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What changed in Quantum Computing Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Quantum Computing Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+299 added−236 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-20)

Top changes in Quantum Computing Inc.'s 2025 10-K

299 paragraphs added · 236 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe anticipate that future generations of the RC will introduce greater speed of performance and scalability, which will enable the RC to participate in large language model training and other applications. While technology challenges remain in scaling this technology, this is one of our focus areas to gain a significant share in the artificial intelligence / machine learning hardware market.
Biggest changeTo date, the market for reservoir computing has been limited due to computing cost and technical implementation complexities, which the RC is designed to address. We anticipate that future generations of the RC will introduce greater performance and scalability, which will enable the RC to participate in LLM training and other applications.
The QPhoton Merger substantially broadened the Company’s technology portfolio and enabled us to develop a group of closely related products to EQC, based on our underlying Core Photonics Technology. TFLN Optical Chips We believe that TFLN optical integrated circuits (“TFLN Optical Chips”) will ultimately provide the greatest scalability and performance advantages for quantum information processing, sensing, and imaging applications.
The QPhoton Merger substantially broadened the Company’s technology portfolio and enabled us to develop a group of closely related products to the EQC, based on our underlying Core Photonics Technology. TFLN Optical Chips We believe that TFLN optical integrated circuits (“TFLN Optical Chips”) will ultimately provide the greatest scalability and performance advantages for quantum information processing, sensing, and imaging applications.
The practical benefits on payload and signal-to-noise enhancement can be used to produce LiDAR machines that are greatly enhanced in their ability to measure at improved resolution and distances from aircraft, drones, and even satellites. Launched July 2023, QCi’s Quantum Photonic Vibrometer is a proprietary, powerful instrument for remote vibration detection, sensing, and inspection.
The practical benefits on payload and signal-to-noise enhancement can be used to produce LiDAR machines that are greatly enhanced in their ability to measure at improved resolution and distances from aircraft, drones, and even satellites. Launched in July 2023, QCi’s Quantum Photonic Vibrometer is a proprietary, powerful instrument for remote vibration detection, sensing, and inspection.
To further protect our intellectual property, we enter into confidentiality agreements with our executive officers, employees, consultants and directors. 1 Seskir, Z.C., Korkmaz, R. & Aydinoglu, A.U., The landscape of the quantum start-up ecosystem , EPJ Quantum Technol. 9, 27 (2022), at https://doi.org/10.1140/epjqt/s40507-022-00146-x 5 Trademarks The Company has three registered trademarks, “QPhoton,” “QGraph” and “Qatalyst.” The Company has no pending trademark applications.
To further protect our intellectual property, we enter into confidentiality agreements with our executive officers, employees, consultants and directors. 1 Seskir, Z.C., Korkmaz, R. & Aydinoglu, A.U., The landscape of the quantum start-up ecosystem , EPJ Quantum Technol. 9, 27 (2022), at https://doi.org/10.1140/epjqt/s40507-022-00146-x 6 Trademarks The Company has three registered trademarks, “QPhoton,” “QGraph” and “Qatalyst.” The Company has no pending trademark applications.
These entities range in size from diversified global companies with significant research and development resources such as IBM, Google, Intel, Microsoft, Quantinuum (formerly Honeywell) and Amazon to recent market entrants such as D-Wave Quantum, Rigetti Computing, IonQ, PsiQuantum, Xanadu and Infleqtion (formerly ColdQuanta), as well as smaller privately funded development stage companies whose narrower product focuses may allow them to be more effective in deploying resources towards a specific industry demand.
These entities range in size from diversified global companies with significant research and development resources such as IBM, Google, Intel, Microsoft, Quantinuum (formerly Honeywell) and Amazon, to recent market entrants such as D-Wave Quantum, Rigetti Computing, IonQ, PsiQuantum, Xanadu and Infleqtion (formerly ColdQuanta), as well as smaller privately funded development stage companies whose narrower product focuses may allow them to be more effective in deploying resources towards a specific customer or industry demand.
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 quantum cyber authentication (a method for highly secure communication within a network).
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.
In addition to new computational methodologies using quantum mechanics, there is a corresponding emergence of new materials in microprocessors that may be able to overcome some of the limitations of the silicon based processors used in classical computers. One promising area is in the use of photonics, which uses particles of light for computation.
In addition to new computational methodologies using quantum phenomena, there is a corresponding emergence of new materials in microprocessors that may be able to overcome some of the limitations of the silicon-based processors used in classical computers. One promising area is in the use of photonics, which uses particles of light for computation.
Our ability to evolve and adapt rapidly over an extended period of time will be critical in remaining competitive. We perform a broad range of research and development efforts to identify and position for the changing demands of future customers and users, industry trends, and competitive forces.
Our ability to evolve and adapt rapidly over an extended period will be critical in remaining competitive. We perform a broad range of research and development efforts to identify and position for the changing demands of current and future customers and users, industry trends, and competitive forces.
This planned evolution of technology and product enhancements will involve improving the size and capacity of the EQC machines, as well as speed, scalability, and performance fidelity. The EQC is available both as a cloud-based subscription service, similar to other quantum machines, as well as an affordable on-premises solution.
This planned evolution of technology and product enhancements will involve improving the size and capacity of the EQC machines, as well as speed, scalability, and performance fidelity. The EQC is available both as a cloud-based service, similar to other quantum machines, as well as an on-premises solution.
As consideration for the license and other rights granted under the license agreement, QPhoton agreed to pay the Licensor (i) $35,000 upon full execution of the license agreement, (ii) $28,000 each annual anniversary of the effective date of the license agreement, (iii) 9% of the membership units of QPhoton and (iv) a royalty of 3.5% of the net sales price of each licensed product sold or license by QPhoton and any affiliate and sublicensee.
As consideration for the license and other rights granted under the license agreement, QPhoton agreed to pay the Licensor (i) $35,000 upon full execution of the license agreement, (ii) $28,000 each annual anniversary of the effective date of the license agreement (the “Anniversary Payment”), (iii) 9% of the membership units of QPhoton and (iv) a royalty of 3.5% of the net sales price of each licensed product sold or license by QPhoton and any affiliate and sublicensee (the “Royalty Payment”).
We believe that our core photonics technology applications offer practical, cost-effective solutions that can materially advance the adoption of quantum machines across several market segments including: 1. Quantum computing, including quantum optimization computing 2. Reservoir computing, including edge hardware devices 2 3. Remote sensing and imaging, including LiDAR and quantum photonic vibrometry 4.
We believe that our Core Photonics Technology applications offer practical, cost-effective solutions that can materially advance the adoption of quantum machines across several market segments including: 1. Quantum computing, including quantum optimization computing 2. Artificial Intelligence, including edge hardware devices 3. Remote sensing and imaging, including LiDAR and quantum photonic vibrometry 4.
Market Opportunity The Company believes that quantum solutions have the potential to bring significant and increasing advances in the fields of medicine, engineering, autonomous vehicles, energy management, and cybersecurity and that the demand for quantum computing in these market sectors will likely outpace and outperform the general-purpose universal computing market in the near- to mid-term and into the foreseeable future.
Market Opportunity The Company believes that quantum solutions have the potential to bring significant and increasing advances in the fields of medicine, logistics, defense, finance, engineering, autonomous vehicles, energy management, and cybersecurity and that demand for quantum computing in these market sectors will outpace and outperform the general-purpose universal computing market in the near- to mid-term and into the foreseeable future.
ITEM 1. BUSINESS . The High-Performance Computing Landscape There is a large and growing demand for ever-increasing computational performance in information processing and data storage. The recent emergence of artificial intelligence, large language models, and machine learning algorithms has added to the need for efficient processing of vast volumes of data.
ITEM 1. BUSINESS . The High-Performance Computing Landscape There is a large and growing demand for ever-increasing computational performance in information processing. The recent emergence of artificial intelligence (“AI”), large language models (“LLMs”), and machine learning (“ML”) algorithms has added to the need for efficient processing of vast volumes of data.
Further, Mordor Intelligence published a market report, “ Photonic Integrated Circuit Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)” forecasts that the photonic integrated circuit (PIC) market, currently valued at $15.1 billion, will grow at a compound annual growth rate of 20.5% to $38.4 billion in 2029.
Further, Mordor Intelligence published a market report, “ Photonic Integrated Circuit Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)” which forecasts that the photonic integrated circuit (“PIC”) market, valued at $15.1 billion in 2024, will grow at a compound annual growth rate of 20.5% to $38.4 billion in 2029.
The EQC’s use of the environment as an integral part of the system is in sharp contrast to competing quantum approaches, including the aforementioned superconducting, trapped-ion, and annealing architectures, which seek to establish stable quantum states by the complete elimination of environmental effects.
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 consumes 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 will enable us to develop and produce multiple generations of quantum machines with increasing computational power, scalability, and speed.
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.
We believe that competition in this market segment will intensify. Many of our competitors may have longer operating histories, significantly greater financial, technical, product development, and marketing resources, and greater name recognition than we do.
We believe that competition in this market segment will intensify as time goes on. Many of our competitors may have longer operating histories, significantly greater financial, technical, product development and marketing resources, and greater name recognition than we do.
The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (both linear and non-linear) and its compatibility with silicon-based semiconductor fabrication methods.
The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (linear, non-linear ferroelectric, and electro-optic) and its compatibility with silicon-based semiconductor fabrication methods.
Our longer-term product development plan is to migrate product designs based on discrete components, including EQC’s current design, to a set of optical integrated circuits built on wafers using a crystalline material called lithium niobate (“Thin Film Lithium Niobate” or “TFLN”).
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”).
Patents The Company has two granted United States patents. Country Serial No. Filing Date Patent No.
Patents The Company has three granted United States patents. Country Serial No. Filing Date Patent No.
An “edge device” allows the user to process, measure, and analyze data locally (at the user’s device) as opposed to over a network where data must be sent over the internet or through some cloud service.
An “edge device” allows the users to process, measure, and analyze data locally (connected directly to the user’s device) as opposed to over a network where data must be sent over the internet or through some cloud service.
Cybersecurity, including authentication While the current quantum computing market comprises a fraction of the broader high-performance computing market, we anticipate that quantum computers will unlock new applications that are unlikely to be addressable by existing high-performance computers comprised of leveraging classical processing units.
Cybersecurity, including quantum authentication 3 While the current quantum computing market comprises a fraction of the broader high-performance computing market, we believe that quantum computers will unlock new applications that are unlikely to be addressable by existing high-performance computers that utilize classical processing units.
There is a growing belief among computer science experts that quantum computing, which uses quantum mechanics to solve problems faster than traditional computers, may offer a potential solution to the hard limits now being approached by classical computers.
There is a growing belief among some computer science experts that quantum computing will solve problems faster than traditional computers and may offer a potential solution to the hard limits now being approached by classical computers.
Our approach uses a combination of a high-powered laser, and a patented detection methodology deeply rooted in the fundamental principles of quantum mechanics, resulting in what we believe will be an unbreakable basis for private network communication. 4 Competition The quantum computing industry is highly competitive and rapidly evolving and will likely remain so for the foreseeable future.
Our approach uses a combination of a high-powered laser, and a patented detection methodology deeply rooted in the fundamental principles of quantum mechanics, resulting in what we believe will provide trusted protection for private network communication. 5 Competition The quantum computing industry is highly competitive and rapidly evolving and will likely remain so for the foreseeable future.
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. Our acquisition of QPhoton, Inc.
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 cryogenic products based on superconducting, ion-trap, or annealing architectures.
Our competitors could use these resources to market or develop products or services that are more effective or less costly than any or all of our products or services. Intellectual Property Our intellectual property consists of patents, trademarks, and trade secrets.
Our competitors could use these resources to market or develop products or services that are more effective, more broadly adopted, have more customer or industry awareness, or are less costly than any or all of our current or future products and services. Intellectual Property Our intellectual property consists of patents, trademarks, and trade secrets.
Our Entropy Quantum Computer (“EQC”) is a quantum application of our Core Photonics Technology, designed to solve complex optimization problems. EQC is based on a patent-pending methodology that utilizes the energy in the environment to drive controlled feedback through energy loss in a photonic circuit architecture.
Our Entropy Quantum Computer (“EQC”), 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 “QPhoton Merger”) in June 2022, enabled us to offer the aforementioned products, integrated with the Company’s software platform, Qatalyst, that existed before the QPhoton Merger. 1 QCi’s proprietary core technology rests in our ability to condition, manipulate, and measure single photons (particles of light). Specifically, our integrated photonics approach exploits the non-linear capabilities of photons (our “Core Photonics Technology”).
Our acquisition of QPhoton, Inc. in June 2022 (the “QPhoton Merger”), enabled us to offer the aforementioned products, integrated with the Company’s former software platform, Qatalyst, that was developed before the QPhoton Merger. 2 Our 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”).
Classical computers that use silicon microprocessors are understood to have performance limitations in solving certain classes of computational problems, in particular, optimization problems. Solving large optimization problems requires complex calculations that cannot currently be performed in a reasonable amount of time using classical computing systems for problem sizes relevant to many industrial and real-world applications.
Solving large-scale optimization problems requires complex calculations that cannot currently be performed in a reasonable amount of time using classical computing systems for problem sizes relevant to many industrial and real-world applications.
The Company is completing the buildout of a state-of-the-art TFLN chip manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”).
In March 2025, the Company substantially completed the buildout of its state-of-the-art TFLN chip research and development, prototyping and small-batch manufacturing facility in a leased space within Arizona State University’s Research Park in Tempe, Arizona (the “AZ Chips Facility”).
Our proprietary technology is central to our strategy because we believe that it enables us to leverage the advantages of size, weight, power, and cost over competing cryogenic products.
Our Core Photonics Technology is central to our strategy because we believe it provides advantages in size, weight, power, and cost over competing cryogenic products.
While the Company is developing proprietary chip designs to for TFLN Optical Chips for exclusive use in our products for the aforementioned applications, the Company’s foundry services offering at our AZ Chips Facility will make available a range of custom TFLN chips (custom single photon detectors) for sale into existing commercial markets, including optical devices such as electro-optical modulators, periodically poled devices for frequency conversion and micro ring resonator cavities. 3 Entropy Quantum Computer QCi launched a new EQC device during the first quarter of 2024 (Dirac-3) and plans to release a series of additional EQC products in the coming years that build and expand upon the same analog architecture.
While the Company is developing proprietary chip designs for TFLN Optical Chips for exclusive use in our products, the Company’s foundry services offering at our AZ Chips Facility will make available a range of custom TFLN chips (custom single photon detectors) for sale into existing commercial markets, including optical devices such as electro-optical modulators, periodically poled devices for frequency conversion and micro ring resonator cavities. 4 Entropy Quantum Computer “Dirac” is our EQC product platform of increasingly advanced optimization devices utilizing our Core Photonics Technology.
The Company also offers a 401(k) retirement savings plan and participation in the stock option plan to all full-time employees. There are no unpaid liabilities under the Company’s benefit plans, and the Company has no obligation to pay for post-retirement health and medical costs of retired employees. 6
There are no unpaid liabilities under the Company’s benefit plans, and the Company has no obligation to pay for post-retirement health and medical costs of retired employees. 10
The Company is pursuing opportunities under the CHIPS Act but there is no guarantee that it will actually receive any funding thereunder. Corporate Information Our executive offices are located at 5 Marine View Plaza, Suite 214, Hoboken, NJ 07030, and our telephone number is (703) 436-2121. Our corporate website is www.quantumcomputinginc.com.
Corporate Information Our executive offices are located at 5 Marine View Plaza, Suite 214, Hoboken, NJ 07030, and our telephone number is (703) 436-2121. Our corporate website is www.quantumcomputinginc.com.
We believe that this suggests significant potential demand for QCi’s products and services. Products and Products in Development The Company believes it is well-positioned in the marketplace due to its Core Photonics Technology in integrated photonics that allows QCi to offer a suite of quantum machines to the market today with a robust technology roadmap for the future.
We believe QCi is well-positioned to benefit from this forecasted increase in demand. Products and Products in Development We believe our Core Photonics Technology provides us with a competitive advantage as compared to our competitors and it allows QCi to offer a suite of quantum machines to the market today with a robust technology roadmap for the future.
We believe that this device offers significant advancements in sensitivity, speed, and resolution, capable of discerning for the first time, highly obscured and non-line-of-sight objects. The Quantum Photonic Vibrometer measures the vibration frequency of a remote target by utilizing fast-gated single photon counting to directly detect returning photons whose wavefunctions are dynamically modulated as they are reflected off the target.
The Quantum Photonic Vibrometer measures the vibration frequency of a remote target by utilizing fast-gated single photon counting to directly detect returning photons whose wavefunctions are dynamically modulated as they are reflected off the target.
LiDAR and Quantum Photonic Vibrometer QCi’s LiDAR uses patented methodologies that leverage the selective use of spatial-temporal modes to maximize the signal-to-noise ratio of weak information signals in a high-noise background.
LiDAR and Quantum Photonic Vibrometer QCi’s LiDAR uses patented methodologies that leverage the selective use of spatial-temporal modes to maximize the signal-to-noise ratio of weak information signals in a high-noise background. This technology allows QCi machines to see through dense fog and provide image fidelity at great distances with very high-resolution in difficult environments such as snow, ice, and water.
The Company Quantum Computing Inc. is an American company utilizing integrated photonics and non-linear quantum optics to develop and deliver machines for quantum computing, reservoir computing, and remote sensing, imaging and cybersecurity applications. Our vision is to lead the revolution in photonics and quantum computing with scalable, accessible, and affordable solutions for real-world problems.
Our Business Quantum Computing Inc. is an American company incorporated in Delaware and based in Hoboken, New Jersey utilizing integrated photonics and non-linear quantum optics to develop and deliver machines for quantum computing, machine learning, remote sensing, imaging and cybersecurity applications.
Our benchmarking analyses further show that the RC is capable of delivering superior performance in time-dependent tasks, such as chaotic time series prediction, unstructured financial model prediction, natural language processing, and weather forecasting. To date, the market for reservoir computing has been limited due to computing cost and technical implementation complexities, which we designed the RC to address.
Actual performance may vary depending on use case and deployment environment. Our analyses further show that the RC is capable of delivering superior performance in time-dependent tasks, such as chaotic time series prediction, unstructured financial model prediction, natural language processing, and weather forecasting.
We believe that these emerging approaches will create an opportunity for new materials and methods that can meet the growing demand for scalable performance and power efficiency.
We believe that these emerging approaches will create an opportunity for new materials and methods that can meet the growing demand for scalable performance and power efficiency. While it is difficult to determine which area that quantum computers will create the first practical impact, we expect continued technological development across multiple quantum computing modalities and architectures over the coming years.
Our employees are not part of a collective bargaining agreement and we believe that our relationships with our employees and contract workers are good. The Company offers a health and welfare benefit plan to current full-time employees that provides medical, dental, vision, life, and disability benefits.
The Company offers a health and welfare benefit plan to current full-time employees that provides medical, dental, vision, life, and disability benefits. The Company also offers a 401(k) retirement savings plan and participation in the stock option plan to all full-time employees.
Issue Date Title Status Anticipated Expiration Date USA 17/560,816 12/23/2021 11,436,519 09/06/2022 Machine Learning Mapping for Quantum Processing Units Granted 12/23/2041 USA 17/810,198 06/30/2022 12,008,436 06/11/2024 Machine Learning Mapping for Quantum Processing Units Granted 06/30/2042 Exclusive License Agreement QCi has an exclusive license to seven patents issued to the Stevens Institute of Technology, pursuant to the license agreement dated December 17, 2020 by and among QPhoton and The Trustees of The Stevens Institute of Technology (the “Licensor”).
Issue Date Title Status Anticipated Expiration Date USA 17/560,816 12/23/2021 11,436,519 09/06/2022 Machine Learning Mapping for Quantum Processing Units Granted 12/23/2041 USA 17/810,198 06/30/2022 12,008,436 06/11/2024 Machine Learning Mapping for Quantum Processing Units Granted 06/30/2042 USA 17/745,752 5/16/2022 12,493,811 12/09/2025 Variational Analog Quantum Oracle Learning Granted 5/16/2042 In connection with the Luminar Acquisition (as defined below), QCi acquired 23 issued patents, 16 pending United States patents and 9 foreign patent publications.
Users can then use these same interfaces on conventional computers to achieve optimization performance advantages using our cloud-based solution. Reservoir Computer Launched in June 2023, QCi’s first reservoir computing product is an edge device that used an integrated circuit that can be reprogrammed after manufacturing and optimized for recurrent neural network applications.
Artificial intelligence Launched in June 2023, QCi’s first AI product, a reservoir computing machine (an “RC”) called “Emucore,” is an edge device that can be reprogrammed after manufacturing and optimized for recurrent neural network applications.
Specifically, TFLN electro-optical modulators have the advantages of large bandwidth, low power consumption, and small size.
The report further describes how such increase in demand is expected to be principally driven by the advantages of large bandwidth, low power consumption, and small size that TFLN electro-optical modulators possess.
Information appearing on our website is not part of this Annual Report. Employees As of December 31, 2024, the Company had 41 full-time employees and nine part-time contract staff, 34 of whom are focused on product development.
Human Capital As of December 31, 2025, the Company had 72 full-time employees and 5 part-time contract staff, 55 of whom are focused on product development. Our employees are not part of a collective bargaining agreement and we believe that our relationships with our employees and contract workers are good.
Several of these technologies are in the early stages of commercialization and several are available to customers through our research & development offerings. Our Strategy QCi’s strategy is to provide a range of accessible and affordable quantum machines to commercial and government markets, supported by professional services through our “Quantum Solutions” offering.
Several of these technologies are in the early stages of commercialization and several are available to customers through our research and development offerings. Our Strategy QCi’s strategy is to build a vertically integrated photonics and quantum optics platform capable of supporting scalable, commercial applications across AI, high-performance computing, cybersecurity, and remote sensing.
Additionally, we believe that our foundry services offering will address the growing TFLN market and photonic integrated circuit markets. A recent Market Research Reports: Document ID: LPI08232779; Published August 8, 2023 “ Thin Film Lithium Niobate Market Forecast 2023 – 2029 ,” indicates a significant potential market growth for TFLN devices.
A recent Market Research Reports: Document ID: LPI08232779; Published August 8, 2023 “ Thin Film Lithium Niobate Market Forecast 2023 - 2029 ,” indicates a significant potential market growth for TFLN devices, from $190.4 million in 2022 to an estimated $1.9 billion by 2029 - a compound annual growth rate of 39 percent.
QCi’s Reservoir Computer (“RC”) is a standalone device that can be plugged into a local computer or server without having to connect over the internet.
QCi’s RC is a standalone device that can be plugged into a local computer or server without having to connect over the internet. Based on internal benchmarking results, we believe that the RC’s hardware-based approach may provide advantages over certain traditional software implementations, including faster processing speeds and lower energy consumption in selected time-dependent tasks.
We are reviewing the new regulations but do not believe they will have a substantial adverse impact on the Company. The U.S. government has also placed some export restrictions on certain types of cryogenic quantum computing equipment as well as some optical materials.
Export Administration Regulations. Exports of such products may require a license in certain circumstances. We are reviewing these regulations but do not believe they will have a substantial adverse impact on the Company, although the regulatory landscape continues to evolve.
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While it is difficult to determine the date that quantum computers will begin to have practical relevance, we believe that quantum computers with gradually increasing performance will be introduced by multiple vendors over the next five years.
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Classical computers, or the computers that are currently used in home and office settings, that use silicon microprocessors are understood to have performance limitations in solving certain classes of computational problems, in particular, large-scale optimization problems. Optimization deals with finding the best solution to a problem according to a defined criteria from a set of possible solutions.
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As an early participant in this rapidly growing market, we believe we are well-positioned to capture a meaningful amount of this growth. We also believe that there is further potential upside from quantum computing and technology more broadly opening new markets not included in traditional high-performance computing market size estimates.
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Besides quantum computing, we also believe that photonics approaches to information processing will see continued development to eventually create impacts in various computing spaces by significantly reducing power consumption.
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The study covers use applications and segments that forecast the global TFLN electro-optical modulator market, valued at $190.4 million in 2022, to grow an estimated $1,931.3 million by 2029 - a compound annual growth rate of 39 percent. The report further describes how such increase in demand is expected to be principally driven by the material advantages described above.
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Our vision is to lead the revolution in photonics and quantum information technology with scalable, accessible, and affordable solutions to bring quantum technology into real-world application to solve real-world problems.
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EQC is a full-stack system, incorporating QCi’s custom user interface software Qatalyst, which allows users to avoid the complexity of software development kits (“SDKs”) at the circuit level and has evolved from QCi’s primary SaaS offering to the software that powers our offerings. Operating on EQC, Qatalyst enables developers to create and execute quantum-ready applications using application programming interfaces.
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In addition, the Company is in the planning stages for another higher volume manufacturing facility, which we sometimes refer to as “FAB 2.” As part of our long-term strategic plan to acquire complimentary businesses, in February 2026, the Company acquired Luminar Semiconductor, Inc. (“LSI”). LSI provides products and services that leverage its advanced photonics semiconductor technologies.
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We believe that the RC’s hardware-based approach to reservoir computing has advantages over more traditional software approaches, including significantly faster processing speeds, 80% - 95% less energy consumption, portability (size of power bank), affordability, and requiring significantly shorter training time.
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LSI designs chip-scale devices including laser diodes, semiconductor optical amplifiers, avalanche photodiodes, passive waveguides, photonic integrated circuits, and other related photonic chips, which are incorporated into products at various levels of integration by leveraging extensive in-house advanced photonic packaging technologies. The LSI integrated solutions include components, modules, subsystems, and systems that serve a broad set of customer requirements.
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This technology allows QCi machines to see through dense fog and provide image fidelity at great distances with very high resolution in difficult environments such as snow, ice, and water.
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Extensive design capabilities are complemented by an in-house III-V photonic semiconductor fabrication facility and photonics module manufacturing capabilities. These production resources are employed to deliver high performance, high reliability products to a growing number of customers in a wide array of industries that include aerospace and defense, sensing and instrumentation, and optical communications.
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On June 15, 2022, the Licensor agreed to assign the license agreement to QCi upon consummation of the QPhoton Merger. Government Regulation and Incentives Export Regulation The U.S. government issued regulations in 2024 placing some restrictions on exporting quantum computing products under the Export Administration Act. Those exports will now require a license.
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Acquiring LSI provides QCi with advanced semiconductors and related components, as well as design, testing and consulting services to industry, in particular for Aerospace and Defense applications. Through the acquisition of LSI, QCi has broadened its photonic chip design capability as well as our optical component and system design and advanced packaging capabilities.
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At this time, however, we do not expect there to be significant export limitations on the Company’s products. Incentives The Creating Helpful Incentives to Produce Semiconductors Act of 2022 (the “CHIPS Act”) was designed to address the global computer chip shortage and attract chip manufacturing, and innovation to the United States.
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LSI’s capabilities are highly synergistic with the QCi technology roadmap and will support the integration of chip-scale devices such as laser diodes and photodetectors with QCi’s thin film lithium niobate photonic integrated circuit (PIC) platform. Collaborative efforts between the LSI and QCi technical teams will be instrumental to delivering QCi’s photonic- and quantum-based system products.
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The CHIPS Act is a $280 billion spending package aimed at encouraging the growth of the US-based semiconductor industry. To assist in securing the domestic chip supply, the CHIPS Act provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development.
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As an early participant in this rapidly growing market, we believe we are positioned to seek to capture a portion of this growth, although commercialization remains uncertain. Additionally, we believe that our foundry services offering through our AZ Chips Facility will address the growing TFLN market and photonic integrated circuit markets.
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QCi launched a new EQC device during the first quarter of 2024 (Dirac-3), which improved upon and expanded the capability we had previously shown with our Dirac-1 and Dirac-2 products, and plans to release a series of additional EQC products in the coming years that build and expand upon the same architecture. We are currently developing our Dirac-4 device.
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While technology challenges remain in scaling this technology, this is one of our focus areas to gain a significant share in the AI/ML hardware market. In November 2025, we launched our newest version RC called “Neurawave,” a photonics based reservoir computer.
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We believe that this device offers significant advancements in sensitivity, speed, and resolution, and is designed to enhance sensitivity in detecting obscured and non-line-of-sight objects under certain environmental conditions.
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Issue Date Title Status Anticipated Expiration Date USA 12/789350 5/27/2010 8401399 3/19/2013 Chip-Based Advanced Modulation Format Transmitter Granted 4/18/2031 USA 13/761867 2/7/2013 8718486 5/6/2014 Chip-Based Advanced Modulation Format Transmitter Granted 5/27/2030 USA 14/267582 5/1/2014 9270380 2/23/2016 Chip-Based Advanced Modulation Format Transmitter Granted 5/27/2030 USA 15/046969 2/18/2016 9887780 2/6/2018 Chip-Based Advanced Modulation Format Transmitter Granted 5/27/2030 USA 12/789344 5/27/2010 8401405 3/19/2013 Monolithic Widely-Tunable Coherent Receiver Granted 2/22/2031 USA 13/761973 2/7/2013 8712256 4/29/2014 Monolithic Widely-Tunable Coherent Receiver Granted 5/27/2030 USA 14/263855 4/28/2014 9246596 1/26/2016 Monolithic Widely-Tunable Coherent Receiver Granted 5/27/2030 USA 14/069956 11/1/2013 9344196 5/17/2016 Integrated Interferometric Optical Transmitter Granted 11/1/2033 USA 15/154756 5/13/2016 9941971 4/10/2018 Integrated Interferometric Optical Transmitter Granted 11/1/2033 USA 15/938842 3/28/2018 10320152 6/11/2019 Tunable Laser Granted 3/28/2038 USA 16/431285 6/4/2019 11251584 2/15/2022 Tunable Laser Granted 3/28/2038 USA 15/962972 4/25/2018 10355451 7/16/2019 Laser With Sampled Grating Distributed Bragg Reflector Granted 3/28/2038 7 Country Serial No.
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Issue Date Title Status Anticipated Expiration Date USA 16/688908 11/19/2019 11152764 10/19/2021 Gratings For High Power Single Mode Laser Granted 11/19/2039 USA 16/213917 12/7/2018 11391969 7/19/2022 Systems And Methods for Wavelength Monitoring Granted 1/14/2039 USA 16/823823 3/19/2020 11431149 8/30/2022 Single Mode Laser with Large Optical Mode Size Granted 7/18/2040 USA 18/157793 1/20/2023 {US-2023-0268714-A1} Patent Pending Single Mode Laser with Large Optical Mode Size Patent Pending China 202410080622.3 1/18/2024 {CN118380861 A} Patent Pending Single Mode Laser with Large Optical Mode Size Patent Pending USA 17/021993 9/15/2020 11721951 8/8/2023 Tunable Laser with Active Material on At Least One End for Monitoring Performance Granted 9/15/2040 USA 18/337374 6/19/2023 12095228 9/17/2024 Tunable Laser with Active Material on At Least One End for Monitoring Performance Granted 9/15/2040 USA 18/776126 7/17/2024 {US-2025-0023327-A1} Published Tunable Laser with Active Material on At Least One End for Monitoring Performance USA 17/025962 9/18/2020 11631963 4/18/2023 Optical Device with Coating for Operation in Multiple Environments Granted 2/7/2041 USA 17/062462 10/2/2020 11581700 2/14/2023 Multiple Optoelectronic Devices with Thermal Compensation Granted 2/8/2041 USA 18/361421 7/28/2023 {US-2023-0387654-A1} Patent Pending Multiple Optoelectronic Devices with Thermal Compensation Patent Pending USA 17/163028 1/29/2021 11837838 12/5/2023 Laser Having Tapered Region Granted 6/6/2041 USA 18/486968 10/13/2023 12224554 2/11/2025 Laser Having Tapered Region Granted 1/29/2041 USA 17/656193 3/23/2022 12063073 8/13/2024 System And Method for External Wavelength Control of Optical Modulators Granted 3/23/2042 USA 17/806460 6/10/2022 {20230023686} Published Designs For Lateral Current Control in Optical Amplifiers and Lasers China 202280055651.3 6/10/2022 {CN117837034 A} Published Designs For Lateral Current Control in Optical Amplifiers and Lasers Europe - EPO 22821164.5 6/10/2022 {EP4352839 A4} Published Designs For Lateral Current Control in Optical Amplifiers and Lasers 6/10/2024 USA 17/901741 9/1/2022 {US-2023-0072926-A1} Patent Pending Multiwavelength Optical Sources Patent Pending China 202222346704.7 9/2/2022 CN218866146 U ZL202222346704.7 4/14/2023 Multiwavelength Optical Sources Granted 9/2/2032 8 Country Serial No.
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Issue Date Title Status Anticipated Expiration Date USA 17/950847 9/22/2022 {US-2023-0088485-A1} Published Segmented Contact for Current Control in Semiconductor Lasers and Optical Amplifiers China 2022800713529 9/22/2022 {CN118140367 A} Published Segmented Contact for Current Control in Semiconductor Lasers and Optical Amplifiers 9/22/2042 Europe - EPO 22790132.9 9/22/2022 {EP4406079 A1} Published Segmented Contact for Current Control in Semiconductor Lasers and Optical Amplifiers USA 18/421386 1/24/2024 {20240258766} Patent Pending Isolation Used for Integrated Optical Single Mode Lasers Patent Pending PCT PCT/US24/12838 1/24/2024 {WO2024158953} Patent Pending Isolation Used for Integrated Optical Single Mode Lasers Patent Pending USA 18/604159 3/13/2024 {US-2024-0310590-A1} Patent Pending Semiconductor Laser Chip for Photonic Wire Bonding Patent Pending USA 18/612981 3/21/2024 {US-2024-0322529-A1} Patent Pending Spatial And Temporal Adjustment of Laser Device Drive Current Using Asic Drives Patent Pending USA 18/323284 5/24/2023 {US-2024-0396307-A1} Published Spectral-Based Correction Of Laser Bar Smile USA 18/761160 7/1/2024 {US-2025-0015563-A1} Published Systems And Methods for Beam Combination of Tapered Diode Lasers and Amplifiers USA 18/784721 7/25/2024 {US-2025-0038476-A1} Published Thermally Compensated Wavelength Tunable Lasers USA 18/913726 10/11/2024 {US-2025-0125584-A1} Published Distributed Feedback Lasers with Tunable Distributed Bragg Reflector Integration USA 19/242753 6/18/2025 Patent Pending Pwb Polarization Rotation Patent Pending USA 19/242759 6/18/2025 Patent Pending Dfb And Dbr Lasers with Grating and Etch Stop Patent Pending USA 18/181978 3/10/2023 {US-2023-0291170-A1} Published Etalon Vapor Cell for Atomic Sensing Europe - EPO 24189401.3 7/18/2024 {EP4498538 A1} Patent Pending Multiple Optoelectronic Devices with Thermal Compensation Patent Pending China 202411020678.6 7/29/2024 {CN119447981 A} Patent Pending Multiple Optoelectronic Devices with Thermal Compensation Patent Pending USA 18/074668 12/5/2022 12209866 1/28/2025 Atomic Sensor System(1) Granted 3/27/2043 USA 18/181978 3/10/2023 {US-2023-0291170-A1} Published Etalon Vapor Cell For Atomic Sensing(1) (1) Patent owned and developed jointly by Northrop Grumman Systems Corporation and Freedom Photonics, LLC, a subsidiary of Luminar. 9 Exclusive License Agreement QCi has an exclusive license to seven patents issued to the Stevens Institute of Technology, pursuant to the license agreement dated December 17, 2020 by and among QPhoton and The Trustees of The Stevens Institute of Technology (the “Licensor”).
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On June 15, 2022, the Licensor agreed to assign the license agreement to QCi upon consummation of the QPhoton Merger and as such QCi is responsible for the Anniversary Payments and the Royalty Payments on an ongoing basis.
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Title Country Serial Number File Date Patent Number Issue Date Discriminate Remote Sensing and Surface Profiling Based on Superradiant Photonic Backscattering USA 17/077,878 22-Oct-20 11,264,775 01-Mar-22 Method And Apparatus for Quantum Measurement Via Mode Matched Photon Conversion USA 15/824,832 28-Nov-17 10,935,379 02-Mar-21 Chip-Integrated Device and Methods For Generating Random Numbers That Is Reconfigurable and Provides Genuineness Verification USA 16/624,768 19-Dec-19 11,442,697 13-Sep-22 Systems And Methods for Quantum-Secured, Private-Preserving Computations USA 17/769,303 16-Oct-20 11,711,209 25-Jul-23 Approaches, Apparatuses and Methods for LIDAR applications based on modeselective frequency conversion USA 17/251,749 13-Jun-19 12,455,355 28-Oct-25 Super Ising Emulator with Multi-Body Interactions and All-to-All Connections USA 17/924,638 13-May-21 12,526,915 13-Jan-26 Devices and methods for low voltage optical modulation USA 17/923,554 06-May-21 12,292,626 06-May-25 Government Regulation and Incentives Export Regulation The Department of Commerce Bureau of Industry and Security (BIS) issued regulations in September 2024 placing some controls and licensing requirements on the export of certain quantum computing products and technology under the U.S.
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The U.S. government has also placed some export restrictions on certain other technologies potentially relevant to the Company’s products including cryogenic quantum computing equipment as well as some optical materials, integrated circuits and related microelectronics. At this time, however, we do not expect there to be significant limitations on the Company’s products.
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Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) will be made available free of charge on our website as soon as reasonably practicable after we electronically file these materials with, or furnish it to, the SEC on their website located at www.sec.gov.
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The information contained on, or that can be accessed through, and the contents of our website are not incorporated into this Annual Report on Form 10-K, and our reference to the URL for our website is intended to be an inactive textual reference only.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+32 added−23 removed206 unchanged
Biggest changeAll such legal proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming and disruptive to our operations and distracting to management. If resolved against us, such legal proceedings could result in excessive verdicts, injunctive relief or other equitable relief that may affect how we operate our business.
Biggest changeFrom time to time and in the ordinary course of our business, we and certain of our subsidiaries may become involved in various legal proceedings. All such legal proceedings are inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming and disruptive to our operations and distracting to management.
The market price of our common stock has in the past and may going forward fluctuate widely in response to various factors, some of which are beyond our control, including: ● actions by competitors; ● actual or anticipated growth rates relative to our competitors; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission (the “SEC”); ● economic, legal and regulatory factors unrelated to our performance; 22 ● any future guidance that we may provide to the public, any changes in such guidance or any difference between our guidance and actual results; ● changes in financial estimates or recommendations by any securities analysts who follow our common stock; ● speculation by the press or investment community regarding our business; ● litigation; ● changes in key personnel; and ● future sales of our common stock by our officers, directors and significant stockholders.
The market price of our common stock has in the past and may going forward fluctuate widely in response to various factors, some of which are beyond our control, including: ● actions by competitors; ● actual or anticipated growth rates relative to our competitors; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission (the “SEC”); ● economic, legal and regulatory factors unrelated to our performance; ● any future guidance that we may provide to the public, any changes in such guidance or any difference between our guidance and actual results; ● changes in financial estimates or recommendations by any securities analysts who follow our common stock; ● speculation by the press or investment community regarding our business; ● litigation; ● changes in key personnel; and ● future sales of our common stock by our officers, directors and significant stockholders.
Our current competitors include: ● large, well-established technology companies that generally compete across our products, including IBM, Quantinuum, Google, Microsoft and Amazon; ● large research organizations funded by sovereign nations such as China, Russia, Canada, Australia and the United Kingdom, and those in the European Union; additional countries may decide to fund quantum computing programs in the future; ● less-established public and private companies with competing technology, including IonQ, Rigetti Computing, PsiQuantum, Xanadu and D-Wave Quantum, and companies located outside the United States; and ● new or emerging entrants seeking to develop competing technologies.
Our current competitors include: ● large, well-established technology companies that generally compete across our products, including IBM, Quantinuum, Google, Microsoft and Amazon; ● large research organizations funded by sovereign nations such as China, Russia, Canada, Australia and the United Kingdom, and those in the European Union; additional countries may decide to fund quantum computing programs in the future; ● less-established public and private companies with competing technology, including IonQ, Rigetti Computing, PsiQuantum, Infleqtion, Xanadu and D-Wave Quantum, and companies located outside the United States; and ● new or emerging entrants seeking to develop competing technologies.
Furthermore, our industry generally relies on a limited number of TFLN Optical Chips manufacturers whose operations tend to be concentrated in China and other parts of East Asia, which makes us especially susceptible to adverse developments in these regions’ economic and political conditions, particularly to the extent that such developments create an unfavorable business environment that significantly affects our operations.
Furthermore, our industry generally relies on a limited number of TFLN Optical Chips and wafer manufacturers whose operations tend to be concentrated in China and other parts of East Asia, which makes us especially susceptible to adverse developments in these regions’ economic and political conditions, particularly to the extent that such developments create an unfavorable business environment that significantly affects our operations.
If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in legal proceedings brought against us, it could have an adverse effect on our business, financial condition and results of operations. 18 We intend to continue exploring strategic business acquisitions and other business combinations and transactions, which are subject to inherent risks.
If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in legal proceedings brought against us, it could have an adverse effect on our business, financial condition and results of operations. We intend to continue exploring strategic business acquisitions and other business combinations and transactions, which are subject to inherent risks.
If any of these events, or other macroeconomic trends, should cause a prolonged disruption of operations that impact our third-party TFLN Optical Chips manufacturing partners, they may experience operational downtimes or have to operate at reduced capacities, which could have a material adverse effect on our business, financial condition, and results of operations.
If any of these events, or other macroeconomic trends, should cause a prolonged disruption of operations that impact our third-party TFLN Optical Chips and wafer manufacturing partners, they may experience operational downtimes or have to operate at reduced capacities, which could have a material adverse effect on our business, financial condition, and results of operations.
All of these factors can add further risk to business conducted with these potential customers and could lead to lower revenue results than originally anticipated. 15 Additionally, changes in government spending could negatively impact us. Our anticipated future revenues from the U.S. government are expected to result from contracts awarded under various U.S. government programs.
All of these factors can add further risk to business conducted with these potential customers and could lead to lower revenue results than originally anticipated. Additionally, changes in government spending could negatively impact us. Our anticipated future revenues from the U.S. government are expected to result from contracts awarded under various U.S. government programs.
Failure of QCi to grow at rates similar to that of the broader quantum computing industry may adversely affect our operating results and ability to effectively compete within the industry. We may not manage growth effectively. Our failure to manage growth effectively could harm our business, results of operations and financial condition.
Failure of QCi to grow at rates similar to that of the broader quantum computing industry may adversely affect our operating results and ability to effectively compete within the industry. 13 We may not manage growth effectively. Our failure to manage growth effectively could harm our business, results of operations and financial condition.
In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. 20 However, we may not be able to prevent unauthorized use of our intellectual property.
In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. However, we may not be able to prevent unauthorized use of our intellectual property.
TFLN Optical Chips manufacturers and distributors are concentrated primarily in China and other parts of East Asia, which is an area that is or may be subject to geopolitical uncertainty, trade disputes and restrictions, environmental disasters, and other risks.
TFLN Optical Chips manufacturers, suppliers and distributors are concentrated primarily in China and other parts of East Asia, which is an area that is or may be subject to geopolitical uncertainty, trade disputes and restrictions, environmental disasters, and other risks.
Further, deterioration in the political relationship between the U.S. and China result in loss of access to suppliers of key components with little or no warning, which would adversely affect our ability to develop and manufacture our products.
Further, deterioration in the political relationship between the U.S. and China may result in loss of access to suppliers of key components with little or no warning, which would adversely affect our ability to develop and manufacture our products.
It is uncertain if and to what extent various states will conform to the current law. In addition, our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities.
It is uncertain if and to what extent various states will conform to the current law. 14 In addition, our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities.
As a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates . We currently do not expect to declare or pay dividends on our common stock.
We currently do not intend to pay dividends on our common stock. As a result, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates . We currently do not expect to declare or pay dividends on our common stock.
If any of these events occur, it could have a material adverse effect on our business, prospects, financial condition or results of operations. 11 The quantum computing industry is competitive and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers.
If any of these events occur, it could have a material adverse effect on our business, prospects, financial condition or results of operations. 15 The quantum computing industry is competitive and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers.
Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, amounts they owe. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to continue our research and development activities or manufacture our products.
Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, amounts they owe. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely affecting our ability to continue our research and development activities or manufacture our products.
Further, subsequent decreases in inflation and interest rates may not result in a reduction of costs. 19 We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.
Further, subsequent decreases in inflation and interest rates may not result in a reduction of costs. 24 We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.
Our quantum computers are inherently complex and incorporate technology and components that may note have been used for computing products and that may contain defects and errors, particularly when first introduced. We have a limited frame of reference from which to evaluate the long-term performance of our computers.
Our quantum computers are inherently complex and incorporate technology and components that may not have been used for computing products and that may contain defects and errors, particularly when first introduced. We have a limited frame of reference from which to evaluate the long-term performance of our computers.
In addition, the stock markets, including the Nasdaq Stock Market LLC (“Nasdaq”) on which our common stock is listed, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These broad market fluctuations may materially affect our stock price, regardless of our operating results.
In addition, the stock markets, including the Nasdaq on which our common stock is listed, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These broad market fluctuations may materially affect our stock price, regardless of our operating results.
Unforeseen issues associated with scaling up and constructing quantum computing technology at commercially viable levels could negatively impact our business, financial condition and results of operations. Our growth is dependent upon our ability to successfully market and sell our quantum computers and quantum computing products and services.
Unforeseen issues associated with scaling up and constructing quantum computing technology at commercially viable levels could negatively affect our business, financial condition and results of operations. Our growth is dependent upon our ability to successfully market and sell our quantum computers and quantum computing products and services.
The U.S. government continues to add additional entities, in China and elsewhere, to restricted party lists impacting the ability of U.S. companies to provide products and technology and, in certain cases, services, to these entities and, in some cases, to receive products, technology or services from these entities.
The U.S. government continues to add additional entities, in China and elsewhere, to restricted party lists affecting the ability of U.S. companies to provide products and technology and, in certain cases, services, to these entities and, in some cases, to receive products, technology or services from these entities.
We are an early-stage company and we have not generated any material revenues to offset our operating expenses. We incurred negative cash flows from operating activities and recurring net losses in fiscal years 2024 and 2023. As of December 31, 2024 and 2023, our accumulated deficit was $200.5 million and $131.9 million, respectively.
We are an early-stage company and we have not generated any material revenues to offset our operating expenses. We incurred negative cash flows from operating activities and recurring net losses in fiscal years 2025, 2024 and 2023. As of December 31, 2025 and 2024, our accumulated deficit was $219.2 million and $200.5 million, respectively.
Should we wish to register the offer and sale of our securities to the public prior to the time we are eligible to use Form S-3, both our transaction costs and the amount of time required to complete the transaction could increase, making it more difficult to execute any such transaction successfully and potentially harming our financial condition.
Should we wish to register the offer and sale of our securities to the public without the ability to use Form S-3, both our transaction costs and the amount of time required to complete the transaction could increase, making it more difficult to execute any such transaction successfully and potentially harming our financial condition.
Commercial traction of quantum computing technology may never occur. We have no experience in producing large quantities of our products and are currently constructing advanced generations of our products.
Commercial adoption of quantum computing technology is uncertain and may never occur. We have no experience in producing large quantities of our products and are currently constructing advanced generations of our products.
Any delay or unavailability of key products required for our development activities in a timely or cost-effective manner could delay or prevent us from further developing our products and services on our expected timelines or at all and could materially harm our business.
Any delay or unavailability of key products required for our development activities in a timely or cost-effective manner could delay or prevent us from further developing our products and services on our expected timelines or at all and could materially harm our business. Acquisitions or divestitures could result in adverse impacts on our operations.
In order to expand our products and services and grow our market and client base, we may continue to seek and complete strategic business acquisitions and other combinations, investments, or partnerships that we believe are complementary to our business.
In order to expand our products and services and grow our market and client base, we may continue to seek and complete strategic business acquisitions and other combinations, investments, or partnerships that we believe are complementary to our business. For example, in February 2026, we acquired Luminar.
If we are unable to generate significant revenues in future periods, we will not be able to achieve profitability, and if we should achieve, to maintain profitability.
If we are unable to generate significant revenues in future periods, we will not be able to achieve profitability, and even if we achieve profitability, we may be unable to maintain it.
These public cloud services are predominantly on Amazon Web Services at the present time. 12 Any material change in our contractual and other business relationships with Amazon Web Services or other cloud providers could result in reduced use of our products and services, increased expenses, including service credit obligations, and harm our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
Any material change in our contractual and other business relationships with Amazon Web Services or other cloud providers could result in reduced use of our products and services, increased expenses, including service credit obligations, and harm our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
As a result, our insiders have the ability to significantly influence our management and affairs through the election and removal of the members of our board of directors (the “Board”) and all other matters requiring stockholder approval, including any future merger, consolidation or sale of all or substantially all of our assets.
Yuping Huang of 10.9% of the shares of our common stock. 29 As a result, our insiders have the ability to significantly influence our management and affairs through the election and removal of the members of our board of directors (the “Board”) and all other matters requiring stockholder approval, including any future merger, consolidation or sale of all or substantially all of our assets.
Even if the market in which we compete achieves its anticipated growth levels, our business could fail to grow at similar rates, if at all. Our success will depend upon our ability to expand, scale our operations, and increase our sales and support capability.
Even if the market in which we compete achieves its anticipated growth levels, our business could fail to grow at similar rates, if at all. Our business model depends on our ability to expand and scale our operations and to increase our sales and support capability.
Our business model is unproven and may never allow us to cover our costs. 7 We have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve or sustain profitability or remain a going concern.
Our business model is unproven and may never allow us to cover our costs. 11 We have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve or sustain profitability or continue operations as planned.
Our ability to utilize our federal net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the QPhoton Merger or other transactions.
Our ability to utilize our federal net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the QPhoton Merger, the acquisition of Luminar Semiconductor, Inc., or other transactions. Similar rules may apply under state tax laws.
The resale of significant amounts of our common stock under Rule 144 or under any other exemption from the registration requirements of the Securities Act, if available, or pursuant to subsequent registrations of shares of our common stock, could cause the market price of our shares of common stock to decline significantly. 24 We currently do not intend to pay dividends on our common stock.
The resale of significant amounts of our common stock under Rule 144 or under any other exemption from the registration requirements of the Securities Act, if available, or pursuant to subsequent registrations of shares of our common stock, could cause the market price of our shares of common stock to decline significantly.
We may not be able to cost effectively manage production at a scale or quality consistent with customer demand in a timely or economical manner. Our ability to scale is dependent also upon components that we must source from multiple countries, including China. Shortages or supply interruptions in any of these components will adversely impact our ability to generate revenues.
We may not be able to cost effectively manage production at a scale or quality consistent with customer demand in a timely or economical manner. Our ability to scale is dependent also upon components that we must source from multiple countries, including China.
Our executive officers and directors possess significant voting power with respect to our common stock, which will limit your influence on corporate matters. As of March 18, 2025, our directors and executive officers collectively beneficially own approximately 20.1% of the shares of our common stock including the beneficial ownership of Dr.
Our executive officers and directors possess significant voting power with respect to our common stock, which will limit your influence on corporate matters. As of February 27, 2026, our directors and executive officers collectively beneficially own approximately 12.4% of the shares of our common stock including the beneficial ownership of Dr.
Any disruption to the operations of these manufacturers or distributors could cause significant delays in the production or shipment of our products and impact our financial condition. Our success also depends in part on the manufacturing of TFLN Optical Chips.
Any disruption to the operations of these manufacturers or distributors could cause significant delays in the production or shipment of our products and impact our financial condition. Our success also depends in part on the manufacturing of TFLN Optical Chips for which we may rely, at least in part, on third-party manufacturers and suppliers.
Shares of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.
Shares of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock. Some of our outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act.
As a result of our limited operating history, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
As a result of our limited operating history, our ability to accurately forecast our future results of operations is limited, inherently uncertain and subject to numerous factors outside our control, including our ability to plan for and model future growth.
Similarly, if we settle such legal proceedings, it may affect how we operate our business. Future court decisions, alternative dispute resolution awards, business expansion or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial noneconomic remedies or punitive damages may be sought.
Future court decisions, alternative dispute resolution awards, business expansion or legislative activity may increase our exposure to litigation and regulatory investigations. In some cases, substantial noneconomic remedies or punitive damages may be sought.
We may be unable to acquire the necessary capabilities and personnel required to manage growth or to identify, manage and exploit potential strategic relationships and market opportunities. 9 We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations and may need additional capital sooner than planned to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and we cannot be sure that additional financing will be available.
We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations and may need additional capital sooner than planned to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and we cannot be sure that additional financing will be available.
To date the Board has authorized two classes of Preferred, Series A and Series B, for a total of 4,630,000 authorized shares, leaving an additional 5,370,000 preferred shares to be authorized at the discretion of the Board. 25 The rights of holders of our preferred stock that may be issued could be superior to the rights of holders of our shares of common stock.
To date the Board has authorized two classes of Preferred, Series A and Series B, for a total of 4,630,000 authorized shares, leaving an additional 5,370,000 preferred shares to be authorized at the discretion of the Board.
We rely on access to high-performance third-party classical computing through public clouds and high-performance computing centers to deliver quantum products and services to customers. We may not be able to maintain connectivity with these resources, which could make it harder for us to reach customers or deliver products and services in a cost-effective manner.
We may not be able to maintain connectivity with these resources, which could make it harder for us to reach customers or deliver products and services in a cost-effective manner. Our products and services may from time to time incorporate high-performance classical computing through public clouds to provide services to end users and our partners.
Our technology could be deemed a matter of national security and, as such, our customer base could be tightly restricted. We also may accept government grants that place restrictions on the business’ ability to operate.
Our technology could be deemed a matter of national security and, as such, our customer base could be tightly restricted. We also may accept government grants that place restrictions on the business’ ability to operate. Any such actions could impact our business operations and have a material adverse effect on our business prospectus, financial condition and results of operations.
Any disruption in the manufacture of TFLN Optical Chips resulting from such events could cause significant delays in the development and production of our products. 13 In addition, we may depend on third-party TFLN Optical Chips manufacturing partners or distributors who may be affected by changes in governmental policies, taxation, rising inflation or interest rates, social instability, geopolitical conflicts and tensions, and diplomatic and social developments which are outside of our control.
In addition, we may depend on third-party TFLN Optical Chips and wafer manufacturing partners or distributors who may be affected by changes in governmental policies, taxation, rising inflation or interest rates, social instability, geopolitical conflicts and tensions, and diplomatic and social developments which are outside of our control.
If we are unable to obtain or use components for inclusion in our products, if component prices increase significantly or if we are unable to export or sell our products to any of our customers, our business, liquidity, financial condition and/or results of operations would be materially and adversely affected.
If we are unable to obtain or use components for inclusion in our products, if component prices increase significantly or if we are unable to export or sell our products to any of our customers, our business, liquidity, financial condition and/or results of operations would be materially and adversely affected. 22 We may become subject to legal proceedings that could have a material adverse impact on our financial position and results of operations.
The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to shares of our common stock. Furthermore, any issuances of additional stock (common or preferred) will dilute the percentage of ownership interest of then-current holders of our capital stock and may dilute our book value per share. ITEM 1B. UNRESOLVED STAFF COMMENTS.
Furthermore, any issuances of additional stock (common or preferred) will dilute the percentage of ownership interest of then-current holders of our capital stock and may dilute our book value per share. ITEM 1B. UNRESOLVED STAFF COMMENTS. Not applicable.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans. There can be no assurance that financing will be available to us on favorable terms, or at all.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans. We may be unable to obtain additional financing on acceptable terms, or at all, and any such financing may be dilutive to existing stockholders.
If any of these events occur, our business, prospects, financial condition and operating results could be harmed. 14 In addition, our growth and future demand for our products is highly dependent upon the adoption by developers and customers of quantum computers, as well as on our ability to demonstrate the value of quantum computing to our customers.
In addition, our growth and future demand for our products is highly dependent upon the adoption by developers and customers of quantum computers, as well as on our ability to demonstrate the value of quantum computing to our customers.
For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our platform or put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition.
For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our platform or put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition. 16 We rely on access to high-performance third-party classical computing through public clouds and high-performance computing centers to deliver quantum products and services to customers.
Any significant disruption to our website or internal computer systems could result in a loss of customers and could adversely affect our business and results of operations. 16 We have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints.
We have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints.
Similarly, individual and industry concerns or negative publicity regarding technophobic views in the context of quantum computing could limit market acceptance of our quantum computing products and services.
Similarly, individual and industry concerns or negative publicity regarding technophobic views in the context of quantum computing could limit market acceptance of our quantum computing products and services. If any of these events occur, our business, prospects, financial condition and operating results could be harmed.
These sales, or the perception that these sales might occur, could depress the market price of our common stock or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
These sales, or the perception that these sales might occur, could depress the market price of our common stock or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. 28 Delays in filing financial reports, internal control weaknesses, and restatements could hinder our ability to maintain Form S-3 eligibility and adversely affect our business and stock price.
Government actions and regulations, such as tariffs and trade protection measures, especially in China and the United States, may adversely impact our business, including our ability to obtain products from our suppliers Government actions and regulations, such as tariffs and trade protection measures, may limit our ability to obtain products from our suppliers or sell our products and services to customers.
We cannot predict the timing, location, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. 21 Government actions and regulations, such as tariffs and trade protection measures, especially in China and the United States, may adversely impact our business, including our ability to obtain products from our suppliers Government actions and regulations, such as tariffs and trade protection measures, may limit our ability to obtain products from our suppliers or sell our products and services to customers.
Any such actions could impact our business operations and have a material adverse effect on our business prospectus, financial condition and results of operations. 17 In addition, the Chinese government exercises significant control over China’s economy through the allocation of resources, control of the incurrence and payment of foreign currency-denominated obligations, setting of monetary policy and provision of preferential treatment to particular industries or companies.
In addition, the Chinese government exercises significant control over China’s economy through the allocation of resources, control of the incurrence and payment of foreign currency-denominated obligations, setting of monetary policy and provision of preferential treatment to particular industries or companies.
However, we may not be aware that our products, services or technologies are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation. 21 For example, there may be issued patents of which we are unaware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our current or future products, services or technologies.
For example, there may be issued patents of which we are unaware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our current or future products, services or technologies.
The quantum computing industry is in its early stages and volatile, and if it does not develop, if it develops slower than we anticipate, if it encounters negative publicity or if our quantum computing products and services do not achieve commercial adoption, the growth of our business will be harmed.
Any technological breakthroughs that render our technology obsolete or inferior to other products could have a material adverse effect on our business, financial condition or results of operations. 18 The quantum computing industry is in its early stages and volatile, and if it does not develop, if it develops slower than we anticipate, if it encounters negative publicity or if our quantum computing products and services do not achieve commercial adoption, the growth of our business will be harmed.
We have recorded a valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
If we earn taxable income, such limitations could result in increased future income tax liability and our future cash flows could be adversely affected. We have recorded a valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy.
We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy. 25 Risks Related to Intellectual Property Any failure to obtain, maintain and protect our intellectual property rights could impair our ability to protect and commercialize our proprietary products and technology and cause us to lose our competitive advantage.
Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services and operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and phishing attacks against business networks have become more prevalent and may occur on our systems in the future.
Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services and operations and loss, misuse or theft of data.
If defects in our technology lead to erroneous outputs, third parties relying on those outputs may draw from them erroneous conclusions, creating a risk that we will be liable to those third parties. 8 If we cannot evolve and scale our business and operations effectively, we may not be able to execute our business strategies in a cost-effective manner and our business, financial condition, profitability and results of operations could be adversely affected.
If we cannot evolve and scale our business and operations effectively, we may not be able to execute our business strategies in a cost-effective manner and our business, financial condition, profitability and results of operations could be adversely affected.
While we expect to regain eligibility to use Form S-3 as of September 1, 2025, there can be no guarantees that we will remain timely and current in our public reporting through such date.
To maintain eligibility to use Form S-3, we must be timely and current in our public reporting. There can be no guarantees that we will remain timely and current in our public reporting in the future.
Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the functionality of our services.
We could incur significant expenses and losses related to direct attacks on our website or internal systems. Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the functionality of our services.
In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues. Such government contracts also may limit our ability to do business with foreign governments or prevent us from selling our products in certain countries.
In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues.
In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results.
In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results. 26 We may face patent infringement and other intellectual property claims that could be costly to defend, result in injunctions and significant damage awards, or limit our ability to use certain key technologies in the future, all of which could harm our business.
Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or sales of debt or equity securities. We cannot predict the timing, location, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.
Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or sales of debt or equity securities.
Risks Related to Our Common Stock Our stock price has been and may continue to be volatile or may decline regardless of our operating performance, and you may lose part or all of your investment.
It may become easier for third parties to compete with our products by copying functionality, which could adversely affect our revenue and operating margins. 27 Risks Related to Our Common Stock Our stock price has been and may continue to be volatile or may decline regardless of our operating performance, and you may lose part or all of your investment.
Delays in filing financial reports, internal control weaknesses, and restatements could hinder our ability to regain Form S-3 eligibility and adversely affect our business and stock price.
Failure to address and remediate any internal control weaknesses could affect our ability to maintain Form S-3 eligibility and adversely affect our business, operations, and stock price.
We incurred net losses each year since 2018 and we believe that we will continue to incur operating and net losses each quarter until at least the time we begin generating significant revenue from our products and services, which may never occur. Even with significant production, we may never become profitable from the sale of our products and services.
We incurred net losses each year since 2018 and we expect to continue to incur operating and net losses for the foreseeable future and may never achieve or sustain profitability, even if we begin generating significant revenue from our products and services, which may never occur.
If we commence large-scale development of our quantum computers and other products, they may contain defects in design and manufacture that may cause them to not perform as expected or that may require repair and design changes.
We are actively searching for alternative suppliers outside of China, including in the United States, but there is no assurance that we can locate comparable components at reasonable prices within the desired timeframes. 12 If we commence large-scale development of our quantum computers and other products, they may contain defects in design and manufacture that may cause them to not perform as expected or that may require repair and design changes.
While it is uncertain whether such technological breakthroughs will occur in the next several years, that does not preclude the possibility that such technological breakthroughs could eventually occur. Any technological breakthroughs that render our technology obsolete or inferior to other products could have a material adverse effect on our business, financial condition or results of operations.
While it is uncertain whether such technological breakthroughs will occur in the next several years, that does not preclude the possibility that such technological breakthroughs could eventually occur.
As a result, the actual scope of work performed pursuant to any such contracts, in addition to related contract revenue, could be less than total contract value. In addition, product purchases by such organizations are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays.
Our contracts with government agencies are typically structured in phases, with each phase subject to satisfaction of certain conditions. As a result, the actual scope of work performed pursuant to any such contracts, in addition to related contract revenue, could be less than total contract value.
As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operations and access to capital. Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
We may also face litigation as a result of the material weaknesses in our internal control over financial reporting. Any such litigation, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition. Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
Any attempts by hackers to disrupt our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation or brand. We could incur significant expenses and losses related to direct attacks on our website or internal systems.
Computer malware, viruses, computer hacking and phishing attacks against business networks have become more prevalent and may occur on our systems in the future. 20 Any attempts by hackers to disrupt our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation or brand.
Our financial statements do not include any adjustments that might result from the outcome of this uncertainty or from the sale of the PIPE Shares. We have also encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries.
We have also encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries.
If a significant portion of our source code leaks, however, we might lose future trade secret protection for that source code. It may become easier for third parties to compete with our products by copying functionality, which could adversely affect our revenue and operating margins.
If a significant portion of our source code leaks, however, we might lose future trade secret protection for that source code.
Government agencies and large organizations often undertake a significant evaluation process that results in a lengthy sales cycle. Our contracts with government agencies are typically structured in phases, with each phase subject to satisfaction of certain conditions.
Such government contracts also may limit our ability to do business with foreign governments or prevent us from selling our products in certain countries. 19 Government agencies and large organizations often undertake a significant evaluation process that results in a lengthy sales cycle.
Removed
Furthermore, the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. We have not emerged from the development stage and may be unable to raise further equity.
Added
Even with significant production, we may never become profitable from the sale of our products and services.
Removed
These factors, among others, that raise substantial doubt about our ability to continue as a going concern may be partially or fully mitigated by the net proceeds received by the Company in conjunction with the sale of 8,163,266 shares of Common Stock (the “PIPE Shares”) issued to the investors pursuant to certain Securities Purchase Agreements dated January 7, 2025.
Added
Our supply chain could be adversely affected by geopolitical tensions, export controls, trade restrictions, tariffs or other changes in U.S. or foreign government policies affecting cross-border commerce. Shortages or supply interruptions in any of these components will adversely impact our ability to generate revenues.
Removed
We are actively searching for alternative suppliers outside of China, but there is no assurance that we can locate comparable components at reasonable prices within the desired timeframes.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+13 added−4 removed3 unchanged
Biggest changeWhile the Company maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 26
Biggest changeAlthough we take cybersecurity risks seriously, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on the Company. While the Company maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. 31
The information technology team manages the Company’s cybersecurity policies, including employee training, with the ultimate goal of preventing cybersecurity incidents, if possible, while also maintaining IT system performance and data integrity to minimize the business impact should an incident occur.
The Company has implemented policies for its personnel, including awareness programs, travel security programs and other related cybersecurity best practices. The information technology team manages the Company’s cybersecurity policies, including employee training, with the ultimate goal of preventing cybersecurity incidents, if possible, while also maintaining IT system performance and data integrity to minimize the business impact should an incident occur.
Our customers, suppliers and other business partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance and results of operations. We are continually evaluating best practices and methods to protect the Company from a wide range of potential threats.
Our customers, suppliers and other business partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance and results of operations.
The Company is coordinating closely with the Board’s Risk Committee to ensure that the Company will implement the appropriate cybersecurity technologies to protect the Company and its intellectual property. Third parties play an important role in our cybersecurity program. We engage third-party services to conduct evaluations of our security controls, including penetration testing and consulting on best practices.
The Company is coordinating closely with the Board’s Risk Committee to ensure that the Company will implement the appropriate cybersecurity technologies to protect the Company and its intellectual property. Governance The Board, in coordination with the Risk Committee, oversees the Company’s ERM process, including the management of risks arising from cybersecurity threats.
Removed
Due to the risks that these cybersecurity threats pose to our business, we are investing in cyber defense systems and training programs. The Board, through the Risk Committee, oversees the Company’s processes for identifying and mitigating risks, including cybersecurity risks.
Added
The Board, through the Risk Committee, is actively involved in oversight of the Company’s risk management program, and cybersecurity represents an important component of the Company’s overall approach to enterprise risk management (“ERM”).
Removed
Company management periodically briefs the Board on our cybersecurity and information security policies and plans, and the Board is apprised of cybersecurity incidents deemed to have a moderate or higher business impact.
Added
The Company’s cybersecurity policies, standards, processes and practices are integrated into the Company’s ERM program and are based on recognized frameworks established by the National Institute of Standards and Technology, the International Organization for Standardization and other applicable industry standards.
Removed
We continue to evaluate our cybersecurity requirements to address the evolving cybersecurity risks that the Company faces in an increasingly technically capable environment. The Company has implemented policies for its personnel, including awareness programs, travel security programs and other related cybersecurity best practices.
Added
In general, the Company seeks to address cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that the Company collects and stores by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Removed
The third-party services include testing both the design and operational effectiveness of security controls. Although we take cybersecurity risks seriously, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on the Company.
Added
Risk Management and Strategy As one of the critical elements of the Company’s overall ERM approach, the Company’s cybersecurity program is focused on the following key areas: ● Governance: As discussed in more detail under the heading “Governance,” The Board’s oversight of cybersecurity risk management is supported by the Risk Committee, which regularly interacts with the Company’s ERM function, the Company’s Information Technology Director (“IT Director”), other members of management and relevant management committees and councils, including management’s Cybersecurity Council. ● Collaborative Approach: The Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner, including assessments of materiality under applicable securities laws. ● Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, antimalware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. ● Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident response and recovery plans that fully address the Company’s response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis. 30 ● Third-Party Risk Management: The Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. ● Education and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes and practices.
Added
The Company engages in the periodic assessment and testing of the Company’s policies, standards, processes and practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning.
Added
The Company periodically engages third parties to perform assessments on our cybersecurity measures, including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.
Added
The results of such assessments, audits and reviews are reported to the Risk Committee and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews.
Added
The Board and the Risk Committee each receive regular presentations and reports on cybersecurity risks, which address a wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to the Company’s peers and third parties.
Added
The Board and the Risk Committee also receive prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, including those that are determined to be potentially material, as well as ongoing updates regarding any such incident until it has been addressed.
Added
To facilitate the success of the Company’s cybersecurity risk management program, multidisciplinary teams throughout the Company are deployed to address cybersecurity threats and to respond to cybersecurity incidents.
Added
Through ongoing communications with these teams, the IT Director and the Risk Committee monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents on an ongoing basis, and report such threats and incidents to the Risk Committee when appropriate.
Added
The IT Director has served in various roles in information technology and information security for over 30 years, including serving as Senior System Administrator, Principal Architect, and Director of Cloud Engineering.
Added
To date, cybersecurity threats and any previously identified cybersecurity incidents have not materially affected the Company’s business strategy, results of operations, or financial condition, and the Company is not aware of any cybersecurity risks that are reasonably likely to materially affect the Company.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. We maintain our principal office at 5 Marine View Plaza, Suite 214, Hoboken, NJ 07030. The Company leases 7,503 square feet of laboratory and office space in a multistory, multi-tenant building in Hoboken, NJ under a five-year lease ending September 30, 2027.
Biggest changeITEM 2. PROPERTIES. We maintain our principal office at 5 Marine View Plaza, Suite 214, Hoboken, NJ 07030. The Company’s principal office is comprised of 16,390- square feet of laboratory and office space in a multistory, multi-tenant building under a multi-year lease, most of which ends on May 31, 2028, with a portion of the lease ending July 31, 2030.
The Company also has a short-term agreement for approximately 300 square feet in a multi-tenant facility in Arlington, VA that provides 24/7 furnished co-working space, conference room space, and other services on an as-needed basis.
The Company also has a short-term agreement for approximately 800 square feet in a multi-tenant facility in Tysons, VA that provides 24/7 furnished co-working space, conference room space, and other services on an as-needed basis.
Added
As a result of the LSI Acquisition, we also have a leased facility in Santa Barbara, CA for 20,337 square feet which expires November 30, 2026, a leased facility in Wilmington, MA for 7,573 square feet that expires January 30, 2030, a lease in Cranbury, NJ for 16,464 square feet that expires March 31, 2028, and a leased facility in Beford, MA for 19,332 square feet which expires August 31, 2028.
Added
Each of the LSI leases contains extension options.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

14 edited+17 added−6 removed3 unchanged
Biggest changeThe 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. To date the New Jersey District Court has not certified a class or designated a lead plaintiff. The Company disputes the allegations in the complaint and intends to vigorously defend against the asserted claims.
Biggest changeThe 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.
Arbitration over Stock Options In February 2025, the Company entered into arbitrations with two former consultants regarding forfeiture of stock options.
Arbitration over Stock Options Arbitration over Stock Options In February 2025, the Company entered into arbitrations with two former consultants regarding forfeiture of stock options.
After the Delaware Chancery Court dismissed BV Advisory’s other claims against the Company and QPhoton, on October 17, 2024, the Delaware Chancery Court entered a Stipulation and Order dismissing BV Advisory’s claim for breach of the BV Note Purchase Agreement, subject to BV Advisory’s right to elect to transfer the BV Note claim to the Superior Court of the state of Delaware (the “Delaware Superior Court”).
After the Delaware Chancery Court dismissed BV Advisory’s other claims against the Company and QPhoton, on October 17, 2024, the Delaware Chancery Court entered a Stipulation and Order dismissing BV Advisory’s claim for breach of the BV Note Purchase Agreement, subject to BV Advisory’s right to elect to transfer its claim to the Superior Court of the state of Delaware (the “Delaware Superior Court”).
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 United States District Court for the District of New Jersey, 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 Section 10(b) and 20(a) of the Exchange Act.
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 Section 10(b) and 20(a) of the Exchange Act.
The receivership petition filed by BV Advisory against the Company in July 2023 in the Delaware Chancery Court was dismissed without prejudice in May 2024. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 28 PART II
The receivership petition filed by BV Advisory against the Company in July 2023 in the Delaware Chancery Court was dismissed without prejudice in May 2024. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 34 PART II
BV Advisory v. QCi Appraisal Action BV Advisory Partners, LLC (“BV Advisory”) was purportedly a shareholder of QPhoton, Inc., the predecessor in interest to QPhoton (both referred to as “QPhoton” in this Legal Proceedings discussion).
BV Advisory Partners, LLC Proceedings BV Advisory v. QCi Appraisal Action BV Advisory Partners, LLC (“BV Advisory”) was a shareholder of QPhoton, Inc., the predecessor in interest to the Company’s subsidiary, QPhoton, LLC (both referred to as “QPhoton” in this Legal Proceedings discussion).
On October 13, 2022, BV Advisory filed a petition in the Court of Chancery of the State of Delaware (the “Delaware Chancery Court”) seeking appraisal rights (the “Appraisal Petition”) on the shares of common stock of QPhoton it allegedly owns (which shares represented 10% of the shares of common stock of QPhoton outstanding immediately prior to the Company’s acquisition of QPhoton) pursuant to Section 262 of the Delaware General Corporation Law.
On October 13, 2022, BV Advisory filed a petition in the Court of Chancery of the State of Delaware (the “Delaware Chancery Court”) seeking appraisal rights on the shares of common stock of QPhoton it owned (which shares represented 10% of the shares of common stock of QPhoton outstanding immediately prior to the Company’s acquisition of QPhoton) pursuant to Section 262 of the Delaware General Corporation Law.
On July 14, 2022, BV Advisory returned the cashier’s check and disputed the calculation of the amount paid to settle the BV Notes. On August 16, 2022, BV Advisory filed a complaint in the Delaware Chancery Court naming the Company and certain of its directors and officers (among others) as defendants (the “Breach Lawsuit”). BV Advisory Partners, LLC v.
On July 14, 2022, BV Advisory returned the cashier’s check and disputed the calculation of the amount paid to settle the notes. On August 16, 2022, BV Advisory filed a complaint in the Delaware Chancery Court naming the Company and certain of its directors and officers (among others) as defendants.
BV Advisory Injunction Lawsuit On January 31, 2025, the Company filed a complaint in Delaware Chancery Court against BV Advisory and its principal Keith Barksdale (the “BV Defendants”) asserting claims for defamation, breach of contract, conversion, aiding and abetting conversion, and misappropriation of trade secrets based on the BV Defendants’ unauthorized possession and dissemination of certain of the Company’s confidential and privileged documents.
BV Advisory Injunction Lawsuit On January 31, 2025, the Company filed a complaint in Delaware Chancery Court against BV Advisory and Barksdale, asserting claims for defamation, breach of contract, conversion, aiding and abetting conversion, and misappropriation of trade secrets based on their unauthorized possession and dissemination of certain of the Company’s confidential and privileged documents.
BV Advisory elected to transfer the claim for breach of the BV Note Purchase Agreement to the Delaware Superior Court. On November 12, 2024, BV Advisory filed a new complaint in the Delaware Superior Court, asserting a claim for breach of the BV Note Purchase Agreement and for breach of the implied covenant of good faith and fair dealing.
On November 12, 2024, BV Advisory filed a new complaint in the Delaware Superior Court, asserting a claim for breach of the BV Note Purchase Agreement and for breach of the implied covenant of good faith and fair dealing. 32 QCi v.
Pursuant to the BV Note Purchase Agreement, on March 1, 2021, March 23, 2021, and July 9, 2021, QPhoton and BV Advisory entered into convertible promissory notes for $200,592, $150,000, and $150,000, respectively, for a total of $500,592 (the “BV Notes”).
QCi Breach of Contract Lawsuit On March 1, 2021, QPhoton entered into a Note Purchase Agreement with BV Advisory (the “BV Note Purchase Agreement”), pursuant to which, on March 1, 2021, March 23, 2021, and July 9, 2021, QPhoton and BV Advisory entered into convertible promissory notes for $200,592, $150,000, and $150,000, respectively, for a total of $500,592.
On June 16, 2022, the effective date of our acquisition of QPhoton, QPhoton tendered a cashier’s check to BV Advisory in the amount of $535,684.24, representing the full principal balance of the BV Notes and accrued interest through June 16, 2022.
The notes bore interest at a rate of 6% per annum and matured two years from the issuance date. On June 16, 2022, the effective date of our acquisition of QPhoton, QPhoton tendered a cashier’s check to BV Advisory in the amount of $535,684.24, representing the full principal balance of the notes and accrued interest through June 16, 2022.
The former consultants did not exercise their vested options and the options were duly forfeited. In December 2024, the former consultants claimed that they still retained the right to exercise the options, which the Company rejected. The Company believes that these claims are without merit and intends to defend itself vigorously.
The former consultants did not exercise their vested options and the options were forfeited. In December 2024, the former consultants claimed that they still retained the right to exercise the options, which the Company rejected.
Quantum Computing Inc. , et al., C.A. No. 2022-0719-VCG (Del. Ch.). BV Advisory sought, among other relief, monetary damages from QPhoton for an alleged breach of the BV Note Purchase Agreement.
BV Advisory sought, among other relief, monetary damages from QPhoton for an alleged breach of the BV Note Purchase Agreement.
Removed
The parties agreed to suspend discovery pending resolution of outstanding motions in two related cases. The Company does not have sufficient information to assess the potential impact of the Appraisal Petition at this time. BV Advisory v.
Added
BV Advisory elected to transfer the claim for breach of the BV Note Purchase Agreement to the Delaware Superior Court.
Removed
QCi Breach of Contract Lawsuit On March 1, 2021, QPhoton entered into a Note Purchase Agreement with BV Advisory (the “BV Note Purchase Agreement”).
Added
The Company sought, among other relief, injunctive relief and damages.
Removed
The BV Notes all bore interest at a rate of 6% per annum and matured two years from the issuance date.
Added
Resolution On July 17, 2025, the Company entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Barksdale and BV Advisory, pursuant to which, among other things, (i) Barksdale, BV Advisory, and the Company agreed to settle all disputes between them without admissions of any kind and release all Claims, as defined therein, that they might have against each other, on the terms and conditions set forth therein, (ii) the Company agreed to pay $750,000 to BV Advisory and Barksdale, collectively, and issue 1,900,000 shares of its common stock (the “Shares”) to Barksdale or entities designated by him, and (iii) the Company agreed to file a registration statement providing for the resale of the Shares by July 31, 2025.
Removed
The Company answered the complaint on December 16, 2024. The Company believes that BV Advisory’s BV Note claims have no merit and intends to defend itself vigorously, but does not have sufficient information to assess the potential impact of the Breach Lawsuit at this time. 27 QCi v.
Added
On July 28, the Company filed such a resale registration statement on Form S-1, which the SEC declared effective on August 4, 2025. BV Advisory had been both a lender to and shareholder of QPhoton.
Removed
The Company seeks, among other relief, injunctive relief and damages. On February 11, 2025, the Court granted the Company’s motion for a temporary restraining order and instructed the parties to negotiate an expedited case schedule.
Added
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.
Removed
On February 13, 2025, the Court entered a stipulated case schedule that set a trial for April 8 and 9, 2025 on the Company’s claims for conversion, aiding and abetting conversion, and misappropriation of trade secrets. The parties are currently engaged in discovery.
Added
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 intends to bring a motion to dismiss the second amended complaint. The motion is presently due on or before March 13, 2025.
Added
Shareholder Derivative Action Lawsuit On March 31, 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.
Added
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.
Added
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.
Added
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.
Added
The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims 33 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.
Added
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.
Added
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.
Added
The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.
Added
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 which the Company and named defendants in that action plan to file on or before March 13, 2026.
Added
On February 23, 2026, with respect to the claims brought by one of the two consultants, an arbitrator ruled in favor of the former consultant on 1 of the 7 claims. The arbitrator ruled in favor of the Company on the remaining 6 claims.
Added
The relief granted to the consultant in the arbitrator’s partial award is confidential and immaterial to the Company’s financial condition, results of operations, and cash flows. The Company has determined that the remaining arbitration is not material to its financial condition, results of operations or cash flows, and therefore the Company is discontinuing disclosure with respect to such proceeding.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+3 added−0 removed5 unchanged
Biggest changeAs of March 18, 2025, we had 137,244,545 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. Holders of Common Equity As of March 18, 2025, there were approximately 214 stockholders of record of our common stock.
Biggest changeAs of February 27, 2026, we had 224,538,254 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. Holders of Common Equity As of February 27, 2026, there were approximately 210 stockholders of record of our common stock.
Unregistered Sales of Equity Securities and Use of Proceeds During the year ended December 31, 2024, we have issued securities that were not registered under the Securities Act, all of which were previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. ITEM 6. [Reserved]
Unregistered Sales of Equity Securities and Use of Proceeds During the year ended December 31, 2025, we have issued securities that were not registered under the Securities Act, all of which were previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Added
Securities Authorized for Issuance under Equity Compensation Plans Please see Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” under Part III of this Annual Report on Form 10-K, which is incorporated by reference to our 2026 Proxy Statement, for information on where to find information required by Item 201(d) of Regulation S-K.
Added
Stock Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. 35 The following graph depicts the total cumulative stockholder return on our common stock from December 31, 2020 through December 31, 2025, relative to the performance of the Nasdaq and S&P 500 indexes.
Added
The graph assumes an initial investment of $100.00 at the close of trading on December 31, 2020 and that all dividends paid by companies included in these indices have been reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance. ITEM 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

38 edited+28 added−10 removed32 unchanged
Biggest changeThe Company’s development team includes optical engineers, mathematicians, physicists, and software developers. 29 Results of Operations Our results of operations for the years ended December 31, 2024 and 2023 is as follows (in thousands, except percentages): Year Ended December 31, 2024 2023 % Change Revenue: Total revenue $ 373 $ 358 4 % Gross profit 112 162 (31 )% Gross profit margin 30 % 45 % Operating expenses: Research and development 11,318 8,891 27 % Sales and marketing 1,818 1,806 1 % General and administrative 12,913 15,708 (18 )% Total operating expenses 26,049 26,405 (1 )% Loss from operations (25,937 ) (26,243 ) (1 )% Non-operating income and (expense): Interest and other income 423 295 43 % Interest expense, net (2,496 ) (1,602 ) 56 % Change in fair value of warrant liabilities (40,532 ) 528 NM Total non-operating income (expense) (42,605 ) (779 ) NM Net loss $ (68,542 ) $ (27,022 ) 154 % Revenues The Company’s revenues during the years ended December 31, 2024 and 2023 consisted of (in thousands): Year Ended December 31, 2024 2023 % Change Services $ 346 $ 353 (2 )% Products 27 5 440 % Total $ 373 $ 358 4 % Revenues for the year ended December 31, 2024 were $373 thousand compared to $358 thousand for the year ended December 31, 2023, an increase of $15 thousand, or 4%.
Biggest changeTrade and other international disputes can have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company’s products and services, all of which can further adversely affect the Company’s business and results of operations. 37 Results of Operations Our results of operations for the years ended December 31, 2025 and 2024 is as follows (in thousands, except percentages): Year Ended December 31, 2025 2024 % Change Revenue: Total revenue $ 682 $ 373 83 % Gross profit 67 112 (40 )% Gross profit margin 10 % 30 % Operating expenses: Research and development 20,473 11,318 81 % Sales and marketing 3,431 1,818 89 % General and administrative 27,240 12,913 111 % Total operating expenses 51,144 26,049 96 % Loss from operations (51,077 ) (25,937 ) 97 % Non-operating income and (expense): Interest and other income, net 20,718 423 4,798 % Interest expense (65 ) (2,496 ) (97 )% Change in fair value of derivative liability 11,750 (40,532 ) 129 % Total non-operating income (expense), net 32,403 (42,605 ) (176 )% Net loss $ (18,674 ) $ (68,542 ) (73 )% Revenues The Company’s revenues during the years ended December 31, 2025 and 2024 consisted of (in thousands): Year Ended December 31, 2025 2024 % Change Services $ 368 $ 346 6 % Products 314 27 1,063 % Total $ 682 $ 373 83 % Revenues for the year ended December 31, 2025 were $682 thousand compared to $373 thousand for the year ended December 31, 2024, an increase of $309 thousand, or 83%.
In particular, uncertain and unfavorable conditions in the United States and global macroeconomic environment, including inflationary pressures, rising interest rates, bank failures, and financial and credit market fluctuations, could reduce our ability to access capital on favorable terms, or at all.
In particular, 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 on favorable terms, or at all.
As much revenues will be derived from the sales of our products and services, our business operations may be adversely affected by the products and services offered by our competitors and any prolonged recession periods.
As revenues will be derived from the sales of our products and services, our business operations may be adversely affected by the products and services offered by our competitors and any prolonged recession periods.
The year-over-year change was driven by changes in the number of, size of and level of effort performed on active customer proof of concept and research and development services and customer hardware contracts. In 2024, the Company continued to execute its business strategy to provide quantum-ready solutions for solving real-world problems.
The year-over-year change was driven by changes in the number of, size of and level of effort performed on active customer proof of concept and research and development services and customer hardware contracts. In 2025, the Company continued to execute its business strategy to provide quantum-ready solutions for solving real-world problems.
If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of December 31, 2024, will be accounted for as a reduction of income tax expense.
If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of December 31, 2025, will be accounted for as a reduction of income tax expense.
Non-operating Income (Expense) The following table summarizes our non-operating income (expense) for the years ended December 31, 2024 and 2023 (in thousands, except percentages).
Non-operating Income (Expense) The following table summarizes our non-operating income (expense) for the years ended December 31, 2025 and 2024 (in thousands, except percentages).
Accordingly, as of December 31, 2024 and 2023, we had only issued 6,325,503 of the QPhoton Warrants.
Accordingly, as of December 31, 2025 and 2024, we had only issued 6,325,503 of the QPhoton Warrants.
Cost of revenues for each of the years ended December 31, 2024 and 2023 consists primarily of salary expense.
Cost of revenues for each of the years ended December 31, 2025 and 2024 consists primarily of salary expense.
We will require a significant amount of cash for continued investment in our Foundry Services offering, including but not limited to our AZ Chips Facility and any future-identified space for expansion, as well as ongoing research and development for our non-linear quantum optical products and photonics chips.
We will require a significant amount of cash for continued investment in our Foundry Services offering, including but not limited to future-identified space for expansion of our AZ Chips Facility, as well as the construction or acquisition of a high-volume chip manufacturing facility, as well as ongoing research and development for our non-linear quantum optical products and photonics chips.
See Note 7, Financial Liabilities , in the accompanying notes to our consolidated financial statements appearing elsewhere in this report for additional information. Liquidity and Capital Resources We have incurred net losses and experienced negative cash flows from operations since inception.
See Note 12, Capital Stock , in the accompanying notes to our consolidated financial statements appearing elsewhere in this report for additional information on the QPhoton Warrants. 40 Liquidity and Capital Resources We have incurred net losses and experienced negative cash flows from operations since inception.
A third alleged shareholder, BV Advisory, rejected the Merger Consideration and commenced litigation in Delaware Chancery Court (see Note 8, Contingencies – Legal Proceedings , in this Form 10-K for additional information and Item 3, Legal Proceedings , in this Form 10-K for a full discussion), and to date that litigation has not been resolved.
A third alleged shareholder, BV Advisory, rejected the Merger Consideration and commenced litigation in Delaware Chancery Court (see Note 10, Contingencies - Legal Proceedings , in this Form 10-K for additional information and Item 3, Legal Proceedings , in this Form 10-K for a full discussion). That litigation was resolved in 2025.
The loss on change in value of warrant liability is entirely comprised of mark-to-market adjustments for the QPhoton Warrants, as defined below in the accompanying notes to our consolidated financial statements appearing elsewhere in this report, which had no carrying value as of December 31, 2023.
See Note 12, Capital Stock , in the accompanying notes to our consolidated financial statements appearing elsewhere in this report for additional information on the QPhoton Warrants The loss on change in value of derivative liability is entirely comprised of mark-to-market adjustments for the QPhoton Warrants, as defined below in the accompanying notes to our consolidated financial statements appearing elsewhere in this report, which had no carrying value as of December 31, 2023.
Fair Value of Warrant Liabilities and Derivatives Determining the fair market value of the QPhoton Warrants, which were included in the merger consideration paid to the stockholders of QPhoton (the “QPhoton Merger Consideration”), is a critical accounting estimate.
Fair Value of Derivative Liability Determining the fair market value of the QPhoton Warrants, which were included in the merger consideration paid to the stockholders of QPhoton (the “QPhoton Merger Consideration”), is a critical accounting estimate.
In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating results. As of December 31, 2024, we had federal and state net operating loss (“NOL”) carryforwards of approximately $89.4 million, or $19.6 million on a tax-effected basis.
In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating results. As of December 31, 2025, we had federal and state net operating loss (“NOL”) carryforwards of approximately $158.1 million, or $27.1 million on a tax-effected basis.
The Company is developing quantum and ancillary non-quantum products for high-performance computing applications based on proprietary photonics technology. QCi’s products are designed to operate at room temperature and low power at an affordable cost in the areas of high-performance computing, sensing and imaging, and quantum cybersecurity.
Overview QCi is a development stage company with limited operations and revenue. The Company is developing quantum and ancillary non-quantum products for high-performance computing applications based on proprietary photonics technology. QCi’s products are designed to operate at room temperature and low power at an affordable cost in the areas of high-performance computing, sensing, and quantum cybersecurity.
Year Ended December 31, % 2024 2023 Change General and administrative $ 12,913 $ 15,708 (18 )% 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.
Year Ended December 31, % 2025 2024 Change General and administrative $ 27,240 $ 12,913 111 % 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.
In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our consolidated financial statements. 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable.
In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our consolidated financial statements.
Cash Flows The following table summarizes our cash flow for the years ended December 31, 2024 and 2023 (in thousands): Year Ended December 31, 2024 2023 Net cash used in operating activities $ (16,213 ) $ (18,315 ) Net cash used in investing activities (6,036 ) (2,612 ) Net cash provided by financing activities 99,135 17,678 Net increase (decrease) in cash and cash equivalents $ 76,886 $ (3,249 ) Net cash used in operating activities for the years ended December 31, 2024 and 2023 was $16.2 million and $18.3 million, respectively, in each case primarily as a result of our net loss in each period offset by noncash adjustments for stock-based compensation, mark-to-market valuation adjustments on financial liabilities, and depreciation and amortization.
Cash Flows The following table summarizes our cash flow for the years ended December 31, 2025 and 2024 (in thousands): Year Ended December 31, 2025 2024 Net cash used in operating activities $ (30,294 ) $ (16,213 ) Net cash used in investing activities (788,327 ) (6,036 ) Net cash provided by financing activities 1,477,556 99,135 Net increase in cash and cash equivalents $ 658,935 $ 76,886 41 Cash Flows from Operating Activities Net cash used in operating activities for the years ended December 31, 2025 and 2024 was $30.3 million and $16.2 million, respectively, in each case primarily as a result of our net loss in each period offset by noncash adjustments for stock-based compensation, mark-to-market valuation adjustments on derivative liabilities, and depreciation and amortization.
Our lack of a scaled and distributed base of revenue generation by product and sales channel can result in significant differences in gross margin between reporting periods.
Our lack of a scaled and distributed base of revenue generation by product and sales channel can result in significant differences in gross margin between reporting periods. We anticipate product gross margins will improve as we build additional units of each product.
Year Ended December 31, % 2024 2023 Change Research and development $ 11,318 $ 8,891 27 % Research and development expenses consist primarily of compensation for employees that primarily engage in research and development efforts and fees for the development of hardware products and supporting software.
Year Ended December 31, % 2025 2024 Change Research and development $ 20,473 $ 11,318 81 % 39 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.
In determining the fair market value of the QPhoton Warrants, the Company determines which underlying options and warrants are in-the-money or out-of-the-money at period end by comparing to the bid price of the Company’s common stock, then accounts for changes period-over-period by realizing a mark-to-market gain or loss for the period.
In determining the fair market value of the QPhoton Warrants, the Company determines which underlying options and warrants are in-the-money or out-of-the-money at period end by comparing to the bid price of the Company’s common stock, then accounts for changes period-over-period by realizing a mark-to-market gain or loss for the period. 42 An additional critical accounting estimates involves determining the fair value of the conversion features inherent in the Streeterville Convertible Note (the “Streeterville Derivative Liability”), which involves inherent uncertainties and the application of management judgement.
Cost of Revenues Cost of revenues, which consists of direct labor expenses, primarily salary costs for engineering and solutions staff delivering services, and other direct component costs for custom hardware on research and development contracts, was $261 thousand for the year ended December 31, 2024, compared to $196 thousand for the prior year, an increase of $65 thousand, or 33%.
The Company also started to recognize revenue for cloud-based access to the Dirac-3 quantum optimization system during 2025. 38 Cost of Revenues Cost of revenue, which consists of direct labor expenses, primarily salary costs for engineering and solutions staff delivering services, and other direct component costs for custom hardware on research and development contracts, was $615 thousand for the year ended December 31, 2025, compared to $261 thousand for the prior year, an increase of $354 thousand, or 136%.
Revenue was derived from sales of hardware products and professional services in 2024 and 2023, in each case provided to multiple commercial and government customers under multi-month contracts.
Revenue was derived from sales of hardware products and professional services in 2025 and 2024, in each case provided to multiple commercial and government customers under multi-month contracts. Product revenue increased substantially compared to 2024 due to successful sales of vibrometer and quantum networking devices which were delivered during 2025.
Because of the complexity of some of these uncertainties, the ultimate resolution may result in a tax payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is made available.
Because of the complexity of some of these uncertainties, the ultimate resolution may result in a tax payment that is materially different from our current estimate of the unrecognized tax benefit liabilities.
Net cash used in investing activities for the years ended December 31, 2024 and 2023 was $6.0 million and $2.6 million, respectively, and was attributable to our purchase of TFLN Optical Chips manufacturing equipment for our AZ Chips Facility, as well as computer hardware and laboratory equipment.
Cash Flows from Investing Activities Net cash used in investing activities for the years ended December 31, 2025 and 2024 was $788.3 million and $6.0 million, respectively, and was attributable to our purchase of computer hardware, laboratory equipment and TFLN Chips manufacturing equipment, as well as the purchase of $1,197.9 million in available-for-sale-debt securities offset by $376.3 million in proceeds from sales of available-for-sale-debt securities.
We believe that none of the unrecognized tax benefits may be recognized by the end of 2024. Legal and Other Contingencies The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.
These differences will be reflected as increases or decreases to income tax expense in the period in which new information is made available. 43 We believe that none of the unrecognized tax benefits may be recognized by the end of 2026. Legal and Other Contingencies The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.
Operating Expenses Operating expenses of approximately $26.0 million in 2024 decreased as compared to approximately $26.4 million in 2023 primarily as a result of a decrease in general and administrative expenses, partially offset by an increase in research and development expenses, as set forth in the below tables (in thousands, except percentages).
Operating Expenses Operating expenses of approximately $51.1 million during the year ended December 31, 2025 increased as compared to approximately $26.0 million in 2024 primarily as a result of higher research and development expenses, sales and marketing expenses and general and administrative expenses, as set forth in the below tables (in thousands, except percentages).
The Streeterville Derivative Liability will be mark-to-market adjusted on a quarterly basis and accreted as interest expense while the Streeterville Convertible Note is outstanding. 34 Fair Market Value and Useful Life of Intangible Assets Determining the fair market value and useful life of the intangible assets acquired by the Company through the QPhoton Merger is another critical accounting estimate.
Fair Market Value and Useful Life of Intangible Assets Determining the fair market value and useful life of the intangible assets acquired by the Company through the QPhoton Merger is another critical accounting estimate.
See “Forward-Looking Statements.” You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K, Overview QCi is a development stage company with limited operations and revenue.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties.
Research and development expenses in 2024 increased $2.4 million or 27% compared with 2023 primarily due to higher employee-related expenses, primarily as a result of higher stock-based compensation and bonus expenses to incentivize and retain key technologists, as well as higher depreciation for long-lived laboratory equipment, offset partially by lower professional and hosting services.
Research and development expenses during the year ended December 31, 2025 increased $9.2 million or 81% compared with 2024 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 hosting services expenses and lower stock based compensation expense.
Year Ended December 31, % 2024 2023 Change Sales and marketing $ 1,818 $ 1,806 1 % Selling and marketing expenses consist primarily of employee compensation as well as customer lead generation activities, tradeshow participation, advertising and other marketing and selling costs. 31 Net selling and marketing expenses in 2024 were largely unchanged as compared with 2023, with increases primarily due to higher stock-based compensation, offset by lower outsourced professional services costs, related marketing program costs, and lower trade show and travel-related costs in 2024.
Year Ended December 31, % 2025 2024 Change Sales and marketing $ 3,431 $ 1,818 89 % 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.
We expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development and go-to-market programs. As of December 31, 2024, the Company had cash and cash equivalents of $78.9 million.
During the year ended December 31, 2025, the Company raised net proceeds of $1,475.1 million through the private placement of equity. The Company has no lines of credit or short-term debt obligations outstanding. We expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development and go-to-market programs.
We believe, however, that the Company’s existing cash and cash equivalents, together with any cash generated from operations and the proceeds from any additional equity or debt issuances will be sufficient to meet the Company’s liquidity needs for at least the next 12 months. 32 The following table summarizes total current assets, liabilities and working capital at December 31, 2024, compared to December 31, 2023 (in thousands): December 31, 2024 December 31, 2023 Increase/ (Decrease) Current assets $ 79,151 $ 2,656 $ 76,495 Current liabilities $ 4,559 $ 4,812 $ (253 ) Working capital (deficit) $ 74,592 $ (2,156 ) $ 76,748 At December 31, 2024, we had working capital of $74.6 million as compared to working capital deficit of $2.2 million at December 31, 2023, an increase of $76.8 million.
We believe, however, that the Company’s existing cash and cash equivalents, together with any cash generated from operations and the proceeds from any additional equity or debt issuances will be sufficient to meet the Company’s liquidity needs for at least the next 12 months.
The following discussion and analysis of the results of operations and financial condition for the years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 20, 2025.
The increase in 2024 is primarily due to the purchase of additional equipment in connection with establishing the AZ Chip Facility. 33 Net cash provided by financing activities for the years ended December 31, 2024 and 2023 was $99.1 million and $17.7 million, respectively.
Cash Flows from Financing Activities Net cash provided by financing activities for the years ended December 31, 2025 and 2024 was $1,477.6 million and $99.1 million, respectively. Cash flows provided by financing activities during year ended December 31, 2025 were primarily attributable to net proceeds from our stock issuances.
The increase for 2024 was predominantly driven by the increases in direct labor expenses and other direct costs required to perform on the contracts during 2024 compared to the prior year. 30 Gross Margin Gross margin for the year ended December 31, 2024 was $112 thousand compared to $162 thousand for the prior year, a decrease of $50 thousand, or 31%.
The increase for 2025 was primarily due to the increases in direct labor expenses on R&D services contracts and custom hardware contracts, an increase in production overhead, and increased other direct costs (primarily parts and materials) required to perform on the contracts during the 2025 compared to the prior year.
Year Ended December 31 % 2024 2023 Change Interest and other income $ 423 $ 295 43 % Interest expense, net (2,496 ) (1,602 ) 56 % Change in value of derivative and warrant liabilities (40,532 ) 528 NM Other income (expense) $ (42,605 ) $ (779 ) NM Non-operating expense increased to $42.6 million for 2024 compared to $779 thousand for 2023, primarily as the result of a $40.5 million decrease in the change in fair value of the derivative liability for the QPhoton Warrants, as defined below, during 2024 compared to a $528 thousand increase in 2023.
Interest expense during the year ended December 31, 2025 is related to late payroll tax filings. Change in fair value of derivative and warrant liability during the year ended December 31, 2025 increased $52,282 or 129% compared with 2024 as a result of the change in the fair value of the QPhoton Warrant Liability (as defined below).
Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed under Item 1A, “Risk Factors.” The following analysis generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Removed
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Added
The Company’s development team includes optical engineers, technicians, mathematicians, physicists, and software developers. 36 Recent Developments On December 15, 2025, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Luminar Technologies, Inc., a Delaware corporation (the “Seller”) and Luminar, pursuant to which, subject to the terms and conditions set forth in the Stock Purchase Agreement, the Company agreed to acquire all of the issued and outstanding shares of common stock of Luminar from the Seller (the “Luminar Acquisition”) for a total purchase price of $110 million in cash (the “Purchase Price”).
Removed
On a percentage basis, gross margin was 30%, a decrease of 15% year-over-year. The change was the result of a new custom hardware contract that had lower margins due to its cost of revenues being comprised of other direct component costs in addition to direct labor expenses.
Added
The Luminar Acquisition was completed on February 2, 2026. $11.0 million of the Purchase Price was placed with an escrow agent in connection with the signing of the Stock Purchase Agreement. The escrowed amount will remain with the escrow agent to cover certain limited indemnification obligations of the Seller pursuant to the Stock Purchase Agreement until February 2, 2027.
Removed
General and administrative expenses in 2024 decreased $2.8 million or 27% compared with 2023 primarily due to lower employee- and advisor-related expenses, including stock-based compensation, payroll, bonus and travel expenses, as well as lower legal fees and consulting services driven by changes made within and by the Company’s management team, offset by increased audit fees driven by the Company retaining a new independent registered public accounting firm in May 2024and such firm’s re-audit of the Company’s consolidated financial statements for the years ended December 31, 2023 and 2022.
Added
The Seller, together with certain of its subsidiaries, is a debtor in a voluntary Chapter 11 case before the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), which commenced on December 15, 2025. Luminar is not a debtor in such Chapter 11 case and is operating in the ordinary course of business.
Removed
See Note 10, Capital Stock , in the accompanying notes to our consolidated financial statements appearing elsewhere in this report for additional information on the QPhoton Warrants.
Added
Upon Bankruptcy Court approval, the Company was designated as the “stalking horse” bidder in connection with a sale of Luminar under Section 363 of the Bankruptcy Code.
Removed
In addition, interest expense, net, which consists of interest on financial liabilities and amortization of debt issuance costs, increased $128 thousand or 43% in 2024 compared to 2023, which increase was primarily attributable to interest paid on the secured convertible promissory note in the original principal amount of $8.25 million that we issued to Streeterville Capital, LLC in August 2024 (the “Streeterville Convertible Note”), which we paid in full as of December 31, 2024.
Added
The Luminar Acquisition was conducted through a Bankruptcy Court-supervised process pursuant to Bankruptcy Court-approved bidding procedures and was subject to the receipt of higher or better offers from competing bidders at an auction, approval of the sale by the Bankruptcy Court, and the satisfaction of certain conditions.
Removed
Through December 31, 2024, the Company has raised $167.8 million through its issuance of common stock and $20.1 million through its issuance of convertible promissory notes and other debt for a total of $187.9 million. The Company has no lines of credit or short-term debt obligations outstanding.
Added
Key Factors Affecting Our Performance Macroeconomic conditions, including inflation, interest rates and currency fluctuations, have directly and indirectly impacted, and could in the future materially impact, the Company’s results of operations and financial condition. Our business may be affected by disruptions or delays to the federal government budget.
Removed
The increase in working capital is primarily attributable to an increase in cash from the net proceeds of our sales of 16 million shares of common stock for an aggregate of $40 million in November 2024 and 10 million shares of common stock for an aggregate of $50 million in December 2024, and our issuance of 23.7 million shares of common stock for an aggregate of $23.8 million through the Company’s ATM, as defined below, managed by Ascendiant Capital Markets, LLC during 2024, offset by the use of cash to pay for operating expenses and capital investments in property and equipment.
Added
We are subject to a lengthy product commercialization timeline and a lengthy sales cycle. Beginning in the second quarter of 2025, new U.S. tariffs were announced, including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the EU, among others.
Removed
For more information on the November and December issuances, please see Note 10, Capital Stock , in the accompanying notes to our consolidated financial statements appearing elsewhere in this report.
Added
In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. Various modifications to the U.S. tariffs have been announced and further changes could be made in the future, which may include additional sector-based tariffs or other measures.
Removed
Cash flows provided by financing activities during year ended December 31, 2024 were attributable to proceeds from our stock issuances in November and December 2024, and the proceeds from our sale of shares of common stock pursuant to the ATM facility and our issuance of the Streeterville Convertible Note, partially offset by repayments on the Streeterville Unsecured Note, as defined below, and the Streeterville Convertible Note as well as redemptions of shares of Series A Preferred Stock.
Added
Tariffs and other measures that are applied to the Company’s products or their components can have a material adverse impact on the Company’s business, results of operations and financial condition, including impacting the Company’s supply chain, components, pricing and gross margin.
Removed
An additional critical accounting estimates involves determining the fair value of the conversion features ingerent in the Streeterville Convertible Note (the “Streeterville Derivative Liability”), which involves inherent uncertainties and the application of management judgement.
Added
The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures.
Added
During 2025 we were able to sell more off the shelf products as opposed to 2024 where we mostly provided services to create bespoke solutions for our customers.
Added
Gross Margin Gross margin for the year ended December 31, 2025 was $67 thousand compared to $112 thousand for the prior year, a decrease of $45 thousand, or 40%. On a percentage basis, gross margin was 10%, a decrease of 20% year-over-year.
Added
The decrease in gross margin was largely due to higher than anticipated direct labor expenses required to complete the assembly and test of the first unit of a new hardware product. Cost information from the production of the first unit will be used in adjusting pricing of subsequent product sales.
Added
The Company is aggressively pursuing its technology roadmap and has hired additional scientists, engineers and technicians in order to accelerate the development of key technologies and products.
Added
Sales and marketing expenses during the year ended December 31, 2025 increased $1.6 million or 89% compared with 2024 primarily due to increases in the sales staff, higher tradeshow and travel-related costs and increased marketing program costs.
Added
During the year ended December 31, 2025 the sales and marketing team participated in 1or 2 conferences and trade shows per month, compared to 1 or 2 trade shows per quarter during 2024, including greater participation in international quantum technology events, resulting in higher travel expenses.
Added
General and administrative expenses during the year ended December 31, 2025 increased $14.3 million or 111% compared with 2024 primarily due to higher employee and advisor-related expenses relating to development and implementation of internal financial controls, expansion of accounting staff, increased recruiting fees and legal expenses related to multiple financings, mergers and acquisition activity, and ongoing litigation.
Added
Year Ended December 31 % 2025 2024 Change Interest and other income, net $ 20,718 $ 423 4,798 % Interest expense (65 ) (2,496 ) (97 )% Change in fair value of derivative and warrant liability 11,750 (40,532 ) 129 % Other income (expense), net $ 32,403 $ (42,605 ) (176 )% Interest and other income, net, during the year ended December 31, 2025 increased $20,295 or 4,798% compared with 2024 primarily due to the Company maintaining higher cash balances in mutual funds, deposit and money market accounts, U.S.
Added
Treasuries and corporate bonds during as a result of the substantial amount of new funding the Company raised in 2025. Interest expense during the year ended December 31, 2025 decreased $2,431 or 97% compared with 2024 primarily due to a decrease of interest on financial liabilities as the related borrowings were paid off during 2024.
Added
The change in value of the warrant liability is a non-cash charge comprised of mark-to-market adjustments for the QPhoton Warrants (as defined below).
Added
Future mark-to-market adjustments may result in losses if the Company’s stock price increases above the Company’s closing bid price of $10.26 per share on December 31, 2025; such adjustments may alternatively result in gains if the closing bid share price of the Company’s common stock decreases.
Added
We also expect to incur additional integration and scaling costs associated with the LSI acquisition. As of December 31, 2025, the Company had cash and cash equivalents of $737.9 million and short-term and long-term investments of $782.5 million.
Added
We believe that our existing cash, cash equivalents and investments will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months, although we may choose to take advantage of opportunistic capital raising or refinancing transactions at any time.
Added
The following table summarizes total current assets, liabilities and working capital at December 31, 2025, compared to December 31, 2024 (in thousands): December 31, 2025 December 31, 2024 Increase/ (Decrease) Current assets $ 1,133,720 $ 79,151 $ 1,054,569 Current liabilities $ 11,074 $ 4,559 $ 6,515 Working capital (deficit) $ 1,122,646 $ 74,592 $ 1,048,054 At December 31, 2025, we had working capital of $1,122.7 million as compared to working capital of $74.6 million at December 31, 2024, an increase of $1,048.0 million.
Added
The increase in working capital is primarily attributable to an increase in cash and available-for-sale debt securities from the net proceeds of our sales of our sales of 86.3 million shares of common stock for an aggregate of $1,475.1 million during 2025. On a long-term basis, our liquidity is dependent on continuation and expansion of operations and receipt of revenues.
Added
Demand for the Company’s 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.
Added
As revenues will be derived from the sales of our products and services, our business operations may be adversely affected by the products and services offered by our competitors and any prolonged recession periods.
Added
The Streeterville Derivative Liability will be mark-to-market adjusted on a quarterly basis and accreted as interest expense while the Streeterville Convertible Note is outstanding. The Streeterville Convertible Note was paid off in 2024.

Other QUBT 10-K year-over-year comparisons