Quantum Computing Inc.

Previous wording

QCi is a growth stage company with expanding operations and revenue following the LSI and NuCrypt acquisitions. The Company is developing and marketing quantum and ancillary non-quantum products for high-performance computing, artificial intelligence, networking and sensing applications based on proprietary photonics technology, as well as optical components including lasers and photo detectors. 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’s development team includes optical engineers, technicians, mathematicians, physicists, and software developers. Our go-to-market strategy emphasizes scalability, accessibility, and affordability, and is supported by a professional services offering to help customers implement applications in optimization, sensing, imaging, and cybersecurity.

Current wording

QCi is a growth stage company with expanding operations and revenue following the LSI, NuCrypt and NHanced acquisitions. The Company is developing and marketing quantum and ancillary non-quantum products for high-performance computing, artificial intelligence, networking and sensing applications based on proprietary quantum optics and photonics technology, as well as optical components including lasers and photo detectors. 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’s development team includes engineers, technicians, mathematicians, physicists, and software developers. Our go-to-market strategy emphasizes scalability, accessibility, and affordability, and is supported by a professional services offering to help customers implement applications in optimization, sensing, imaging, and cybersecurity.

Previous wording

Our longer-term product development plan is to migrate product designs based on discrete components, including EQC’s current designs, to a set of optical integrated circuits built on wafers using a crystalline material called thin film lithium niobate (“TFLN”). The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (linear, non-linear ferroelectric, and electro-optic) and its compatibility with silicon-based semiconductor fabrication methods. In March 2025, the Company substantially completed the buildout of its state-of-the-art TFLN chip research and development, prototyping and small-batch manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”). Additional details about our Tempe, AZ and Hoboken, NJ facilities are discussed in Liquidity and Capital Resources in this report and in our 2025 Annual Report on Form 10-K. In addition, the Company is in the planning stages for another higher volume manufacturing facility, which we sometimes refer to as “FAB 2.”

Current wording

Our longer-term product development plan is to migrate product designs based on discrete components, including EQC’s current designs, to a set of optical integrated circuits built on wafers using a crystalline material called thin film lithium niobate (“TFLN”). The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (linear, non-linear ferroelectric, and electro-optic) and its compatibility with silicon-based semiconductor fabrication methods. In March 2025, the Company substantially completed the buildout of its "state-of-the-art" TFLN chip research and development, prototyping and small-batch manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”). Additional details about our Tempe, AZ and Hoboken, NJ facilities are discussed in Liquidity and Capital Resources in this report and in our 2025 Annual Report on Form 10-K. In addition, through the NHanced acquisition, the Company has launched another higher volume manufacturing facility, which we sometimes refer to as “FAB 2.”

Previous wording

As part of our long-term strategic plan to acquire complimentary businesses, in February 2026, the Company acquired Luminar Semiconductor, Inc. (“LSI”). LSI provides products and services that leverage its advanced photonics semiconductor technologies. LSI designs chip-scale devices including laser diodes, semiconductor optical amplifiers, avalanche photodiodes, passive waveguides, photonic integrated circuits, and other related photonic chips, which are incorporated into products at various levels of integration by leveraging extensive in-house advanced photonic packaging technologies. The LSI integrated solutions include components, modules, subsystems, and systems that serve a broad set of customer requirements. Extensive design capabilities are complemented by an in-house III-V photonic semiconductor fabrication facility and photonics module manufacturing capabilities. These production resources are employed to deliver high performance, high reliability products to a growing number of customers in a wide array of industries that include aerospace and defense, sensing and instrumentation, and optical communications. Acquiring LSI provides QCi with advanced semiconductors and related components, as well as design, testing and consulting services to industry, in particular for Aerospace and Defense applications. Through the acquisition of LSI, QCi has broadened its photonic chip design capability as well as our optical component and system design and advanced packaging capabilities. LSI’s capabilities are highly synergistic with the QCi technology roadmap and will support the integration of chip-scale devices such as laser diodes and photodetectors with QCi’s thin film lithium niobate photonic integrated circuit (“PIC”) platform. Collaborative efforts between the LSI and QCi technical teams will be instrumental to delivering QCi’s photonic- and quantum-based system products.

Current wording

As part of our long-term strategic plan to acquire complementary businesses, in February 2026, the Company acquired Luminar Semiconductor, Inc. (“LSI”). LSI provides products and services that leverage its advanced photonics semiconductor technologies. LSI designs chip-scale devices including laser diodes, semiconductor optical amplifiers, avalanche photodiodes, passive waveguides, photonic integrated circuits, and other related photonic chips, which are incorporated into products at various levels of integration by leveraging extensive in-house advanced photonic packaging technologies. The LSI integrated solutions include components, modules, subsystems, and systems that serve a broad set of customer requirements. Extensive design capabilities are complemented by an in-house III-V photonic semiconductor fabrication facility and photonics module manufacturing capabilities. These production resources are employed to deliver high performance, high reliability products to a growing number of customers in a wide array of industries that include aerospace and defense, sensing and instrumentation, and optical communications. Acquiring LSI provides QCi with advanced semiconductors and related components, as well as design, testing, manufacturing, and consulting services to industry, in particular for Aerospace and Defense applications. Through the acquisition of LSI, QCi has broadened its photonic chip design capability as well as its optical component and system design and optical packaging capabilities. LSI’s capabilities are highly synergistic with the QCi technology roadmap and support the integration of chip-scale devices such as laser diodes and photodetectors with QCi’s thin film lithium niobate photonic integrated circuit (“PIC”) platform. Collaborative efforts between the LSI and QCi technical teams are instrumental to delivering QCi’s photonic- and quantum-based system products.

Previous wording

The Company continued to add to its communications product options with the acquisition of NuCrypt in March 2026. This acquisition helps establish quantum communications as an important commercialization vertical within QCi’s broader quantum technology strategy. By integrating NuCrypt’s suite of quantum communications systems and products, QCi expects to advance its technology roadmap while extending its portfolio of quantum communications and quantum photonics solutions.** **

Current wording

The Company continued to add to its communications product options with the acquisition of NuCrypt in March 2026. This acquisition helps boost quantum communications as an important commercialization vertical within QCi’s broader quantum technology strategy. By integrating NuCrypt’s suite of quantum communications systems and products, QCi expects to advance its technology roadmap while extending its portfolio of quantum communications and quantum photonics solutions.

Previous wording

The markets for high-performance conventional and quantum computing, photonics, and cloud-based services are dynamic and competitive. Aggregate demand for our solutions is correlated with macroeconomic and geopolitical conditions (including inflation, interest rates, currency fluctuations, trade policy and tariffs, and international conflicts), which can affect customer budgets, purchasing timelines, our supply chain, component availability and pricing, and gross margins. In the near term, under utilization of production facilities is likely to depress gross margins and amortization of intangibles acquired in the LSI and NuCrypt acquisitions will add to operating expenses.

Current wording

The markets for high-performance conventional and quantum computing, photonics, and cloud-based services are dynamic and competitive. Aggregate demand for our solutions is correlated with macroeconomic and geopolitical conditions (including inflation, interest rates, currency fluctuations, trade policy and tariffs, and international conflicts), which can affect customer budgets, purchasing timelines, our supply chain, component availability and pricing, and gross margins. In the near term, under-utilization of production facilities is likely to depress gross margins and amortization of intangibles acquired in the LSI, NuCrypt and NHanced acquisitions will add to operating expenses.

Previous wording

Our future performance depends on advancing our Entropy Quantum Computer (EQC) and thin-film lithium niobate photonic integrated circuit (PIC) platforms to commercial readiness, completing required hardware and systems testing, and readying supporting infrastructure. We operate with lengthy development, qualification, and sales cycles; our ability to convert research collaborations and pilot projects into production deployments and multi-year engagements will influence bookings, revenue trajectory, and margin. U.S. federal budget conditions and the timing of government grants and procurement for advanced computing, sensing, and defense applications may also affect demand and award timing. See Part II, Item 1A, Risk Factors, for related risks, including dependence on certain suppliers and third-party manufacturers, significant cash requirements to fund product development and manufacturing capacity, and risks associated with integrating LSI and scaling our Arizona Chips Facility.

Current wording

Our future performance depends on advancing our EQC and thin-film lithium niobate photonic integrated circuit (PIC) platforms to commercial readiness, completing required hardware and systems testing, and readying supporting infrastructure. We operate with lengthy development, qualification, and sales cycles; our ability to convert research collaborations and pilot projects into production deployments and multi-year engagements will influence bookings, revenue trajectory, and margin. U.S. federal budget conditions and the timing of government grants and procurement for advanced computing, sensing, and defense applications may also affect demand and award timing. See Part II, Item 1A, "Risk Factors", for related risks, including dependence on certain suppliers and third-party manufacturers, significant cash requirements to fund product development and manufacturing capacity, and risks associated with integrating LSI, NuCrypt and NHanced and scaling our Arizona Chips Facility.

Previous wording

Our ability to attract, develop, and retain engineers, scientists, and other key personnel is critical to executing our roadmap. The integration of LSI and the scaling of our Arizona Chips Facility and planned “FAB 2” will require additional investment, and execution outcomes will influence product cost, time-to-market, and margin profile. See “Liquidity and Capital Resources.”

Current wording

Our ability to attract, develop, and retain engineers, scientists, and other key personnel is critical to executing our roadmap. The integration of LSI, NuCrypt and NHanced, the scaling of our Arizona Chips Facility and the expansion of “FAB 2”

Previous wording

Our results of operations for the three months ended March 31, 2026 and 2025 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 six months ended June 30, 2026 and 2025 are as follows (in thousands, except percentages, with non-meaningful percentage changes labeled as “NM”):

Previous wording

Revenue for the three months ended March 31, 2026 was $3.7 million compared to $39 thousand for the comparable prior year period, an increase of $3.7 million. Acquisitions, including our LSI and NuCrypt acquisitions, contributed $3.5 million in total revenue during the three months ended March 31, 2026. Revenue without the acquisitions increased $0.2 million over the prior year.

Current wording

Revenue for the three months ended June 30, 2026 was $5.6 million compared to $61 thousand for the comparable prior year period, an increase of $5.5 million. Revenue for the six months ended June 30, 2026 was $9.2 million compared to $100 thousand for the comparable prior year period, an increase of $9.1 million. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, contributed $5.1 million and $8.6 million in total revenue during the three and six months ended June 30, 2026. Revenue for the six months ended June 30, 2026 without the acquisitions increased $0.6 million over the prior year.

Previous wording

Cost of revenue was $4.4 million for the three months ended March 31, 2026, compared to $26 thousand for the comparable prior year period, an increase of $4.4 million. The increase was primarily due to the LSI and NuCrypt acquisitions which added $4.2 million in costs for the three months ended March 31, 2026. Cost of revenue without the acquisitions increased $0.2 million over the prior year.

Current wording

Cost of revenue was $6.7 million for the three months ended June 30, 2026, compared to $35 thousand for the comparable prior year period, an increase of $6.7 million. Cost of revenue was $11.1 million for the six months ended June 30, 2026, compared to $61 thousand for the comparable prior year period, an increase of $11.1 million. The increase was primarily due to the LSI, NuCrypt and NHanced acquisitions which added $6.5 million and $10.7 million in costs for the three and six months ended June 30, 2026. Cost of revenue without the acquisitions increased $0.4 million over the prior year.

Previous wording

Gross margin for the three months ended March 31, 2026 was a loss of $0.7 million compared to $13 thousand for the comparable prior year period. The decrease in gross margin was largely due to under-absorption of fixed costs due to lower production volumes. We anticipate product gross margins will improve as volumes recover.

Current wording

Gross profit (loss) for the three months ended June 30, 2026 was a loss of $1.2 million compared to $26 thousand for the comparable prior year period. Gross profit (loss) for the six months ended June 30, 2026 was a loss of $1.9 million compared to $39 thousand for the comparable prior year period. The decrease in gross profit (loss) was primarily due to the under-absorption of fixed costs due to lower production volumes at QCI, LSI and NHanced. We anticipate product gross profit (loss) will improve as production volumes recover. However, there can be no assurance that production volumes will increase as expected or that gross margins will approve.

Previous wording

Operating expenses for the three months ended March 31, 2026 increased by $11.5 million compared to the three months ended March 31, 2025. Acquisitions, including our LSI and NuCrypt acquisitions, added $1.9 million in total operating expenses. The increase is further discussed below.

Current wording

Operating expenses for the three and six months ended June 30, 2026 increased by $11.7 million and $23.2 million compared to the three months and six months ended June 30, 2025. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, added $2.4 million and $4.3 million in total operating expenses for the three and six months ended June 30, 2026, respectively. The increase is further 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 $7.0 million for the three months ended March 31, 2026, compared to $3.0 million for the three months ended March 31, 2025. Research and development expenses increased $4.0 million for the three months ended March 31, 2026. Acquisitions, including our LSI and NuCrypt acquisitions, contributed to $0.7 million of the increase with the remaining increase primarily due to higher headcount and related payroll costs, higher recurring lab equipment and consumables costs, and higher depreciation for long-lived laboratory equipment, partially offset by lower stock based compensation expense. 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.

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 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 $8.4 million and $15.4 million for the three and six months ended June 30, 2026 as compared to $6.0 million and $9.0 million for the three and six months ended June 30, 2025. Research and development expenses increased $2.5 million and $6.4 million for the three and six months ended June 30, 2026, respectively, as compared to the comparable prior year period. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, contributed $1.1 million and $1.8 million of the increase for the three and six months ended June 30, 2026, respectively. The remaining increase is primarily due to higher headcount and related payroll costs, higher recurring lab equipment and consumables costs, and higher depreciation for long-lived laboratory equipment, partially offset by lower stock-based compensation expense. The Company has hired additional scientists, engineers and technicians in order to accelerate the development of key technologies and products.

Previous wording

Sales 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 $1.6 million for the three months ended March 31, 2026 as compared to $0.7 million for the three months ended March 31, 2025, a 138% increase. Acquisitions added $0.3 million of selling and marketing expenses. The remaining increase is primarily due to increases in the sales staff, higher tradeshow and travel-related costs and increased marketing program costs.

Current wording

Sales 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 $1.9 million and $3.5 million for the three and six months ended June 30, 2026 as compared to $0.7 million and $1.4 million for the three and six months ended June 30, 2025. Sales and marketing expenses increased 184% and 161% for the three and six months ended June 30, 2026, respectively as compared to the prior comparable period. Acquisitions added $0.5 million and $0.8 million of selling and marketing expenses for the three and six months ended June 30, 2026. The remaining increase is primarily due to increases in the sales staff, 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. General and administrative expenses were $11.3 million for the three months ended March 31, 2026 compared to $4.6 million for the three months ended March 31, 2025. General and administrative expenses increased 143% for the three months ended March 31, 2026, compared to the comparable prior year period primarily due to acquisitions ($0.9 million), acquisition-related transaction expenses ($5.6 million) and ongoing litigation ($0.1 million).

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 $11.5 million and $22.8 million for the three and six months ended June 30, 2026 as compared to $3.5 million and $8.2 million for the three and six months ended June 30, 2025. General and administrative expenses increased 224% and 178% for the three and six months ended June 30, 2026, compared to the comparable prior year period. Acquisitions added $0.9 million and $1.8 million for the three and six months ended June 30, 2026, respectively. The remaining increase is primarily due to acquisition-related transaction expenses ($7.3 million) and ongoing litigation ($0.1 million).

Previous wording

Interest and other income was $13.5 million for the three months ended March 31, 2026 and $1.7 million for the three months ended March 31, 2025, an increase over the prior year of $11.8 million. The increase was primarily due to the Company maintaining higher cash balances in mutual funds, deposit and money market accounts, U.S. Treasuries, U.S. agency securities, corporate debt securities, asset-backed securities and certificates of deposits

Current wording

Interest and other income was $13.0 million and $26.4 million for the three and six months ended June 30, 2026 and $1.8 million and $3.5 million for the three and six months ended June 30, 2025. Interest and other income increased $11.1 million and $22.9 million for the three and six months ended June 30, 2026, compared to the comparable prior year period. The increase in interest income was primarily due to the Company maintaining higher cash balances in mutual funds, deposit and money market accounts, U.S. Treasuries, U.S. agency securities, corporate debt securities, asset-backed securities and certificates of deposits in 2026 compared with the prior year periods.

Previous wording

The Company recognized a gain of $3.2 million during the three months ended March 31, 2026 as a result of 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 $6.85 per share on March 31, 2026.

Current wording

The Company recognized a loss of $1.7 million during the three months ended June 30, 2026 and a gain of $1.5 million during the six months ended June 30, 2026 as a result of 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 $9.70 per share on June 30, 2026.

Previous wording

We have incurred net losses and experienced negative cash flows from operations since inception. During the three months ended March 31, 2026, the Company raised $3.5 million through the exercise of stock options. The Company has no lines of credit or short-term debt obligations outstanding. 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, 2026, the Company had cash and cash equivalents of $257.7 million and investments of $1.2 billion.

Current wording

We have incurred net losses and experienced negative cash flows from operations since inception. During the six months ended June 30, 2026, the Company raised $4.3 million through the issuance of stock. The Company has no lines of credit or short-term debt obligations outstanding. 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, 2026, the Company had cash and cash equivalents of $189.2 million and investments of $1.1 billion.

Previous wording

At March 31, 2026, we had working capital of $990.0 million as compared to working capital of $1.1 billion at December 31, 2025, a decrease of $133.0 million. The decrease in working capital is primarily attributable to the use of cash to finance acquisitions.

Current wording

At June 30, 2026, we had working capital of $969.7 million as compared to working capital of $1.1 billion at December 31, 2025, a decrease of $152.9 million. The decrease in working capital is primarily attributable to the use of cash to finance acquisitions.

Previous wording

The following table summarizes our cash flow for the three months ended March 31, 2026 and 2025 (in thousands).

Current wording

The following table summarizes our cash flow for the six months ended June 30, 2026 and 2025 (in thousands).

Previous wording

Net cash used in operating activities for the three months ended March 31, 2026 was $9.4 million compared to $4.4 million for the same period in 2025. Cash used in the three months ended March 31, 2026 consisted of net loss of $4.1 million and a change in operating assets and liabilities of $5.7 million partially offset by non-cash charges of $0.4 million. The non-cash charges consist of depreciation and amortization of $2.3 million and stock based compensation of $1.2 million offset by the change in fair value of derivatives of $3.2 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was $23.3 million compared to $10.5 million for the same period in 2025. Cash used in the six months ended June 30, 2026 consisted of net loss of $15.8 million and a change in operating assets and liabilities of $(14.9) million partially offset by non-cash charges of $7.4 million. The non-cash charges consist of depreciation and amortization of $5.1 million and stock-based compensation of $3.0 million offset by the change in fair value of derivatives of $1.5 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 and 2025 was $474.3 million and $1.7 million, respectively, and was attributable to net purchases of available for sale securities of $372.5 million, cash paid for acquisitions of $99.9 million and capital expenditures of $1.8 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 and 2025 was $529.7 million and $2.8 million, respectively, and was attributable to net purchases of available for sale securities of $356.5 million, cash paid for acquisitions of $168.7 million and capital expenditures of $4.5 million.

Previous wording

Net cash provided by financing activities was $3.5 million and $93.6 million, respectively, for the three months ended March 31, 2026 and 2025. Cash flows provided by financing activities during the three months ended March 31, 2026 were attributable to net proceeds for our stock issuances.

Current wording

Net cash provided by financing activities was $4.3 million and $283.1 million, respectively, for the six months ended June 30, 2026 and 2025. Cash flows provided by financing activities during the six months ended June 30, 2026 were attributable to net proceeds for our stock issuances.