Infleqtion, Inc.

Comparison of the three months ended June 30, 2026 and 2025

The following table sets forth our condensed consolidated statements of operations for the periods indicated (unaudited; in thousands):

Total revenue

Total revenue increased by $8.3 million, or 157%, to $13.5 million for the three months ended June 30, 2026, compared to $5.3 million for the three months ended June 30, 2025. The increase was primarily attributable to a $6.7 million increase in revenue from services performed under the QGG contract with NASA, a $0.5 million increase in revenue from services performed under the Sapient contract with the US Army, and a $0.4 million increase in revenue from services performed under the ARPA-E ENCODE project with the U.S. Department of Energy, driven by increased project activity during the current period.

Total cost of revenue

Total cost of revenue increased by $6.8 million, or 147%, to $11.4 million for the three months ended June 30, 2026, compared to $4.6 million for the three months ended June 30, 2025. The increase was primarily attributable to a $3.3 increase in subcontractor expense primarily related to the QGG contract, and a $1.7 million increase in stock-based compensation, primarily due to higher equity award activity and the front-loaded recognition of expense under the graded attribution method following the Closing of the Business Combination.

Research and development expense increased by $7.4 million, or 139%, to $12.7 million for the three months ended June 30, 2026, compared to$5.3 million for the three months ended June 30, 2025. The increase was primarily attributable to a$4.7 million increase in stock-based compensation expense, primarily due to higher equity award activity and the front-loaded recognition of expense under the graded attribution method following the Closing of the Business Combination; a $1.5 million increase in payroll and other compensation costs in the U.S. and U.K., primarily attributable to increased personnel supporting the advancement of our logical qubit roadmap and general research and development activities, a $0.4 million increase in transaction-driven employer tax expense on stock option exercises by international employees and a $0.9 million increase in material costs.

Selling, general and administrative expense increased by$13.6 million, or 217%, to$19.8 million for the three months ended June 30, 2026, compared to$6.3 million for the three months ended June 30, 2025. The increase was primarily attributable to a$4.9 million increase of stock-based compensation expense, primarily due to higher equity award activity and the front-loaded recognition of expense under the graded attribution method following the Closing of the Business Combination, a $3.4 million increase in payroll and other compensation costs due to increased headcount to support operating as a public company, an increase of $1.6 million of investor relations, SEC filing, and other public-company costs incurred following the Business Combination, an increase of $1.3 million of additional audit and accounting expenses, an increase of $1.2 million of transaction-driven employer tax expense on stock option exercises by international employees and a $1.0 million increase in legal expenses.

Other income (expense)

Interest income, net

Interest income increased by$4.3 million, or 598%, to$5.0 million for the three months ended June 30, 2026, compared to$0.7 million for the three months ended June 30, 2025. The increase was primarily attributable to higher balances invested in government money market funds and available-for-sale securities, which were funded with proceeds received upon the Closing of the Business Combination in February 2026.

Comparison of the six months ended June 30, 2026 and 2025

The following table sets forth our condensed consolidated statements of operations for the periods indicated (unaudited; in thousands):

Total revenue

Total revenue increased by$10.0 million, or 74%, to$23.4 million for the six months ended June 30, 2026, compared to $13.5 million for the six months ended June 30, 2025. The increase was primarily attributable to a $10.7 million increase in revenue from services performed under the QGG contract with NASA, a $0.8 million increase in revenue from services performed under the Sapient contract with the U.S. Army, and a $0.7 million increase in revenue from services performed for the National Security Strategic Investment Fund Morse contract, each due to increased project activity during the current period. These increases were partially offset by a $2.3 million decrease in revenue from the Rack Mount Optical Clocks (“RMOC”) project with the U.S. Army due to lower levels of activity compared to the prior-year period.

Total cost of revenue

Total cost of revenue increased by $9.5 million, or 103%, to$18.7 million for the six months ended June 30, 2026, compared to $9.3 million for the six months ended June 30, 2025. The increase was primarily attributable to a $4.4 million increase in subcontractor expense, primarily related to the QGG contract, a$2.6 million increase in stock-based compensation expense, primarily due to higher equity award activity and the front-loaded recognition of expense under the graded attribution method following the Closing of the Business Combination, and a $1.5 million increase in payroll and other compensation costs for increased headcount.

Research and development expense increased by$12.1 million, or 116%, to$22.6 million for the six months ended June 30, 2026, compared to$10.5 million for the six months ended June 30, 2025. The increase was primarily attributable to a$7.0 million increase in stock-based compensation expense, primarily due to higher equity award activity and the front- loaded recognition of expense under the graded attribution method following the Closing of the Business Combination, $3.7 million increase in payroll and other compensation costs primarily attributable to increased personnel supporting the advancement of our logical qubit roadmap and general research and development activities, a $1.2 million increase in material costs, primarily attributable to increased purchases and consumptions of materials and components used in research and development; and a $0.4 million increase in transaction-driven employer tax expense on stock option exercises by international employees.

Selling, general and administrative expense increased by$34.1 million, or 283%, to$46.1 million for the six months ended June 30, 2026, compared to$12.0 million for the six months ended June 30, 2025. The increase was primarily attributable to $11.5 million of non-recurring expenses associated with the Business Combination, an increase of$8.8 million of stock-based compensation expense, primarily due to higher equity award activity and the front-loaded recognition of expense under the graded attribution method following the Closing of the Business Combination, a $5.3 million increase in payroll and other compensation costs due to increased headcount to support operating as a public company, a $4.0 million increase of audit and accounting expenses, a $1.8 million increase of legal expenses, a $1.6 million increase of investor relations, SEC filing, and other public-company costs incurred following the Business Combination and a $1.2 million increase of transaction-driven employer tax expense on stock option exercises by international employees.

Other income (expense)

Interest income, net

Interest income increased by$7.1 million, or 665%, to$8.2 million for the six months ended June 30, 2026, compared to$1.1 million for the six months ended June 30, 2025. The increase was attributable to higher balances invested in government money market funds and available-for-sale securities from the prior period, funded with the proceeds received from the Closing of the Business Combination in February 2026.

Liquidity and Capital Resources

We have incurred net losses and used cash in operating activities since inception. Prior to the Business Combination, we have funded our operations primarily through the issuance of convertible redeemable preferred stock, resulting in aggregate gross proceeds of approximately $285.4 million. At the Closing of the Business Combination, our cash position increased significantly primarily due to proceeds of approximately $401.6 million received from funds held in CCX’s trust account and proceeds of approximately $126.5 million received from the PIPE Investment, partially offset by approximately $1.8 million of transaction-related costs which were accounted for as equity issuance related costs and recorded in additional paid in capital, and $10.7 million of transaction-related costs that were expensed as selling, general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss during the six months ended June 30, 2026. Following Closing of the Business Combination, our primary sources of liquidity have shifted to cash on hand and available-for-sale securities.

For the six months ended June 30, 2026, we incurred a net loss of $54.4 million, and as of June 30, 2026, we had an accumulated deficit of $287.9 million. We expect to continue to incur operating losses and higher operating expenses for the foreseeable future as we invest in the development and commercialization of our technologies.

Our cash and cash equivalents consist primarily of cash held in banks, checking deposits, money market funds and highly liquid investments, including short-dated U.S. Treasury securities. As of June 30, 2026, we had cash and cash equivalents of $59.3 million and restricted cash, of $1.1 million. Our available-for-sale securities are primarily invested in short- and long-term corporate debt securities and U.S. Treasury securities, generally with longer maturities than those classified as cash equivalents. As of June 30, 2026, we had $522.5 million of available-for-sale securities.

As of June 30, 2026, cash and cash equivalents included approximately $27.4 million received from employees and former employees in connection with stock option exercises for the payment of related tax withholding obligations. The Company is required to remit these amounts to the applicable taxing authorities, and such funds are not available to fund the Company’s operations. The corresponding obligation is recorded as employee tax withholdings payable within current liabilities.

Based on our current operating plan, management believes that our cash, cash equivalents and available-for-sale securities, excluding amounts held for remittance to taxing authorities, as of June 30, 2026 will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least 12 months from the date of this Quarterly Report on Form 10-Q. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available funds from our cash, cash equivalents and available-for-sale securities balances. However, this determination is based upon internal projections and assumptions and is subject to changes in market conditions, business execution and other factors.

Our primary short-term cash requirements include funding working capital needs and operating lease obligations. Working capital requirements may fluctuate significantly from period to period, particularly due to the timing of receipts and payments associated with long-term customer contracts. Our medium- to long-term cash requirements are expected to consist primarily of investments in facilities, equipment, personnel, research and development activities, and potential strategic acquisitions.

Until such time as we can generate significant revenue from commercializing our products and services, if ever, we expect to finance our liquidity needs through our cash, cash equivalents, and available-for-sale securities. We may elect, or be required, to seek additional capital through public or private equity financings, debt financings or other sources. However, additional financing may not be available on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our quantum computing and sensing efforts. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors” in our Annual Report on Form 10-K and other our other filings with the SEC.

Our product roadmap benefits significantly from external funding sources to advance the technological roadmap across quantum sensing and quantum computing as technological advances in these areas are funded as cost of sales of the respective programs rather than through internal research and development. In addition, we invest aggressively in research and development across quantum sensing and quantum computing, including capital expenditures, business development and engineering. In addition to the quantum computers in our technological roadmap, we also develop full-stack quantum computers and quantum computing test-beds to push the technological frontier of these programs, enabling advances in quantum computing architecture, integrated photonics and vacuum cell technologies, as well as improvements in gate fidelity and quantum error correction. We expect to continue to invest in research and development as a public company to fund these technological priorities and realize our goal of at-scale, fault-tolerant quantum computing.

In addition to our research and development efforts, we have historically invested in demonstration units that can be deployed in the field and showcased to customers in a variety of real-world, in-situ environments, such as Tiqker clocks for long-term testing and quantum radio frequency systems that can be used to demonstrate an array of use cases to a variety of potential end-customers. We have also historically pursued acquisitions to expand our capabilities, de-risk our technological roadmaps and readily scale resources. We expect that we will continue to make investments in strategic acquisition opportunities going forward.

Convertible Redeemable Preferred Stock

At the Closing, Legacy Infleqtion had Series Seed, Series Seed II, Series A, Series B, Series B-1, Series C and Series C-1 convertible redeemable preferred stock outstanding. Upon the Closing, all outstanding shares of Legacy Infleqtion’s convertible redeemable preferred stock were automatically surrendered and exchanged for the right to receive shares of CCX common stock based on the Exchange Ratio, representing the Company’s Common Stock after the Closing.

The following table summarizes the exchange of the Legacy Infleqtion convertible redeemable preferred stock at the Closing:

Refer to Note 10 - Convertible Redeemable Preferred Stock to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information about our convertible redeemable preferred stock.

Cash Flows

The following table summarizes our condensed consolidated statement of cash flows and cash and cash equivalents, for the six months ended June 30, 2026 and 2025 (unaudited; in thousands):

Cash used in operating activities

Net cash used in operating activities was$6.0 million for the six months ended June 30, 2026, compared to$9.7 million for the six months ended June 30, 2025, representing a $3.8 million decrease in cash used. This change was primarily attributable to a $39.4 million increase in net loss offset by an $18.7 million increase in non-cash operating adjustments and $24.5 million increase in cash provided by working capital changes.

Non-cash adjustments increased by $18.7 million for the six months ended June 30, 2026 compared to six months ended June 30, 2025, primarily due to an $18.5 million increase in stock-based compensation expense and a $1.5 million increase in the fair value of the contingent obligation related to the Morton acquisition.

Net cash impacts from changes in working capital increased by $24.5 million for the six months ended June 30, 2026 compared to six months ended June 30, 2025. The increases were primarily attributable to a $38.0 million increase in accrued liabilities, primarily related to tax withholding obligations payable to taxing authorities in connection with stock option exercises by employees and former employees. These increases were partially offset by a $6.5 million decrease in accounts payable, primarily due to the timing of vendor payments and a $5.3 million decrease in contract liabilities due to the timing of revenue recognition, customer billings, and advance payments.

Cash used in investing activities

Net cash used in investing activities was $474.2 million for the six months ended June 30, 2026, compared to $1.1 million for the six months ended June 30, 2025, an increase of $473.1 million. The increase was primarily attributable to a $529.7 million increase in purchases of available-for-sale securities, partially offset by a $60.2 million increase in available-for- sale securities maturities. Net cash used in investing activities for the six months ended June 30, 2026 also included $3.0 million for the purchase of a non-marketable equity investment in a privately held company.

Cash provided by financing activities

Net cash provided by financing activities was $529.1 million for the six months ended June 30, 2026, compared to $49.3 million for the six months ended June 30, 2025, representing a $479.8 million increase. The increase was primarily attributable to $528.2 million of net proceeds from the Business Combination, net of redemptions and issuance costs and a $3.9 million increase in proceeds from stock option exercises. These increases were partially offset by $3.3 million of offering costs that were capitalized prior to the Closing. Net cash provided by financing activities for the six months ended June 30, 2025 included $49.2 million of proceeds from the issuance of Series C convertible redeemable preferred stock.

Contractual Obligations and Commitments

The commitment amounts presented below are associated with material contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. As of June 30, 2026, there have been no material changes with regard to contractual obligations and commitments from those disclosed in our “Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in the consolidated financial statements for the year ended December 31, 2025 included in the Current Report on Form 8-K/A that we filed with the SEC on March 31, 2026, except as disclosed below.

Operating lease obligations

We utilize non-cancellable operating leases for various real estate in Colorado, Wisconsin, Illinois, the U.K. and Australia primarily used as office space, which expire at various dates through 2030 and some of which contain multi-year renewal options. As of June 30, 2026, our remaining contractual obligations for our operating lease obligations were approximately $25.3 million.

In April 2026, the Company executed an amendment to its operating lease for its Louisville, Colorado facility. The amendment increases the leased premises by approximately 68,000 square feet and extends the lease expiration date from March 31, 2030 to August 31, 2037.

In June 2026, the Company executed an amendment to its operating lease for its Oxford, U.K. facility. The amendment increases the leased premises by approximately 44,000 square feet and extends the lease expiration date from October 6, 2034 to June 9, 2036.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements during the periods presented, and do not currently have any material off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates

There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the Company’s audited financial statements for the year ended December 31, 2025 included in the Current Report on Form 8-K/A.

Recently Issued or Adopted Accounting Standards

A description of recently issued and adopted accounting pronouncements are described in Note 1 - Summary of Operations and Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.