DESCRIPTION OF CANON LETTER OF INTENT
As previously disclosed in a Current Report on Form 8-K that GigCapital5, Inc., a Delaware corporation
(GigCapital5), filed with the U.S. Securities and Exchange Commission (the SEC) on December 8, 2022, GigCapital5 entered into a Business Combination Agreement (as amended, the BCA) with
QTI Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of GigCapital5 (Merger Sub) and QT Imaging, Inc., a Delaware corporation (QT Imaging), pursuant to the terms of which Merger Sub will
merge with and into QT Imaging (the Merger), with QT Imaging as the surviving company in the Merger (the Surviving Corporation), and after giving effect to the Merger, the Surviving Corporation will be a wholly
owned subsidiary of GigCapital5, which will be renamed as QT Imaging Holdings, Inc. (QTI Holdings).
As previously disclosed, on
May 31, 2023, QT Imaging entered into a confidential Sales Agent Agreement (the NXC Agreement) with NXC Imaging (NXC), a wholly owned subsidiary of Canon Medical Systems USA, Inc. (CMSU),
pursuant to which QT Imaging 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. Additionally, NXC was appointed as the exclusive servicer of QT Imaging products sold by NXC under the terms of the NXC Agreement.
QT Imaging has also entered into a non-binding letter of intent (the Canon Letter of Intent),
with CMSU and Canon Medical Systems, Inc. (CMSC) pursuant to which four binding purchase orders delivered in January 2024 to QT Imaging for the acquisition by CMSC of two QT scanners, with 50% of the payment for the QT
scanners having taken place on January 31, 2024 and the remaining payment and the shipment of the two QT scanners to occur by April 15, 2024.
CMSC will conduct feasibility studies on the QT scanners that it is acquiring, including product quality validation, development and manufacturing studies,
clinical evaluation, regulatory investigation and marketing validation (the Feasibility Study). The Feasibility Study will commence upon delivery of the QT scanners and the parties will make their best efforts to complete the
Feasibility Study by July 31, 2024, but in any case, no later than the end of the year 2024.
Upon successful conclusion of the Feasibility Study, QT
Imaging and CMSC intend to engage in a good faith discussion to develop a binding OEM agreement with CMSC, with such agreement targeted for execution in the second half of 2024. Under the contemplated OEM agreement, CMSC will commercialize and
service the QT scanner worldwide, with Canon-branded systems to be sold exclusively through Canon global channels, including by NXC as provided for in the NXC Agreement, and a license fee to be mutually agreed upon to be paid to QT Imaging for each
system sold by Canon or its partners. The parties also intend that CMSU will leverage the contemplated OEM agreement to source QT scanners for sale in the U.S. on terms to be mutually agreed upon.
CMSC will also use QT scanners that it is acquiring 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.
IMPORTANT NOTICES
About GigCapital5
GigCapital5 is a blank check company, also commonly referred to as a special purpose acquisition company, or SPAC, formed for the purpose of entering into a
merger, capital stock exchange, asset acquisition, stock purchase reorganization or similar business combination with one or more businesses or entities. While GigCapital5s efforts to identify a target business may span many industries, the
focus of GigCapital5s search is for prospects within the technology, media and telecommunications, aerospace and defense, advanced medical equipment, intelligent automation and sustainable industries. GigCapital5 was sponsored by
GigAcquisitions5, LLC, which was founded by GigFounders, LLC, each a member entity of GigCapital Global, and formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization, or
similar business combination with one or more businesses.