QT Imaging Holdings Announces Favorable Amendment of Convertible Promissory Note

Rhea-AI Summary

QT Imaging Holdings (NASDAQ:QTI) has announced a favorable amendment to its $10,000,000 convertible promissory note with YA II PN, The amendment, executed on September 26, 2024, follows a trigger event on September 11, 2024, that led to a $1,500,000 payment by the company on September 13, 2024. Key changes include:

• Extension of the note's maturity date by approximately 6 months to December 15, 2025
• Deferral of all monthly cash payments until January 15, 2025
• Reduction of monthly payment obligations from $1,500,000 to $600,000 during trigger events
• Waiver of potential Nasdaq delisting as an event of default

CEO Dr. Raluca Dinu expressed gratitude for the partnership, stating that the amendment provides runway for QTI's first-year plan as a public company, focusing on commercial shipments of Breast Acoustic CT™ Scanners in the United States.

Positive

• Extension of convertible note maturity date by 6 months, providing more time for repayment
• Reduction of monthly payment obligations from $1,500,000 to $600,000 during trigger events
• Deferral of all monthly cash payments until January 15, 2025, improving short-term cash flow
• Waiver of potential Nasdaq delisting as an event of default, reducing risk for the company

Negative

• Occurrence of a trigger event related to share price, indicating potential stock performance issues
• Ongoing debt obligation of $10,000,000 convertible promissory note
• Need for amendment suggests financial challenges or cash flow concerns

Insights

Financial Analyst

This amendment to QT Imaging Holdings' convertible promissory note is a positive development for the company's financial flexibility. By reducing monthly payment obligations from $1,500,000 to $600,000 and deferring payments until January 2025, QTI has significantly improved its short-term cash flow position. This gives the company more runway to focus on commercializing its Breast Acoustic CT™ Scanners without immediate financial pressure.

The extension of the note's maturity date by 6 months provides additional breathing room. Moreover, the waiver of potential Nasdaq delisting as an event of default removes a significant risk factor. These changes collectively strengthen QTI's financial position and reduce near-term risks, which should be viewed favorably by investors.

However, it's important to note that while this amendment eases immediate financial strain, it does not eliminate the debt. The company will still need to demonstrate commercial success with its imaging systems to meet future payment obligations and drive long-term value.

Medical Device Expert

The amendment to QT Imaging Holdings' convertible note is indirectly beneficial for the company's product development and commercialization efforts. By reducing immediate financial pressures, QTI can allocate more resources towards the critical phase of launching its Breast Acoustic CT™ Scanners in the U.S. market.

This technology represents a potential advancement in breast imaging, offering a radiation-free alternative to traditional mammography. The success of these commercial shipments is important for QTI's future. The additional financial flexibility provided by this amendment could allow for more robust marketing efforts, customer support and potentially accelerated R&D for system improvements or new applications.

However, the medical device market is highly competitive and regulated. QTI will need to demonstrate clear clinical benefits and cost-effectiveness to gain market share. The extended runway is valuable, but the company must capitalize on this opportunity to establish its technology in the market and generate revenue to meet future financial obligations.

NOVATO, Calif.--(BUSINESS WIRE)-- QT Imaging Holdings, Inc. (NASDAQ:QTI), a medical device company engaged in research, development, and commercialization of innovative body imaging systems, is pleased to announce an amendment to its $10,000,000 convertible promissory note with YA II PN, Ltd. (the “Investor,” and such promissory note, the “Note”).

On September 11, 2024, a trigger event associated with the share price of the company occurred under the terms of the Note. As a result, the company made a payment of $1,500,000 on September 13, 2024, and could have been obligated to make subsequent similar monthly payments. On September 26, 2024, the company and the Investor entered into an amendment of the Note, whereby the parties agreed to amend certain terms of the Note to reduce the company’s monthly payment obligations resulting from the trigger event.

The maturity date of the Note was extended approximately 6 months from June 4, 2025, to December 15, 2025. Additionally, the amendment deferred all monthly cash payments due until January 15, 2025, replaced the company’s prior monthly payment obligation of approximately $1,500,000 during a trigger event with an unqualified obligation to make monthly payments of approximately $600,000 beginning on January 15, 2025, and waived the potential delisting of the company’s common stock from Nasdaq as an event of default under the Note.

“On behalf of the QTI leadership team and Board of Directors, I would like to thank the Yorkville team for their partnership and trust, as the execution of this amendment gives the QTI team the runway to successfully execute its first year plan as a public company, where our keen focus remains the successful commercial shipments of our Breast Acoustic CT™ Scanners in the United States,” said Dr. Raluca Dinu, Chief Executive Officer and member of the Board of Directors.

About QT Imaging Holdings, Inc.

QT Imaging Holdings, Inc. is a public (NASDAQ: QTI) medical device company engaged in research, development, and commercialization of innovative body imaging systems using low frequency sound waves. QT Imaging Holdings, Inc. strives to improve global health outcomes. Its strategy is predicated upon the fact that medical imaging is critical to the detection, diagnosis, and treatment of disease and that it should be safe, affordable, accessible, and centered on the patient’s experience. For more information on QT Imaging Holdings, Inc., please visit the company’s website at www.qtimaging.com.

Breast Acoustic CT™ is a trademark of an affiliate of QT Imaging Holdings, Inc.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as “will,” and “expect,” or the negative thereof or comparable terminology, and include (without limitation) statements regarding future payments by QT Imaging Holdings under the Yorkville note, plans for QT Imaging Holdings, new product development and introduction, and product sales growth and projected revenues. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks include, but are not limited to: research results from the use of the Breast Acoustic CT™ Scanner, the ability of QT Imaging Holdings to sell and deploy the Breast Acoustic CT™ Scanner, the ability to extend product offerings into new areas or products, the ability to commercialize technology, unexpected occurrences that deter the full documentation and “bring to market” plan for products, trends and fluctuations in the industry, changes in demand and purchasing volume of customers, unpredictability of suppliers, the ability to attract and retain qualified personnel and the ability to move product sales to production levels. Additional factors that could cause actual results to differ are discussed under the heading “Risk Factors” and in other sections of QT Imaging Holdings' (and its predecessor, GigCapital5, Inc.) filings with the SEC, and in its other current and periodic reports filed or furnished from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to QT Imaging Holdings as of the date hereof, and QT Imaging Holdings assumes no obligation to update any forward-looking statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240930951003/en/

For media inquiries, please contact:

Stas Budagov

Chief Financial Officer

Stas.Budagov@qtimaging.com

Source: QT Imaging Holdings, Inc.

FAQ

What changes were made to QT Imaging Holdings' (QTI) convertible promissory note?

QTI amended its $10M convertible note, extending the maturity date to December 15, 2025, deferring monthly payments until January 15, 2025, reducing monthly obligations from $1.5M to $600K during trigger events, and waiving potential Nasdaq delisting as a default event.

When did the trigger event occur for QT Imaging Holdings (QTI) and what was the initial payment?

A trigger event associated with QTI's share price occurred on September 11, 2024, resulting in an initial payment of $1,500,000 made by the company on September 13, 2024.

What is QT Imaging Holdings (QTI) focusing on for its first year as a public company?

QTI is focusing on the successful commercial shipments of its Breast Acoustic CT™ Scanners in the United States during its first year as a public company.

How did the amendment affect QT Imaging Holdings' (QTI) monthly payment obligations?

The amendment reduced QTI's monthly payment obligations from approximately $1,500,000 to $600,000 during trigger events, with payments deferred until January 15, 2025.