UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2025
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from __________________ to __________________
Commission
File Number 001-40615
QUANTUM
COMPUTING INC.
(Exact
name of registrant as specified in its charter)
5 Marine View Plaza, Suite 214, Hoboken, NJ 07030
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (703)436-2121
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $.0001 QUBT The Nasdaq Stock Market LLC
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was
required to submit and post such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☒
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒.
The aggregate market value of the voting and non-voting
common stock held by non-affiliates of the registrant as of June 30, 2025, the last business day of the registrant’s most recently
completed second fiscal quarter, was $2,545,765,591 based on the closing price of $19.17 per share of Quantum Computing Inc. common stock
on the Nasdaq Stock Market LLC on that date. Shares of the registrant’s common stock held by each officer and director and each
other person who may be deemed to be an affiliate of the registrant have been excluded from the computation. This determination of affiliate
status with respect to the foregoing calculation is not necessarily a conclusive determination for other purposes.
As
of February 27, 2026, there were 224,538,254 shares of the registrant’s common stock issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Information required by Part III of this
Form 10-K is incorporated by reference to the registrant’s proxy statement (the “Proxy Statement”) for the 2026 annual
meeting of stockholders, which Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end
of the fiscal year covered by this Form 10-K.
TABLE OF CONTENTS
PART I 1
ITEM 1. BUSINESS. 2
ITEM 1A. RISK FACTORS. 11
ITEM 1B. UNRESOLVED STAFF COMMENTS. 30
ITEM 1C. CYBERSECURITY. 30
ITEM 2. PROPERTIES. 32
ITEM 3. LEGAL PROCEEDINGS. 32
ITEM 4. MINE SAFETY DISCLOSURES. 34
ITEM 6. [RESERVED] 36
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 44
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 44
ITEM 9A. CONTROLS AND PROCEDURES. 44
ITEM 9B. OTHER INFORMATION. 47
ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. 47
PART III 48
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 48
ITEM 11. EXECUTIVE COMPENSATION. 48
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 48
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. 49
i
PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section
21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, forward-looking statements are
identified by terms such as “may,” “will,” “should,” “could,” “would,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,”
“potential” and similar expressions intended to identify forward-looking statements.
These forward-looking statements are only predictions
and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by such forward-looking statements. Factors that could cause or contribute to differences in our future financial and other results include
those discussed in the risk factors set forth in Part I, Item 1A of this Annual Report on Form 10-K as well as those discussed elsewhere
in this Annual Report on Form 10-K and the factors described below:
● the market acceptance for our products and services;
● inability or failure to protect intellectual property;
● global inflation and interest rates;
● impacts of the wars in Ukraine or Israel or other global conflicts;
● fluctuations in foreign exchange rates;
You should read this Annual Report on Form 10-K and the documents that
we reference in this Annual Report on Form 10-K and have filed with the Securities and Exchange Commission (the “SEC”) as
exhibits to this Annual Report on Form 10-K with the understanding that our actual future results, levels of activity, performance and
events and circumstances may be materially different from what we expect. We qualify all forward-looking statements by these cautionary
statements.
Throughout this Annual Report on Form 10-K, the
terms “we,” “us,” “our,” “the Company,” “our Company,” “QCi” and
“QUBT,” refer to Quantum Computing Inc., a Delaware corporation, and unless the context indicates otherwise, also includes
our wholly-owned subsidiaries.
1
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. 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.
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.
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. 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. 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. 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.
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 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. 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 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”). 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 EQC’s involvement of the changing environment as an integral part of the system
is in sharp contrast to competing quantum approaches, including superconducting, trapped-ion, and annealing architectures, which seek
to establish stable quantum states by the complete elimination of environmental effects. As a result, the EQC can consume less power than
these competing methods and operates at room temperature making it compatible with an ordinary server room environment. We anticipate
that our EQC may enable us to develop and produce multiple generations of quantum machines with increasing computational power, scalability,
and speed.
Our longer-term product development plan is to migrate product designs
based on discrete components, including EQC’s current designs, to a set of optical integrated circuits built on wafers using a crystalline
material called thin film lithium niobate (“TFLN”). The Company believes that TFLN is an excellent material for optical integrated
circuit design, given its advantageous optical properties (linear, non-linear ferroelectric, and electro-optic) and its compatibility
with silicon-based semiconductor fabrication methods. In March 2025, the Company substantially completed the buildout of its state-of-the-art
TFLN chip research and development, prototyping and small-batch manufacturing facility in a leased space within Arizona State University’s
Research Park in Tempe, Arizona (the “AZ Chips Facility”). 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. LSI designs chip-scale devices
including laser diodes, semiconductor optical amplifiers, avalanche photodiodes, passive waveguides, photonic integrated circuits, and
other related photonic chips, which are incorporated into products at various levels of integration by leveraging extensive in-house advanced
photonic packaging technologies. The LSI integrated solutions include components, modules, subsystems, and systems that serve a
broad set of customer requirements. Extensive design capabilities are complemented by an in-house III-V photonic semiconductor fabrication
facility and photonics module manufacturing capabilities. These production resources are employed to deliver high performance, high
reliability products to a growing number of customers in a wide array of industries that include aerospace and defense, sensing and instrumentation,
and optical communications. Acquiring LSI provides QCi with advanced semiconductors and related components, as well as design, testing
and consulting services to industry, in particular for Aerospace and Defense applications. Through the acquisition of LSI, QCi has broadened
its photonic chip design capability as well as our optical component and system design and advanced packaging capabilities. LSI’s
capabilities are highly synergistic with the QCi technology roadmap and will support the integration of chip-scale devices such as laser
diodes and photodetectors with QCi’s thin film lithium niobate photonic integrated circuit (PIC) platform. Collaborative efforts
between the LSI and QCi technical teams will be instrumental to delivering QCi’s photonic- and quantum-based system products.
In addition to our EQC technology, we have leveraged
QCi’s core photonics technology to demonstrate powerful quantum sensing use cases in LIDAR (light detection and ranging), a technology
that uses pulsed laser light to measure distances to objects by calculating the time it takes for the reflected light to return, reservoir
computing, a form of neural network that can be used in machine learning applications, and a quantum cyber solution, a method for highly
secure communication within a network. Several of these technologies are in the early stages of commercialization and several are available
to customers through our research and development offerings.
Our 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. 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. We further differentiate ourselves in the market by offering, in addition to
cloud-based access to our quantum computers, on-premises installation of our EQC product, which is rack-mountable and compatible with
standard server room infrastructure and requires no special cooling, shielding, or power considerations.
Further, our EQC development plan to gradually
replace discrete optical components with photonic integrated circuits will provide us the ability to fabricate and sell a range of custom
lithium niobate chips for use in our own product lines as well as TFLN Optical Chips, as defined below, for sale into existing commercial
markets for optical devices.
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. 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. 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. Estimates of the size of the global high-performance
computing industry vary, but according to Grand View Research, the high-performance computing market was valued at $39.1 billion in 2019
and is expected to reach a value of $53.6 billion by 2027, see Grand View Research - High Performance Computing Market Size Worth $53.6
Billion By 2027, https://www.grandviewresearch.com/press-release/global-high-performance-computing-hpc-market According to a report
from Allied Market Research, the global enterprise quantum computing market size was valued at $1.3 billion in 2020 and is projected to
reach $18.3 billion by 2030, growing at a compound annual growth rate of 29.7% from 2021 to 2030, according to a published report on the
enterprise quantum computing market at https://www.alliedmarketresearch.com/enterprise-quantum-computing-market (Information contained
on, or that can be accessed through, these websites is not incorporated by reference in this Annual Report, and you should not consider
information on these websites to be part of this Annual Report). 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. 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. 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. 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. 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. 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. 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. 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. 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.
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. 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. 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. 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. To 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.
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.
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 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. 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. 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. By counting photons at a megahertz rate, important properties such as material composition
and mechanical integrity can be determined within seconds and, depending on detection distance, with microwatt to milliwatt optical power.
Working at an eye-safe wavelength, the system can accurately characterize the vibration spectra of solid or liquid targets with vibration
amplitude as small as 100 nanometers.
Quantum Networks and Quantum Authentication
QCi has developed a prototype system to address
one of the major challenges in cybersecurity, the authentication of users on a network, which is currently facilitated by the distribution
of “private keys” by a trusted third party. This approach is inherently insecure as keys are bundled and travel with the encrypted
data, making it susceptible to harvest-and-decrypt-later vulnerability. QCi has developed a quantum authentication technology and methodology
that eliminates the need for trust in third-party involvement in key distribution. 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. As this industry continues to grow and mature, we expect a
continued influx of new competitors, products, hardware advances, and concepts to emerge that can dramatically transform the industry
and our business. Due to the high price point of quantum computing hardware today, novel business models may emerge to adapt to customer
preferences in the high-performance computing industry. 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.
According to research conducted by The Quantum
Insider, there are over 700 companies and approximately 400 university academic groups working in various aspects of quantum technology,
with approximately 400 of these having a pure-play focus on quantum computing.
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, we face competition from large research organizations
funded by sovereign nations such as China, Russia, Canada, Australia and the United Kingdom, as well as the European Union, and we believe
that additional countries will invest in quantum computing in the future. We will continue to face competition from the existing high-performance
computing industry using classical (non-quantum) computers.
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. 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 trade secrets consist of product formulas, research and development, and unpatentable know-how, all
of which we seek to protect, in part, by confidentiality agreements. To protect our intellectual property, we rely on a combination of
laws and regulations, as well as contractual restrictions. Federal trademark law protects our registered trademarks. We also rely on the
protection of laws regarding unregistered copyrights for certain content we create and trade secret laws to protect our proprietary technology.
To further protect our intellectual property, we enter into confidentiality agreements with our executive officers, employees, consultants
and directors.
6
Trademarks
The Company has three registered trademarks, “QPhoton,”
“QGraph” and “Qatalyst.” The Company has no pending trademark applications.
Patents
The Company has three granted United States patents.
In connection with the Luminar Acquisition (as
defined below), QCi acquired 23 issued patents, 16 pending United States patents and 9 foreign patent publications.
7
8
USA 19/242753 6/18/2025 Patent Pending Pwb Polarization Rotation Patent Pending
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”). QPhoton agreed to reimburse the Licensor for patent prosecution
expenses in the amount of $125,041 and deliver to the Licensor an annual report and quarterly report pursuant to the terms of the license
agreement. 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”). 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.
Title Country Serial Number File Date Patent Number Issue Date
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. 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. 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.
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.
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. 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.
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. 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. 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
ITEM 1A. RISK FACTORS.
This Annual Report on Form 10-K contains forward-looking
statements that involve risks and uncertainties, such as statements of our objectives, expectations and intentions. The cautionary statements
made in this Annual Report on Form 10-K should be read as applicable to all forward-looking statements wherever they appear in this report.
Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include
those discussed below, as well as those discussed elsewhere in this Annual Report on Form 10-K.
Risks Related to Our Financial Condition and
Status as an Early-Stage Company
We are in our early stages and have a limited
operating history, which makes it difficult to forecast the future results of our operations.
QCi was formed in 2018 and merged with QPhoton
in June 2022. 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. Our
ability to generate revenues will largely be dependent on our ability to develop and produce a suite of products based on quantum photonic
technologies, with steadily increasing capabilities. Our technical roadmap may not be realized as quickly as hoped, or even at all. As
a result, our historical results should not be considered indicative of our future performance. Further, in future periods, our growth
could slow or decline for a number of reasons, including but not limited to slowing demand for our quantum products and services, increased
competition, changes to technology, our inability to scale up our technology, a decrease in the growth of the market, or our failure,
for any reason, to continue to take advantage of growth opportunities.
We have also encountered, and will continue to
encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If our assumptions regarding
these risks and uncertainties and our future growth are incorrect or change, or if we do not address these risks successfully, our operating
and financial results could differ materially from our expectations, and our business could suffer. Our success as a business ultimately
relies upon fundamental research and development breakthroughs in the coming years. There is no certainty these research and development
milestones will be achieved as quickly as hoped, or even at all.
We have a history of operating losses and
expect to incur significant expenses and continuing losses for the foreseeable future.
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. Even with significant production, we
may never become profitable from the sale of our products and services.
We expect to incur significantly higher losses
in future periods as we continue to incur significant expenses in connection with the design, development and manufacturing of our quantum
computers and other products and services, and as we expand our research and development activities, invest in manufacturing capabilities,
build up inventories of components for our quantum computers and other products, increase our sales and marketing activities, develop
our infrastructure, and increase our general and administrative functions to support our growing operations. We may find that these efforts
are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses.
If we are unable to achieve and/or sustain profitability, or if we are unable to achieve the growth that we expect from these investments,
it could have a material adverse effect on our business, financial condition or results of operations. Our business model is unproven
and may never allow us to cover our costs.
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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.
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. 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. Beyond this, we may incur significant
losses in the future for a number of reasons including other risks described in this document, and we may encounter unforeseen expenses,
difficulties, complications, delays and other unknown events. Accordingly, we may not ever achieve profitability.
We may not be able to scale our business
quickly enough to meet customer and market demand, which could adversely affect our financial condition and results of operations or cause
us to fail to execute on our business strategies.
In order to grow our business, we will need to
continually evolve and scale our business and operations to meet customer and market demand. Quantum computing technology has never been
sold at large-scale commercial levels. Evolving and scaling our business and operations places increased demands on our management as
well as our financial and operational resources to:
● attract new customers and grow our customer base;
● invest in our platform and product offerings;
● effectively manage organizational change;
● accelerate and/or refocus research and development activities;
● expand manufacturing and supply chain capacity;
● increase sales and marketing efforts;
● broaden customer support and services capabilities;
● maintain or increase operational efficiencies;
● implement appropriate operational and financial systems; and
● establish and maintain effective financial controls and procedures.
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. There are significant technological challenges associated with developing, producing, marketing and selling products
and services in the high-performance computing industry, including our products and services, and we may not be able to resolve all of
the difficulties that may arise in a timely or cost-effective manner, or at all. 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 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. Recent tensions between the United States
and China have resulted in the U.S.’s imposition of a series of tariffs and other restrictions on imports from China and sourcing
from certain Chinese persons or entities, as well as other business restrictions. 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. 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.
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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. 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. There can be no assurance that we will
be able to detect and fix any defects in our quantum computers in a timely manner that does not disrupt our services to our customers.
If our technology fails to perform as expected, customers may seek out a competitor or turn away from quantum computing entirely, each
of which could adversely affect our sales and brand and could adversely affect our business, prospects and results of operations. 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.
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.
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. Even if the market in which we compete meets the size estimates
and growth forecasted, our business could fail to grow at similar rates, if at all.
Our growth is dependent upon our ability to successfully
expand our products and services, retain customers, bring in new customers and retain critical talent. 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. We do not have experience with the large-scale production
and sale of quantum computing technology. Our growth and long-term success will depend upon the development of our sales and production
capabilities.
Moreover, because of our advanced technology,
our customers will require particular support and service functions, some of which are not currently available and may never be available.
If we experience delays in adding such support capacity or servicing our customers efficiently, or experience unforeseen issues with the
reliability of our technology, we could overburden our servicing and support capabilities. Similarly, increasing the number of our products
and services would require us to rapidly increase the availability of these services. Failure to adequately support and service our customers
may inhibit our growth and ability to expand.
There is no assurance that we will be able to
ramp our business to meet our sales, manufacturing, installation, servicing and quantum computing targets, that expected growth levels
will prove accurate or that the pace of growth will continue at the current rate. 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.
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We may not manage growth effectively.
Our failure to manage growth effectively could
harm our business, results of operations and financial condition. We anticipate that a period of significant expansion will be required
to address potential growth. This expansion will place a significant strain on our management, operational and financial resources. Expansion
will require significant cash investments and management resources and there is no guarantee that they will generate additional sales
of our products or services, or that we will be able to avoid cost overruns or be able to hire additional personnel to support us. In
addition, we will also need to ensure our compliance with regulatory requirements in various jurisdictions applicable to the sale, installation
and servicing of our products. To manage the growth of our operations and personnel, we must establish and maintain appropriate and scalable
operational and financial systems, procedures and controls and a qualified finance, administrative and operations staff. 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.
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. If we are unable to raise additional funding when needed, we may be required to delay,
limit or substantially reduce our development efforts.
Our business and future plans for expansion are
capital-intensive, and we will require additional capital for equipment and facilities for hardware manufacturing and optical chip fabrication.
The specific timing of cash inflows and outflows may fluctuate substantially from period to period. We will require a significant amount
of cash for expenditures as we invest in ongoing research and development and business operations. Our operating plan may change because
of factors currently unknown, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings
or other sources. Such financings may result in dilution to stockholders, issuance of securities with priority as to liquidation and dividend
and other rights more favorable than those of our common stock, imposition of debt covenants and repayment obligations or other restrictions
that may adversely affect our business. Any funds we raise may not be sufficient to enable us to continue to implement our long-term business
strategy. Further, our ability to raise additional capital may be adversely impacted by worsening global economic conditions and disruptions
to and volatility in the credit and financial markets in the United States and worldwide resulting from disruptions in access to bank
deposits or lending commitments due to bank failures, the ongoing war between Russia and Ukraine and the related sanctions imposed against
Russia, and the war between Israel and Hamas, the state of the military conflict between Israel and Hezbollah and the related risk of
a larger regional conflict. 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. The inability to obtain financing when
needed may make it more difficult for us to operate our business or implement our growth plans and we may be required to delay, limit
or substantially reduce our quantum computing development efforts. Our ability to raise additional capital through the sale of securities
could be significantly impacted by the resale of our securities by holders of our securities, which could result in a significant decline
in the trading price of our securities and potentially hinder our ability to raise capital on terms that are acceptable to us or at all.
Failure to identify errors in the quantitative
models we utilize to manage our business could adversely impact product performance and client relationships.
We employ various quantitative models to manage
our business. Any errors in the underlying models or model assumptions could have unanticipated and adverse consequences on our business
and reputation.
Our ability to use net operating loss carryforwards
and other tax attributes may be limited in connection with the QPhoton Merger or other ownership changes.
We have incurred losses during our history, do
not expect to become profitable in the near future and may never achieve profitability. To the extent that we continue to generate taxable
losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all.
Under current law, U.S. federal net operating
loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility
of such net operating loss carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income, or less.
It is uncertain if and to what extent various states will conform to the current law.
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In addition, our net operating loss carryforwards
are subject to review and possible adjustment by the IRS, and state tax authorities. Under Sections 382 and 383 of the Internal Revenue
Code of 1986, as amended (the “Code”), our federal net operating loss carryforwards and other tax attributes will become subject
to an annual limitation in the event of certain cumulative changes in the ownership of the Company. An “ownership change”
pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s
stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
Similar rules apply under state tax laws. 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.
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.
Risks Related to Our Business and Industry
We have not produced any of our products
at volume and we face significant barriers in our attempts to develop and manufacture our products, including the need to invent and develop
new technology. If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail.
Producing quantum computers, sensors and networks
is a difficult undertaking. There are significant manufacturing and engineering challenges that we must overcome. We face significant
challenges in completing development of our quantum computers and other products, and in producing quantum computers in sufficient volumes.
Even if we complete development and achieve volume production of our products, if the cost, accuracy, performance characteristics or other
specifications fall short of our expectations, our business, financial condition and results of operations would be adversely affected.
The performance capabilities of our products will
depend on the development and production of TFLN Optical Chips to achieve scale, performance and cost. There is significant development
and intellectual property risk in the specification, design and development of TFLN Optical Chips and our plans could be impacted by lack
of funding, competition or even unknown core technology factors intrinsic to the work. This would limit the ability of QCi to scale its
growth to expected levels over the longer term and the Company could lose momentum.
We may be unable
to reduce the production cost sufficiently, which may prevent us from pricing our quantum systems competitively.
Our revenue projections are dependent on the cost
per manufactured system decreasing over the next several years as our quantum computers advance. These cost projections are based on economies
of scale due to demand for our products and services, technological innovation and negotiations with third-party parts suppliers. If these
cost savings do not materialize, the production cost may be higher than projected, making our quantum computing products and services
less competitive than those offered by our competitors, which could have a material adverse effect on our business, financial condition
or results of operations.
If our products and services fail to deliver
customer value to a broader range of customers than classical approaches, our business, financial condition and future prospects may be
harmed.
“Quantum advantage”
refers to the moment when a quantum computer can compute faster than existing classical computers, while quantum supremacy is achieved