Company: QTIWW
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001628280-25-051332
Chunk: 45

Company: QT IMAGING HOLDINGS, INC.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 45
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 using published industry operating profit and cost metrics.The Monte Carlo simulation developed a distribution of projected revenues for 2024 through 2026 using a Geometric Brownian Motion framework based on a standard normal distribution of returns. The simulation also developed a distribution of potential daily common stock prices for 2026 using a Geometric Brownian Motion framework. The resulting fair value is based on the average of the number of shares that will be paid out for each triggering event over a statistically significant number of simulations.The Gulf Medical Distribution Agreement, which was signed on August 21, 2025, contained Minimum Purchase Requirements, which increased the likely expected value for revenue in 2026, resulting in a change in fair value of $2.2 million during the third quarter of 2025.Significant assumptions used in the valuation of the fair value of the earnout liability as of September 30, 2025 and December 31, 2024 were as follows:

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September 30, 2025December 31, 2024Fair value of common stock$7.11 $1.47 Volatility of revenue23.0 %23.0 %Discount rate applicable to revenue7.0 %7.0 %Risk-free rate3.7 %4.2 %Risk premium3.3 %2.7 %Cost of debt15.5 %15.5 %Credit risk spread11.8 %11.3 %Equity volatility105.0 %120.0 %The activity for the fair value of the earnout liability for the three and nine months ended September 30, 2025 were as follows:Earnout LiabilityBeginning balance, January 1, 2025$440,000 Change in fair value50,000Ending balance, March 31, 2025490,000 Change in fair value(210,000)Ending balance, June 30, 2025280,000 Change in fair value2,230,000 Ending balance, September 30, 2025$2,510,000 Derivative LiabilityIn March 2024, the Company recorded a derivative liability related to the Pre-Paid Advance issued on March 4, 2024 pursuant to the SEPA, dated November 15, 2023, between QT Imaging and Yorkville. The Pre-Paid Advance contained the following derivative features (“Derivatives”) as defined in the SEPA that were recognized at