Quantum Computing Inc.

Previous wording

QCi is a development stage company with limited operations and revenue. The Company is developing quantum and ancillary non-quantum products for high-performance computing applications based on proprietary photonics technology. QCi’s products are designed to operate at room temperature and low power at an affordable cost in the areas of high-performance computing, sensing and imaging, and quantum cybersecurity. The Company has generated some revenue based on sales of products and related services to date and is expanding its sales and marketing efforts. The Company’s development team includes optical engineers, mathematicians, physicists, and software developers.

Current wording

QCi is a development stage company with limited operations and revenue. The Company is developing quantum and ancillary non-quantum products for high-performance computing, sensing, and networking applications based on proprietary photonics technology. QCi’s products are designed to operate at room temperature and low power at an affordable cost in the areas of high-performance computing, sensing, and quantum cybersecurity. The Company has generated some revenue based on sales of products and related services to date and is expanding its sales and marketing efforts. The Company’s development team includes optical engineers, technicians, mathematicians, physicists, and software developers.

Previous 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”):

Current wording

Our results of operations for the three and nine months ended September 30, 2025 and 2024 are as follows (in thousands, except percentages, with non-meaningful percentage changes labeled as “NM”):

Previous 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.

Current wording

Revenue for the three months ended September 30, 2025 was $384 thousand compared to $101 thousand for the comparable prior year period, an increase of $283 thousand or 280%. Revenue for the nine months ended September 30, 2025 was $484 thousand compared to $311 thousand for the comparable prior year period, an increase of $173 thousand or 56%. The respective increases in revenue are primarily due to increases 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. Increasing the hours worked on time and materials R&D contracts increased recognized revenue, and additional labor and materials was required to achieve a higher percentage completion on custom hardware contracts. The Company also started to recognize revenue for cloud-based access to the Dirac-3 quantum optimization system during the three months ended September 30, 2025.

Previous 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.

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 $258 thousand for the three months ended September 30, 2025, compared to $92 thousand for the comparable prior year period, an increase of $166 thousand or 180%. Cost of revenue was $319 thousand for the nine months ended September 30, 2025, compared to $233 thousand for the comparable prior year period, an increase of $86 thousand or 37%. These increases are primarily due to the increases in direct labor expenses on R&D services contracts and custom hardware contracts, and increased other direct costs (primarily parts and materials) required to perform on the contracts during the 2025 periods compared to the prior year periods. Revenue increased faster than direct costs year over year due to greater use of labor categories with higher margins and sale of Dirac-3 computing services.

Previous wording

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 wording

Gross margin for the three months ended September 30, 2025 was $126 thousand and 33% of revenue compared to $9 thousand and 9% of revenue for the comparable prior year period. Gross margin for the nine months ended September 30, 2025 was $165 thousand and 34% of revenue compared to $78 thousand and 25% of revenue for the comparable prior year period. The respective changes were primarily the result of changes in the mix of labor categories and number of personnel used to perform the active contracts. Gross margins also increased year over year due to greater use of labor categories with higher margins, and the start of revenue from cloud-access to Dirac-3, which has a higher gross margin than R&D services.

Previous wording

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 wording

Operating expenses for the three and nine months ended September 30, 2025 increased by $5.1 million and $11.9 million, respectively compared to the three and nine months ended September 30, 2024. These increases are due to higher research and development expenses, sales and marketing costs and general and administrative expenses, as discussed below.

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. 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.

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 $4.5 million and $13.5 million for the three and nine months ended September 30, 2025, compared to $2.2 million and $6.6 million, respectively for the three and nine months ended September 30, 2024. Research and development expenses increased $2.3 million and $6.9 million, respectively, for the three and nine months ended September 30, 2025. These increases were due to higher headcount and related payroll costs and stock based compensation expense, higher recurring lab equipment and consumables costs, and higher depreciation for long-lived laboratory equipment, partially offset by hosting services. The Company is aggressively pursuing its technology roadmap and has hired additional scientists, engineers and technicians in order to accelerate the development of key technologies and products.

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. 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.

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 $787 thousand and $2.1 million for the three and nine months ended September 30, 2025 as compared to $363 thousand and $1.2 million for the three and nine months ended September 30, 2024. Selling and marketing expenses increased 117% and 72% for the three and nine months ended September 30, 2025, respectively, as compared to the prior comparable period, primarily due to increases in the sales staff, higher tradeshow and travel-related costs and increased marketing program costs. During 2025 the sales and marketing team has participated in 1or 2 conferences and trade shows per month, compared to 1 or 2 trade shows per quarter during 2024, including greater participation in international quantum technology events, resulting in higher travel expenses.

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. 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.

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 $5.2 million and $13.4 million for the three and nine months ended September 30, 2025 compared to $2.8 million and $9.3 million for the three and nine months ended September 30, 2024. General and administrative expenses increased 84% for the three months ended and increased 44% for the nine months ended September 30, 2025, compared to the comparable prior year periods primarily due to higher employee and advisor-related expenses relating to development and implementation of internal financial controls, expansion of accounting staff, increased recruiting fees and legal expenses related to multiple financings and ongoing litigation.

Previous wording

Other non-operating income (expense) includes interest and other income, interest expense and change in fair value of derivative liability.

Current wording

Non-operating income (expense) includes interest and other income, interest expense and change in fair value of derivative liability.

Previous 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.

Current wording

Interest and other income of $3.5 million and $7.1 million for the three and nine months ended September 30, 2025 consists of changes in the fair value of investments and earned interest on cash and cash equivalents offset by interest expense. Interest income increased over the prior year by $3.5 million and $6.9 million, respectively, for the three and nine months ended September 30, 2025. These increases are due to the Company maintaining higher cash balances in mutual funds, deposit and money market accounts, U.S. Treasuries and corporate bonds during the 2025 periods compared to the 2024 periods as a result of the substantial amount of new funding the Company raised in 2025 compared to 2024.

Previous wording

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 wording

Interest expense of $4 thousand and $120 thousand, respectively, for the three and nine months ended September 30, 2025 is related to late payroll tax filings. Interest expense of $307 thousand and $462 thousand for the three and nine months ended September 30, 2024 consisted of interest on financial liabilities. The related borrowings were paid off during the year ended December 31, 2024.

Previous 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.

Current wording

The Company recognized a gain of $9.2 million during the three months ended September 30, 2025 as a result of the change in fair value of the QPhoton Warrant liability. During the nine months ended September 30, 2025, the Company recognized a gain of $4.8 million 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 $18.41 per share on September 30, 2025. No gains or losses were recorded in the comparable periods ended September 30, 2024.

Previous 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.

Current wording

We have incurred net losses and experienced negative cash flows from operations since inception. During the three and nine months ended September 30, 2025, the Company raised $474.9 million and $756.5 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 September 30, 2025, the Company had cash and cash equivalents of $352.4 million and investments of $460.6 million.

Previous 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.

Current wording

At September 30, 2025, we had working capital of $559.2 million as compared to working capital of $74.6 million at December 31, 2024, an increase of $484.6 million. The increase in working capital is primarily attributable to an increase in cash and available-for-sale debt securities from the net proceeds of our sales of 49.1 million shares of common stock for an aggregate of $756.5 million during the nine months ended September 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 six months ended June 30, 2025 and 2024 (in thousands).

Current wording

The following table summarizes our cash flow for the nine months ended September 30, 2025 and 2024 (in thousands).

Previous 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.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2025 and 2024 was $19.3 million and $12.4 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.

Previous 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.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $466.2 million and $3.1 million, respectively, and was attributable to our purchase of computer hardware, laboratory and TFLN Chips manufacturing equipment as well as the purchase of $460.6 million in available-for-sale debt securities.

Previous 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.

Current wording

Net cash provided by financing activities was $758.9 million and $16.6 million, respectively, for the nine months ended September 30, 2025 and 2024. Cash flows provided by financing activities during the nine months ended September 30, 2025 were primarily attributable to net proceeds from our stock issuances.