufacturing and deploying the QT Breast Scanner and our products under development is a complex, multi-step process that depends on factors outside our control, and could cause us to expend significant time and resources prior to earning associated revenues; • the manufacturing cost of the QT Breast Scanner and our products under development may be higher than we expect, may increase significantly, or may increase at a higher rate than anticipated; • the manufacturing of the QT Breast Scanner and our future products may take longer than we expected, and we may have insufficient manufacturing capacity and experience delays in manufacturing and deployment, which would have a negative impact on the timing of our revenues; • deployment and full utilization of the QT Breast Scanner may not be achieved if insurance and other reimbursements and patient co-pays are not sufficient to defray costs incurred in providing and interpreting scans by hospital imaging centers, cancer centers or other women’s health-care centers that purchase our devices and services, and we may not be able to sustain these relationships unless our devices can be profitable to these providers; • a QT Breast Scanner device may perform fewer scans per day than our estimates due to a number of factors, including low market acceptance rate, technical failures and downtime, service disruptions, outages or other performance problems, which would have a negative impact on our revenues and our ability to recover costs; and • our customers may not be able to find or retain a sufficient number of radiologists to review the images generated by the QT Breast Scanner device especially as we deploy additional systems and the volume of scans increases.
Relying upon these collaborative arrangements for our technology subjects us to a number of risks, including: • we may not be able to control the amount and timing of resources that our collaborators may devote to our technology; • should a collaborator fail to comply with applicable laws, rules or regulations when performing services for us, we could be held liable for such violations; • our collaborators may have a shortage of qualified personnel, particularly radiologists who can review the medical images generated by the QT Breast Scanner and products and services under development, especially as we deploy additional devices and new products and the volume of scans increases; • we may be required to relinquish important rights, such as marketing and distribution rights; • business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; • under certain circumstances, a collaborator could move forward with a competing product developed either independently or in collaboration with others, including our competitors; • our current or future collaborators may utilize our proprietary information in a way that could expose us to competitive harm; • our collaborators could obtain ownership or other control over intellectual property that is material to our business; and • collaborative arrangements are often terminated or allowed to expire, which could delay the ability to commercialize our technology.
Relying upon these collaborative arrangements for our technology subjects us to a number of risks, including: • we may not be able to control the amount and timing of resources that our collaborators may devote to our technology; • should a collaborator fail to comply with applicable laws, rules or regulations when performing services for us, we could be held liable for such violations; • our collaborators may have a shortage of qualified personnel, particularly radiologists who can review the medical images generated by the QT Breast Scanner and products and services under development, especially as we deploy additional devices and new products and the volume of scans increases; • we may be required to relinquish important rights, such as marketing and distribution rights; • business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; • under certain circumstances, a collaborator could move forward with a competing product developed either independently or in collaboration with others, including our competitors; 44 Table of Contents • our current or future collaborators may utilize our proprietary information in a way that could expose us to competitive harm; • our collaborators could obtain ownership or other control over intellectual property that is material to our business; and • collaborative arrangements are often terminated or allowed to expire, which could delay the ability to commercialize our technology.
Compared to the earlier regulatory framework of Medical Device Directive (“MDD”), the MDR promotes a shift from the pre-approval stage (i.e., the path to CE Marking) to a life-cycle approach and places greater emphasis on clinical data and clinical evaluations to assure the safety and performance of new medical devices.
Compared to the earlier regulatory framework of Medical Device Directive, the MDR promotes a shift from the pre-approval stage (i.e., the path to CE Marking) to a life-cycle approach and places greater emphasis on clinical data and clinical evaluations to assure the safety and performance of new medical devices.
Commercialization of the QT Breast Scanner and products under development in foreign markets, either directly or through third parties, is subject to additional risks and uncertainties, including: • reimbursement and insurance coverage; • our inability to find agencies, dealers or distributors in specific countries or regions; • our inability to directly control commercial activities of third parties; • limited resources to be deployed to a specific jurisdiction; • the burden of complying with complex and changing regulatory, tax, accounting and legal requirements; • different medical imaging practice and customs in foreign countries affecting acceptance in the marketplace; • import or export licensing and other requirements that could impair our ability to compete in international markets or subject our company to liability if we violate such laws and regulations; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers for technical training; • reduced protection of intellectual property rights in some foreign countries; • foreign currency exchange rate fluctuations; and • interpretations of contractual provisions governed by foreign laws in the event of a contract dispute.
Commercialization of the QT Breast Scanner and products under development in foreign markets, either directly or through third parties, is subject to additional risks and uncertainties, including: • reimbursement and insurance coverage; • our inability to find agencies, dealers or distributors in specific countries or regions; 41 Table of Contents • our inability to directly control commercial activities of third parties; • limited resources to be deployed to a specific jurisdiction; • the burden of complying with complex and changing regulatory, tax, accounting and legal requirements; • different medical imaging practice and customs in foreign countries affecting acceptance in the marketplace; • import or export licensing and other requirements that could impair our ability to compete in international markets or subject our company to liability if we violate such laws and regulations; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers for technical training; • reduced protection of intellectual property rights in some foreign countries; • foreign currency exchange rate fluctuations; and • interpretations of contractual provisions governed by foreign laws in the event of a contract dispute.
Similarly, any dividends, distributions or similar payments to QT Imaging from the Company will be permitted only to the extent there is an applicable exception to the dividends and distributions covenants under this loan agreement. Item 1B: Unresolved Staff Comments None
Similarly, any dividends, distributions or similar payments to QT Imaging, Inc. from the Company will be permitted only to the extent there is an applicable exception to the dividends and distributions covenants under this loan agreement. Item 1B: Unresolved Staff Comments None
Any loans or other extensions of credit to QT Imaging from the Company will be permitted only to the extent there is an applicable exception to the investment covenants under this loan agreement.
Any loans or other extensions of credit to QT Imaging, Inc. from the Company will be permitted only to the extent there is an applicable exception to the investment covenants under this loan agreement.
Some potential factors that could adversely impact the development and commercialization of our imaging technology or related products and services include: • our inability to achieve sufficient market acceptance by hospitals and clinics, providers of medical imaging services, medical professionals such as radiologists, third-party payors, and others in the medical community; • our inability to compete with existing medical imaging technology companies with ultrasound, mammography and MRI systems, who have well entrenched market-share worldwide and significantly more resources than we do; • our inability to hire, train and retain qualified sales and marketing personnel; • our inability to establish, maintain and expand our sales, marketing and distribution networks; • our inability to obtain and/or maintain necessary regulatory approvals; and • our inability to effectively protect our intellectual property.
Some potential factors that could adversely impact the development and commercialization of our imaging technology or related products and services include: • our inability to achieve sufficient market acceptance by hospitals and clinics, providers of medical imaging services, medical professionals such as radiologists, third-party payors, and others in the medical community; 38 Table of Contents • our inability to compete with existing medical imaging technology companies with ultrasound, mammography and MRI systems, who have well entrenched market-share worldwide and significantly more resources than we do; • our inability to hire, train and retain qualified sales and marketing personnel; • our inability to establish, maintain and expand our sales, marketing and distribution networks; • our inability to obtain and/or maintain necessary regulatory approvals; and • our inability to effectively protect our intellectual property.
We will be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following September 28, 2026, the fifth anniversary of our initial public offering (“IPO”), (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We will be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following September 28, 2026, the fifth anniversary of our initial public offering (“ IPO ”), (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
The Charter provides that, unless we consent in writing to the selection of an alternative forum, the (i) Delaware Court of Chancery (the “Court of Chancery”) of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action, suit or proceeding brought on our behalf; (B) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers, or stockholders to us or to our stockholders; (C) any action, suit or proceeding asserting a claim arising pursuant to the DGCL, the Charter or the Bylaws; or (D) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; and (ii) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
The Charter provides that, unless we consent in writing to the selection of an alternative forum, the (i) Delaware Court of Chancery (the “ Court of Chancery ”) of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (A) any derivative action, suit or proceeding brought on our behalf; (B) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers, or stockholders to us or to our stockholders; (C) any action, suit or proceeding asserting a claim arising pursuant to the DGCL, the Charter or the Bylaws; or (D) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; and (ii) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our competitive position also depends on our ability to: • generate widespread awareness, acceptance and adoption of our technology and future products or services; • develop new or enhanced technologies or features that improve the convenience, efficiency, safety or perceived safety, and productivity of our technology and future products or services; • properly identify customer needs and deliver new products or services or product enhancements to address those needs; • limit the time required from prototype development to commercial production; 66 Table of Contents • limit the timing and cost of regulatory approvals; • attract and retain qualified personnel and collaborators; • protect our inventions with patents or otherwise develop proprietary products and processes; and • secure sufficient capital resources to expand both our continued research and development, and sales and marketing efforts.
Our competitive position also depends on our ability to: • generate widespread awareness, acceptance and adoption of our technology and future products or services; • develop new or enhanced technologies or features that improve the convenience, efficiency, safety or perceived safety, and productivity of our technology and future products or services; • properly identify customer needs and deliver new products or services or product enhancements to address those needs; • limit the time required from prototype development to commercial production; • limit the timing and cost of regulatory approvals; • attract and retain qualified personnel and collaborators; • protect our inventions with patents or otherwise develop proprietary products and processes; and • secure sufficient capital resources to expand both our continued research and development, and sales and marketing efforts.
The FDA and foreign regulatory agencies regulate, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; pre-market clearance and approval; conformity assessment procedures; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to occur, could lead to death or serious injury; post-market approval studies; and product import and export.
The FDA and foreign regulatory agencies regulate, among 53 Table of Contents other things, with respect to medical devices: design, development and manufacturing; testing, labeling, content and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; pre-market clearance and approval; conformity assessment procedures; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to occur, could lead to death or serious injury; post-market approval studies; and product import and export.
Our dependence on such third-party manufacturers and suppliers involves a number of risks, including: • insufficient capacity or delays in meeting our demand; • inadequate manufacturing yields, inferior quality and excessive costs; • inability to manufacture products that meet the agreed upon specifications; • inability to obtain an adequate supply of materials; • trade restrictions and changes in tariffs; • inability to comply with the relevant regulatory requirements for the manufacturing process; • limited warranties on products supplied to us; • inability to comply with our contractual obligations; • potential increases in prices; and • increased exposure to potential misappropriation of our intellectual property.
Our dependence on such third-party manufacturers and suppliers involves a number of risks, including: • insufficient capacity or delays in meeting our demand; • inadequate manufacturing yields, inferior quality and excessive costs; • inability to manufacture products that meet the agreed upon specifications; 40 Table of Contents • inability to obtain an adequate supply of materials; • trade restrictions and changes in tariffs; • inability to comply with the relevant regulatory requirements for the manufacturing process; • limited warranties on products supplied to us; • inability to comply with our contractual obligations; • potential increases in prices; and • increased exposure to potential misappropriation of our intellectual property.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law (“DGCL”), which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board of directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law (“ DGCL ”), which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board of directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder.
Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors (the “Board”) and will depend on, among other things, our business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to our indebtedness, industry trends and other factors that the Board may deem relevant.
Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors (the “ Board ”) and will depend on, among other things, our business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to our indebtedness, industry trends and other factors that the Board may deem relevant.
For a discussion of the Company’s Approved Supplier List and engagements with suppliers, see “Business-Manufacturing.” Any future potential relationships with collaborators may require us to rely on external consultants, advisors, and experts for assistance in several key functions, including research and development, manufacturing, regulatory and intellectual property.
For a discussion of the Company’s Approved Supplier List and engagements with suppliers, see “ Business — Manufacturing .” Any future potential relationships with collaborators may require us to rely on external consultants, advisors, and experts for assistance in several key functions, including research and development, manufacturing, regulatory and intellectual property.
As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturers and us. This risk could be compounded by any offshore location of CMSC, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems.
As a result, yield problems may not be identified until well into the production process, and resolution of yield problems may require cooperation between our manufacturers and us. This risk could be compounded by any future offshore location of our manufacturers, increasing the effort and time required to identify, communicate and resolve manufacturing yield problems.
Our ability to make distributions, loans and other payments for the purposes described above and for any other purpose may be limited by credit agreements to which the Company is party from time to time, including the existing loan agreement with Lynrock Lake, and will be subject to the negative covenants set forth therein.
Our ability to make distributions, loans and other payments for the purposes described above and for any other purpose may be limited by credit agreements to which the Company is party from time to time, including the existing credit agreement with Lynrock Lake (the “ Lynrock Lake Credit Agreement ”), and will be subject to the negative covenants set forth therein.
The device is not intended to be used as a replacement for screening mammography”—FDA 510(k) K162372 and K220933 54 Table of Contents • “The QT Breast Scanner Model 2000A satisfies the requirements of the Certification Mark of the ECM [CE Mark Certification of the European Union]—No. 0P210730.QTUTQ02” The Company has initiated engagement with the FDA to determine the most appropriate regulatory pathway for its premarket submission and to align on the clinical studies necessary to support such submission.
The device is not intended to be used as a replacement for screening mammography”—FDA 510(k) K162372 and K220933 • “The QT Breast Scanner Model 2000A satisfies the requirements of the Certification Mark of the ECM [CE Mark Certification of the European Union]—No. 0P210730.QTUTQ02” The Company has initiated engagement with the FDA to determine the most appropriate regulatory pathway for its premarket submission and to align on the clinical studies necessary to support such submission.
If the Company’s not able to implement the requirements of Section 404, including any additional requirements once the Company’s no longer an emerging growth company, in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting are effective, 91 Table of Contents which may subject the Company to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.
If the Company’s not able to implement the requirements of Section 404, including any additional requirements once the Company’s no longer an emerging growth company, in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting are effective, which may subject the Company to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; 98 Table of Contents • costs related to intercompany restructurings; • changes in tax laws, regulations or interpretations thereof; or • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; • changes in tax laws, regulations or interpretations thereof; or • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can issue a European Community (“EC”) Declaration of Conformity based on a self-assessment of the conformity of its products with the essential requirements of the EU Medical Devices Directive, a conformity assessment procedure requires the intervention of an organization accredited by a member state of the EEA to conduct conformity assessments, or a Notified Body.
Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can issue a European Community (“ EC ”) Declaration of Conformity based on a self-assessment of the conformity of its products with the essential requirements of the EU Medical Devices Directive, a conformity assessment procedure requires the intervention of an organization accredited by a member state of the EEA to conduct conformity assessments, or a Notified Body.
In addition, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards.
In addition, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) are required to comply with the new or revised financial accounting standards.
Our ability to execute our model is dependent on a number of factors, including the ability of our senior management team to execute our model, our ability to incentivize, train and support international distribution partners in different geographic regions, our ability to begin or maintain our pace of product development, manufacturing and commercialization, our ability to meet the changing needs of the medical imaging market, and the ability of our employees to perform at a high-level.
Our ability to execute our model is dependent on a number of factors, including the ability of our senior management team to execute our model, our ability to incentivize, train and support international distribution partners in different geographic regions, our ability to begin or maintain our pace of product development, 35 Table of Contents manufacturing and commercialization, our ability to meet the changing needs of the medical imaging market, and the ability of our employees to perform at a high-level.
We expect sales to hospitals, academic medical centers, cancer centers, and imaging centers to be our primary customers.
We expect sales to hospitals, academic medical centers, cancer centers, and imaging centers to be our primary end customers.
We may be limited by resources, including qualified personnel, funds for capital investments, and other constraints from offering improvements to our products and services and our business, operating results and financial condition will suffer as a result. 65 Table of Contents Employee attrition may have an adverse impact on our business, results of operations or internal controls.
We may be limited by resources, including qualified personnel, funds for capital investments, and other constraints from offering improvements to our products and services and our business, operating results and financial condition will suffer as a result. Employee attrition may have an adverse impact on our business, results of operations or internal controls.
As a result, we could face regulatory actions, including significant fines or penalties, adverse publicity and possible loss of business. In addition, there are ongoing public policy discussions regarding whether the standards for de-identified, anonymous or pseudonymized health information are sufficient to adequately protect patient privacy.
As a result, we could face regulatory actions, including significant fines or penalties, adverse publicity and possible loss of business. 61 Table of Contents In addition, there are ongoing public policy discussions regarding whether the standards for de-identified, anonymous or pseudonymized health information are sufficient to adequately protect patient privacy.
Since we may operate and sell our products around the world, we will be subject to the United States Foreign Corrupt Practices Act (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, and other anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we currently or may do business, both domestic and abroad.
Since we may operate and sell our products around the world, we will be subject to the United States Foreign Corrupt Practices Act (the “ FCPA ”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, and other anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we currently or may do business, both domestic and abroad.
Even if patents covering our future products are obtained, once the patent life has expired, we may be open to competition from competitive products. 83 Table of Contents Given the amount of time required for the development, testing and regulatory review of new products, patents protecting our future products might expire before or shortly after we or our future partners commercialize those products.
Even if patents covering our future products are obtained, once the patent life has expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new products, patents protecting our future products might expire before or shortly after we or our future partners commercialize those products.
If we fail to attract new personnel or fail to retain and motivate our current personnel, our business, financial condition, results of operations and future growth prospects could be severely harmed. Industry data, projections and estimates relied upon by us are inherently uncertain, subject to interpretation and may not have been independently verified.
If we 80 Table of Contents fail to attract new personnel or fail to retain and motivate our current personnel, our business, financial condition, results of operations and future growth prospects could be severely harmed. Industry data, projections and estimates relied upon by us are inherently uncertain, subject to interpretation and may not have been independently verified.
Compliance with these requirements is a prerequisite to be able to affix the Conformité Européene (“CE”) mark to our products, without which they cannot be sold or marketed in the EEA. To demonstrate compliance with the essential requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
Compliance with these requirements is a prerequisite to be able to affix the Conformité Européene (“ CE ”) mark to our products, without which they cannot be sold or marketed in the EEA. To demonstrate compliance with the essential requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
There is also a risk that the third parties that license us data and enable us to receive de-identified PHI may fail to properly de-identify PHI under HIPAA or personal data under applicable state or other privacy laws, some of which may impose different standards for de- 76 Table of Contents identification than those required by HIPAA.
There is also a risk that the third parties that license us data and enable us to receive de-identified PHI may fail to properly de-identify PHI under HIPAA or personal data under applicable state or other privacy laws, some of which may impose different standards for de- identification than those required by HIPAA.
For example, the TCJA enacted on December 22, 2017, eliminated the shared responsibility payment for individuals who fail to maintain minimum essential coverage under Section 5000A of the Internal Revenue Code of 1986, commonly referred to as the “individual mandate,” effective January 1, 2019. On December 14, 2018, a U.S.
For example, the TCJA enacted on 64 Table of Contents December 22, 2017, eliminated the shared responsibility payment for individuals who fail to maintain minimum essential coverage under Section 5000A of the Internal Revenue Code of 1986, commonly referred to as the “individual mandate,” effective January 1, 2019. On December 14, 2018, a U.S.
In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses.
In addition, we may seek to obtain additional licenses from our licensors and, in connection with 71 Table of Contents obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses.
If we are unable to obtain needed financing on acceptable terms, or otherwise, we may not be able to implement our business plan, which could have a material adverse effect on our 52 Table of Contents business, financial condition and results of operations, including a decline in the trading price of our common stock.
If we are unable to obtain needed financing on acceptable terms, or otherwise, we may not be able to implement our business plan, which could have a material adverse effect on our business, financial condition and results of operations, including a decline in the trading price of our common stock.
The privacy standards and security standards under HIPAA establish a set of standards for the protection of individually identifiable health information by health plans, health care clearinghouses and certain health care providers, (collectively referred to as “Covered Entities”), and the business associates with whom Covered Entities enter into service relationships pursuant to which individually identifiable health information may be exchanged.
The privacy standards and security standards under HIPAA establish a set of standards for the protection of individually identifiable health information by health plans, health care clearinghouses and certain health care providers, (collectively referred to as “ Covered Entities ”), and the business associates with whom Covered Entities enter into service relationships pursuant to which individually identifiable health information may be exchanged.
Any of the events referenced above could have a material adverse effect on our reputation, business, results of operations, financial condition and cash flows. Patent terms may be inadequate to protect our competitive position on our future products for an adequate amount of time. Patents have a limited lifespan.
Any of the events referenced above could have a material adverse effect on our reputation, business, results of operations, financial condition and cash flows. 68 Table of Contents Patent terms may be inadequate to protect our competitive position on our future products for an adequate amount of time. Patents have a limited lifespan.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names. We have not conducted any registrability studies for possible future trademarks to assess whether such marks would be successfully registered.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other trademarks or trademarks that incorporate 70 Table of Contents variations of our unregistered trademarks or trade names. We have not conducted any registrability studies for possible future trademarks to assess whether such marks would be successfully registered.
These and other factors, including the following, may affect the rate and level of market acceptance: • effectiveness of the sales and marketing efforts of us, and our distribution partners; • perception by medical professionals and patients of the convenience, safety, efficiency and benefits of the QT Breast Scanner or products under development using our technology, compared to competing methods of medical imaging; • opposition from certain industry leaders, which may limit our ability to promote the QT Breast Scanner or products under development that are cleared by the FDA and other regulatory agencies, and to penetrate into the medical imaging market in the U.S. or other geographical areas; 50 Table of Contents • the level of commitment and support that we receive from our partners, such as cloud storage providers, as well as medical professionals such as radiologists; • coverage determinations and reimbursement levels of third-party payors; • the changing and volatile U.S. and global economic environments, including as a result of the COVID-19 pandemic; • timing of market introduction of competing products, and the sales and marketing initiatives of such products; • press and blog coverage, social media coverage, and other publicity and public relations factors by others; and • lack of financing or other resources to successfully develop and commercialize our technology and implement our business plan.
These and other factors, including the following, may affect the rate and level of market acceptance: • effectiveness of the sales and marketing efforts of us, and our distribution partners; • perception by medical professionals and patients of the convenience, safety, efficiency and benefits of the QT Breast Scanner or products under development using our technology, compared to competing methods of medical imaging; • opposition from certain industry leaders, which may limit our ability to promote the QT Breast Scanner or products under development that are cleared by the FDA and other regulatory agencies, and to penetrate into the medical imaging market in the U.S. or other geographical areas; • the level of commitment and support that we receive from our partners, such as cloud storage providers, as well as medical professionals such as radiologists; • coverage determinations and reimbursement levels of third-party payors; • the changing and volatile U.S. and global economic environments; • timing of market introduction of competing products, and the sales and marketing initiatives of such products; • press and blog coverage, social media coverage, and other publicity and public relations factors by others; and • lack of financing or other resources to successfully develop and commercialize our technology and implement our business plan.
If we are unable to achieve or maintain an adequate level of market acceptance, we may not generate significant revenue or become profitable and our business, financial condition, results of operations and prospects would be significantly harmed. The success of our business model is subject to numerous risks and uncertainties.
If we are unable to achieve or maintain an adequate level of market acceptance, we may not generate significant revenue or become profitable and our business, financial condition, results of operations and prospects would be significantly harmed. 36 Table of Contents The success of our business model is subject to numerous risks and uncertainties.
We may, from time to time, be subject to claims and may become party to litigation in the normal course of business, including class action lawsuits. Such claims and litigation proceedings may be brought by third parties, including our customers, competitors, advisors, service providers, partners or collaborators, employees, and governmental or regulatory bodies.
We may, from time to time, be subject to claims and may become party to litigation in the normal course of business, including class action lawsuits. Such claims and litigation proceedings may be brought by third parties, including our 45 Table of Contents customers, competitors, advisors, service providers, partners or collaborators, employees, and governmental or regulatory bodies.
Our marketing efforts, including any social media marketing efforts that we may implement in the future, may expose our company to additional regulatory scrutiny, including from the FTC and other consumer protection agencies and regulators.
Our marketing efforts, including any social media marketing efforts that we may implement in the future, may expose us to additional regulatory scrutiny, including from the FTC and other consumer protection agencies and regulators.
Unlike directives, which must be implemented into the national laws of the European Economic Area (EEA) Member States, the regulations would be directly applicable, i.e., without the need for adoption of EEA member state laws implementing them, in all EEA Member States and are intended to eliminate current differences in the regulation of medical devices among EEA Member States.
Unlike directives, which must be implemented into the national laws of the EEA Member States, the regulations would be directly applicable, i.e., without the need for adoption of EEA member state laws implementing them, in all EEA Member States and are intended to eliminate current differences in the regulation of medical devices among EEA Member States.
If tax authorities change applicable tax laws, our overall taxes could increase, and our financial condition or results of operations may be adversely impacted. 81 Table of Contents Risks Related to our Intellectual Property It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.
If tax authorities change applicable tax laws, our overall taxes could increase, and our financial condition or results of operations may be adversely impacted. Risks Related to Our Intellectual Property It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property 85 Table of Contents may be ineffective and could result in substantial costs and diversion of resources and adversely affect our competitive position, business, financial condition, results of operations and prospects.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and adversely affect our competitive position, business, financial condition, results of operations and prospects.
Any of these events could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects. 86 Table of Contents We may be required to pay certain milestones and royalties and fulfill other obligations under our license agreements with third-party licensors.
Any of these events could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects. We may be required to pay certain milestones and royalties and fulfill other obligations under our license agreements with third-party licensors.
If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. 89 Table of Contents We do not intend to pay dividends on shares of common stock for the foreseeable future.
If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. We do not intend to pay dividends on shares of common stock for the foreseeable future.
The loan agreement with Lynrock Lake and related documents contain, and instruments governing any future indebtedness of ours would likely contain, a number of covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • create liens on certain assets; • incur additional debt; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and • sell certain assets.
The loan agreement with Lynrock Lake Master Fund LP (“ Lynrock Lake ”) and related documents contain, and instruments governing any future indebtedness of ours would likely contain, a number of covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • create liens on certain assets; • incur additional debt; • consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and • sell certain assets.
Because the techniques used by hackers change frequently and are increasingly complex and sophisticated, and new technologies may not be identified until they are launched against a target, we and our 63 Table of Contents third-party service providers may be unable to anticipate these techniques or detect an incident, assess its severity or impact, react or appropriately respond in a timely manner or implement adequate preventative measures.
Because the techniques used by hackers change frequently and are increasingly complex and sophisticated, and new technologies may not be identified until they are launched against a target, we and our third-party service providers may be unable to anticipate these techniques or detect an incident, assess its severity or impact, react or appropriately respond in a timely manner or implement adequate preventative measures.
The Amended Distribution Agreement further provides that the Forecast for 2025 and 2026 shall be no less than the MOQs set forth in an exhibit to the Amended Distribution Agreement, by quarter and by year.
The Amended NXC Distribution Agreement further provides that the forecast for 2026 shall be no less than the MOQs set forth in an exhibit to the Amended NXC Distribution Agreement, by quarter and by year.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results. Our QT Breast Scanner technology may become obsolete.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results. 58 Table of Contents Our QT Breast Scanner technology may become obsolete.
The MDR, among other things, is intended to establish a 78 Table of Contents uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The MDR become applicable three years after publication (in 2020).
The MDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation. The MDR become applicable three years after publication (in 2020).
If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions.
If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities (as described below), or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions.
In addition, a cybersecurity attack could result in other negative consequences, including disruption of our internal operations, increased cyber security protection costs, lost revenue, regulatory actions or litigations. Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our competitive position.
In addition, a cybersecurity attack could result in other negative consequences, including disruption of our internal operations, increased cyber security protection costs, lost revenue, regulatory actions or litigations. 47 Table of Contents Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our competitive position.
The increased attention that the medical technology industry is receiving from FDA leadership that understands the challenging and rapidly 70 Table of Contents changing nature of the U.S. health care system creates the possibility of unanticipated regulatory and other potential changes to the Company’s products and its overall business.
The increased attention that the medical technology industry is receiving from FDA leadership that understands the challenging and rapidly changing nature of the U.S. health care system creates the possibility of unanticipated regulatory and other potential changes to the Company’s products and its overall business.
Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
Changes in accounting principles or their application to us could result in unfavorable accounting charges or effects, which could adversely affect our results of operations and growth prospects. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States (“ GAAP ”).
In addition, a default under our secured loan could trigger a cross default under agreements governing any future indebtedness. Our results of operations may not be sufficient to service our indebtedness and to fund our other expenditures, and we may not be able to obtain financing to meet these requirements.
In addition, a default under our secured credit facility could trigger a cross default under agreements governing any future indebtedness. Our results of operations may not be sufficient to service our indebtedness and to fund our other expenditures, and we may not be able to obtain financing to meet these requirements.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval or clearance that we may have obtained and we may not achieve or sustain profitability.
If we are slow or unable to adapt to changes in existing requirements or the adoption 63 Table of Contents of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval or clearance that we may have obtained and we may not achieve or sustain profitability.
Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of common stock. However, there is no guarantee that the warrants will ever be in-the-money prior to their expiration.
Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of common stock. However, there is no guarantee that the warrants will ever be in-the-money prior to their expiration. As such, the warrants may expire worthless.
If we fail to sell products that satisfy our customers’ demands, or respond effectively to new 73 Table of Contents product announcements by our competitors, then market acceptance of our products could be reduced and our business, results of operations and financial condition could be adversely affected.
If we fail to sell products that satisfy our customers’ demands, or respond effectively to new product announcements by our competitors, then market acceptance of our products could be reduced and our business, results of operations and financial condition could be adversely affected.
Healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs. • The HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), imposes criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services.
Healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs. 59 Table of Contents • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“ HITECH ”), imposes criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services.
These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation risks, if any of the Company’s products and associated services are considered susceptible to third-party tampering.
These regulatory efforts 55 Table of Contents could lead to new FDA requirements in the future or additional product liability or other litigation risks, if any of the Company’s products and associated services are considered susceptible to third-party tampering.
Likewise, if any of our current D&O insurance coverage should 88 Table of Contents become unavailable to us or become economically impractical, we may need to decrease our coverage limits or increase our self-insured retention or we may be unable to renew such insurance at all.
Likewise, if any of our current D&O insurance coverage should become unavailable to us or become economically impractical, we may need to decrease our coverage limits or increase our self-insured retention or we may be unable to renew such insurance at all.
If our future customers significantly reduce spending in areas in which our technology and products are utilized, or prioritize other expenditures over our technology and products, our business, financial condition, results of operations and prospects would be materially adversely affected.
If our future 50 Table of Contents customers significantly reduce spending in areas in which our technology and products are utilized, or prioritize other expenditures over our technology and products, our business, financial condition, results of operations and prospects would be materially adversely affected.
We may never successfully stimulate market interest in our QT Breast Scanner in the near-to-mid-term at any level or at all, which may cause our business to fail. The medical 49 Table of Contents imaging industry is also highly competitive, and our technology, products, services or business models may not achieve widespread market acceptance.
We may never successfully stimulate market interest in our QT Breast Scanner in the near-to-mid-term at any level or at all, which may cause our business to fail. The medical imaging industry is also highly competitive, and our technology, products, services or business models may not achieve widespread market acceptance.
Third-party payors may not cover or provide adequate reimbursement for imaging services using the QT Breast Scanner and our products under development, assuming we are able to fully develop and obtain all regulatory approvals and clearances to market it in the 57 Table of Contents United States or other geographies.
Third-party payors may not cover or provide adequate reimbursement for imaging services using the QT Breast Scanner and our products under development, assuming we are able to fully develop and obtain all regulatory approvals and clearances to market it in the United States or other geographies.
Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain new clearances or approvals, increase the costs of compliance or restrict our ability to maintain any approvals we are able to obtain.
Such policy or regulatory changes could impose additional requirements upon us that could 56 Table of Contents delay our ability to obtain new clearances or approvals, increase the costs of compliance or restrict our ability to maintain any approvals we are able to obtain.
Academic institutions, government agencies, and other public and private research organizations may seek patent protection regarding potentially competitive products or technologies and may establish exclusive collaborative 55 Table of Contents or licensing relationships with our competitors. Our competitors may be better equipped than we are to respond to competitive pressures. Competition will likely intensify.
Academic institutions, government agencies, and other public and private research organizations may seek patent protection regarding potentially competitive products or technologies and may establish exclusive collaborative or licensing relationships with our competitors. Our competitors may be better equipped than we are to respond to competitive pressures. Competition will likely intensify.
We expect to rely on third-party suppliers for the commercial production of the QT Breast Scanner and products under development.
If cleared, we expect to rely on third-party suppliers for the commercial production of the QT Breast Scanner and products under development.
Among the factors complicating our customers’ ability to bill and receive reimbursement from third-party payors are: • disputes among payors as to which party is responsible for payment; • disparity in coverage among various payors; 58 Table of Contents • disparity in information and billing requirements among payors; and • incorrect or missing billing information, which is required to be provided by the ordering physician.
Among the factors complicating our customers’ ability to bill and receive reimbursement from third-party payors are: • disputes among payors as to which party is responsible for payment; • disparity in coverage among various payors; • disparity in information and billing requirements among payors; and • incorrect or missing billing information, which is required to be provided by the ordering physician.
The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states. 75 Table of Contents In addition, we expect to obtain health information that is subject to privacy and security requirements under HITECH and its implementing regulations.
The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states. In addition, we expect to obtain health information that is subject to privacy and security requirements under HITECH and its implementing regulations.
Beginning in 2020, payment will be made to the furnishing professional for an applicable advanced diagnostic imaging service only if the claim indicates that the ordering professional consulted a qualified clinical decision support mechanism, as identified by HHS, as to whether the ordered service adheres to the applicable AUC.
Beginning in 2020, payment will be made to the furnishing professional for an applicable advanced diagnostic imaging service only if the claim indicates that the ordering professional consulted a qualified clinical decision support mechanism, as identified by HHS, as to whether the ordered service adheres 43 Table of Contents to the applicable AUC.
We 64 Table of Contents periodically consolidate, integrate, upgrade and expand our information systems’ capabilities as a result of technology initiatives, recently enacted regulations, changes in our system platforms and integration of new business acquisitions.
We periodically consolidate, integrate, upgrade and expand our information systems’ capabilities as a result of technology initiatives, recently enacted regulations, changes in our system platforms and integration of new business acquisitions.
Since low yields may result from either design or process 56 Table of Contents technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used.
Since low yields may result from either design or process technology failures, yield problems may not be effectively determined or resolved until an actual product exists that can be analyzed and tested to identify process sensitivities relating to the design rules that are used.
Our warrants will become exercisable for the common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. Our private warrants and our public warrants issued as part of GigCapital5’s IPO are exercisable for one share of common stock at $2.30 per share.
Our warrants will become exercisable for the common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. Our private warrants and our public warrants issued as part of GigCapital5’s IPO are exercisable for one share of common stock at $6.90 per share.
Also, healthcare regulations concerning personal health information, including but not limited to HIPAA, HITECH, 42 CFR Part II, and their State law equivalents such as the California Consumer Privacy Act (the “CCPA”), as recently amended and expanded by the California Privacy Rights Act (the “CPRA”), could have a significant effect on the manner in which we must handle healthcare related data, and the costs of complying with such standards could be significant.
Also, healthcare regulations concerning personal health information, including but not limited to HIPAA, HITECH, 42 CFR Part II, and their State law equivalents such as the CCPA, as recently amended and expanded by the California Privacy Rights Act (the “ CPRA ”), could have a significant effect on the manner in which we must handle healthcare related data, and the costs of complying with such standards could be significant.
These laws and regulations generally prohibit improper payments or offers of improper payments to government officials, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.
These laws and regulations generally prohibit improper payments or offers of 65 Table of Contents improper payments to government officials, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.
The Company cannot be certain that it will be successful in meeting and continuing to meet the requirements to market a medical device in the EEA under the new regulatory framework called the Medical Device Regulation (“MDR”).
The Company cannot be certain that it will be successful in meeting and continuing to meet the requirements to market a medical device in the EEA under the new regulatory framework called the MDR.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe rely upon in-house and third- party cybersecurity vendors to monitor our IT systems and assets and have a governance structure and processes as described above to assess, identify, manage, and report cybersecurity risks. 99 Table of Contents We continue to assess the risks and changes in the cyber environment and invest in enhancements to our cybersecurity capabilities.
Biggest changeWe rely upon in-house and third-party cybersecurity vendors to monitor our IT systems and assets and have a governance structure and processes as described above to assess, identify, manage, and report cybersecurity risks. We continue to assess the risks and changes in the cyber environment and invest in enhancements to our cybersecurity capabilities.
Senior leadership regularly briefs the full Board of Directors on our cybersecurity and information security posture and the Audit Committee is to be apprised of cybersecurity incidents deemed to pose a critical risk to our information technology (“IT”) assets or business.
Senior leadership regularly briefs the full Board of Directors on our cybersecurity and information security posture and the Audit Committee is to be apprised of cybersecurity incidents deemed to pose a critical risk to our information technology (“ IT ”) assets or business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3: Legal Proceedings We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity. Item 4: Mine Safety Disclosures Not applicable 100 Table of Contents Part II
Biggest changeItem 3: Legal Proceedings We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us or any of our officers or directors in their corporate capacity. 83 Table of Contents Item 4: Mine Safety Disclosures Not applicable 84 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−4 removed0 unchanged
Biggest changeAs a result, effective January 28, 2025, the Company’s common stock commenced trading in the over‑the-counter market under the symbol “QTIH”, and the trading of the common stock was upgraded to the OTCQB Venture Market on March 11, 2025.
Biggest changeItem 5: Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Through January 27, 2025, our common stock was listed on The Nasdaq Stock Market LLC (“ Nasdaq ”), trading under the ticker symbol “QTI.” Upon the completion of proceedings to delist our common stock, Nasdaq suspended trading in our common stock, and effective January 28, 2025, our common stock commenced trading in the over‑the-counter market under the symbol “QTIH,” and was upgraded to the OTCQB Venture Market on March 11, 2025.
Equity Compensation Plans See Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of Part III of this Annual Report for information relating to securities authorized for issuance under our equity compensation plans. Item 6: Reserved
Recent Purchases of Equity Securities We made no repurchases of our equity securities during the fourth quarter of the fiscal year ended December 31, 2025 Equity Compensation Plans See Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of Part III of this Annual Report for information relating to securities authorized for issuance under our equity compensation plans.
We currently do not expect to pay any dividends on our common stock in the foreseeable future. Recent Unregistered Sales of Equity Securities Please refer to the Quarterly Report on Form 10-Q and registration statement on Form S-1 that we have filed with the SEC for information regarding our Private Placement that closed on November 22, 2024.
Recent Unregistered Sales of Equity Securities Please refer to the Quarterly Report on Form 10-Q and registration statement on Form S-1 that we have filed with the SEC for information regarding our Private Placement that closed on October 3, 2025 and the Form 8-K that we have filed with the SEC for information regarding our Private Placement that closed on January 22, 2026.
Removed
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our common stock is currently listed on The Nasdaq Stock Market LLC.
Added
Effective January 28, 2026, upon meeting all of the Nasdaq listing requirements, our common stock was uplisted from the OTCQB Venture Market to the Nasdaq Capital Market and began trading under the ticker symbol “QTI.” As of March 24, 2026, there were approximately 369 stockholders of record of our common stock.
Removed
However, the Company has received written notice from Nasdaq that it has commenced proceedings to delist the Company’s common (ticker symbol: QTI) from Nasdaq, and suspended trading in the Company’s common stock pending the completion of such proceedings.
Added
Dividend Policy We have never declared or paid any cash dividend on our common stock. We currently do not expect to pay any dividends on our common stock in the foreseeable future.
Removed
Any over-the-counter market quotations of our common stock reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions. As of March 28, 2025, there were approximately 384 stockholders of record of our common stock. Dividend Policy We have never declared or paid any cash dividend on our common stock.
Removed
Recent Purchases of Equity Securities We made no repurchases of our equity securities during the fourth quarter of the fiscal year ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

78 edited+69 added−112 removed57 unchanged
Biggest changeOn December 11, 2024, the Company and NXC entered into the Amended Distribution Agreement (which we further amended on March 28, 2025), which provides the Company with MOQs that could result in cash inflows of up to $18.0 million in 2025 and $27.0 million in 2026.
Biggest changeWe entered into several distribution agreements which provided us with MOQs as follow: • On June 18, 2024, as amended on December 11, 2024 and further amended on March 28, 2025, we entered into the Amended NXC Distribution Agreement with NXC, which provides us with MOQs amounting to expected cash inflows of up to $28.5 million in 2026. • On August 21, 2025, we entered into the Gulf Medical Distribution Agreement with GMC, a corporation organized and existing under the laws of Saudi Arabia, for an initial term of three years.
On June 6, 2017, FDA, in response to QT Imaging’s Section 510(K) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device.
On June 6, 2017, the FDA, in response to QT Imaging’s Section 510(K) Summary of Safety and Effectiveness premarket notification, determined that the QT Breast Scanner is substantially equivalent to the predicate device.
On December 11, 2024, we and NXC entered into the Amended Distribution Agreement, which amends and restates the NXC Distribution Agreement in its entirety, making some modifications to the NXC Distribution Agreement but retaining other terms. We further amended the Amended Distribution Agreement on March 28, 2025.
On December 11, 2024, we and NXC entered into the Amended NXC Distribution Agreement, which amends and restates the NXC Distribution Agreement in its entirety, making some modifications to the NXC Distribution Agreement but retaining other terms. We further amended the Amended NXC Distribution Agreement on March 28, 2025.
As part of the effort to build the sales and marketing capabilities in the United States, QT Imaging entered into the Amended Distribution Agreement, pursuant to which QT Imaging appointed NXC as the exclusive agent for the sale of the QT Breast Scanner in the U.S. and U.S. territories.
As part of the effort to build the sales and marketing capabilities in the United States, QT Imaging entered into the Amended NXC Distribution Agreement, pursuant to which QT Imaging appointed NXC as the exclusive agent for the sale of the QT Breast Scanner in the U.S. and U.S. territories.
Our strategies for commercializing the QT Breast Scanner include the following: • Create disruptive technological innovation (software, artificial intelligence, and smart physics) to improve medical imaging and thus health care quality and access. • Continue to improve our high quality, high resolution, native 3D, reproducible image quality regardless of operator or breast size/tissue type breast imaging technology, as well as the techniques for quantifiable analysis, comparison, and training. • Partner with strategic business and distribution channels to address the U.S. market for breast imaging immediately and, other regions in the future, to place the QT Breast Scanner in hospitals, radiology centers, etc. and generate awareness of the benefits of our technology. • Perform small scale manufacturing internally to the Company and partner strategically for large scale manufacturing. • Expand the market by supporting additional Direct-to-Customer and Direct-to-Patient approaches to enable the ability to lower health care costs and increase access via personal medical imaging. • Provide a new social and economic opportunity for consumers to take control of some aspects of their own health care—such as imaging for minor injuries or medical conditions without needing a healthcare “gate-keeper.” • Focus our intellectual capabilities and ethical framework to become unified in our mission to improve the quality and lower the cost of health care world-wide . . .
Our strategies for commercializing the QT Breast Scanner include the following: • Create disruptive technological innovation (software, artificial intelligence, and smart physics) to improve medical imaging and thus health care quality and access. • Continue to improve our high quality, high resolution, native 3D, reproducible image quality regardless of operator or breast size/tissue type breast imaging technology, as well as the techniques for quantifiable analysis, comparison, and training. • Partner with strategic business and distribution channels to address the U.S. market for breast imaging immediately and, other regions in the future, to place the QT Breast Scanner in hospitals, radiology centers, etc. and generate awareness of the benefits of our technology. • Perform manufacturing internally to us and partner strategically for large scale manufacturing. • Expand the market by supporting additional Direct-to-Customer and Direct-to-Patient approaches to enable the ability to lower health care costs and increase access via personal medical imaging. • Provide a new social and economic opportunity for consumers to take control of some aspects of their own health care—such as imaging for minor injuries or medical conditions without needing a healthcare “gate-keeper.” • Focus our intellectual capabilities and ethical framework to become unified in our mission to improve the quality and lower the cost of health care world-wide . . .
Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including, without limitation: • The timing, receipt and amount of revenues from the sales of the QT Breast Scanner and related products and services, or any future approved or cleared products and product candidates, if any; • The cost of future activities, including product sales, medical affairs, marketing, manufacturing and distribution for the QT Breast Scanner; • The costs, timing, and outcomes of regulatory review of applications for expanded clearances for the QT Breast Scanner and clearance for other products; • The scope, progress, results and costs of researching, developing and manufacturing our product candidates or any future product candidates, and conducting studies and clinical trials; • The timing of, and the costs involved in, obtaining regulatory approvals or clearances for our product candidates or any future product candidates; • The cost of manufacturing our product candidates or any future product candidates and any products we successfully commercialize, including costs associated with building out our manufacturing capabilities; • The cost and time needed to attract and retain skilled personnel to support our continued growth; • Our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into; and • The costs associated with being a public company.
Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including, without limitation: 97 Table of Contents • The timing, receipt and amount of revenues from the sales of the QT Breast Scanner and related products and services, or any future approved or cleared products and product candidates, if any; • The cost of future activities, including product sales, medical affairs, marketing, manufacturing and distribution for the QT Breast Scanner; • The costs, timing, and outcomes of regulatory review of applications for expanded clearances for the QT Breast Scanner; • The scope, progress, results and costs of researching, developing and manufacturing our product candidates or any future product candidates, and conducting studies and clinical trials; • The timing of, and the costs involved in, obtaining regulatory approvals or clearances for our product candidates or any future product candidates; • The cost of manufacturing our product candidates or any future product candidates and any products we successfully commercialize, including costs associated with building out our manufacturing capabilities; • The cost and time needed to attract and retain skilled personnel to support our continued growth; • Our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into; and • The costs associated with being a public company.
Our future funding requirements, both short-and long-term, will depend on many factors, including, without limitation: • Having the cash to repay our debt obligations as they come due; • Expand our current manufacturing operations and expand existing and build new partnerships with contract manufacturing third-party vendors; • Purchase inventory for our planned shipments; • Expand or enhance our distribution with third-party distribution channels; • The progress and results of our trials and interpretation of those results by the FDA (and other regulatory authorities, as required); • Seek regulatory clearances for product candidates and expanded regulatory clearance for the QT Breast Scanner; • The cost of operating as a public company, including hiring additional personnel as well as increased director and officer insurance premiums, audit and legal fees, investor relations fees and expenses related to compliance with public company reporting requirements under the Exchange Act and rules implemented by the SEC and Nasdaq; and 114 Table of Contents • The costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending our intellectual property-related claims.
Our future funding requirements, both short-and long-term, will depend on many factors, including, without limitation: • Having the cash to repay our debt obligations as they come due; • Expand our current manufacturing operations and expand existing and build new partnerships with contract manufacturing third-party vendors; • Purchase inventory for our planned shipments; • Expand or enhance our distribution with third-party distribution channels outside of the U.S.; • The progress and results of our trials and interpretation of those results by the FDA (and other regulatory authorities, as required); • Seek regulatory clearances for product candidates and expanded regulatory clearance for the QT Breast Scanner; • The cost of operating as a public company, including hiring additional personnel as well as increased director and officer insurance premiums, audit and legal fees, investor relations fees and expenses related to compliance with public company reporting requirements under the Exchange Act and rules implemented by the SEC and Nasdaq; and • The costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending our intellectual property-related claims.
The Yorkville Warrant is exercisable until February 26, 2030. Yorkville may cashless exercise the Yorkville Warrant. The Yorkville Warrant is also subject to adjustments in the event that the Company’s common stock undergoes a split, reverse-split or similar event. Furthermore, the Yorkville Warrant has provided the holder with piggyback registration rights.
The Yorkville Warrant is exercisable until February 26, 2030. Yorkville may cashless exercise the Yorkville Warrant. The Yorkville Warrant is also subject to adjustments in the event that our common stock undergoes a split, reverse-split or similar event. Furthermore, the Yorkville Warrant has provided the holder with piggyback registration rights.
Liquidity and Capital Resources Sources of Liquidity Liquidity describes our ability to meet financial obligations which arise during the normal course of business. To date, we have financed our operations primarily through the sale of equity securities, issuances of convertible notes and other debt, and grants from the U.S. government.
Liquidity and Capital Resources Sources of Liquidity Liquidity describes our ability to meet financial obligations which arise during the normal course of business. To date, we have financed our operations primarily through the sale of equity securities, issuances of convertible notes and other debt, 92 Table of Contents and grants from the U.S. government.
The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods or services. We determine revenue recognition through the following steps: 1. Identification of the contract, or contracts, with a customer: We consider the terms and conditions of the contract in identifying the contracts.
The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods or services. We determine revenue recognition through the following steps: 99 Table of Contents 1. Identification of the contract, or contracts, with a customer: We consider the terms and conditions of the contract in identifying the contracts.
Our goal is to improve global health outcomes through the development and commercialization of imaging devices that address critical healthcare challenges with accuracy and precision. 101 Table of Contents With the support of nearly $18 million in financial support from the U.S.
Our goal is to improve global health outcomes through the development and commercialization of imaging devices that address critical healthcare challenges with accuracy and precision. 85 Table of Contents With the support of nearly $18.0 million in financial support from the U.S.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.
For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood 100 Table of Contents of being realized upon ultimate settlement with the relevant tax authority.
Any additional debt 109 Table of Contents financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Any additional debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
As of the date the consolidated financial statements were available to be issued, management is not aware of any pending claims that will have a material impact on our consolidated financial statements. Emerging Growth Company We are an emerging growth company (“ EGC ”), as defined in the JOBS Act.
As of the date the consolidated financial statements were available to be issued, management is not aware of any pending claims that will have a material impact on our consolidated financial statements. Emerging Growth Company We are an emerging growth company (“ EGC ”), as defined in the Jumpstart Our Business Startups Act of 2012 (“ JOBS Act ”).
Selling, general and administrative expenses include facilities, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance. Selling, general and administrative expenses also include consulting expenses and costs for conferences, meetings, and other events.
Selling, general and administrative expenses include facilities, depreciation and other expenses, which include direct or 90 Table of Contents allocated expenses for rent and maintenance of facilities and insurance. Selling, general and administrative expenses also include consulting expenses and costs for conferences, meetings, and other events.
Our actual results may materially differ from 116 Table of Contents these estimates. In addition, any change in these estimates or their underlying assumptions could have a material adverse effect on our operating results.
Our actual results may materially differ from these estimates. In addition, any change in these estimates or their underlying assumptions could have a material adverse effect on our operating results.
Our research and development expenses may vary significantly based on factors such as, without limitation: • The timing and progress of development activities; • Our ability to maintain our current research and development programs and to establish new ones; • The receipt of regulatory approvals from applicable regulatory authorities without the need for independent clinical trials or validation; • Duration of subject participation in any trials and follow-ups; • The countries and jurisdictions in which the trials are conducted; • Length of time required to enroll eligible subjects and initiate trials; • Per trial subject costs; 106 Table of Contents • Number of trials required for regulatory approval; • The timing, receipt, and terms of any marketing approvals from applicable regulatory authorities; • The success of our distribution arrangements, and our ability to establish new licensing or collaboration arrangements; • Establishing contract manufacturing partnerships or making arrangements with third-party manufacturers; • The hiring and retention of research and development personnel; • Obtaining, maintaining, defending, and enforcing intellectual property rights; and • The phases of development of our product candidates.
Our research and development expenses may vary significantly based on factors such as, without limitation: • The timing and progress of development activities; • Our ability to maintain our current research and development programs and to establish new ones; • The receipt of regulatory approvals from applicable regulatory authorities without the need for independent clinical trials or validation; • Duration of subject participation in any trials and follow-ups; • The countries and jurisdictions in which the trials are conducted; • Length of time required to enroll eligible subjects and initiate trials; • Per trial subject costs; • Number of trials required for regulatory approval; • The timing, receipt, and terms of any marketing approvals from applicable regulatory authorities; • The success of our distribution arrangements, and our ability to establish new licensing or collaboration arrangements outside of U.S.; • The hiring and retention of research and development personnel; • Obtaining, maintaining, defending, and enforcing intellectual property rights; and • The phases of development of our product candidates.
The Lynrock Lake Warrant is also subject to anti-dilution adjustments to the exercise price and the number of shares which may be purchased upon exercise of the Lynrock Lake Warrant in the event that the Company issues shares of common stock (or derivative securities) at a price that is either less than the $0.40 exercise price or the fair market value of a share of common stock from the immediately prior trading day.
The Lynrock Lake Warrant is also subject to anti-dilution adjustments to the exercise price and the number of shares which may be purchased upon exercise of the Lynrock Lake Warrant in the event that we issue shares of common stock (or derivative securities) at a price that is either less than the $1.20 exercise price or the fair market value of a share of common stock from the immediately prior trading day.
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Cable Car an amount equal to the full principal, interest and fees amount of approximately $1,625,000 in cash to fully settle and discharge the Company’s obligations under the Cable Car Note and extinguish the Cable Car Note as having been fully performed.
On February 26, 2025, we used a portion of the proceeds of the Lynrock Lake Term Loan to pay Cable Car an amount equal to the full principal, interest and fees amount of approximately $1.6 million in cash to fully settle and discharge our obligations under the Cable Car Note and extinguish the Cable Car Note as having been fully performed.
The Credit Agreement is secured by a first priority lien on substantially all assets of the Company and provides for a term loan in the aggregate principal amount of $10,100,000 at an interest rate of 10.0% per annum, compounded quarterly. The maturity date of the Credit Agreement is March 31, 2027.
The Lynrock Lake Credit Agreement is secured by a first priority lien on substantially all our assets and provides for a term loan in the aggregate principal amount of $10.1 million at an interest rate of 10.0% per annum, compounded quarterly. The maturity date of the Lynrock Lake Credit Agreement is March 31, 2027.
The Company and Yorkville also entered into that certain Termination Agreement, dated February 26, 2025 (the “Termination Agreement”), pursuant to which the parties acknowledged the termination of the SEPA effective February 26, 2025.
We and Yorkville also entered into that certain Termination Agreement, dated February 26, 2025 (the “ Termination Agreement ”), pursuant to which the parties acknowledged the termination of the SEPA effective February 26, 2025.
On February 26, 2025, the Company used a portion of the proceeds of the Lynrock Lake Term Loan to pay Yorkville an amount equal to $3,000,000 in cash and issued to Yorkville warrants to purchase 15,000,000 shares of its common stock at an exercise price of $0.40 per share pursuant to the Yorkville Warrant to fully settle and discharge the Company’s obligations under the Yorkville Note and extinguish the Yorkville Note as having been fully performed.
On February 26, 2025, we used a portion of the proceeds of the Lynrock Lake Term Loan to pay Yorkville an amount equal to $3.0 million in cash and issued to Yorkville a warrant to purchase 5,000,071 shares of its common stock at an exercise price of $1.20 per share pursuant to a Warrant to Purchase Common Stock (the “ Yorkville Warrant ”) to fully settle and discharge our obligations under the Yorkville Note and extinguish the Yorkville Note as having been fully performed.
The Working Capital Note was issued to provide us with additional working capital during the period prior to consummation of the Business Combination Agreement with GigCapital5.
The Working Capital Note was issued to provide the Company with additional working capital during the period prior to consummation of the Business Combination Agreement with 95 Table of Contents GigCapital5.
Cost is determined using the weighted- average cost method. We periodically reviews the value of items in inventory and provides write-offs of inventory that is obsolete. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value.
Cost is determined using the weighted- average cost method. We periodically reviews the value of items in inventory and provides write-offs of inventory that is obsolete. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Once inventory has been written down below cost, it is not subsequently written up.
We have reserved the right to sell directly to customers as an exception. Furthermore, we may, in our sole discretion, sell the QT Breast Scanners to any other person or entity anywhere in the world without notice to NXC or NXC’s prior consent. NXC is also allowed to assign sales agents for the purpose of QT Breast Scanner sales.
Furthermore, we may, in our sole discretion, sell the QT Breast Scanners to any other person or entity 86 Table of Contents anywhere in the world without notice to NXC or NXC’s prior consent. NXC is also allowed to assign sales agents for the purpose of QT Breast Scanner sales.
Critical Accounting and Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Critical Accounting and Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
On March 4, 2024, the Working Capital Note was agreed to be amended and subordinated pursuant to and in accordance with the terms of the Business Combination Agreement. Effective on the Closing of the Business Combination, the Working Capital Note cannot be repaid prior to the repayment or conversion of the Yorkville Note issued to Yorkville.
On March 4, 2024, the holder of the Working Capital Note agreed to extend and subordinate the promissory note pursuant to and in accordance with the terms of the Business Combination Agreement. Effective on the closing of the Business Combination, the Working Capital Note cannot be repaid prior to the repayment or conversion of the Yorkville Note received from Yorkville.
The Working Capital Note was subsequently amended and restated six times on June 12, 2023 to add an additional principal amount of $100,000, August 15, 2023 to add an additional principal amount of $75,000, August 29, 2023 to add an additional principal amount of $100,000, September 12, 2023 to add an additional principal amount of $75,000, September 15, 2023 to add an additional principal amount of $50,000, and October 26, 2023 to add an additional principal amount of $55,000, for an aggregate principal amount outstanding as of December 31, 2023 under the Working Capital Note of $705,000.
The Working Capital Note was subsequently amended and restated six times on June 12, 2023 to add an additional principal amount of $0.1 million, August 15, 2023 to add an additional principal amount of $0.1 million, August 29, 2023 to add an additional principal amount of $0.1 million, September 12, 2023 to add an additional principal amount of $0.1 million, September 15, 2023 to add an additional principal amount of $0.1 million, and October 26, 2023 to add an additional principal amount of $0.1 million, for an aggregate principal amount outstanding as of December 31, 2025 and 2024 under the Working Capital Note of $0.7 million.
Net Cash used in Investing Activities Net cash used in investing activities was $87,790 for the year ended December 31, 2024 as compared to $13,040 for the year ended December 31, 2023. The use of net cash used in investing activities for both periods was related to the purchase of property and equipment.
Net Cash used in Investing Activities Net cash used in investing activities was $0.1 million for the year ended December 31, 2025 as compared to $0.1 million for the year ended December 31, 2024. The use of net cash used in investing activities for both periods was related to the purchase of property and equipment.
The Working Capital Note is interest-free and originally matured on the earlier of (i) the date on which we consummated the Business Combination with GigCapital5, Inc.; (ii) the date we wind up; or (iii) December 31, 2023.
The Working Capital Note is interest-free and originally matured on the earlier of (i) the date on which the Company consummated the Business Combination with GigCapital5; (ii) the date the Company winds up; or (iii) December 31, 2023. The Working Capital Note may be prepaid without penalty.
We expect our cost of revenue to increase in absolute dollars and decrease as a percentage of revenues over time as we shift to new manufacturing processes and vendors that we anticipate will result in greater efficiency and lower per unit costs.
We expect our cost of revenue to increase in absolute dollars and decrease as a percentage of revenues over time as we shift to new manufacturing processes and vendors that we anticipate will result in greater efficiency and lower per unit costs. 89 Table of Contents We expect we will continue to invest additional resources into our products to expand and further develop our offerings.
We expect to derive future liquidity primarily through our revenues with customers and sale of equity securities. Our current liquidity position consists of cash on hand and certificates of deposit. Since our inception, we have incurred significant operating losses and negative cash flows. As of December 31, 2024 and 2023, we had an accumulated deficit of $31,940,527 and $17,770,145, respectively.
We expect to derive future liquidity primarily through our revenues with customers and sale of equity securities. Our current liquidity position consists of cash on hand and certificates of deposit. We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $53.0 million as of December 31, 2025.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Condition and Results of Operations” to “we,” “our,” “us,” “QT Imaging,” and the “Company” refer to the business and operations of QT Imaging and its subsidiary prior to the Business Combination and to QT Imaging Holdings and its subsidiaries after the Business Combination.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Condition and Results of Operations” to “we,” “our,” “us,” “QT Imaging,” “QT Imaging Holdings, Inc.” or the “Company” and other similar terms refer to QT Imaging Holdings, Inc. and its consolidated subsidiaries.
Furthermore, in connection with the Lynrock Lake Term Loan, the Company issued to Lynrock Lake, pursuant to the terms of a Warrant to Purchase common stock (the “Lynrock Lake Warrant”), warrants to purchase 61,000,000 shares of its common stock at an exercise price of $0.40 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035.
Furthermore, in connection with the Lynrock Lake Term Loan, we issued to Lynrock Lake, pursuant to the terms of a Warrant to Purchase common stock, the Lynrock Lake Warrant to purchase 20,333,623 shares of common stock at an exercise price of $1.20 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035.
Related Party Convertible Notes Payable In July 2020, we issued three convertible notes to three of its stockholders for advances up to $3,500,000 in principal (the “2020 Notes”) and bearing annual interest of 5% on any amounts drawn. An additional note was issued in March 2022 as part of the 2020 Notes, but with an annual interest rate of 8%.
Related Party Convertible Notes Payable Our three convertible notes to three of our stockholders for advances up to $3.5 million in principal issued in July 2020 (the “ 2020 Notes ”) bear annual interest of 5% on any amounts drawn. The additional note issued in March 2022 as part of the 2020 Notes, has an annual interest rate of 8%.
Since our consummation of the Merger, we expect to incur additional costs associated with operating as a public company.
We expect to incur additional costs associated with operating as a public company.
On February 26, 2025, the Company entered into a credit agreement (the “Credit Agreement”) that provides a senior secured term loan (the “Lynrock Lake Term Loan”) with Lynrock Lake.
Recent Developments On February 26, 2025, we entered into the Lynrock Lake Credit Agreement that provides a senior secured term loan (the “ Lynrock Lake Term Loan ”) with Lynrock Lake.
On February 26, 2025, the Company entered into the Credit Agreement that provides the Lynrock Lake Term Loan with Lynrock Lake for a term loan in the aggregate principal amount of $10.1 million and repaid the secured Cable Car Note, and fully settled its obligations under the Yorkville Note and terminated the Yorkville SEPA by paying $3.0 million in cash and issuing a 5-year warrant for 15 million shares.
On February 26, 2025, we entered into the Lynrock Lake Credit Agreement that provides the Lynrock Lake Term Loan with Lynrock Lake in the aggregate principal amount of $10.1 million, which was used to repay the Car Note issued in February 2024, fully settled its obligations under the Yorkville Note issued on March 4, 2024, and terminated the SEPA with Yorkville by paying $3.0 million in cash and issuing the Yorkville Warrant.
Once inventory has been written down below cost, it is not subsequently written up. 117 Table of Contents Income Taxes Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Income Taxes Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
In accordance with this accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax benefit.
In accordance with this accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax benefit. Recent Accounting Pronouncements See Note 1 to the audited consolidated financial statements for a discussion of recent accounting pronouncements.
The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods. Service revenue is generally related to maintenance and training the customer..
For sales of products (which include the QT Breast Scanner and any accessories), revenue is recognized when a customer obtains control of the promised goods. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these goods. Service revenue is generally related to maintenance and training the customer.
Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the research and development of our products, which include payroll and payroll related expenses, facilities costs, depreciation expense, materials and supplies, and consultant costs. We expense all research and development costs in the periods in which such costs are incurred.
The level and timing of investment in these areas could affect our cost of revenue in the future. Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred in connection with the research and development of our products, which include payroll and payroll related expenses, facilities costs, depreciation expense, materials and supplies, and consultant costs.
During the year ended December 31, 2024, we incurred a net loss of $8,984,880 and used $10,033,477 of cash in operating activities, which includes the repayment of net liabilities assumed from the business combination. We continue to incur losses, and our ability to achieve and sustain profitability will depend on the achievement of sufficient revenues to support our cost structure.
During the year ended December 31, 2025, we incurred a net loss of $21.1 million and used $9.0 million of cash in operating activities. We expect to continue to incur losses, and our ability to achieve and sustain profitability will depend on the achievement of sufficient revenues to support our cost structure.
Research and development activities are central to our business. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in the development of the QT Breast Scanner and devote significant resources to the research and development of the full-body scanner product candidate intended for orthopedic and pediatric use.
We expense all research and development costs in the periods in which such costs are incurred. Research and development activities are central to our business. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to invest in the development of the QT Breast Scanner.
If we are unable to raise additional funds when needed, we may be required to delay, reduce, or eliminate our product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves. 115 Table of Contents Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and secure sources of financing and attain profitable operations.
If we are unable to raise additional funds when needed, we may be required to delay, reduce, or eliminate our product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.
All principal and interest payments are due on or before July 1, 2025. The 2020 Notes are convertible, at the holder’s option, into shares of common stock at the lower of $14.59 per share or the offering price in a financing of at least $5,000,000 in equity from unaffiliated parties.
The 2020 Notes are convertible, at the holder’s option, into shares of our common stock at the lower of $43.77 per share or the offering price in a financing of at least $5.0 million in equity from unaffiliated parties.
Cash Flows The following table provides information regarding our cash flows for the periods presented: For Year Ended December 31, 2024 2023 Net cash used in operating activities $ (10,033,477) $ (2,651,143) Net cash used in investing activities (87,790) (13,040) Net cash provided by financing activities 11,128,685 2,373,793 Net increase (decrease) in cash and restricted cash and cash equivalents $ 1,007,418 $ (290,390) Net Cash Used In Operating Activities Net cash used in operating activities was $10,033,477 for the year ended December 31, 2024 as compared to $2,651,143 for the year ended December 31, 2023.
Cash Flows The following table provides information regarding our cash flows for the periods presented: Year Ended December 31, (in thousands) 2025 2024 Net cash used in operating activities $ (8,959) $ (10,033) Net cash used in investing activities (124) (88) Net cash provided by financing activities 18,353 11,128 Net increase in cash and restricted cash and cash equivalents $ 9,270 $ 1,007 Net Cash Used In Operating Activities Net cash used in operating activities was $9.0 million for the year ended December 31, 2025 as compared to $10.0 million for the year ended December 31, 2024.
Contractual Obligations We lease our operating facilities in Novato, California, under a non-cancelable operating lease through May 31, 2027. There are no options or rights to extend the term of this lease. Contingencies Litigation We are subject to occasional lawsuits, investigations and claims arising out of the normal course of business.
There are no options or rights to extend the term of this lease. 98 Table of Contents Contingencies Litigation We are subject to occasional lawsuits, investigations and claims arising out of the normal course of business.
Change in fair value of derivative liability Change in the fair value of derivative liability was $4,817,600 for the year ended December 31, 2024. The change in fair value of derivatives was primarily driven by the decline in the value of our common stock during the year ended December 31, 2024.
Change in fair value of derivative liability Change in the fair value of derivative liability changed by $4.7 million to income of $0.1 million for the year ended December 31, 2025 from income of $4.8 million for the year ended December 31, 2024. The change was primarily due to the decline in the value of our common stock.
Under the NXC Distribution Agreement, NXC is appointed as the exclusive reseller to market, advertise, and resell QT Breast Scanners in the U.S. and U.S. territories. NXC will purchase for the purpose of reselling, leasing or renting QT Breast Scanners directly to its customers, but is not obligated to purchase any particular quantity of QT Breast Scanners from us.
NXC will purchase for the purpose of reselling, leasing or renting QT Breast Scanners directly to its customers, but is not obligated to purchase any particular quantity of QT Breast Scanners from us. We have reserved the right to sell directly to customers as an exception.
The net change in operating assets and liabilities was primarily due to a decrease in inventory of $98,594, an increase in accounts payable of $876,074, an increase in accrued expenses and other current liabilities $645,840, and an increase in deferred revenue of $347,619, partially offset primarily by a decrease in other liabilities of $205,701 and an increase in prepaid expenses and other current assets of $116,103.
The net change in operating assets and liabilities was primarily due to an increase in accounts receivable of $0.1 million, an increase in prepaid expenses and other current assets of $0.2 million, a decrease in accounts payable of $2.0 million, a decrease in accrued expenses and other liabilities of $0.8 million, partially offset by a decrease in inventory of $1.5 million, and an increase in other liabilities of $0.2 million.
Net cash used for the year ended December 31, 2024 consisted of a net loss of $8,984,880, adjusted for non-cash expenses primarily including depreciation and amortization of $230,804, stock-based compensation of $289,795, fair value of common stock issued in exchange for services and in connection with non-redemption agreements of $3,698,350, issuance of common stock in connection with a stock subscription agreement of $206,000, warrant modification expense of $200,513, loss on debt extinguishment of $383,511, non-cash interest of $3,589,728, decrease in warrant liability of $187,173, decrease in derivative liability of $4,817,600, decrease in earnout liability of $3,230,000, and the net change in operating assets and liabilities of $1,384,385.
Net cash used for the year ended December 31, 2024 consisted of a net loss of $9.0 million, adjusted for non-cash expenses including depreciation and amortization of $0.2 million, stock-based compensation of $0.3 million, warrant modification expense of $0.2 million, fair value of common stock issued in exchange for services and in connection with non-redemption agreements of $3.7 million, a loss of $0.2 million related to issuance of common stock in connection with a stock subscription agreement, non-cash interest of $3.6 million, a decrease in fair value of warrant liability of $0.2 million, a decrease in fair value of derivative liability of $4.8 million, a decrease in fair value of earnout liability of $3.2 million.
In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on the Related Party Working Capital Note Payable was extended to October 21, 2027. On March 4, 2024, we assumed the $1,560,000 outstanding balance of the Extension Note from a related party and pursuant to the Business Combination Agreement.
In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on the Working Capital Note was extended to October 1, 2027.
Net Cash provided by Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $11,128,685, primarily due to $10,525,000 of net proceeds received from issuance of long-term debt related to the Yorkville Pre-Paid Advance and the Cable Car Note, net proceeds of $1,238,529 received from the Merger, net proceeds from sale of common stock and warrants of $999,998, and cash proceeds of $500,000 received from issuance of common stock pursuant to a subscription agreement, partially offset by repayment of the Bridge Loan of $800,000, cash paid for debt issuance costs of $59,069, and repayments against the Yorkville Note and PPP loans of $1,275,773.
During the year ended December 31, 2024, net cash provided by financing activities was $11.1 million, primarily due to $10.5 million of net proceeds received from issuance of long-term debt related to the Yorkville Pre-Paid Advance and the Cable Car Note, $1.0 million of net proceeds from the sale of common stock, cash proceeds of $0.5 million received from issuance of common stock pursuant to a subscription agreement, and net proceeds of $1.2 million received from the business combination of QT Imaging, Inc. and GigCapital5, Inc.
The Amended Distribution Agreement has a term that runs until December 31, 2026, unless earlier terminated or extended by mutual written agreement. We have also entered into the Canon Letter of Intent with CMSU and CMSC pursuant to which CMSC purchased and acquired two QT Breast Scanners in the first half of 2024.
The Amended NXC Distribution Agreement has a term that runs until December 31, 2026, unless earlier terminated or extended by mutual written agreement. As of December 31, 2025, we have delivered 48 QT Breast Scanners to NXC and NXC’s customers pursuant to the NXC Sales Agent Agreement and Amended NXC Distribution Agreement.
Terms not defined herein are as defined in the annual report. Overview We are a medical device company founded in 2012 and engaged in the research, development, and commercialization of innovative body imaging systems using low energy sound.
Overview We are a medical device company founded in 2012 and engaged in the research, development, and commercialization of innovative body imaging systems using low energy sound. We believe that medical imaging is critical to the detection, diagnosis, and treatment of disease and that it should be safe, affordable, and accessible.
In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity date on the these convertible notes was extended to October 21, 2027. Related Party Working Capital Loan and Extension Note On May 3, 2023, we issued a promissory note (the “Working Capital Note”) to a stockholder for a principal amount of $250,000.
In connection with the issuance of the Lynrock Lake Term Loan, on February 26, 2025, the maturity dates on both the Convertible Note Payable and Working Capital Notes were extended to October 21, 2027.
The term of the Canon Manufacturing Agreement is through December 31, 2026. We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $31,940,527 as of December 31, 2024.
We have incurred net operating losses and negative cash flows from operations since our inception and had an accumulated deficit of $53.0 million as of December 31, 2025. During the year ended December 31, 2025, we incurred a net loss of $21.1 million and used $9.0 million of cash in operating activities.
Other expense, net Other expense, net increased by $16,082 to $560,648 for the year ended December 31, 2024, from $544,566 for the year ended December 31, 2023.
Other expense, net Other expense, net increased by $8.2 million to $8.8 million for the year ended December 31, 2025 from an expense of $0.6 million for the year ended December 31, 2024.
The net change in operating assets and liabilities was primarily due an increase accounts receivable of $67,119, an increase in prepaid expenses and 113 Table of Contents other current assets of $200,770, a decrease in accounts payable of $1,954,768, a decrease in accrued expenses and other current liabilities of $542,878, and a decrease in deferred revenue of $298,254, partially offset by a decrease in inventory of $1,506,746 and an increase in other liabilities of $172,658.
The net change in operating assets and liabilities was primarily due an increase in accounts receivable of $5.7 million, an increase in prepaid expenses and other current assets of $0.3 million, and an increase in inventory of $1.9 million, partially offset primarily by an increase in accounts payable of $2.5 million, an increase in accrued expenses and other current liabilities of $0.4 million, and an increase in other liabilities of $1.1 million.
Net of these payments, the Company had $5.4 million of net proceeds for working capital purposes. Management believes that the cash received for the Lynrock Lake Term Loan and additional revenue anticipated from MOQs per the Amended Distribution Agreement will be sufficient to fund the Company’s current operating plan for at least the next 12 months.
We believe that the additional cash received from the Lynrock Lake Term Loan, the PIPE investments, and the additional expected revenue from MOQs per the Amended NXC Distribution Agreement and new distribution partners in the Gulf 93 Table of Contents region, Gulf Medical and Al Naghi Medical Co., will be sufficient to fund our current operating plan for at least the next 12 months.
The expense for the year ended December 31, 2024 was primarily due to a loss on debt extinguishment of $383,511 related to the conversion of the Extension Note, and a modification expense of $200,513 related to the decrease in exercise price of our private placement warrants and working capital note warrants.
The increase was primarily due to $6.6 million in noncash expense incurred at issuance of the Lynrock Lake Term Loan, and $2.2 million in expense due to an extinguishment loss and modification charges for the Yorkville Note and Cable Car Note during the year ended December 31, 2025, which was partially offset by the modification expense of $0.2 million related to the decrease in exercise price of our private placement warrants and working capital note warrants in the year ended December 31, 2024.
If we are unable to obtain adequate capital, we could be forced to cease operations. See the section entitled “ Risk Factors ” for additional factors and risks associated with our capital requirements. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.
Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and secure sources of financing and attain profitable operations. If we are unable to obtain adequate capital, we could be forced to cease operations. See the section entitled “ Risk Factors ” for additional factors and risks associated with our capital requirements.
As of December 31, 112 Table of Contents 2024 , an aggregate of 253,199 shares of common stock would be issued if the entire principal and interest under the 2020 Notes was converted. As of December 31, 2024 and 2023, the outstanding amount of the 2020 Notes was $3,143,725 and accrued interest of $550,430 and $377,772, respectively.
As of December 31, 2025, an aggregate o f 89,303 s hares of common stock would be issued if the entire principal and interest under the 2020 Notes was converted.
As of December 31, 2024, the outstanding amount of the Yorkville Note was $3,532,591, net of the unamortized debt discount of $4,807,820 and accrued interest of $155,203.
As of December 31, 2025, the outstanding amount of the Lynrock Lake Term Loan was $0.7 million, net of the unamortized debt discount of $9.4 million, and accrued interest of $0.9 million.
Change in fair value of warrant liability Change in fair value of warrant liability was $187,173 for the year ended December 31, 2024.
Change in fair value of warrant liability Change in fair value of warrant liability changed by $3.8 million to an expense of $3.6 million for the year ended December 31, 2025 from an income of $0.2 million for the year ended December 31, 2024.
Pursuant to the terms of the Canon Manufacturing Agreement, we appoint CMSC as the exclusive manufacture of the QT Breast Scanners to be distributed by NXC. The purchase prices applicable to the purchase orders as of the date of the Canon Manufacturing Agreement shall be separately agreed between the parties in writing.
QTI retains the right to perform manufacturing in Novato, California. The purchase prices applicable to the purchase orders as of the date of the Canon Manufacturing Agreement shall be separately agreed between the parties in writing. The term of the Canon Manufacturing Agreement is through December 31, 2026.
The increase in revenue was primarily attributable to the sale of eleven QT Breast Scanners in the year of 2024 as compared with no scanners sold in the year of 2023 due to the timing of sales orders received, availability of scanners that were earmarked and ready for sale to customers.
The increase in revenue was primarily due to the sale of 40 QT Breast Scanners for year ended December 31, 2025 as compared with twelve scanners sold for the year ended December 31, 2024 due to the MOQs in accordance with the Amended NXC Distribution Agreement.
Net cash used for the year ended December 31, 2023 consisted of a net loss of $6,098,951, adjusted for non-cash expenses including depreciation and amortization of $480,694, stock-based compensation of $709,394, non-cash interest of $66,367, induced conversion expense of $168,356, debt extinguishment loss of $376,086, and non-cash operating lease expense of $8,246, partially offset by the net change in operating assets and liabilities of $1,655,033.
Net cash used for the year ended December 31, 2025 consisted of a net loss of $21.1 million, adjusted for non-cash expenses primarily including depreciation and amortization of $0.1 million, stock-based compensation of $0.8 million, loss on issuance of the Lynrock Lake Term Loan of $6.6 million, debt extinguishment loss of $2.1 million, debt modification expense of $0.1 million, non-cash interest of $1.2 million, change in fair value of warrant liability of $3.6 million, change in fair value of derivative liability of $0.1 million, change in fair value of earnout liability of $1.8 million.
Cost of Revenue Cost of revenue increased by $2,103,832 to $2,238,820 for the year ended December 31, 2024 from $134,988 for the year ended December 31, 2023.
Revenue Revenue increased by $14.0 million to $18.9 million for the year ended December 31, 2025 from $4.9 million for the year ended December 31, 2024.
The increase in cost of revenue was primarily attributable to the sale of eleven QT Breast Scanners in the year of 2024 as compared with no scanners sold in the year of 2023, which was partially offset by inventory write-offs in the year of 2023.
Cost of revenue increased by $8.1 million to $10.3 million for the year ended December 31, 2025 from $2.2 million for the year ended December 31, 2024. The increase was primarily due to the sale of 40 QT Breast Scanners for the year ended December 31, 2025 as compared with twelve scanners sold for the year ended December 31, 2024.
“It’s about time.” Consistent with our strategy, on May 31, 2023, we entered into the NXC Sales Agent Agreement with NXC, pursuant to which we appointed NXC as the non-exclusive agent for the sale of QT Imaging products and services in non-exclusive territories: the U.S., U.S. territories, and U.S. Department of Defense installations.
“It’s about time.” On June 18, 2024, we entered into the NXC Distribution Agreement with NXC Imaging, Inc. (“NXC”) to appoint NXC as the exclusive reseller to market, advertise, and resell QT Breast Scanners in the U.S. and U.S. territories.
We cannot reasonably determine the nature, timing and costs of the efforts that will be necessary to complete the enhancements of the QT Breast Scanner, or estimate the nature, timing and costs that will be necessary to complete the development of, and obtain regulatory approval for, the full-body scanner product candidate.
We cannot reasonably determine the nature, timing and costs of the efforts that will be necessary to build our QTI Cloud SaaS platform, run clinical trials that are necessary to generate biomarker data, and reduce the bill of materials and other costs to manufacture the QT Breast Scanner.
Change in fair value of earnout liability Change in the fair value of earnout liability was $3,230,000 for the year ended December 31, 2024. The change in fair value of derivatives was primarily driven by the decline in the value of our common stock during the year ended 108 Table of Contents December 31, 2024.
Change in fair value of earnout liability Change in the fair value of earnout liability changed by $5.0 million to an expense of $1.8 million for the year ended December 31, 2025 from income of $3.2 million for the year ended December 31, 2024.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $8,121,822 to $11,549,512 for the year ended December 31, 2024 from $3,427,690 for the year ended December 31, 2023.
The increase was primarily due to an increase in professional service expenses of $0.5 million and an increase in employee compensation expenses of $0.3 million. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased by $2.5 million to $9.1 million for the year ended December 31, 2025 from $11.6 million for the year ended December 31, 2024.
Components of Our Results of Operations Revenue Revenue consists of revenue from the sale of our products including the QT Breast Scanner, accessories, and related services, which are primarily training and maintenance. For sales of products (which include the QT Breast Scanner and any accessories), revenue is recognized when a customer obtains control of the promised goods.
Effective January 28, 2026, upon meeting all of the Nasdaq listing requirements, the Company’s common stock was uplisted from the OTCQB Venture Market to the Nasdaq Capital Market and began trading under the ticker symbol “QTI.” Components of Our Results of Operations Revenue Revenue consists of revenue from the sale of our products including the QT Breast Scanner, associated software, accessories, and related services, which are primarily training and maintenance.
CMSC has no right to reverse engineer the QT Breast Scanner and may only modify and disassemble the QT Breast Scanner as necessary to conduct the Feasibility Study. On March 28, 2025, we entered into the Canon Manufacturing Agreement with CMSC.
On March 28, 2025, we entered into the Canon Manufacturing Agreement (the “ Canon Manufacturing Agreement ”) with Canon Medical Systems, Inc. (“ CMSC ”). Pursuant to the terms of the Canon Manufacturing Agreement, we appointed CMSC as the exclusive manufacturer of the QT Breast Scanners to be distributed by NXC.
Through December 31, 2023, we issued warrants in connection with the note to purchase a total of 5,091 shares of common stock which 3,540 shares were exercisable at a price of $12.40 per share and 1,551 shares were exercisable at a price of $11.67 per share.
Furthermore, in connection with the Lynrock Lake Term Loan, we issued the Lynrock Lake Warrant, which is a warrant to purchase 20,333,623 shares of our common stock at an exercise price of $1.20 per share. The Lynrock Lake Warrant is exercisable until February 26, 2035. Lynrock Lake may cashless exercise the Lynrock Lake Warrant.
Removed
We believe that medical imaging is critical to the detection, diagnosis, and treatment of disease and that it should be safe, affordable, and accessible.
Added
You should read the following discussion and analysis of QT Imaging Holdings’ financial condition and results of operations in conjunction with the audited consolidated financial statements and notes thereto contained in this Annual Report.

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