Quantum Computing swings to $15.1M Q3 2026 loss
Three completed acquisitions in 2026 broadened QUBT's photonics, quantum communications and advanced manufacturing capabilities.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Quantum Computing Inc. (QUBT) reported third-quarter 2026 revenue of $9.5 million, compared with $384,000 a year earlier, while net results shifted to a $15.1 million loss from $2.4 million of net income. Operating loss was $28.6 million, versus $10.4 million in the third quarter of 2025. For the first nine months, revenue was $18.7 million versus $484,000, and net loss was $30.9 million compared with $17.1 million.
During 2026, the company completed acquisitions of Luminar Semiconductor, NuCrypt and NHanced, adding photonic components, quantum communications, and advanced semiconductor packaging and manufacturing capabilities. The NHanced transaction includes up to $72.0 million of contingent consideration tied to revenue targets as of December 31, 2027, and revenue and EBITDA targets as of December 31, 2028. For the nine months ended September 30, 2026, operating activities used $35.0 million of cash, compared with $19.3 million in 2025. At September 30, 2026, QUBT had $174.3 million in cash and cash equivalents, $1.1 billion in short- and long-term investments including accrued interest, and $916.9 million in working capital; management said liquid assets were adequate for obligations over the next 12 months.
2 points · 0 major0 major · 3 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue was $9.5 million, versus $384,000 a year earlier.
- Minor pointThree acquisitions in 2026 added photonics, quantum communications and manufacturing capabilities.
Negative
- Moderate pointThird-quarter results: $15.1 million net loss, versus $2.4 million income.
- Moderate pointOperating cash use was $35.0 million for nine months, versus $19.3 million.
- Minor pointNine-month net loss was $30.9 million, versus $17.1 million in 2025.
Key Figures
Revenue: $9.5 million
Net income (loss): $15.1 million loss
Revenue: $18.7 million
+5 more
8 metrics
Revenue
$9.5 million
Three months ended September 30, 2026; $384,000 in 2025
Net income (loss)
$15.1 million loss
Three months ended September 30, 2026; $2.4 million net income in 2025
Revenue
$18.7 million
Nine months ended September 30, 2026; $484,000 in 2025
Net loss
$30.9 million
Nine months ended September 30, 2026; $17.1 million in 2025
Net cash used in operating activities
$35.0 million
Nine months ended September 30, 2026; $19.3 million in 2025
Cash and cash equivalents
$174.3 million
As of September 30, 2026
Short- and long-term investments
$1.1 billion
Including accrued interest, as of September 30, 2026
Working capital
$916.9 million
As of September 30, 2026
Key Terms
contingent consideration, available-for-sale debt securities, relief-from-royalty method, Monte Carlo simulation, +1 more
5 terms
contingent consideration financial
"contingent consideration of up to $72.0 million"
Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.
available-for-sale debt securities financial
"purchases of available-for-sale debt securities"
A type of debt investment—like bonds or loans a company buys—that the company intends to hold for a while but may sell before it matures. Think of it as lending money with the option to sell the IOU; changes in its market value alter the company’s reported net worth now but usually don’t affect reported profit until the investment is actually sold, so investors watch these holdings for balance-sheet risk and potential future gains or losses.
relief-from-royalty method financial
"using the relief-from-royalty method"
Monte Carlo simulation technical
"estimated using a Monte Carlo simulation"
A Monte Carlo simulation is a computerized way to model many possible future outcomes by running thousands of randomized “what-if” scenarios, like rolling dice repeatedly to see the range of results. For investors it shows the probability of different returns, losses, or timing outcomes under varied assumptions, helping quantify uncertainty and compare risk — similar to using many practice runs to judge how often a plan succeeds or fails.
thin film lithium niobate technical
"built on wafers using a crystalline material called thin film lithium niobate"
Thin film lithium niobate is a very thin, high-quality crystalline layer of the material lithium niobate placed on a supporting chip to guide and control light on a tiny scale. Think of it as a narrow, super‑responsive lane for light that electronics can steer quickly; it matters to investors because it enables smaller, faster and more energy‑efficient optical components used in high-speed communications, data centers and sensing, which can improve product performance and margins.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were QUBT's revenue and net results in the third quarter of 2026?
QUBT reported $9.5 million in revenue and a $15.1 million net loss for the three months ended September 30, 2026. In the comparable 2025 quarter, revenue was $384,000 and net income was $2.4 million.
What contingent consideration is tied to QUBT's NHanced acquisition?
The NHanced acquisition agreement provides for up to $72.0 million based on revenue as of December 31, 2027, and revenue and EBITDA as of December 31, 2028. The company estimated that escrow and contingent consideration had a combined fair value of $23.8 million and recorded a $3.8 million contingent liability as of September 30, 2026.
What liquidity did QUBT report at September 30, 2026?
QUBT reported $174.3 million in cash and cash equivalents, $1.1 billion of short- and long-term investments including accrued interest, and $916.9 million in working capital. Management stated that liquid assets were adequate to meet obligations over the next 12 months.
AI-generated analysis. How Rhea-AI works. Not financial advice.
See more from StockTitan in Google Search and AI answers.
Adds StockTitan as a preferred source · opens Google
Table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2026
or
For the transition period from __________ to __________
Commission File Number: 001-40615
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code (703 ) 436-2121
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
As of November 6, 2026, there were 226,931,758 shares of the registrant’s common stock outstanding.
Table of contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, forward-looking statements are identified by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements.
These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to differences in our future financial and other results include those discussed in the risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q as well as those discussed elsewhere in this Quarterly Report on Form 10-Q and the factors described below:
•Our ability to effectively manage future growth and achieve operational efficiencies;
•the ability to implement our business plans, forecasts and other expectations, including the integration of recently acquired businesses, and to identify and realize additional opportunities;
•the market acceptance for our products and services;
•the results of our research and development and any failure to adequately and timely develop our products;
•the failure of any of our products to perform as expected and any liability or loss of market share that may come as a result;
•changes in the competitive and highly regulated industries in which we operate, variations in operating performance across competitors, changes in laws and regulations affecting our business and changes in our capital structure;
•success in retaining or recruiting, or changes required in, officers, key employees or directors, and our ability to attract and retain key personnel;
•inability or failure to protect intellectual property;
•the diversion of management’s attention and consumption of resources as a result of acquisitions of other companies and success in integrating and otherwise achieving the benefits of recent and potential acquisitions;
•our inability to effectively integrate or benefit from recently purchased assets or businesses;
•global inflation and interest rates;
•impacts of the wars in Ukraine, Iran or Israel or other global conflicts;
•fluctuations in foreign exchange rates;
•failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;
•any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks; and
•other factors detailed under the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.”
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and
Table of contents
circumstances may be materially different from what we expect. We qualify all forward-looking statements by these cautionary statements.
Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “the Company,” “our Company,” “QCi” and “QUBT,” refer to Quantum Computing Inc., a Delaware corporation, and unless the context indicates otherwise, also includes our wholly-owned subsidiaries.
Table of contents
QUANTUM COMPUTING INC.
TABLE OF CONTENTS
| Page No. | ||||||||
PART I. | FINANCIAL INFORMATION | F-1 | ||||||
Item 1. | Financial Statements (Unaudited) | F-1 | ||||||
Condensed Consolidated Balance Sheets | F-1 | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | F-2 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | F-3 | |||||||
Condensed Consolidated Statements of Cash Flows | F-5 | |||||||
Notes to the Unaudited Condensed Consolidated Financial Statements | F-6 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 1 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 6 | ||||||
Item 4. | Controls and Procedures | 6 | ||||||
PART II. | OTHER INFORMATION | 9 | ||||||
Item 1. | Legal Proceedings | 9 | ||||||
Item 1A. | Risk Factors | 10 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 10 | ||||||
Item 3. | Defaults Upon Senior Securities | 10 | ||||||
Item 4. | Mine Safety Disclosures | 10 | ||||||
Item 5. | Other Information | 10 | ||||||
Item 6. | Exhibits | 11 | ||||||
i
Table of contents
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
QUANTUM COMPUTING INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventory | |||||||||||
| Short-term investments | |||||||||||
| Accrued interest receivable | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Long-term investments | |||||||||||
| Accrued interest receivable - long term | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Deferred revenue | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Derivative liability | |||||||||||
| Operating lease liabilities | |||||||||||
| Contingent liabilities | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies (see Note 10) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
Table of contents
QUANTUM COMPUTING INC.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited, in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Gross profit (loss) | ( | ||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Non-operating income (expense) | |||||||||||||||||||||||
| Interest and other income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Change in fair value of derivative liability | |||||||||||||||||||||||
| Income (loss) before income tax provision | ( | ( | ( | ||||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | ( | ( | ( | ||||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Total comprehensive income (loss) | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Income (loss) per share: | |||||||||||||||||||||||
| Basic and Diluted | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
| Weighted average shares used in computing net income (loss) per common share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
Table of contents
QUANTUM COMPUTING INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands)
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances, July 1, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Issuance of shares related to equity-based plan | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of shares related to exercise of warrants | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||
| Unrealized losses on available-for-sale debt securities | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||
| Balances, September 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances, January 1, 2026 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Issuance of shares related to equity-based plan | - | - | |||||||||||||||||||||||||||||||||
| Issuance of shares related to exercise of warrants | - | - | - | ||||||||||||||||||||||||||||||||
| Shares issued to escrow relating to litigation settlement | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Equity consideration for acquisitions | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||
| Unrealized losses on available-for-sale debt securities | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||
| Balances, September 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
Table of contents
QUANTUM COMPUTING INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited, in thousands)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances, July 1, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Issuance of shares for cash | - | - | |||||||||||||||||||||||||||||||||
| Issuance of shares related to equity-based plan | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of shares related to exercise of warrants | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | |||||||||||||||||||||||||||||||
| Stock-based compensation for services | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Net income | - | - | - | - | |||||||||||||||||||||||||||||||
| Unrealized losses on available-for-sale debt securities | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances, January 1, 2025 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Issuance of shares for cash | - | - | |||||||||||||||||||||||||||||||||
| Issuance of shares related to equity-based plan | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares related to exercise of warrants | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation for services | - | - | - | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | - | ( | |||||||||||||||||||||||||||||
| Unrealized losses on available-for-sale debt securities | - | - | - | - | ( | ( | |||||||||||||||||||||||||||||
| Balances, September 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
Table of contents
QUANTUM COMPUTING INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | ( | ( | |||||||||
| Adjustments to reconcile net loss to net cash used in operations | |||||||||||
| Depreciation and intangibles amortization | |||||||||||
| Change in fair value of derivative liability | ( | ( | |||||||||
| Provision for credit losses | ( | ( | |||||||||
| Amortization of operating lease right-of-use assets | |||||||||||
| Stock-based compensation | |||||||||||
| Stock-based compensation for services | |||||||||||
| Change in operating assets and liabilities | |||||||||||
| Accounts receivable, net | ( | ( | |||||||||
| Inventory | ( | ( | |||||||||
| Accrued interest receivable | ( | ( | |||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other non-current assets | ( | ( | |||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other current liabilities | ( | ||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Purchases of available-for-sale debt securities | ( | ( | |||||||||
| Proceeds from sales of available-for-sale debt securities | |||||||||||
| Proceeds from maturities of available-for-sale debt securities | |||||||||||
| Purchase of Luminar Semiconductor, Inc. | ( | ||||||||||
| Purchase of NHanced Semiconductors, Inc. | ( | ||||||||||
| Purchase of NuCrypt, LLC, net of cash acquired | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from exercise of warrants | |||||||||||
| Proceeds from issuance of common stock | |||||||||||
| Net cash provided by financing activities | |||||||||||
| Net (decrease) increase in cash | ( | ||||||||||
| Cash and cash equivalents, beginning of period | |||||||||||
| Cash and cash equivalents, end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Leased assets obtained in exchange for new operating lease liabilities | $ | $ | |||||||||
| Fair value of derivative liability reclassed to additional paid-in capital due to exercise of warrants | $ | $ | |||||||||
| Fair value of equity consideration related to business combinations | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
Table of contents
QUANTUM COMPUTING INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
September 30, 2026
Note 1. Nature of the Organization and Business
Corporate History
Quantum Computing Inc. (“QCi,” the “Company” or “us”) was originally incorporated in the State of Nevada on July 25, 2001, under a predecessor name. On February 22, 2018, the Company redomiciled to Delaware and changed its name to Quantum Computing Inc. in connection with its transition to a quantum computing technology business. The Company’s common stock, par value $0.0001 , has traded on the Nasdaq Capital Market under the symbol "QUBT" since July 15, 2021. On June 16, 2022, the Company merged with QPhoton, Inc. (“QPhoton”) (the “QPhoton Merger”), a developer of quantum photonic systems and related technologies and applications. The QPhoton Merger enabled us to develop hardware applications integrated with the Company’s software platform, Qatalyst, that existed before the QPhoton Merger.
In February 2026, the Company completed its acquisition of Luminar Semiconductor, Inc. (“LSI”), a manufacturer and supplier of photonic components that are important building blocks on QCi’s technology roadmap. The LSI acquisition brings QCi a portfolio of core photonic technologies, patents, and a highly experienced team of engineers and scientists that are expected to accelerate QCi’s roadmap while continuing to support and grow LSI’s established customer base.
In March 2026, the Company acquired NuCrypt, LLC (“NuCrypt”), a quantum communications technology company. NuCrypt contributes expertise in generating, distributing, and measuring entangled photons over fiber optic links, which is expected to enhance QCi’s development of quantum security products. The NuCrypt acquisition helps establish quantum communications as an important commercialization vertical within QCi’s broader quantum technology strategy. By integrating NuCrypt’s quantum communications systems and products, QCi is expanding its portfolio of quantum secure communications and quantum photonics solutions while advancing its broader quantum technology roadmap.
In June 2026, the Company acquired NHanced Semiconductors, Inc. ("NHanced"), a U.S. based packaging foundry with expertise in hybrid bonding, chiplet architectures, silicon interposers, photonic device integration, advanced semiconductor packaging and manufacturing. The NHanced acquisition launched QCi’s Fab 2 initiative ahead of schedule and significantly expanded the Company’s advanced packaging and semiconductor manufacturing capabilities. NHanced strengthens QCi’s production infrastructure for nanophotonics and thin-film lithium niobate (“TFLN”) technologies while increasing production capacity, operational flexibility and U.S.-based manufacturing capabilities. The NHanced acquisition also expands QCi’s ability to support commercial and government customers across photonics, semiconductor manufacturing, artificial intelligence, defense, aerospace, telecommunications and quantum technologies.
Nature of Business
QCi is an American company utilizing integrated photonics, non-linear quantum optics, and advanced manufacturing to develop and deliver machines for quantum computing, reservoir computing, remote sensing, imaging and cybersecurity applications based on patented and proprietary photonics technology. QCi’s products are designed to operate at room temperature and at very low power levels compared to other quantum systems currently available in the market, such as superconducting, ion-trap, or annealing architectures. We believe that our core technology enables the execution of a go-to-market strategy which emphasizes scalability, accessibility and affordability. Our quantum machines, supported by professional services through our “Quantum Solutions” offering, enable subject matter experts ("SMEs") and end users to deliver critical business solutions involving highly complex optimization problems. Through our LSI and NHanced subsidiaries, QCi also offers a range of photonic components and products, as well as engineering, manufacturing and advanced semiconductor packaging services.
Our leading quantum products today are our Entropy Quantum Computer (“EQC”), reservoir computer, photonic vibrometer, and quantum secured communication systems. Our longer-term product development plan is to migrate our current designs, as well as other product designs based on discrete components, to a set of thin film lithium niobate ("TFLN") optical integrated circuits built on TFLN wafers. We believe that the acquisitions of LSI, NuCrypt and NHanced will accelerate our technology roadmap by enhancing our capabilities in integrated photonics and quantum security, which will broaden our quantum secured network product line and support the Company’s initiatives to further integrate and miniaturize certain products for commercial and government customers. In addition, QCi offers LSI’s portfolio of photonic
F-6
Table of contents
semiconductor products, including lasers, photodetectors and avalanche diodes, as well as NHanced's engineering and advanced packaging services.
Liquidity
The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets, and the satisfaction of liabilities in the normal course of business. As of September 30, 2026, the Company had cash and cash equivalents on hand of $174.3 million, $1.1 billion of short-term and long-term investments including accrued interest, and working capital of $916.9 million. For the nine months ended September 30, 2026, the Company used cash of $35.0 million in operating activities and had an accumulated deficit of $250.1 million. As a result, the Company has adequate liquid assets on hand to meet its obligations over the next 12 months.
Note 2. Significant Accounting Policies
Basis of Presentation and Principles of Consolidation:
The Company prepares its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”), including Accounting Standards Codification (“ASC”) 810, Consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year end is December 31.
Furthermore, the accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements have been included. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2025 has been derived from audited consolidated financial statements at that date, but does not include all disclosures required by U.S. GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Reclassifications
Certain reclassifications have been made to the fiscal 2025 condensed consolidated financial statements to conform with the fiscal 2026 presentation. The reclassifications had no impact on net loss, total assets, total liabilities, or stockholders’ equity.
Risk and Uncertainties
The Company is subject to certain risks and uncertainties and believes changes in any of the following areas could have a material adverse effect on the Company’s future condensed consolidated financial position or consolidated results of operations or cash flows: new product development, including market receptivity; litigation or claims against the Company based on intellectual property, patent, product regulation or other factors; competition from other products; general economic conditions; the ability to attract and retain qualified employees; and, ultimately, to sustain profitable operations.
Use of Estimates
These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the valuation of
F-7
Table of contents
goodwill and intangible assets, deferred tax assets, equity-based transactions and liquidity assessment. Actual results may differ from these estimates.
Cash and Cash Equivalents
Operating Leases
The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in operating lease right-of-use assets on the condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the other current liabilities and operating lease liabilities, respectively, on the condensed consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. All of our leases are comprised of operating leases for our facilities, and as of September 30, 2026 and December 31, 2025, the Company was not party to any finance leases.
Valuation of Goodwill
The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs an annual impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax-deductible goodwill carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performs its annual impairment test during the fourth quarter of each fiscal year. As of September 30, 2026, we had not identified any factors that indicated there was an impairment of our goodwill and determined that no additional impairment analysis was then required.
Intangible Assets
The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of the acquired business to the respective net tangible and intangible assets. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits are consumed.
Property and Equipment
Property and equipment are stated at cost or contributed value. Depreciation of furniture, software and equipment is calculated using the straight-line method over their estimated useful lives, and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated
F-8
Table of contents
amount and the proceeds from the sale are recorded as a gain or loss on sale of equipment. Maintenance and repair costs are expensed as incurred.
Impairment of Long-Lived Assets
The Company has long-lived assets such as tangible property and equipment, identified intangible assets consisting of acquired patents and core technology. When events or changes in circumstances occur that could indicate the carrying value of long-lived assets may not be recoverable, the Company assesses recoverability by determining whether the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If the undiscounted cash flow is less, an impairment charge is recognized for the excess of the carrying amounts of these assets over the fair values. Fair values are determined by discounted future cash flows, appraisals or other methods.
During the three and nine months ended September 30, 2026 and 2025, the Company did not record any impairment related to long-lived assets.
Fair Value of Financial Instruments
The carrying amount of certain financial instruments held by the Company, such as accounts receivable, accrued interest, contract assets and liabilities, accounts payable, and accrued and other current liabilities, approximate fair value due to their short maturities. The carrying amount of the liabilities for the convertible preferred stock warrants represent their fair value. The carrying amounts of the Company’s lease liabilities approximate fair value due to the market interest rates that these obligations bear and interest rates currently available to the Company.
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:
Level 1Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.
Research and Development Costs
Research and development costs include costs directly attributable to the conduct of research and development programs, including the cost of services provided by outside contractors, acquiring work-in-progress intellectual property,
F-9
Table of contents
development, and mandatory compliance fees and contractual obligations. All costs associated with research and development are expensed as incurred.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets where, based upon the available evidence, management concludes that it is more-likely-than-not that the deferred tax assets will not be realized. Realization of deferred tax assets is also dependent upon future earnings, if any, the timing and amount of which are uncertain.
The Company records a liability for the uncertain tax positions taken or expected to be taken on the Company’s tax return when it is more-likely-than-not that the tax position might be challenged despite the Company’s belief that the tax return positions are fully supportable, and additional taxes will be due as a result. To the extent that the assessment of such tax positions changes, for example, based on the outcome of a tax audit, the change in estimate is recorded in the period in which the determination is made. The provision for income taxes includes the impact of provisions for uncertain tax positions.
Net Income (Loss) Per Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share includes the potential dilutive effect of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the “If-Converted” method), unless the effect of such issuances would have been anti-dilutive. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted income (loss) per common share for periods with net losses.
F-10
Table of contents
The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share data):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Basic net loss per common share: | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income (loss) | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average outstanding shares of common share – basic | ||||||||||||||||||||||||||
| Income (Loss) per common share - basic | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Diluted net loss per common share: | ||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income (loss) | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
| Weighted average common shares outstanding - diluted | ||||||||||||||||||||||||||
| Income (Loss) per common share - diluted | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
In periods with a reported net loss, the effect of anti-dilutive stock options, unvested restricted common stock and warrants are excluded and diluted loss per share is equal to basic loss per share.
Due to a net loss in the three and nine months ended September 30, 2026 and the nine months ended September 30, 2025, there were therefore no dilutive securities and hence basic and diluted loss per share were the same. The following is a summary of the weighted average common stock equivalents for the securities outstanding during the period that have been excluded from the computation of diluted net loss per common share for the periods three and nine months ended September 30, 2026 and nine months ended September 30, 2025, as their effect would be anti-dilutive (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Options | |||||||||||||||||||||||
| Unvested restricted common stock | |||||||||||||||||||||||
| Total potentially dilutive shares | |||||||||||||||||||||||
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our condensed consolidated financial position or results of operations upon adoption.
F-11
Table of contents
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to provide disaggregated disclosures of certain expense captions presented on the face of the income statement into specific categories within the notes to the consolidated financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its condensed consolidated financial statements and related disclosures.
On July 30, 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods, and allows for early adoption. The Company adopted the guidance as of January 1, 2026 and adoption did not have a material impact on our consolidated financial statements and related disclosures.
Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC) and the SEC did not or are not expected to have a material effect on our condensed consolidated financial statements.
Note 3. Acquisitions
LSI Acquisition
On December 15, 2025, the Company entered into a Stock Purchase Agreement with Luminar Technologies, Inc., a Delaware corporation (the “Seller”) and Luminar Semiconductor, Inc. a Delaware corporation (“LSI”), pursuant to which, the Company agreed to acquire all of the issued and outstanding shares of common stock of LSI from the Seller (the “Transaction”). The Transaction was completed on February 2, 2026 (the “LSI Closing Date”). LSI is engaged primarily in the design, development, manufacturing, packaging, and development services of photonic components and sub-systems (including semiconductor lasers and photodetectors), application-specific integrated circuits, and pixel-based sensors. LSI’s revenue is derived from customers located in the United States and international markets.
The purchase price was $110.0 million in cash, subject to a dollar-for-dollar adjustment to the extent that the working capital at closing was greater or less than the target working capital of $8.1 million. The consideration paid by the Company at closing consisted of approximately $97.5 million in cash, along with $11.0 million placed with an escrow agent at signing. The escrow will remain in place for twelve months following the LSI Closing Date to cover certain limited indemnification obligations of the Seller.
The fair value of consideration transferred is below (in thousands):
| Initial purchase price | $ | ||||
| Less adjustments per purchase agreement for working capital and indebtedness | ( | ||||
| Preliminary purchase price | |||||
| Amount paid prior to closing date | ( | ||||
| Cash consideration on closing date | $ | ||||
Adjustments of $8 thousand for working capital were made to the preliminary purchase price during the three months ended September 30, 2026.
The acquisition is accounted for in accordance with FASB ASC Topic 805, Business Combinations (“ASC 805”). This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The table below represents the preliminary purchase price allocation for LSI based on estimates, assumptions, valuations and other analyses as of the Closing Date,
F-12
Table of contents
that have not been finalized in order to make a definitive allocation. Accordingly, the adjustments to allocate the purchase price will remain preliminary until management finalizes the fair values of assets acquired and liabilities assumed. The fair value of intangible assets was based upon an independent appraiser utilizing the cost, income or market approach. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The final amounts allocated to assets acquired and liabilities assumed, and therefore, calculation of goodwill, are dependent upon certain valuation and other studies that have not yet been completed and could differ materially from the amounts presented in the condensed consolidated financial statements. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.
The preliminary purchase price is allocated to the tangible and intangible assets and liabilities of LSI based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):
| Acquisition Date Fair Values Assigned | |||||
| Assets acquired: | |||||
| Cash and cash equivalents | $ | ||||
| Accounts receivable | |||||
| Inventory | |||||
| Prepaid expenses and other current assets | |||||
| Property and equipment | |||||
| Operating lease right-of-use assets | |||||
| Intangible assets | |||||
| Liabilities assumed: | |||||
| Accounts payable | |||||
| Accrued expenses | |||||
| Deferred revenue and contract liabilities | |||||
| Other current liabilities | |||||
| Operating lease liabilities, net of current portion | |||||
| Total identifiable net assets acquired | |||||
| Goodwill | |||||
| Preliminary purchase price | $ | ||||
Acquired intangibles include the following (in thousands):
| Fair Value (in thousands) | Useful Life in Years | ||||||||||
| Developed technology | $ | ||||||||||
| Trade name | |||||||||||
| Total | $ | ||||||||||
From the acquisition date through September 30, 2026, LSI contributed revenue of $12.8 million and operating loss of $6.6 million.
F-13
Table of contents
NuCrypt Acquisition
The Company completed its acquisition of NuCrypt, LLC (“NuCrypt”), a quantum communications technology company, on March 4, 2026. The 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.
The purchase price was $2.5 million in cash, subject to a working capital adjustment at closing, and 250 thousand shares of QCi’s common stock. The equity consideration is valued at the fair value as of the acquisition date and will be issued equally in shares of common stock on the first, second and third anniversaries of the acquisition. The shares are reserved out of the Company’s authorized but unissued shares.
The fair value of consideration transferred is below (in thousands):
| Initial cash purchase price | $ | ||||
| Plus adjustments per purchase agreement for working capital | ( | ||||
| Equity consideration at fair value | |||||
| Preliminary purchase price | |||||
| Less: Cash retained by Company | ( | ||||
| Fair value of consideration transferred | $ | ||||
The acquisition is accounted for in accordance with ASC 805. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The table below represents the preliminary purchase price allocation for NuCrypt based on estimates, assumptions, valuations and other analyses as of the Closing Date, that have not been finalized in order to make a definitive allocation. Accordingly, the adjustments to allocate the purchase price will remain preliminary until management finalizes the fair values of assets acquired and liabilities assumed. The fair value of intangible assets was based upon an independent appraiser utilizing the cost, income or market approach. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The fair value of the customer relationships was determined using the multi-period excess earnings income approach or cost approach. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The final amounts allocated to assets acquired and liabilities assumed, and therefore, calculation of goodwill, are dependent upon certain valuation and other studies that have not yet been completed and could differ materially from the amounts presented in the condensed consolidated financial statements. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.
F-14
Table of contents
The preliminary purchase price is allocated to the tangible and intangible assets and liabilities of NuCrypt based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):
| Acquisition Date Fair Values Assigned | |||||
| Assets acquired: | |||||
| Cash and cash equivalents | $ | ||||
| Accounts receivable | |||||
| Prepaid expenses and other current assets | |||||
| Operating lease right-of-use assets | |||||
| Property and equipment | |||||
| Intangible assets | |||||
| Liabilities assumed: | |||||
| Accounts payable | |||||
| Other current liabilities | |||||
| Total identifiable net assets acquired | |||||
| Goodwill | |||||
| Preliminary purchase price | $ | ||||
Acquired intangibles include the following (in thousands):
| Fair Value (in thousands) | Useful Life in Years | ||||||||||
| Developed technology | $ | ||||||||||
| Customer relationships | |||||||||||
| Trade name | |||||||||||
| Total | $ | ||||||||||
From the acquisition date through September 30, 2026, NuCrypt contributed revenue of $0.7 million and operating loss of $0.1 million.
NHanced Acquisition
The Company completed its acquisition of NHanced Semiconductors, Inc. (“NHanced”) on June 22, 2026. The acquisition marks an important step in QCi’s transition from research-driven innovation and prototyping to scalable commercial production. By adding semiconductor and nanophotonics fabrication capabilities, advanced packaging expertise and specialized engineering talent, QCi is strengthening its operational capabilities and manufacturing readiness.
The purchase price was $48.1 million in cash, subject to a working capital adjustment at closing, $20.0 million placed in escrow and $5.0 million in shares of QCi’s common stock. The escrow amounts are to be paid to the sellers, with interest, upon NHanced achieving certain revenue targets as of December 31, 2027 and 2028. The equity consideration consists of 447 thousand shares valued using the stock price as of the acquisition date. In addition, the acquisition agreement includes contingent consideration of up to $72.0 million based on the achievement of certain post-acquisition performance targets based on revenue as of December 31, 2027 and revenue and EBITDA as of December 31, 2028. The Company estimates that the amount placed in escrow and the contingent consideration have a combined fair value of $23.8 million. As such, the Company has recorded a contingent liability of $3.8 million this quarter on the condensed consolidated balance sheet as of September 30, 2026.
F-15
Table of contents
The fair value of consideration transferred is below (in thousands):
| Initial cash purchase price | $ | ||||
| Plus contingent consideration paid to escrow | |||||
| Plus adjustments per purchase agreement for working capital | |||||
| Total cash payments at close | |||||
| Equity consideration at fair value | |||||
| Contingent consideration at fair value | |||||
| Preliminary purchase price | $ | ||||
The acquisition is accounted for in accordance with ASC 805. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The table below represents the preliminary purchase price allocation for NHanced based on estimates, assumptions, valuations and other analyses as of the closing date, that have not been finalized in order to make a definitive allocation. Accordingly, the adjustments to allocate the purchase price will remain preliminary until management finalizes the fair values of assets acquired and liabilities assumed. The fair value of intangible assets was based upon an independent appraiser utilizing the cost, income or market approach. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The final amounts allocated to assets acquired and liabilities assumed, and therefore, calculation of goodwill, are dependent upon certain valuation and other studies that have not yet been completed and could differ materially from the amounts presented in the condensed consolidated financial statements. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.
F-16
Table of contents
The preliminary purchase price is allocated to the tangible and intangible assets and liabilities of NHanced based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):
| Acquisition Date Fair Values Assigned | |||||
| Assets acquired: | |||||
| Cash and cash equivalents | $ | ||||
| Accounts receivable | |||||
| Inventory | |||||
| Prepaid expenses and other current assets | |||||
| Property and equipment | |||||
| Operating lease right-of-use assets | |||||
| Other non-current assets | |||||
| Intangible assets | |||||
| Liabilities assumed: | |||||
| Accounts payable | |||||
| Accrued expenses | |||||
| Deferred revenue and contract liabilities | |||||
| Other current liabilities | |||||
| Other non-current liabilities | |||||
| Operating lease liabilities, net of current portion | |||||
| Total identifiable net assets acquired | |||||
| Goodwill | |||||
| Preliminary purchase price | $ | ||||
During the three months ended September 30, 2026, there was a $3.8 million change in purchase price primarily related to the valuation of contingent consideration. In addition, changes to the purchase price allocation was made as certain of the fair value amounts previously estimated were adjusted during the measurement period. These measurement period adjustments related to updated valuation reports and appraisals received from our external valuation specialists as well as changes in internal estimates. The changes in estimates recorded in the three months ended September 30, 2026 include a decrease in inventory of $3.5 million; a decrease in property and equipment of $7.6 million; an increase in intangibles of $35.9 million; and an increase in other current assets and liabilities, net, of $0.2 million. The change in purchase price and the measurement periods adjustments resulted in a decrease in goodwill of $21.1 million. These adjustments were not material to the consolidated statements of operations for the three and nine months ended September 30, 2026.
F-17
Table of contents
Acquired intangibles include the following (in thousands):
| Fair Value (in thousands) | Useful Life in Years | ||||||||||
| Developed technology | $ | ||||||||||
| Trade name | |||||||||||
| Customer relationships | |||||||||||
| Total | $ | ||||||||||
From the acquisition date through September 30, 2026, NHanced contributed revenue of $3.9 million and an operating loss of $2.6 million.
Unaudited Proforma Condensed Consolidated Results
The table below presents the unaudited pro forma condensed consolidated results assuming the acquisition of LSI, NuCrypt and NHanced had occurred on January 1, 2025 (in thousands):
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| QCi as Reported | LSI Pre-Acquisition | NuCrypt Pre-Acquisition | NHanced Pre-Acquisition | Total | |||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net loss | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| QCi as Reported | LSI Pre-Acquisition | NuCrypt Pre-Acquisition | NHanced Pre-Acquisition | Total | |||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||
| QCi as Reported | LSI Pre-Acquisition | NuCrypt Pre-Acquisition | NHanced Pre-Acquisition | Total | |||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net loss | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||
| QCi as Reported | LSI Pre-Acquisition | NuCrypt Pre-Acquisition | NHanced Pre-Acquisition | Total | |||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net income (loss) | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
The proforma information above reflects the combination of the Company’s results of operations as disclosed in the accompanying condensed consolidated statements of operations together with the unaudited results of LSI, NuCrypt and NHanced for the same periods.
F-18
Table of contents
Note 4. Segment Reporting
Our Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, our CODM uses condensed consolidated net (loss) income to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes natural expenses, such as employee wages and benefits at a consolidated level, to manage the Company’s operations and strategic growth initiatives.
The following table presents segment information of revenue, significant expenses and net loss (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Salaries and employee related costs | |||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||
| Rent and facilities | |||||||||||||||||||||||
| Professional services and legal fees | |||||||||||||||||||||||
| Technology & IT costs | |||||||||||||||||||||||
| Direct and indirect materials | |||||||||||||||||||||||
| Other sales and marketing costs | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Other operational expense | |||||||||||||||||||||||
| Operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Non-operating income (expense) | |||||||||||||||||||||||
| Interest and other income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Change in fair value of derivative and warrant liabilities | |||||||||||||||||||||||
| Segment net income (loss) | ( | ( | ( | ||||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Total comprehensive income (loss) | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||
Note 5. Income Taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of September 30, 2026, the Company has a valuation allowance against all of its net deferred tax assets.
The total effective tax rate was 0
For each of the three and nine months ended September 30, 2026 and 2025, the Company’s effective tax rate differed from the federal statutory rate of 21
The Company did not pay any material state income tax during the three and nine months ended September 30, 2026 and 2025.
Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized; as such, the Company is subject to examination for the fiscal years ended 2018 through present.
F-19
Table of contents
Uncertain Tax Positions
Note 6. Available-For-Sale Debt Securities
The following table summarizes available-for-sale debt securities classified as short and long-term investments held by the Company as of September 30, 2026 (in thousands, except remaining maturity contractual):
| Remaining Maturity Contractual | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||
| U.S. Treasuries | < | $ | $ | $ | ( | $ | |||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| Corporate debt securities | < | ( | |||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| Certificates of deposit | < | ( | |||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| Asset-backed securities | < | ( | |||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| ( | |||||||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
The Company may from time to time sell its available-for-sale debt securities. There were $18 thousand in realized losses and $110 thousand in realized gains on sales of available-for-sale debt securities for the three and nine months ended September 30, 2026, respectively. The realized gains on available-for-sale debt securities related to investments purchased during the three and nine months ended September 30, 2026. Therefore, there were no amounts reclassified out of accumulated other comprehensive loss, net of tax during the three and nine months ended September 30, 2026. The Company’s investment portfolio includes callable securities that may be called prior to maturity.
The aggregated net unrealized loss on available-for-sale debt securities in the amount of $8.7 million has been recorded in accumulated other comprehensive loss in the Company’s condensed consolidated balance sheet as of September 30, 2026.
Note 7. Goodwill and Intangible Assets
The changes in goodwill during the nine months ended September 30, 2026 (as discussed further in Note 3) are as follows (in thousands):
| Balance at December 31, 2025 | $ | ||||
| LSI acquisition | |||||
| NuCrypt acquisition | |||||
| NHanced acquisition | |||||
| Balance at September 30, 2026 | $ | ||||
F-20
Table of contents
The composition of intangible assets, net, is as follows (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
| Website domain name and trademark | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Technology and licensed patents | ( | ( | |||||||||||||||||||||||||||||||||
| Customer relationships | ( | - | - | - | |||||||||||||||||||||||||||||||
| Developed technology | ( | - | - | - | |||||||||||||||||||||||||||||||
| Trade name | ( | - | - | - | |||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The Company recorded amortization expense of the Company’s intangible assets of $2.9 million and $5.4 million during the three and nine months ended September 30, 2026, respectively, and $0.5 million and $2.0 million during the three and nine months ended September 30, 2025, respectively. The Company expects future amortization expense to be the following (in thousands):
| Amortization | |||||
| 2026 (remaining 3 months) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 8. Property and Equipment, net
The Company’s property and equipment, net, consist of (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Computer and lab equipment | $ | $ | |||||||||
| Network equipment | |||||||||||
| Furniture and fixtures | |||||||||||
| Software | |||||||||||
| Leasehold improvements | |||||||||||
| Construction in progress | |||||||||||
| Total cost of property and equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
F-21
Table of contents
The Company recorded depreciation expense of $1.6 million and $4.2 million during the three and nine months ended September 30, 2026, respectively, and $0.7 million and $1.1 million during the three and nine months ended September 30, 2025, respectively. Useful lives of the Company’s long-lived assets are as follows:
| Estimated Useful Life (Years) | |||||
| Computer and lab equipment | |||||
| Network equipment | |||||
| Furniture and fixtures | |||||
| Software | |||||
| Leasehold improvements | Lesser of lease term or | ||||
Maintenance and repairs are charged to operations when incurred. When property and equipment are sold or otherwise disposed, the asset account and related accumulated depreciation and amortization accounts are relieved, and any gain or loss is included in other income or expense. There were no significant gains or losses in the three and nine months ended September 30, 2026 or 2025.
Note 9. Operating Leases
The Company leases its facilities under operating leases which expire at various dates through 2038. Most of the Company’s leases include one or more options to renew. The Company’s leases do not provide an implicit rate, and the rates implicit in our leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease assets and liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease.
The table below reconciles the undiscounted future minimum lease payments under these operating leases to the total operating lease liabilities recognized on the condensed consolidated balance sheet as of September 30, 2026 (in thousands):
| Year | ||||||||
| 2026 (remaining 3 months) | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total minimum payments | ||||||||
| Less: imputed interest | ( | |||||||
| Present value of operating lease liabilities | ||||||||
| Less: current portion included in other current liabilities | ( | |||||||
| Long-term operating lease liabilities | $ | |||||||
The payments above include approximately $3.6 million related to options to extend operating leases that are reasonably certain of being exercised.
In conjunction with the acquisition of NHanced, the Company assumed two leases where the prior owner, and now a current employee of the Company, is the lessor. Monthly rent under these leases is $49 thousand with three percent annual increases. Of the total minimum payments presented in the table above, $6.6 million relates to these assumed leases.
F-22
Table of contents
Other information related to operating lease liabilities consists of the following (dollar amounts in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Less sublease revenue | ( | ( | |||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Cash payments for operating leases | $ | $ | $ | $ | |||||||||||||||||||
| Lease assets obtained in exchange for new operating lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||
| Weighted average remaining lease term in years | |||||||||||
| Weighted average discount rate | % | % | |||||||||
Note 10. Commitments and Contingencies
Indemnification Arrangements
We enter into standard indemnification arrangements in our ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties (generally our business partners or customers) in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to our products. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these agreements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal.
We have entered into indemnification agreements with our directors and officers that may require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature. These agreements also require us to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to make a good faith determination whether or not it is practicable for us to obtain directors and officers insurance. We currently have directors and officers liability insurance.
Legal Proceedings
From time to time, we may be involved in legal proceedings arising in the ordinary course of business. In general, management believes that ordinary course of business matters will not have a material adverse effect on our condensed consolidated financial position or results of operations and are adequately covered by our liability insurance. However, it is possible that condensed consolidated cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.
See Part II, Item 1, Legal Proceedings, in this Form 10-Q for additional details on the status of motions in the following proceedings.
Securities Class Action Lawsuit
On February 25, 2025, a class action lawsuit was filed against the Company and certain of its current and past officers in the New Jersey District Court, by a plaintiff seeking to represent a class of all persons who purchased the Company’s
F-23
Table of contents
securities between March 30, 2020 and January 15, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act. The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material information about the Company’s customers, contracts and business operations in its public statements and SEC filings. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. In June 2025, the New Jersey District Court designated a lead plaintiff who filed an amended operative complaint on or about August 26, 2025. The Company filed a motion to dismiss the amended operative complaint on November 14, 2025. While the Company’s motion to dismiss was pending, the lead plaintiff filed a motion for leave to file a second amended complaint. The second amended complaint was subsequently filed on February 13, 2026. The Company filed a motion to dismiss the second amended complaint on March 13, 2026, and the lead plaintiff filed its opposition to the company’s motion to dismiss on April 22, 2026. On May 22, 2026, the Company filed a reply memorandum of law in support of the motion to dismiss. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims asserted. Given the early stage of the litigation, the Company is unable to estimate a range of potential loss at this time. However, an unfavorable outcome could have a material adverse effect on the Company's financial condition, results of operations, and cash flows.
Shareholder Derivative Action Lawsuit
On March 30, 2025, a shareholder derivative action (the “March 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and violations of the Exchange Act by the named officers and directors. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On May 6, 2025, a shareholder derivative action (the “May 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, gross mismanagement, waste of corporate assets, unjust enrichment, aiding and abetting breaches of fiduciary duties, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On June 19, 2025, a shareholder derivative action (the “June 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, waste, unjust enrichment, common law fraud, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On September 25, 2025, a shareholder derivative action (the “September 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the Superior Court of New Jersey Chancery Division, Hudson County, for alleged breaches of fiduciary duty, unjust enrichment, gross mismanagement, corporate waste, and aiding and abetting fiduciary duties. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
The March 2025 Derivative Action, May 2025 Derivative Action, June 2025 Derivative Action, and September 2025 Derivative Action, have each been stayed pending the resolution of the Company’s motion to dismiss the Securities Class Action.
Note 11. Capital Stock
Authorized Classes of Stock
As of September 30, 2026, the Company is authorized to issue common stock, par value $0.0001 per share, and two classes of preferred stock, par value $0.0001 per share, including 1,550,000 shares designated as Series A and 3,079,864 shares designated as Series B. No
F-24
Table of contents
At-the-market facility
The Company did not sell any shares through its at-the-market facility during the three and nine months ended September 30, 2026 and 2025.
Equity Activity
Net proceeds from stock option exercises during the three and nine months ended September 30, 2026 were $0.4 million and $4.7 million, respectively.
Warrants
The table below summarizes the warrants outstanding at September 30, 2026 (in thousands, except exercise price data):
| Issuance Date | Expiration Date | Exercise Price | Issued | Exercised | Forfeited / Canceled | Warrants Outstanding | ||||||||||||||||||||||||||||||||
| June 16, 2022 | May 9, 2027 | $ | ( | ( | ||||||||||||||||||||||||||||||||||
| November 18, 2024 | November 18, 2029 | $ | ( | |||||||||||||||||||||||||||||||||||
| December 12, 2024 | December 12, 2029 | $ | ( | |||||||||||||||||||||||||||||||||||
| January 9, 2025 | January 9, 2030 | $ | ( | |||||||||||||||||||||||||||||||||||
On June 16, 2022, the Company issued 6.3 million QPhoton warrants to purchase common stock at an exercise price of $0.0001 per share, exercisable upon exercise of certain underlying Company options and warrants outstanding as of June 15, 2022. As of September 30, 2026, approximately 71 % of the QPhoton warrants have been forfeited because the corresponding underlying instruments expired or were forfeited. The QPhoton warrants are classified as liabilities and measured at fair value, with changes recognized in earnings. The liability was $0.5 million as of September 30, 2026. See Note 2. Significant Accounting Policies – Fair Value of Financial Instruments for valuation methodology and inputs. During the three and nine months ended September 30, 2026, the Company recognized mark-to-market gains of $0.5 million and $2.0 million, respectively. During the three and nine months ended September 30, 2025, the Company recognized mark-to-market gains of $9.2 million and $4.8 million, respectively. During the nine months ended September 30, 2026 and 2025, $5.3 million and $21.0 million, respectively, was reclassified from warrant liability to additional paid-in capital upon exercise of QPhoton warrants.
Note 12. Stock-based Compensation
Incentive Plans
The Quantum Computing Inc. 2019 Equity and Incentive Plan, as amended in 2021 enabled the Company to grant incentive stock options or nonqualified stock options and other equity awards to employees, directors and consultants of the Company up to a total of 3.0 million shares of common stock, all of which have been issued.
On July 5, 2022, the Board of Directors adopted the Quantum Computing Inc. 2022 Equity and Incentive Plan (the “2022 Plan”), which was approved by a majority of the shareholders in September 2022. The 2022 Plan initially provided for the issuance of up to 16 million shares of the Company’s common stock and includes provisions for annual automatic evergreen increases of 1 million shares of common stock. As of September 30, 2026, the total number of shares of our common stock reserved for issuance under the 2022 Plan is 30 million, of which 11.7 million shares are available to be granted.
F-25
Table of contents
Options
The following table summarizes the Company’s option activity for the nine months ended September 30, 2026 (in thousands, except exercise price and contractual life data):
| Number Outstanding | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||
| Balance as of January 1, 2026 | $ | ||||||||||||||||
| Granted | |||||||||||||||||
| Exercised | ( | 0.0 | |||||||||||||||
| Forfeited | ( | 0.0 | |||||||||||||||
| Balance as of September 30, 2026 | |||||||||||||||||
| Vested and exercisable as of September 30, 2026 | $ | ||||||||||||||||
The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Exercise price | $ | $ | $ | $ | |||||||||||||||||||
| Risk-free interest rate | |||||||||||||||||||||||
| Expected volatility | |||||||||||||||||||||||
| Expected dividend yield | % | % | % | % | |||||||||||||||||||
| Expected life of options (in years) | |||||||||||||||||||||||
The following table summarizes the exercise price range as of September 30, 2026 (in thousands, except exercise price data):
| Exercise Price | Outstanding Options | Exercisable Options | ||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
$ | ||||||||||||||
The weighted average exercise price of stock options granted during the nine months ended September 30, 2026 and 2025 was $9.27 and $10.76 per share, respectively. As of September 30, 2026, total unrecognized compensation cost related to common stock options was $9.0 million, which is expected to be recognized over a period of 2.9 years.
F-26
Table of contents
Restricted Stock
As of September 30, 2026, there were 1.2 million shares of the Company’s common stock issued and unvested that had been awarded as stock-based compensation under the 2022 Plan. The following table summarizes the Company’s activity for restricted stock tied to vesting schedules for the nine months ended September 30, 2026 (in thousands):
| Number Outstanding | Weighted Average Fair Value | ||||||||||
| Unvested as of December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Unvested as of September 30, 2026 | $ | ||||||||||
Stock-based Compensation
The Company recognized stock-based compensation expense related to common stock options and restricted shares of common stock in the following expense categories of its condensed consolidated statements of operations (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Research and development | $ | $ | $ | $ | |||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | |||||||||||||||||||
For the nine months ended September 30, 2025, stock-based compensation on the condensed consolidated statements of stockholders’ equity was $1.5 million higher than expense recorded in the condensed consolidated statement of operations, due to timing differences between award dates and the realization of stock-based compensation expense.
The Company issued 28 thousand and 456 thousand shares of common stock as compensation during the three and nine months ended September 30, 2026. The Company issued no 25 thousand shares of common stock to former executives per their separation agreements.
Note 13. Related Party Transactions
The Company leases two facilities from an employee as a result of the NHanced acquisition. See Note 9 for further discussion. There were no
Note 14. License Agreement – Stevens Institute of Technology
Effective December 17, 2020, QPhoton signed a License Agreement with the Stevens Institute (the “Stevens License Agreement”). The Stevens License Agreement enables the Company to commercially use technology such as licensed patents, licensed patent applications and licensed “Know-How” and is also able to issue sublicenses for the technology under the agreement. The agreement is effective until the later of: (i) the 30-year anniversary of the effective date, or (ii) the expiration of the licensed patent or licensed patent application that is last to expire. As part of the QPhoton Merger, the Stevens License Agreement was assigned to the Company.
F-27
Table of contents
During the term of the Stevens License Agreement and prior to any commercialization or sublicensing of the technology by the Company, the Company is required to submit annual reports to the Stevens Institute reporting on all research, development, and efforts toward commercialization and/or sublicensing made during the year. Once any commercialization and/or sublicensing has been initiated, the Company will deliver quarterly reports to the Stevens Institute reporting on the revenue received by the Company, all sublicenses derived from the sale of licensed products, and the net sales price associated with each transaction. The Company will be responsible for reimbursing Stevens for any costs associated with the prosecution and maintenance of the licensed patents and licensed patent applications moving forward.
Consideration for the Agreement
As consideration for the license and other rights granted under the agreement, QPhoton agreed to pay the following: (i) $35 thousand within 30 days of execution of the agreement, (ii) $28 thousand within 30 days of each annual anniversary of the effective date, (iii) equity in the Company equivalent to 9 % of the outstanding equity of the Company within 30 days of the execution of the agreement, and (iv) royalties of 3.5 % of the net sales price of each licensed product sold or licensed by the company during the quarter then-ended, for which it also received payment, concurrent with the delivery of the relevant quarterly report.
As of September 30, 2026, the Company is working towards commercializing some of the licensed technology, though has not recognized any related revenue and hence has not incurred any royalty expenses payable to the Stevens Institute.
Note 15. Subsequent Events
There are no subsequent events that in management’s opinion are reportable.
F-28
Table of contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read this discussion and analysis in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. For additional context with which to understand our financial condition and results of operations, see the audited consolidated financial statements and accompanying notes contained therein as of December 31, 2025 and 2024 and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 2, 2026. Certain amounts may not foot due to rounding. Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the section entitled Part II, Item 1A. “Risk Factors” included in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” in our Form 10-K. We assume no obligation to update any of these forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.
Business Overview
QCi is a growth-stage quantum photonics company with expanded commercial operations following the LSI, NuCrypt and NHanced acquisitions. The Company develops and markets quantum and ancillary non-quantum products for high-performance computing, artificial intelligence, networking and sensing applications based on proprietary quantum optics and integrated photonics technology, as well as optical components including lasers and photodetectors. QCi’s products are designed to operate at room temperature and low power at an affordable cost for high-performance computing, sensing, and secure communications. 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. The recent acquisitions have expanded the Company’s product offerings, manufacturing capabilities and customer relationships across quantum and photonics markets.
The Company’s strategy is focused on three complementary capabilities: quantum optics, integrated photonics, and advanced manufacturing. Quantum optics supports the development of quantum computing, sensing, and communications; integrated photonics supports the design and development of photonic circuits and components; and manufacturing operations provide fabrication, advanced packaging and related services for internal development and external customers. Together, these capabilities support the Company’s technology roadmap and commercial activities.
QCi’s proprietary core technology is our integrated photonics approach, which allows us to condition, manipulate, and measure single and entangled photons (particles of light) and gives us the ability to exploit the non-linear capabilities of photons (our “core photonics technology”). Our Entropy Quantum Computer (“EQC”), known as our Dirac-3 family of quantum optimization systems, is a quantum application of our core photonics technology, designed to solve complex optimization problems. EQC is based on a patent-pending methodology that uses controlled feedback through energy loss in a photonic loop architecture to drive photonic states to their least lossy configurations. The EQC’s involvement of the changing environment as an integral part of the system is in sharp contrast to competing quantum approaches, including superconducting, trapped-ion, and annealing architectures, which seek to establish stable quantum states by the complete elimination of environmental effects. As a result, the EQC can consume less power than these competing methods and operates at room temperature making it compatible with an ordinary server room environment. We anticipate that our EQC may enable us to develop and produce multiple generations of quantum machines with increasing computational power, scalability, and speed.
In addition to our EQC technology, we have leveraged QCi’s core photonics technology to demonstrate powerful quantum sensing use cases in LiDAR (light detection and ranging), a technology that uses pulsed laser light to measure distances to objects by calculating the time it takes for the reflected light to return, reservoir computing, a form of neural network that can be used in machine learning applications, and a quantum cyber solution, a method for highly secure communication within a network. Several of these technologies are in the early stages of commercialization and several are available to customers through our research and development offerings.
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
1
Table of contents
semiconductor fabrication methods. In March 2025, the Company substantially completed the build out 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 in June 2026, the Company has launched another high-volume manufacturing facility, which we sometimes refer to as “FAB 2.”
During the first half of 2026, the Company completed the acquisitions of LSI, NuCrypt and NHanced, to expand its capabilities across quantum optics, integrated photonics and advanced photonics manufacturing. LSI added photonic semiconductor design, components, fabrication and packaging capabilities, in addition to commercial products and customer relationships. NuCrypt expanded the Company’s quantum communications portfolio, while NHanced added nanophotonics fabrication and advanced packaging capabilities. Together, these acquisitions broadened the Company’s commercial product and service offerings and manufacturing operations and provide additional capabilities to support its quantum photonics technology roadmap.
Key Factors Affecting Our Performance
The expansion of our commercial operations and activity, including the recent LSI, NuCrypt and NHanced acquisitions, is an important factor affecting our financial performance. These acquisitions broadened our photonics products and services, manufacturing capabilities, and customer relationships. Our ability to retain and expand customer relationships, generate new business and increase utilization of our manufacturing capabilities will influence future revenue and profitability. The Company expects that continued improvements in commercial performance will influence revenue and profitability while supporting ongoing investments in its quantum technology roadmap.
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.
Our future performance depends on on both the continued development and commercialization of our quantum optics and integrated photonics technologies and the performance of our commercial products, services and manufacturing operations. This includes advancing our EQC and thin film lithium niobate photonic integrated circuit (PIC) platforms toward 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.
We rely on third-party manufacturers and a limited number of qualified suppliers for certain key components. Availability, quality, lead times, pricing, and our ability to scale internal and external manufacturing with robust quality systems will affect delivery schedules, cost of revenue, and margins. See Part II, Item 1A, “Risk Factors,” for additional discussion.
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” will require additional investment, and execution outcomes will influence product cost, time-to-market, and margin profile. See “Liquidity and Capital Resources.”
Compliance with U.S. export control and economic sanctions regimes and other applicable regulations may affect our addressable markets, supply chain, and operational timelines. See Part II, Item 1A, “Risk Factors,” and the Risk Factors in our 2025 Annual Report on Form 10-K.
2
Table of contents
Results of Operations
Our results of operations for the three and nine months ended September 30, 2026 and 2025 are as follows (in thousands, except percentages, with non-meaningful percentage changes labeled as “NM”):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Total revenue | $ | 9,500 | $ | 384 | NM | $ | 18,742 | $ | 484 | NM | |||||||||||||||||||||||||
| Cost of revenue | 9,072 | 258 | NM | 20,201 | 319 | NM | |||||||||||||||||||||||||||||
| Gross profit (loss) | 428 | 126 | 240 | % | (1,459) | 165 | NM | ||||||||||||||||||||||||||||
| Gross margin | 5 | % | 33 | % | (86) | % | -8 | % | 34 | % | (123) | % | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 8,336 | 4,509 | 85 | % | 23,733 | 13,469 | 76 | % | |||||||||||||||||||||||||||
| Sales and marketing | 5,263 | 787 | 569 | % | 8,792 | 2,139 | 311 | % | |||||||||||||||||||||||||||
| General and administrative | 15,414 | 5,234 | 194 | % | 38,164 | 13,418 | 184 | % | |||||||||||||||||||||||||||
| Total operating expenses | 29,013 | 10,530 | 176 | % | 70,689 | 29,026 | 144 | % | |||||||||||||||||||||||||||
| Loss from operations | (28,585) | (10,404) | 175 | % | (72,148) | (28,861) | 150 | % | |||||||||||||||||||||||||||
| Non-operating income (expense): | |||||||||||||||||||||||||||||||||||
| Interest and other income | 13,047 | 3,544 | 268 | % | 39,496 | 7,083 | 458 | % | |||||||||||||||||||||||||||
| Interest expense | (65) | (4) | 1525 | % | (248) | (120) | 107 | % | |||||||||||||||||||||||||||
| Change in fair value of derivative liability | 458 | 9,246 | (95) | % | 1,952 | 4,780 | (59) | % | |||||||||||||||||||||||||||
| Total non-operating income | 13,440 | 12,786 | 5 | % | 41,200 | 11,743 | 251 | % | |||||||||||||||||||||||||||
| Net income (loss) | $ | (15,145) | $ | 2,382 | (736) | % | $ | (30,948) | $ | (17,118) | 81 | % | |||||||||||||||||||||||
Revenue for the three months ended September 30, 2026, was $9.5 million compared to $384 thousand for the comparable prior year period, an increase of $9.1 million. Revenue for the nine months ended September 30, 2026 was $18.7 million compared to $484 thousand for the comparable prior year period, an increase of $18.3 million. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, contributed $8.8 million and $17.4 million in total revenue during the three and nine months ended September 30, 2026. Revenue for the nine months ended September 30, 2026 without the acquisitions increased $0.9 million over the comparable prior year period.
Cost of Revenue
Cost of revenue was $9.1 million for the three months ended September 30, 2026, compared to $258 thousand for the comparable prior year period, an increase of $8.8 million. Cost of revenue was $20.2 million for the nine months ended September 30, 2026, compared to $319 thousand for the comparable prior year period, an increase of $19.9 million. The increase was primarily due to the LSI, NuCrypt and NHanced acquisitions which added $5.8 million and $16.5 million in costs for the three and nine months ended September 30, 2026. Cost of revenue for the nine months ended September 30, 2026, without the acquisitions increased $3.4 million over the comparable prior year period.
Gross Profit (Loss)
Gross profit for the three months ended September 30, 2026, was $428 thousand compared to $126 thousand for the same period last year. Gross profit (loss) for the nine months ended September 30, 2026, was a loss of $1.5 million compared to a gross profit of $165 thousand for the same period last year.
Gross margins are influenced by production volumes and manufacturing utilization, particularly as the Company continues to integrate and scale its operations. Amortization of intangible assets of $2.7 million also served to depress gross margins. While the company generated positive gross profit in the third quarter of 2026, lower volumes and fixed costs from recent acquisitions contributed to a gross loss for the nine-month period. Increasing production volume, improving manufacturing utilization and driving operating efficiency are expected to be important factors affecting future gross margins.
Operating Expenses
3
Table of contents
Operating expenses for the three and nine months ended September 30, 2026, increased by $18.5 million and $41.7 million compared to the three and nine months ended September 30, 2025. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, added $6.4 million and $10.7 million in total operating expenses for the three and nine months ended September 30, 2026, respectively. The increase is further discussed below.
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 $8.3 million and $23.7 million for the three and nine months ended September 30, 2026, as compared to $4.5 million and $13.5 million for the three and nine months ended September 30, 2025. Research and development expenses increased $3.8 million and $10.3 million for the three and nine months ended September 30, 2026, respectively, as compared to the comparable prior year period. Acquisitions, including our LSI, NuCrypt and NHanced acquisitions, contributed $0.9 million and $2.7 million of the increase for the three and nine months ended September 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 to accelerate the development of key technologies and products, testing, and commercial activities across the Company's portfolio.
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 $5.3 million and $8.8 million for the three and nine months ended September 30, 2026, as compared to $0.8 million and $2.1 million for the three and nine months ended September 30, 2025. Sales and marketing expenses increased 569% and 311% for the three and nine months ended September 30, 2026, respectively, as compared to the prior year comparable period. Acquisitions added $1.1 million and $1.8 million of selling and marketing expenses for the three and nine months ended September 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. The staff increases support the Company's efforts to expand commercial sales efforts across its broader product and services portfolio for a variety of end markets.
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 $15.4 million and $38.2 million for the three and nine months ended September 30, 2026, as compared to $5.2 million and $13.4 million for the three and nine months ended September 30, 2025. General and administrative expenses increased 194% and 184% for the three and nine months ended September 30, 2026, compared to the comparable prior year period. Acquisitions added $4.5 million and $6.3 million for the three and nine months ended September 30, 2026, respectively. The remaining increase is primarily due to acquisition-related transaction expenses of $1.0 million and $8.3 million for the three and nine months ended September 30, 2026.
Non-operating Income (Expense)
Non-operating income (expense) includes interest and other income, interest expense and change in fair value of derivative liability.
Interest and other income was $13.0 million and $39.5 million for the three and nine months ended September 30, 2026, and $3.5 million and $7.1 million for the three and nine months ended September 30, 2025. Interest and other income increased $9.5 million and $32.4 million for the three and nine months ended September 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.
Interest expense, net consists primarily of interest on financial liabilities, including payroll tax related penalties.
The Company recognized gains of $0.5 million and $2.0 million during the three and nine months ended September 30, 2026, respectively, as a result of the change in fair value of the QPhoton Warrant liability. The change in value of the warrant liability results from 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 $8.45 per share on September 30, 2026.
4
Table of contents
Liquidity and Capital Resources.
As of September 30, 2026, the Company had cash and cash equivalents of $174.3 million and investments, including accrued interest, of $1.1 billion. During the nine months ended September 30, 2026, the Company raised $4.7 million through the exercise of warrants and stock options. The Company has no lines of credit or short-term debt obligations outstanding.
The Company’s financial resources support its continued investment across three strategic priorities: expand its commercial photonics business, scale manufacturing capabilities and advance the quantum roadmap. These investments include research and development, product commercialization, manufacturing infrastructure and go-to-market activities. In addition, we expect to continue investing in our TFLN chip manufacturing capabilities, including our Foundry Services offering at our Arizona Chips Facility, potential facility expansion and the development of our quantum optics and integrated photonics technologies.
The Company has incurred net losses and experienced negative cash flows from operations since inception. We expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development, manufacturing, and commercialization. While the expansion of our commercial operations provides additional revenue opportunities, our future cash requirements will depend on various factors including the pace of commercialization, manufacturing utilization, operating expenses and our ability to generate cash from operations.
We believe that our existing cash, cash equivalents and investments will be sufficient to meet our anticipated working capital and capital expenditure needs for at least the next twelve months. We may also choose to pursue opportunistic capital raising or financing transactions to support our long-term strategic priorities.
Until such time as we can generate sufficient cash flow from operations to fund our operating and investment activities, we expect to rely on existing financial resources. and may pursue equity and/or debt financings or other capital sources, including but not limited to U.S. government grant and loan programs. We may, however, be unable to raise sufficient funds or enter such other arrangements, when needed, on favorable terms, or at all. Uncertain and unfavorable conditions in the United States and global macroeconomic environment, including inflationary pressures, interest rates, bank failures, and financial and credit market fluctuations, could reduce our ability to access capital.
Additional debt or equity financing could dilute existing shareholders or introduce terms affecting their rights. In addition, debt financing may introduce covenants that restrict certain business activities. If sufficient capital is not available when needed, we may be required to delay, limit, or substantially reduce our product development, manufacturing expansion and go-to-market efforts. We believe, however, that existing cash, cash equivalents and investments, together with any cash generated from operations and the proceeds from any additional equity or debt issuances will be sufficient to meet the our anticipated working capital and capital expenditure needs for at least the next 12 months.
The following table summarizes total condensed consolidated current assets, liabilities and working capital at September 30, 2026, compared to December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | Increase/ (Decrease) | |||||||||||||||
| Current assets | $ | 934,362 | $ | 1,133,720 | $ | (199,358) | |||||||||||
| Current liabilities | $ | 17,509 | $ | 11,074 | $ | 6,435 | |||||||||||
| Working capital | $ | 916,853 | $ | 1,122,646 | $ | (205,793) | |||||||||||
At September 30, 2026, we had working capital of $916.9 million as compared to working capital of $1.1 billion at December 31, 2025, a decrease of $205.8 million. The decrease in working capital is primarily attributable to the use of cash to finance acquisitions.
5
Table of contents
Cash Flows
The following table summarizes our cash flow for the nine months ended September 30, 2026 and 2025 (in thousands).
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net cash used in operating activities | (35,014) | (19,278) | |||||||||
| Net cash used in investing activities | (533,241) | (466,169) | |||||||||
| Net cash provided by financing activities | 4,655 | 758,938 | |||||||||
| Net (decrease) increase in cash | $ | (563,600) | $ | 273,491 | |||||||
Net cash used in operating activities for the nine months ended September 30, 2026, was $35.0 million compared to $19.3 million for the same period in 2025. Cash used in the nine months ended September 30, 2026, consisted of net loss of $30.9 million and an increase in net operating assets and liabilities of $18.1 million partially offset by non-cash charges of $14.0 million. The non-cash charges consist primarily of depreciation and amortization of $9.7 million, stock-based compensation of $5.1 million, and amortization of operating lease right-of-use assets of $1.5 million partially offset by the change in fair value of derivatives of $2.0 million.
Net cash used in investing activities for the nine months ended September 30, 2026 and 2025, was $533.2 million and $466.2 million, respectively, and was attributable to net purchases of available for sale securities of $350.6 million, cash paid for acquisitions of $168.8 million and capital expenditures of $13.9 million.
Net cash provided by financing activities was $4.7 million and $758.9 million, respectively, for the nine months ended September 30, 2026 and 2025. Cash flows provided by financing activities during the nine months ended September 30, 2026, were attributable to net proceeds for our stock issuances.
On a long-term basis, our liquidity is dependent on the continuation and expansion of operations and receipt of revenues. Demand for our products and services will be dependent on, among other things, market acceptance of our products and services, the technology market in general, and general economic conditions, which are cyclical in nature. As most of our revenues will be from the sales of our products and services, our business operations may be adversely affected by the actions of our competitors and prolonged recession periods.
Critical Accounting Estimates
Certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our consolidated financial statements. In applying these policies, our management uses judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our consolidated financial statements.
There have been no material changes to our critical accounting estimates since our Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026 (the “2025 Form 10-K”).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risks from the information presented in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” in the 2025 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, our management recognized that controls and procedures, no matter how well conceived and operated, can provide only
6
Table of contents
reasonable, not absolute, assurance that the objectives of the controls are met. Management necessarily applied judgment in evaluating the cost-benefit relationship of possible controls and procedures. The design of any controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures. Based on such evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2026, our disclosure controls and procedures were not effective to provide reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (b) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses in our internal control over financial reporting described below.
Material Weakness in Internal Control over Financial Reporting
A “material weakness,” as defined in Rule 1-02(a)(4) of Regulation S-X, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses:
•We did not design and maintain an effective control environment commensurate with our financial reporting requirements. During the period, we lacked a sufficient number of trained professionals with (i) an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. Additionally, limited personnel resulted in insufficient segregation of duties in our finance and accounting functions.
•The material weakness in the control environment contributed to additional material weaknesses: (i) we did not design and maintain an effective risk-assessment process at a precise enough level to identify new and evolving risks of material misstatement in our financial statements, including timely changes to existing controls or implementation of new controls to respond to changes in risk; and (ii) we did not design and maintain effective information technology general controls (“ITGCs”) for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (a) user-access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to financial applications, programs and data; (b) program change-management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (c) computer-operations controls to ensure that data backups are authorized and monitored; and (d) controls to obtain, review and evaluate third-party service-organization reports and to implement complementary user-entity controls, as applicable.
These material weaknesses did not result in a material misstatement to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. However, if not remediated, these material weaknesses could result in a material misstatement to our annual or quarterly consolidated financial statements that might not be prevented or detected on a timely basis.
Management’s Plan to Remediate the Material Weaknesses
The Company has taken steps to strengthen its internal controls over financial reporting and continues to make progress in addressing previously identified material weaknesses.
The Company has been implementing and continues to implement measures designed to remediate the material weaknesses described above and to ensure that the related controls are designed, implemented and operating effectively. During 2025, we strengthened our accounting function through the hiring of five full-time accounting professionals, including a
7
Table of contents
Controller and a Manager of Technical Accounting, to enhance oversight, technical expertise and execution of key financial reporting processes. In addition to identifying and remediating design deficiencies in our processes, we have formally documented procedures for significant accounting and financial reporting processes, including procedures addressing revenue recognition and segregation of duties. In 2026, we increased accounting and finance staff through the LSI, NuCrypt and NHanced acquisitions, hired additional purchasing staff, and hired an Accounts Payable Manager and a Manager of Financial Reporting.
During the remainder of 2026, we plan to continue to (i) further document and implement control procedures and control monitoring; (ii) identify and remediate gaps in our information-technology general controls related to security, user access, restricted access and change management; and (iii) design and implement risk-assessment processes to identify and address new and evolving risks associated with financial reporting. We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment. Management will continue to monitor and evaluate the effectiveness of internal control over financial reporting on an ongoing basis and will implement additional enhancements as necessary. We currently expect that these measures, once fully implemented and operational for a sufficient period of time and tested, will remediate the material weaknesses; however, the material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively, and we cannot assure investors that remediation will be completed by the end of 2026 or at all.
Changes in Internal Control over Financial Reporting
Except for the remediation measures described above and the ongoing integration of the internal controls of LSI, NuCrypt and NHanced into our internal control over financial reporting, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
8
Table of contents
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Except as listed below, there is no action, suit, or proceeding by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or our subsidiaries, threatened against or affecting the Company, our common stock, our subsidiaries, or the Company’s or its subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect on the Company.
Securities Class Action Lawsuit
On February 25, 2025, a class action lawsuit was filed against the Company and certain of its current and past officers in the New Jersey District Court, by a plaintiff seeking to represent a class of all persons who purchased the Company’s securities between March 30, 2020 and January 15, 2025, alleging violations of Sections 10(b) and 20(a) of the Exchange Act. The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material information about the Company’s customers, contracts and business operations in its public statements and SEC filings. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. In June 2025, the New Jersey District Court designated a lead plaintiff who filed an amended operative complaint on or about August 26, 2025. The Company filed a motion to dismiss the amended operative complaint on November 14, 2025. While the Company’s motion to dismiss was pending, the lead plaintiff filed a motion for leave to file a second amended complaint. The second amended complaint was subsequently filed on February 13, 2026. The Company filed a motion to dismiss the second amended complaint on March 13, 2026 and lead plaintiff filed its opposition to the Company’s motion to dismiss on April 22, 2026. On May 22, 2026 the Company filed a reply memorandum of law in support of the motion to dismiss. The motion is pending before the Court. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims asserted. Given the early stage of the litigation, the Company is unable to estimate a range of potential loss at this time; however, an unfavorable outcome could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.
Shareholder Derivative Action Lawsuit
On March 30, 2025, a shareholder derivative action (the “March 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, and violations of the Exchange Act by the named officers and directors. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On May 6, 2025, a shareholder derivative action (the “May 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, gross mismanagement, waste of corporate assets, unjust enrichment, aiding and abetting breaches of fiduciary duties, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On June 19, 2025, a shareholder derivative action (the “June 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, waste, unjust enrichment, common law fraud, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
On September 25, 2025, a shareholder derivative action (the “September 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the Superior Court of New Jersey Chancery Division, Hudson County, for alleged breaches of fiduciary duty, unjust enrichment, gross mismanagement, corporate waste, and aiding and abetting fiduciary duties. The complaint is premised on the same core
9
Table of contents
facts as the securities class action and other related derivative actions previously filed and pending in the United States District Court for the District of New Jersey, specifically, the complaint alleges omissions and misrepresentations related to Quad M, QPhoton, NASA, millionways, and the TFLN foundry. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
The March 2025 Derivative Action, May 2025 Derivative Action, June 2025 Derivative Action, and September 2025 Derivative Action, have each been stayed pending the resolution of the Company’s motion to dismiss the Securities Class Action.
Item 1A. Risk Factors.
Other than the additional risk factor set forth below, there were no material changes to the risk factors disclosed in Part I, Item 1A, Risk Factors of our Annual Report on the Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 2, 2026, as updated by Part II, Item 1A, Risk Factors of our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2026 and June 30, 2026, as filed with the SEC on May 11, 2026 and August 10, 2026, respectively.
We do not believe we are an investment company under the Investment Company Act of 1940; however, if we were required to register as an investment company, our business could be materially and adversely affected.
We are primarily engaged, directly and through our wholly-owned subsidiaries, in the business of developing, manufacturing and selling quantum and photonic technologies, products and services, and we do not believe that we are an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We hold a significant portion of our assets in cash, cash equivalents and short- and long-term investments pending their use in our operations. Whether a company is an investment company depends on the composition of its assets and income and on the nature of its business and activities, which may change over time, and there can be no assurance that the SEC or a court would agree with our position. Maintaining our position may require us to limit the types of investments we hold or the transactions we pursue. If we were required to register under the Investment Company Act, we would become subject to substantial regulation that is inconsistent with our business model, which could have a material adverse effect on our business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2026 that were not previously reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q, and there were no Company repurchases of the Company's equity securities during the three months ended September 30, 2026.
Item 3. Defaults upon Senior Securities.
There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Insider Trading Arrangements
During the fiscal quarter ended September 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted terminated
10
Table of contents
Item 6. Exhibits.
| Exhibit Number | Incorporated by Reference | Filed or Furnished | ||||||||||||||||||||||||||||||
| Exhibit Description | Form | Exhibit | Filing Date | Herewith | ||||||||||||||||||||||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. | X | ||||||||||||||||||||||||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. | X | ||||||||||||||||||||||||||||||
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350. | X | ||||||||||||||||||||||||||||||
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350. | X | ||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | X | ||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Linkbase Document. | X | ||||||||||||||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. | X | ||||||||||||||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Label Linkbase Document. | X | ||||||||||||||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. | X | ||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | X | ||||||||||||||||||||||||||||||
*Indicates a management contract or compensatory plan or arrangement.
11
Table of contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| QUANTUM COMPUTING INC. | ||||||||
Dated: November 9, 2026 | By: | /s/ Dr. Yuping Huang | ||||||
| Dr. Yuping Huang | ||||||||
| Chief Executive Officer and President (Principal Executive Officer) | ||||||||
| By: | /s/ Christopher Roberts | |||||||
| Christopher Roberts | ||||||||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||||
12
Table of contents
13