Quantum Computing Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 14, 2025
QUBT$6.33+12.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-044341
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001213900-25-076846
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 63 previous paragraphs and 44 current paragraphs.
22 unchanged; 15 reworded; 7 added; 24 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Business Overview
Current report
Cost of Revenue
Current report
Gross margin for the three months ended June 30, 2025 was $26 thousand and 43% of revenue compared to $58 thousand and 32% of revenue for the comparable prior year period. Gross margin for the six months ended June 30, 2025 was $39 thousand and 39% of revenue compared to $69 thousand and 33% of revenue for the comparable prior year period. The respective changes were primarily the result of changes in the mix of labor categories used to perform the active contracts.
Current report
Operating expenses for the three and six months ended June 30, 2025 increased by $4,872 thousand and $6,842 thousand, respectively compared to the six months ended June 30, 2024. These increases are primarily due to higher research and development expenses, sales and marketing costs and general and administrative expenses, as discussed below.
Current report
Other non-operating income (expense) includes interest and other income, interest expense and change in fair value of derivative liability.
Current report
Interest expense of $58 thousand and $116 thousand for the three and six months ended June 30, 2025 is related to late payroll tax filings. Interest expense of $155 thousand for the six months ended June 30, 2024 consisted of interest on financial liabilities. The borrowings were paid off during the year ended December 31, 2024.
Current report
There have been no material changes to our critical accounting estimates since our Form 10-K for the year ended December 31, 2024.
Removed paragraphs (24)
Previous report
Overview
Previous report
Market Opportunity
Previous report
The Company believes that quantum solutions have the potential to bring significant and increasing advances in the fields of medicine, engineering, autonomous vehicles, energy management, and cybersecurity and that the demand for quantum computing in these market sectors will likely outpace and outperform the general-purpose universal computing market in the near- to mid-term and into the foreseeable future. We believe that our core photonics technology applications offer practical, cost-effective solutions that can materially advance the adoption of quantum machines across several market segments including:
Previous report
Revenues
Previous report
The Company’s revenues consist of (in thousands):
Previous report
Cost of Revenues
Previous report
Gross margin for the three months ended March 31, 2025 was $13 thousand and 33% compared to $11 thousand and 41% for the comparable prior year period, a decrease of $2 thousand and 8% points. The change was nearly entirely the result of a reduction in contractual service revenue where the cost of revenues was defined under the terms of our general professional services obligation. Our lack of a scaled and distributed base of revenue generation by product and sales channel can result in significant differences in gross margin between reporting periods.
Previous report
Information about our operating expenses for the three months ended March 31, 2025 and 2024 is set forth in the below tables (in thousands, except percentages). Operating expenses for the three months ended March 31, 2025 increased by $2.0 million primarily as a result of higher general and administrative expenses of approximately $1.0 million and research and development expenses of approximately $800 thousand.
Previous report
General and administrative expenses for the three months ended March 31, 2025 increased compared to the comparable prior year period primarily due to higher employee- and advisor-related expenses, including stock-based compensation, payroll, bonus and travel expenses, as well as higher legal fees which can vary significantly period-over-period, offset by a decrease in severance expense recognized during the three months ended March 31, 2024, in connection with the Separation Agreement and General Release of the Company’s former CEO, Mr. Robert Liscouski.
Previous report
The following table summarizes our non-operating income (expense) for the three months ended March 31, 2025 and 2024 (in thousands, except percentages).
Previous report
The $25.4 million increase in other income for the three months ended March 31, 2025 compared to the comparable prior year period is primarily the result of gain in the fair value of the QPhoton Warrant liability recognized during the three months ended March 31, 2025.
Previous report
Interest expense, net consists of interest on financial liabilities, including payroll-related taxes, amortization of debt issuance costs, and accretion of derivative interest. The decrease in interest expense in the three months ended March 31, 2025 compared to 2024 was attributable to decreased borrowings outstanding under the Streeterville Unsecured Note which was paid-in-full as of March 1, 2024. See Note 8,Financial Liabilities, in the accompanying notes to our unaudited condensed consolidated financial statements for additional information.
Previous report
Fair Value of Stock-based Compensation and Derivatives
Previous report
We recognize stock-based compensation expense for all share-based payment awards in accordance with ASC 718,Compensation – Stock Compensation. Stock-based compensation expense for expected-to-vest awards is valued under the single-option approach and amortized on a straight-line basis, accounting for actual forfeitures as they occur. We utilize the Black-Scholes pricing model in order to determine the fair value of stock-based option awards. The Black-Scholes pricing model requires various highly subjective assumptions including volatility, expected option life, and risk-free interest rate. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.
Previous report
Fair Value of Warrant Liabilities and Derivatives
Previous report
Determining the fair market value of the QPhoton Warrants, which were included in the merger consideration paid to the stockholders of QPhoton (the “QPhoton Merger Consideration”), is a critical accounting estimate. The QPhoton Warrants are comprised of warrants to purchase up to 7,028,337 shares of the Company’s common stock at an exercise price of $0.0001 per share (the “QPhoton Warrants”) and are exercisable when and if stock options and warrants issued by the Company and outstanding as of June 15, 2022 are exercised. The Merger Consideration for shareholders Yuping Huang and The Trustees of the Stevens Institute of Technology was issued in 2022. A third alleged shareholder, BV Advisory, rejected the Merger Consideration and commenced litigation in Delaware Chancery Court (see Note 9, Contingencies – Legal Proceedings, in this Form 10-Q for additional information and Item 1, Legal Proceedings, in this Form 10-Q for a full discussion), and to date that litigation has not been resolved. Accordingly, as of March 31, 2025 and 2024, we had only issued 6,325,503 of the QPhoton Warrants. In determining the fair market value of the QPhoton Warrants, the Company determines which underlying options and warrants are in-the-money or out-of-the-money at period end by comparing to the bid price of the Company’s common stock, then accounts for changes period-over-period by realizing a mark-to-market gain or loss for the period.
Previous report
Fair Market Value and Useful Life of Intangible Assets
Previous report
Determining the fair market value and useful life of the intangible assets acquired by the Company through the QPhoton Merger is another critical accounting estimate. In the absence of market pricing for the intangible assets, the Company relied on independent third-party appraisal experts and comparison with similar transactions to arrive at estimates of value as well as useful life. The Company will perform periodic assessments of the intangible assets for impairment, but if any of the initial estimates are incorrect, that could result in a calculation of amortization expense that is too high or too low.
Previous report
Provision for Income Tax
Previous report
The Company’s effective tax rate is 0% for income tax for the three months ended March 31, 2025 and the Company expects that its effective tax rate for the full FY25 year will be 0%. Based on the weight of available evidence, including net cumulative losses and expected future losses, the Company has determined that it is more likely than not that it U.S. federal and state deferred tax assets will not be realized and therefore a full valuation allowance has been provided on the U.S. federal and state net deferred tax assets.
Previous report
In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership over a three-year period (a Section 382 ownership change), utilization of its pre-change net operating loss (NOL) carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code. Generally, U.S. state laws have laws similar to Internal Revenue Code Section 382. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change (subject to certain adjustments) by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforward before utilization.
Previous report
The Company files U.S. federal and state income tax returns. The Company is not currently subject to any income tax examinations. The Company has net operating loss carryovers dating back to the December 2018 year (inception), which generally allows all tax years starting taxable year 2018 to remain open to income tax examinations.
Previous report
Legal and Other Contingencies
Previous report
The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our unaudited condensed consolidated financial statements.
Reworded paragraphs (15)
Previous wording
Our longer-term product development plan is to migrate product designs based on discrete components, including EQC’s current design, to a set of optical integrated circuits built on wafers using a crystalline material called lithium niobate (“Thin Film Lithium Niobate” or “TFLN”). The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (both linear and non-linear) and its compatibility with silicon-based semiconductor fabrication methods. The Company is completing the buildout of a state-of-the-art TFLN chip manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”).
Current wording
Our longer-term product development plan is to migrate product designs based on discrete components, including EQC’s current design, to a set of optical integrated circuits built on wafers using a crystalline material called lithium niobate (“Thin Film Lithium Niobate” or “TFLN”). The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (both linear and non-linear) and its compatibility with silicon-based semiconductor fabrication methods. In March 2025, the Company substantially completed the buildout of a state-of-the-art TFLN chip manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”).
Previous wording
Our results of operations for the three ended March 31, 2025 and 2024 is as follows (in thousands, except percentages, with non-meaningful percentage changes labeled as “NM”):
Current wording
Our results of operations for the three and six months ended June 30, 2025 and 2024 are as follows (in thousands, except percentages, with non-meaningful percentage changes labeled as “NM”):
Previous wording
Revenues for the three months ended March 31, 2025 were $39 thousand compared to $27 thousand for the comparable prior year period, an increase of $12 thousand or 44%. The increase in revenues is primarily due to changes in the number of, size of and level of effort performed on active customer proof-of-concept and research and development services and custom hardware contracts.
Current wording
Revenue for the three months ended June 30, 2025 was $61 thousand compared to $183 thousand for the comparable prior year period, a decrease of $122 thousand or 67%. Revenue for the six months ended June 30, 2025 was $100 thousand compared to $210 thousand for the comparable prior year period, a decrease of $110 thousand or 52%. The respective decrease in revenue is primarily due to changes in the number of, size of and level of effort performed on active customer proof-of-concept and research and development services and custom hardware contracts.
Previous wording
Cost of revenues, which consists of direct labor expenses, primarily salary costs for engineering and solutions staff delivering services, and other direct component costs for custom hardware on research and development contracts, was $26 thousand for the three months ended March 31, 2025, compared to $16 thousand for the comparable prior year period, an increase of $10 thousand or 63%. The increase is primarily due to the increases in direct labor expenses and other direct costs required to perform on the contracts during the 2025 periods compared to the prior year periods.
Current wording
Cost of revenue, which consists of direct labor expenses, primarily salary costs for engineering and solutions staff delivering services, and other direct component costs for custom hardware on research and development contracts, was $35 thousand for the three months ended June 30, 2025, compared to $125 thousand for the comparable prior year period, a decrease of $90 thousand or 72%. Cost of revenue was $61 thousand for the six months ended June 30, 2025, compared to $141 thousand for the comparable prior year period, a decrease of $80 thousand or 57%. The respective decrease is primarily due to the decreases in direct labor expenses and other direct costs required to perform on the contracts during the 2025 periods compared to the prior year periods.
Previous wording
Research and development expenses consist primarily of labor expenses for employees that primarily engage in research and development efforts and non-labor expenses for the development of hardware products and supporting software. We focus the bulk of our research and development activities on the continued development of existing products and the development of new offerings for emerging market opportunities.
Current wording
Research and development expenses consist primarily of labor expenses for employees that primarily engage in research and development efforts and non-labor expenses for the development of hardware products and supporting software. We focus the bulk of our research and development activities on the continued development of existing products and the development of new offerings for emerging market opportunities. Research and development costs were $5,975 thousand and $8,960 thousand for the three and six months ended June 30, 2025 as compared to $2,094 thousand and $4,315 thousand for the three and six months ended June 30, 2024. Research and development expenses increased $3,881 thousand and $4,645 thousand for the three and six months ended June 30, 2025, respectively, as compared to the comparable prior year period primarily due to higher headcount and related payroll costs, higher recurring lab equipment and consumables costs, as well as higher depreciation for long-lived laboratory equipment, partially offset by hosting services.
Previous wording
Selling and marketing expenses consist primarily of employee compensation as well as customer lead generation activities, tradeshow participation, advertising and other marketing and selling costs.
Current wording
Selling and marketing expenses consist primarily of employee compensation as well as customer lead generation activities, tradeshow participation, advertising and other marketing and selling costs. Sales and marketing expenses were $680 thousand and $1,352 thousand for the three and six months ended June 30, 2025 as compared to $429 thousand and $880 thousand for the three and six months ended June 30, 2024. Selling and marketing expenses increased 58% and 54% for the three and six months ended June 30, 2025, respectively as compared to the prior comparable period, primarily due to higher tradeshow and travel-related costs and increased marketing program costs.
Previous wording
General and administrative expenses consist primarily of compensation expenses for employees performing administrative functions, and professional fees incurred for legal, auditing and other consulting services.
Current wording
General and administrative expenses consist primarily of compensation expenses for employees performing administrative functions, and professional fees incurred for legal, auditing and other consulting services. General and administrative expenses were $3,542 thousand and $8,184 thousand for the three and six months ended June 30, 2025 as compared to $2,802 thousand and $6,459 thousand for the three and six months ended June 30, 2024. General and administrative expenses increased 26% for the three months ended and increased 27% for the six months ended June 30, 2025, compared to the comparable prior year period primarily due to higher employee- and advisor-related expenses.
Previous wording
Interest and other income consists of earned interest on loans receivable and cash and cash equivalents. See Note 2,Significant Accounting Policies – Cash and Cash Equivalents, in the accompanying notes to our unaudited condensed consolidated financial statements for additional information on where the Company maintains its cash balances. The increase for the three months ended March 31, 2025 compared to the comparable prior year periods is primarily due to the Company maintaining higher cash balances in mutual funds and deposit and money market accounts during the 2025 periods compared to the 2024 periods.
Current wording
Interest and other income of $1,843 thousand and $3,539 thousand for the three and six months ended June 30, 2025 consists of earned interest on loans receivable and cash and cash equivalents. Interest income increased over the prior year by $1,770 thousand and $3,429 thousand for the three and six months ended June 30, 2025, respectively. The increase is primarily due to the Company maintaining higher cash balances in mutual funds and deposit and money market accounts during the 2025 periods compared to the 2024 periods.
Previous wording
The gain on change in value of warrant liability is comprised of mark-to-market adjustments for the QPhoton Warrants. Future mark-to-market adjustments may result in losses if the Company’s stock price increases above the Company’s closing bid price of $8.00 per share, as defined below. See Note 10,Capital Stock - Warrants, in the accompanying notes to our unaudited condensed consolidated financial statements for additional information on the QPhoton Warrants*.*
Current wording
The Company recognized a loss of $28,096 thousand during the three months ended June 30, 2025 as a result of the change in fair value of the QPhoton Warrant liability. During the six months ended June 30, 2025, the Company recognized a loss of $4,466 thousand related to the change in fair value of the QPhoton Warrant liability. The change in value of the warrant liability is comprised of mark-to-market adjustments for the QPhoton Warrants. Future mark-to-market adjustments may result in losses if the Company’s stock price increases above the Company’s closing bid price of $19.17 per share at June 30, 2025. No gains or losses were recorded in the comparable periods ended June 30, 2024.
Previous wording
We have incurred net losses and experienced negative cash flows from operations since inception. Through March 31, 2025, the Company has raised $267.8 million through private and public placements of equity and $20.1 million through private placements of convertible promissory notes and other debt for a total of $287.9 million. The Company has no lines of credit or short-term debt obligations outstanding when excluding the remaining debt issuance costs. We expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development and go-to-market programs. As of March 31, 2025, the Company had cash and cash equivalents of $166.4 million.
Current wording
We have incurred net losses and experienced negative cash flows from operations since inception. During the three and six months ended June 30, 2025, the Company raised $188.0 million and $218.6 million, respectively, through the private placement of equity. The Company has no lines of credit or short-term debt obligations outstanding when excluding the remaining debt issuance costs. We expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development and go-to-market programs. As of June 30, 2025, the Company had cash and cash equivalents of $348.8 million.
Previous wording
At March 31, 2025, we had working capital of $163.5 million as compared to working capital of $74.6 million at December 31, 2024, an increase of $88.9 million. The increase in working capital is primarily attributable to an increase in cash from the net proceeds of our sales of 8.2 million shares of common stock for an aggregate of $93.6 million in January 2025, offset by the use of cash to pay for operating expenses and capital investments in property and equipment.
Current wording
At June 30, 2025, we had working capital of $346.2 million as compared to working capital of $74.6 million at December 31, 2024, an increase of $271.7 million. The increase in working capital is primarily attributable to an increase in cash from the net proceeds of our sales of 22.2 million shares of common stock for an aggregate of $281.6 million during the six months ended June 30, 2025, offset by the use of cash to pay for operating expenses and capital investments in property and equipment.
Previous wording
The following table summarizes our cash flow for the three months ended March 31, 2025 and 2024 (in thousands).
Current wording
The following table summarizes our cash flow for the six months ended June 30, 2025 and 2024 (in thousands).
Previous wording
Net cash used in operating activities for the three months ended March 31, 2025 and 2024 was $4.4 million and $3.9 million, respectively, in each case primarily as a result of our net loss in each period offset by noncash adjustments for stock-based compensation, mark-to-market valuation adjustments on financial liabilities, and depreciation and amortization.
Current wording
Net cash used in operating activities for the six months ended June 30, 2025 and 2024 was $10.5 million and $7.9 million, respectively, in each case primarily as a result of our net income (loss) in each period offset by noncash adjustments for stock-based compensation, mark-to-market valuation adjustments on financial liabilities, and depreciation and amortization.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $1.7 million and $1.6 million, respectively, and was attributable to our purchase of computer hardware, laboratory and TFLN Chips manufacturing equipment. The increase in investment in the 2025 period is primarily due to the purchase of additional equipment in connection with establishing the Company’s AZ Chip Facility.
Current wording
Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $2.8 million and $2.7 million, respectively, and was attributable to our purchase of computer hardware, laboratory and TFLN Chips manufacturing equipment.
Previous wording
Net cash provided by financing activities was $93.6 million and $9.5 million, respectively, for the three months ended March 31, 2025 and 2024. Cash flows provided by financing activities during the three months ended March 31, 2025 were primarily attributable to proceeds from our stock issuances in January 2025.
Current wording
Net cash provided by financing activities was $283.1 million and $11.0 million, respectively, for the six months ended June 30, 2025 and 2024. Cash flows provided by financing activities during the six months ended June 30, 2025 were primarily attributable to proceeds from our stock issuances.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Research and development expenses for the three months ended March 31, 2025 increased compared to the comparable prior year period primarily due to higher headcount and related payroll costs, higher recurring lab equipment and consumables costs, as well as higher depreciation for long-lived laboratory equipment, partially offset by hosting services.
Previous report — wording carried elsewhere
Selling and marketing expenses for the three months ended March 31, 2025 increased primarily due to higher tradeshow and travel-related costs and increased marketing program costs.