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, ~~2024~~2025

☐ 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)

Delaware		82-4533053
(State or other jurisdiction of incorporation or organization)		(I.R.S Employer Identification No.)

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~~ ☒ 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, ~~2024~~2025, the last business day of the registrant’s most recently completed second fiscal quarter, was $342,~~743~~545,~~396~~ 765,591 based on the closing price of $019.5017 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 ~~March~~February 1827, ~~2025~~2026, there were ~~137~~224,~~244~~538,~~545~~254 shares of the registrant’s common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

~~None~~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.	12
ITEM 1A.	RISK FACTORS.	711
ITEM 1B.	UNRESOLVED STAFF COMMENTS.	2630
ITEM 1C.	CYBERSECURITY.	2630
ITEM 2.	PROPERTIES.	2732
ITEM 3.	LEGAL PROCEEDINGS.	2732
ITEM 4.	MINE SAFETY DISCLOSURES.	2834
	PART II	2935
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	2935
ITEM 6.	[RESERVED]	2936
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	2936
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	3644
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.	3644
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	3644
ITEM 9A.	CONTROLS AND PROCEDURES.	3644
ITEM 9B.	OTHER INFORMATION.	3747
ITEM 9C	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.	3747
	PART III	3848
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.	3848
ITEM 11.	EXECUTIVE COMPENSATION.	4348
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.	4648
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.	48
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	48
	PART IV	49
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.	49

Introductory Comments

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.

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. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Annual Report on Form 10-K. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Annual Report on Form 10-K to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. 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. ~~We qualify~~and ~~all~~the offactors ~~our~~described ~~forward-looking statements by these cautionary statements.~~below:

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Our ability to effectively manage future growth and achieve operational efficiencies;

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the ability to implement our business plans, forecasts and other expectations, including the integration of recently acquired businesses, and to identify and realize additional opportunities;

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the market acceptance for our products and services;

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the results of our research and development and any failure to adequately and timely develop our products;

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the failure of any of our products to perform as expected and any liability or loss of market share that may come as a result;

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changes in the competitive and highly regulated industries in which we operate, variations in operating performance across competitors, changes in laws and regulations affecting our business and changes in our capital structure;

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success in retaining or recruiting, or changes required in, officers, key employees or directors, and our ability to attract and retain key personnel;

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inability or failure to protect intellectual property;

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the diversion of management’s attention and consumption of resources as a result of acquisitions of other companies and success in integrating and otherwise achieving the benefits of recent and potential acquisitions;

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our inability to effectively integrate or benefit from recently purchased assets or businesses;

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global inflation and interest rates;

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impacts of the wars in Ukraine or Israel or other global conflicts;

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fluctuations in foreign exchange rates;

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failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

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any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks; and

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other factors detailed under the section of this Annual Report on Form 10-K entitled “Risk Factors.”

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.

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 (“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, ~~optimization~~ 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, which uses~~ quantum ~~mechanics~~computing towill 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 ~~mechanics~~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 ~~the~~which ~~date~~area that quantum computers will ~~begin~~create tothe ~~have~~first practical ~~relevance~~ impact, we ~~believe~~expect ~~that~~continued technological development across multiple quantum ~~computers~~computing ~~with~~modalities ~~gradually~~and ~~increasing~~architectures ~~performance~~over the coming years. Besides quantum computing, we also believe that photonics approaches to information processing will besee ~~introduced~~continued bydevelopment ~~multiple~~to ~~vendors~~eventually ~~over~~create ~~the~~impacts ~~next~~in various ~~five~~computing ~~years~~spaces by significantly reducing power consumption.

~~The~~Our ~~Company~~ 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, ~~reservoir~~machine ~~computing~~learning, ~~and~~ remote sensing, imaging and cybersecurity applications. Our vision is to lead the revolution in photonics and quantum ~~computing~~information technology with scalable, accessible, and affordable solutions ~~for~~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”) ~~in June 2022~~, enabled us to offer the aforementioned products, integrated with the Company’s former software platform, Qatalyst, that ~~existed~~was developed before the QPhoton Merger.

~~QCi’s~~Our proprietary core technology ~~rests~~is in our ~~ability~~integrated photonics approach, which allows us to condition, manipulate, and measure single and entangled photons (particles of light). ~~Specifically,~~and ~~our~~gives us ~~integrated~~the ~~photonics~~ability ~~approach~~to ~~exploits~~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 ~~utilizes the~~uses ~~energy in the environment to drive~~ controlled feedback through energy loss in a photonic ~~circuit~~loop architecture to drive photonic states to their least lossy configurations. The EQC’s ~~use~~ involvement of the changing 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. As a result, the EQC ~~consumes~~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 ~~will~~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 ~~design~~designs, to a set of optical integrated circuits built on wafers using a crystalline material called thin film lithium niobate (“~~Thin Film Lithium Niobate” or “~~TFLN”). The Company believes that TFLN is an excellent material for optical integrated circuit design, given its advantageous optical properties (~~both~~ linear ~~and~~, non-linear ferroelectric, and electro-optic) and its compatibility with silicon-based semiconductor fabrication methods. ~~The~~In March 2025, the Company issubstantially ~~completing~~completed the buildout of a 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.”

InAs ~~addition~~part toof our ~~EQC~~long-term ~~technology~~strategic plan to acquire complimentary businesses, wein ~~have~~February ~~leveraged~~2026, the Company acquired Luminar Semiconductor, Inc. (“LSI”). LSI ~~QCi’s~~provides ~~core~~products and services that leverage its advanced photonics ~~technology~~semiconductor totechnologies. LSI ~~demonstrate~~designs ~~powerful~~chip-scale ~~quantum~~devices including ~~sensing~~laser ~~use~~diodes, ~~cases~~semiconductor inoptical ~~LIDAR~~amplifiers, ~~(light~~avalanche ~~detection~~photodiodes, passive waveguides, photonic integrated circuits, and other ~~ranging)~~related (aphotonic ~~technology~~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 ~~uses~~serve ~~pulsed~~a broad ~~laser~~set ~~light~~of tocustomer ~~measure~~requirements. Extensive ~~distances~~design tocapabilities ~~objects~~are complemented by ~~calculating~~an ~~the~~in-house ~~time~~III-V itphotonic ~~takes~~semiconductor ~~for~~fabrication facility ~~the~~and ~~reflected~~photonics ~~light~~module manufacturing capabilities. These production resources are employed to ~~return)~~deliver high performance, ~~reservoir~~high ~~computing~~reliability (products to a ~~form~~growing number of ~~neural~~customers ~~network~~in a wide array of industries that ~~can~~include beaerospace ~~used~~and indefense, ~~machine~~sensing ~~learning~~and ~~applications~~instrumentation, and optical communications. Acquiring LSI provides QCi with advanced semiconductors and ~~quantum~~related ~~cyber~~components, ~~authentication~~as (awell ~~method~~as ~~for~~design, ~~highly~~testing ~~secure~~and ~~communication~~consulting ~~within~~services ato ~~network)~~industry, in particular for Aerospace and Defense applications. ~~Several~~Through the acquisition of ~~these~~LSI, ~~technologies~~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 inhighly synergistic with the ~~early~~QCi ~~stages~~technology roadmap and will support the integration of ~~commercialization~~chip-scale devices such as laser diodes and ~~several~~photodetectors ~~are~~with ~~available~~QCi’s thin film lithium niobate photonic integrated circuit (PIC) platform. Collaborative efforts between the LSI and QCi technical teams will be instrumental to ~~customers~~delivering ~~through~~QCi’s ~~our~~photonic- ~~research~~and &quantum-based ~~development~~system ~~offerings~~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 ~~provide~~build a ~~range~~vertically ~~of accessible~~integrated photonics and ~~affordable~~ quantum ~~machines~~optics toplatform ~~commercial~~capable ~~and~~of ~~government~~supporting ~~markets~~scalable, ~~supported~~commercial byapplications ~~professional~~across ~~services~~AI, ~~through~~high-performance ~~our~~computing, ~~“Quantum~~cybersecurity, ~~Solutions”~~and ~~offering~~remote sensing. Our ~~proprietary~~Core ~~technology~~Photonics Technology is central to our strategy because we believe ~~that~~ it ~~enables~~provides ~~us to leverage the~~ advantages ofin 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~~ 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 ~~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. We believe that our ~~core~~Core ~~photonics~~Photonics Technology ~~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~~Artificial ~~computing~~Intelligence, including edge hardware devices

3.	Remote sensing and imaging, including LiDAR and quantum photonic vibrometry

4. Cybersecurity, including quantum 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. 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).

AsWhile anthe ~~early~~current ~~participant~~quantum incomputing ~~this~~market ~~rapidly~~comprises ~~growing~~a fraction of the broader high-performance computing market, we believe wethat quantum computers will unlock new applications that are ~~well~~unlikely to be addressable by existing high-~~positioned~~performance computers that utilize classical processing units. Estimates of the size of the global high-performance computing industry vary, but according to ~~capture~~Grand aView ~~meaningful~~Research, ~~amount~~the high-performance computing market was valued at $39.1 billion in 2019 and is expected to reach a value of ~~this~~$53.6 ~~growth~~billion by 2027, see Grand View Research - High Performance Computing Market Size Worth $53.6 Billion WeBy ~~also~~2027, ~~believe~~https://www.grandviewresearch.com/press-release/global-high-performance-computing-hpc-market ~~that~~According ~~there~~to a report from Allied Market Research, the global enterprise quantum computing market size was valued at $1.3 billion in 2020 and is ~~further~~projected ~~potential~~to ~~upside~~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 ~~and~~market ~~technology~~at ~~more~~https://www.alliedmarketresearch.com/enterprise-quantum-computing-market ~~broadly~~(Information ~~opening~~contained on, ~~new~~or ~~markets~~that can be accessed through, these websites is not ~~included~~incorporated by reference in ~~traditional~~this ~~high-performance~~Annual ~~computing~~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 ~~size~~are ~~estimates~~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~~. The study covers use applications and segments that forecast the global TFLN electro-optical modulator market~~, ~~valued~~from at $190.4 million in 2022, to ~~grow~~ an estimated $1~~,931~~.39 ~~million~~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 ~~material~~ advantages ~~described above. Specifically, TFLN electro-optical modulators have the advantages~~ of large bandwidth, low power consumption, and small size that TFLN electro-optical modulators possess. Further, ~~Mordor~~ 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, ~~currently~~ 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 ~~that~~QCi ~~this~~is ~~suggests~~well-positioned ~~significant~~to ~~potential~~benefit ~~demand for~~from ~~QCi’s~~this ~~products~~forecasted increase ~~and~~in ~~services~~demand.

Products and Products in Development

~~The~~We ~~Company~~believe ~~believes~~our itCore isPhotonics ~~well-positioned~~Technology inprovides ~~the~~us ~~marketplace~~with ~~due~~a tocompetitive ~~its~~advantage ~~Core~~as ~~Photonics~~compared ~~Technology~~to inour ~~integrated~~competitors ~~photonics~~and ~~that~~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 to for TFLN Optical Chips for ~~exclusive~~ 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.

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 ~~analog~~ 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 ~~subscription~~ service, similar to other quantum machines, as well as an ~~affordable~~ on-premises solution.

~~EQC~~Artificial 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. Users can then use these same interfaces on conventional computers to achieve optimization performance advantages using our cloud-based solution.intelligence

~~Reservoir~~Launched ~~Computer~~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.

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. 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. 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. 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. 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. We 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.

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, ~~capable~~and ofis ~~discerning~~designed ~~for~~to ~~the~~enhance ~~first time, highly~~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~~ 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~~ Working at an eye-safe wavelength, the system can accurately characterize the vibration spectra of solid or liquid targets with vibration ~~amplitude~~ 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 beprovide antrusted ~~unbreakable~~protection ~~basis~~ for private network communication.

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 ~~of time~~ will be ~~critical~~ critical in remaining competitive. We perform a broad range of research and development efforts to identify and position for the changing ~~demands~~ 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~~ 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~~ 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 ~~products~~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.

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

Trademarks

The Company has three registered trademarks, “QPhoton,” “QGraph” and “Qatalyst.” The Company has no pending trademark applications.

Patents

The Company has ~~two~~three granted United States patents.

Country

Serial No.

Filing Date

Patent No.

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.

Country

Serial No.

Filing Date

Patent No.

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

Country

Serial No.

Filing Date

Patent No.

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

Country

Serial No.

Filing Date

Patent No.

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.

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
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 ~~U.S.~~Department ~~government~~of Commerce Bureau of Industry and Security (BIS) issued regulations in September 2024 placing some ~~restrictions~~controls and licensing requirements on ~~exporting~~the ~~quantum~~export of certain quantum computing products and technology under the U.S. Export Administration ~~Act~~Regulations. ~~Those~~Exports ~~exports~~of ~~will~~such ~~now~~products may require a license in certain circumstances. We are reviewing ~~the~~these ~~new~~ 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 ~~types~~other oftechnologies 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 ~~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. 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. 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. ~~Information~~Our ~~appearing~~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 isas ~~not~~soon ~~part~~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.

~~Employees~~Human Capital

As of December 31, ~~2024~~2025, the Company had 4172 full-time employees and ~~nine~~5 part-time contract staff, 3455 of whom are focused on product development. Our employees are not part of a collective ~~bargaining~~ 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~~ 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.

610

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 anumerous ~~number~~factors ofoutside ~~uncertainties~~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. 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. 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. 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. 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 ~~believe~~expect ~~that~~to ~~we will~~ continue to incur operating and net losses ~~each~~for ~~quarter~~the ~~until~~foreseeable atfuture ~~least~~and ~~the~~may ~~time~~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.

711

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~~continue aoperations ~~going~~as ~~concern~~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, ~~2024~~2025 and ~~2023~~2024, our accumulated deficit was $~~200~~219.5 2 million and $~~131~~200.95 million, respectively. If we are unable to generate significant revenues in future periods, we will not be able to to achieve profitability, and even if we ~~should~~ achieve profitability, we may be unable to maintain ~~profitability~~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;

●

maintain and increase the rates at which existing customers use our platform, sell additional products and services to our existing customers, and reduce customer churn;

●

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 ~~traction~~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.

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 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. 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.12

8If 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 ~~success~~business ~~will~~model ~~depend~~depends ~~upon~~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~~ 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 ~~impact~~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.

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.

~~There~~We ~~can~~may be nounable ~~assurance~~to ~~that~~obtain ~~financing~~additional ~~will~~financing ~~be available to us~~ on ~~favorable~~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.

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 or other transactions. Similar rules may apply under state tax laws.14

10In 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 once quantum computers are powerful enough to complete calculations that traditional supercomputers cannot perform at all. Broad quantum advantage is when quantum advantage is seen in many applications and developers prefer quantum computers to a traditional computer. No current quantum computers have reached a broad quantum advantage and they may never reach such advantage. While achieving a broad quantum advantage will be critical to the success of any quantum computing company, including us, it would not necessarily lead to commercial viability of the technology that accomplished such advantage, nor would it mean that such system could outperform classical computers in tasks other than the one used to determine a quantum advantage. As quantum computing technology continues to mature, broad quantum advantage, and quantum supremacy, may take years or decades to be realized, if it ever is. If we cannot develop quantum computers that have quantum advantage, customers may not continue to purchase our products and services. If other companies’ quantum computers reach a broad quantum advantage prior to the time we reach such capabilities, it could lead to a loss of customers and the inability to secure new customers. If any of these events occur, it could have a material adverse effect on our business, prospects, financial condition or results of operations.

1115

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.

Since the QPhoton Merger, our business strategy has broadened to include the manufacture of several lines of hardware in addition to the underlying software. As a result, we now operate in markets that are rapidly evolving and highly competitive. We expect competition to intensify as the marketplace continues to mature and new technologies and competitors enter. 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.

We compete based on various factors, including technology, price, performance, multi-cloud availability, brand recognition and reputation, customer support and differentiated capabilities, including ease of administration and use, scalability and reliability, data governance and security. Many of our competitors have substantially greater brand recognition, customer relationships, and financial, technical and other resources than we do, including an experienced sales force and sophisticated supply chain management. They may be able to respond more effectively than us to new or changing opportunities, technologies, standards, customer requirements and buying practices. In addition, many countries are focused on developing quantum computing solutions either in the private or public sector and may subsidize quantum computers, which may make it difficult for us to compete. Many of these competitors do not face the same challenges we do in growing our business. In addition, other competitors might be able to compete with us by bundling their other products in a way that does not allow us to offer a competitive solution.

Further, the industry might recognize the intrinsic advantages of optical integrated circuits in information processing applications and our competitors could shift to a more direct competitive approach using similar technologies, even with strong intellectual property protection.

Additionally, we must be able to achieve our objectives in a timely manner such that we don’t lose ground to competitors, including competing technologies. Because there are a large number of market participants, including certain sovereign nations, focused on developing quantum computing technology, we must dedicate significant resources to achieving any technical objectives on the timelines established by our management team. Any failure to achieve objectives in a timely manner could adversely affect our business, operating results 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.

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.

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. These public cloud services are predominantly on Amazon Web Services at the present time.

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.

Further, if our contractual and other business relationships with our partners are terminated or suspended, either by our partner or by us, or suffer a material change to which we are unable to adapt, such as the elimination of services or features on which we depend, we would be unable to provide our quantum computing products and services business at the same scale and would experience significant delays and incur additional expense in transitioning customers to a different public cloud provider.

We depend on certain suppliers to source products. Failure to maintain our relationship with any of these suppliers, or a failure to replace any of these suppliers, could have a material adverse effect on our business, financial position, results of operations and cash flows.

We buy our products and supplies from companies that manufacture and source products from the United States and abroad. Our ability to develop and maintain relationships with qualified suppliers who can satisfy our standards for quality and delivery in a timely and efficient manner is a significant challenge. Any failure to maintain our relationship with any of our key suppliers, or a failure to replace any such supplier that is lost, could have a material adverse effect on our business, financial position, results of operations and cash flows.

We may be required to replace a supplier if their products do not meet our quality or safety standards, or if the United States government imposes restrictions on trade with certain countries, such as China. In addition, our suppliers could discontinue selling products at any time for reasons that may or may not be in our control or the suppliers’ control, including shortages of raw materials, environmental and social supply chain issues, public health emergencies, labor disputes or weather conditions. Disruptions in transportation lines or geopolitical conditions including the ongoing war between Russia and Ukraine, the war between Israel and Hamas, the state of the military conflict between Israel and Hezbollah or an invasion of Taiwan by China, may also cause global supply chain issues that affect us or our suppliers. While we generally have multiple sources of supply, we do rely on a single supplier for materials in some cases. The loss of, or substantial decrease in the availability of, products from our suppliers, or the loss of a key supplier, temporarily or permanently, could result in a material shortage of products, which could lead to price escalations that we may be unable to offset by our prices to our customers. When supply chain issues are later resolved and prices return to normal levels, we may be required to reduce the prices at which we sell our products to our customers in order to remain competitive. In addition, even where these risks do not materialize, we may incur costs as we prepare contingency plans to address such risks. Our operating results and inventory levels could suffer if we are unable to promptly replace a supplier who is unwilling or unable to satisfy our requirements with a supplier providing similar products. In addition, our suppliers’ ability to deliver products may also be affected by raw material and commodity cost volatility or financing constraints caused by credit market conditions, which could materially and negatively impact our net sales and operating costs, at least until alternate sources of supply are arranged. 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.

~~TFLN~~Acquisitions ~~Optical Chips manufacturers and distributors are concentrated primarily in China and other parts of East Asia, which is an area that is~~ or ~~may~~divestitures ~~be subject to geopolitical uncertainty, trade disputes and restrictions, environmental disasters, and other risks. Any disruption to the operations of these manufacturers or distributors~~ could ~~cause significant delays~~ result in ~~the~~adverse ~~production~~impacts oron ~~shipment of~~ our ~~products and impact our financial condition~~operations.

~~Our~~In ~~success~~order ~~also~~to ~~depends~~grow inour ~~part~~business, onwe ~~the~~may ~~manufacturing~~acquire ofadditional ~~TFLN~~assets ~~Optical~~or ~~Chips~~companies. ~~Unforeseen~~For ~~disruption~~example, ofwe ~~the~~acquired ~~manufacture~~Luminar ofin ~~TFLN~~February ~~Optical~~2026. ~~Chips~~In ~~could~~connection bewith ~~caused~~these byacquisitions aor ~~number~~any ~~of events~~future acquisitions, ~~including a~~there ~~maintenance~~can ~~outage,~~be ~~systems~~no ~~outage~~assurance orthat ~~other~~we ~~disruption,~~will ~~power~~be orable ~~equipment~~to ~~failure~~identify, ~~fires,~~acquire ~~floods,~~or ~~earthquakes~~obtain orthe ~~other~~required ~~natural~~regulatory ~~disasters~~approvals, ~~social~~ ~~unrest~~ or ~~terrorist~~profitably manage ~~activity,~~the ~~work~~additional ~~stoppages,~~businesses ~~public~~or ~~health~~successfully ~~concerns~~integrate ~~(including~~any ~~pandemics)~~acquired businesses, ~~regulatory measures~~products, or ~~other~~technologies ~~operational problems.~~without ~~Any~~substantial ~~disruption~~expenses, delays inor ~~the~~other ~~manufacture~~operational, ofregulatory ~~TFLN~~or ~~Optical~~financial ~~Chips~~problems. ~~resulting~~In ~~from~~addition, ~~such~~any ~~events~~acquired ~~could~~businesses, ~~cause~~products ~~significant~~or ~~delays~~technologies inmay ~~the development~~not ~~and~~achieve ~~production~~anticipated ofrevenues ~~our~~and ~~products~~income growth.

1317

~~In addition~~Further, weacquisitions may ~~depend~~involve ona ~~third-party~~number ~~TFLN~~of ~~Optical~~additional ~~Chips~~risks, ~~manufacturing~~including ~~partners~~diversion of management’s attention, failure to retain key personnel, or ~~distributors~~failure ~~who~~to attract the necessary talent to manage organizational growth. We may bebecome ~~affected~~responsible byfor ~~changes~~unexpected liabilities that were not discovered or disclosed in the ~~governmental~~course ~~policies,~~of ~~taxation~~due diligence in connection with historical acquisitions and any future acquisitions. Additionally, ~~rising~~acquisitions ~~inflation~~with international operations expose us to greater international business risks. If we do not realize the expected benefits or ~~interest~~synergies ~~rates,~~of ~~social~~an ~~instability~~acquisition, such ~~geopolitical~~as ~~conflicts~~revenue ~~and~~gains ~~tensions~~or cost reductions, ~~and~~there ~~diplomatic~~could ~~and~~be ~~social~~a ~~developments~~material ~~which~~adverse ~~are~~effect ~~outside~~on of our ~~control~~business, results of operations, and financial condition.

~~Furthermore,~~We ~~our~~may ~~industry~~also ~~generally~~seek ~~relies~~to ondivest portions of our businesses awhich ~~limited~~may ~~number~~no oflonger ~~TFLN~~be ~~Optical~~aligned ~~Chips~~with ~~manufacturers~~our ~~whose~~strategic ~~operations~~initiatives ~~tend~~and tolong-term beobjectives. ~~concentrated~~Various infactors ~~China~~could ~~and~~materially ~~other~~affect ~~parts~~our ofability to ~~East~~successfully ~~Asia~~do so, ~~which makes~~including usthe ~~especially~~availability ~~susceptible~~of tobuyers ~~adverse~~willing ~~developments~~to inpurchase ~~these~~the ~~regions’~~assets ~~economic~~on ~~and~~terms ~~political~~acceptable ~~conditions~~to us, ~~particularly~~difficulties toin the separation of operations, the ~~extent~~ ~~that~~diversion ~~such~~of ~~developments~~management’s ~~create~~attention anfrom ~~unfavorable~~other business ~~environment~~concerns, ~~that~~the ~~significantly~~disruption ~~affects~~of our ~~operations.~~business, the ~~Although~~potential ~~the~~loss ~~governments~~ of ~~certain~~key ~~countries~~employees, ~~including~~and the ~~United~~retention ~~States,~~of ~~have~~uncertain ~~taken~~contingent ~~actions~~liabilities related to ~~make~~the ~~their~~divested ~~countries~~business. ~~more~~We ~~attractive~~cannot assure ~~for~~that ~~chip~~we ~~manufacturing~~will ~~operations, there~~be ~~can~~successful bein nomanaging ~~assurances~~these or any other significant risks that ~~the~~we ~~current~~encounter ~~geographic~~in ~~concentration~~divesting ofa ~~chip~~business ~~manufacturing~~or ~~will~~product line, beand ~~meaningfully~~any ~~changed~~divestiture inwe ~~the~~undertake ~~near~~could ~~term~~materially and adversely affect our business, financial condition, results of operations orand atcash ~~all~~flows.

IfTFLN ~~any~~Optical ofChips ~~these events~~manufacturers, orsuppliers ~~other~~and ~~macroeconomic~~distributors are concentrated ~~trends,~~primarily ~~should~~in ~~cause~~China aand ~~prolonged~~other ~~disruption~~parts of ~~operations~~East Asia, which is an area that ~~impact~~is ~~our~~or ~~third-party~~may ~~TFLN~~be ~~Optical~~subject ~~Chips~~to ~~manufacturing~~geopolitical ~~partners~~uncertainty, ~~they~~trade disputes ~~may~~and ~~experience~~restrictions, ~~operational~~environmental ~~downtimes~~disasters, orand ~~have~~other risks. Any disruption to ~~operate~~the atoperations ~~reduced~~of ~~capacities,~~these ~~which~~manufacturers or distributors could cause ~~have~~significant adelays ~~material~~in ~~adverse~~the ~~effect~~production onor ~~our~~shipment ~~business, financial~~of ~~condition,~~our products and ~~results~~impact ofour ~~operations~~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. Unforeseen disruption of the manufacture of TFLN Optical Chips could be caused by a number of events, including a maintenance outage, systems outage or other disruption, power or equipment failure, fires, floods, earthquakes or other natural disasters, social unrest or terrorist activity, work stoppages, public health concerns (including pandemics), regulatory measures, or other operational problems. 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.

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.

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. Our supply chain could be adversely affected by geopolitical tensions, trade restrictions, export controls, tariffs or changs in United States or foreign government policies affecting cross-border commerce. Although the governments of certain countries, including the United States, have taken actions to make their countries more attractive for chip manufacturing operations, there can be no assurances that the current geographic concentration of chip manufacturing will be meaningfully changed in the near term or at all.

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.

In order to compete, we must attract, retain and motivate key associates, and the failure to do so could have an adverse effect on our business, financial condition and results of operations.

We depend on our executive officers and management team to run our business. As we develop new business models and new ways of working, we will need to develop suitable skill sets within our organization. In addition, our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees that have highly technical set of skills. The current market for such positions is highly competitive. Qualified individuals are in high demand and we may incur significant costs to attract and retain them. Moreover, the loss of any of our senior management or other key employees or our inability to recruit and develop capable managers could adversely affect our ability to execute our business plan and we may be unable to find adequate replacements.

Even if we are successful in developing our products and executing our strategy, competitors in the industry may achieve technological breakthroughs that render our quantum computing systems obsolete or inferior to other products.

Our continued growth and success depend on our ability to innovate and develop quantum computing technology in a timely manner and effectively market these products. Without timely innovation and development, our quantum computing products and services could be rendered obsolete or less competitive by changing customer preferences or because of the introduction of a competitor’s newer technologies. We believe that many competing technologies will require a technological breakthrough in one or more problems related to science, fundamental physics or manufacturing. 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.

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.

The nascent market for quantum computers is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and competitive factors, evolving government regulation and industry standards, and changing customer demands and behaviors. Our success will depend to a substantial extent on the willingness of our potential customers to use, and increase their utilization of, our products and services, as well as on our ability to demonstrate the value of quantum computing to their respective organization, government agencies, and other purchasers of quantum computing offerings. Negative publicity concerning our products and services or the quantum computing industry as a whole could limit market acceptance of our offerings. If our clients and partners do not perceive the benefits of our products and services, or if they do not drive customer engagement, then our market may not develop at all, or it may develop more slowly than we expect. 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.

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. Delays in future generations of our quantum computers or technical failures at other quantum computing companies could limit acceptance of our products and services. Negative publicity concerning our products and services or the quantum computing industry as a whole could limit acceptance of our products and services. While we believe that quantum computing will solve many large-scale problems, it is possible that such problems may never be solvable by quantum computing technology. If our customers and partners do not see the benefits of our products and services, or if our products and services do not drive commercial sales, then demand for our products and services may not develop at all, or it may develop slower than we expect. If any of these events occur, it could have a material adverse effect on our business, financial condition and results of operations.

We have experienced in the past and could also suffer future disruptions, outages, defects and other performance and quality problems with our quantum computing products and services, our production technology partners or with the public cloud, data centers and internet infrastructure on which we rely.

Our business depends on our quantum computing systems being available through the cloud with a high level of reliability. We have experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with our systems. We have also experienced, and may in the future experience, disruptions, outages, defects and other performance and quality problems with the public cloud and internet infrastructure on which our systems rely. These problems can be caused by a variety of factors, including failed introductions of new functionality, vulnerabilities and defects in proprietary and open- source software, hardware components, human error or misconduct, capacity constraints, design limitations, denial of service attacks or other security-related incidents, foreign objects or debris, weather, construction, supply chain events, or accidents and other force majeure. We do not have a contractual right with our public cloud providers that compensates us for any losses due to availability interruptions in the public cloud.

Any disruptions, outages, defects and other performance and quality problems with our quantum computing system or with the public cloud, internet, and other infrastructure on which they rely could result in reduced use of our systems, increased expenses, including service credit obligations, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our future growth and success depend on our ability to sell effectively to government entities and large enterprises.

Our potential customers are likely to include government agencies and large commercial enterprises. Therefore, our future success will depend on our ability to effectively sell our products to such customers. Sales to these end-customers involve risks that may not be present (or that are present to a lesser extent) with sales to non-governmental agencies or smaller customers. These risks include, but are not limited to, (i) increased purchasing power and leverage held by such customers in negotiating contractual arrangements with us and (ii) longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our solutions. 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.

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. 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. Finally, these organizations typically have longer implementation cycles, require greater product functionality and scalability, require a broader range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead to a delay in revenue recognition and expect greater payment flexibility. 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. Cost cutting, including through consolidation and elimination of duplicative organizations, has become a major initiative for within the U.S. government. Significant reduction in U.S. government spending could have adverse consequences on our prospects, financial position, results of operations and business.

Our quantum computing systems may not be compatible with some or all industry-standard software and hardware in the future, which could harm our business.

Since the QPhoton Merger, we have been focusing more of our efforts on creating quantum computing hardware, in addition to refining the software development platform to access our hardware, and application programing interfaces to access our systems. The industry is rapidly evolving, and customers have many choices for programming languages, some of which may not be compatible with our own application programming interfaces. Our quantum computing development platform is designed to be compatible with most major software languages. If a proprietary (not open source) software toolset became the standard for quantum application development in the future by a competitor, however, usage of our hardware might be limited, which would have a negative impact on the Company. Similarly, if a piece of hardware that we could not integrate with became a necessary component for quantum computing (for instance, quantum networking), the result might have a negative impact on the Company.

Cybersecurity risks and the failure to maintain the integrity of data belonging to the Company could expose us to data loss, litigation and liability, and our reputation could be significantly harmed.

We may from time to time collect and retain large volumes of data relating to our business and from our customers for business purposes, including for transactional and promotional purposes, and our various information technology systems enter, process, summarize and report such data. The integrity and protection of this data is critical to our business. Maintaining compliance with the evolving regulations and requirements applicable to data security and information privacy protection could be difficult and may increase our expenses. In addition, a penetrated or compromised data system or the intentional, inadvertent or negligent release or disclosure of data could result in theft, loss or fraudulent or unlawful use of data relating to our company or our employees, independent distributors or preferred customers, which could harm our reputation, disrupt our operations, or result in remedial and other costs, fines or lawsuits.

Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations. In addition, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

Computer malware, viruses, hacking, phishing attacks and spamming could harm our business and results of operations.

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.

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. Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the functionality of our services. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of our products and services and technical infrastructure may harm our reputation, brand and our ability to attract 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.

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. If our software application is unavailable when customers attempt to access it or it does not load as quickly as they expect, customers may seek other services.

Our quantum computer products rely on software that is highly technical and complex and may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs, or vulnerabilities discovered in our code after deployment, inability to identify the cause or causes of performance problems within an acceptable period of time or difficultly maintaining and improving the performance of our platform, particularly during peak usage times, could result in damage to our reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and financial results.

We expect to continue to make significant investments to maintain and improve the availability of our cloud- based products and services and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

Unfavorable conditions in our industry or the global economy could limit our ability to grow our business and negatively affect our results of operations.

Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers and potential customers. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, inflation, international trade relations, tariffs, public health emergencies (such as the recent COVID-19 pandemic), political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could cause a decrease in business investments, including the progress on development of quantum technologies, and negatively affect the growth of our business. In addition, in challenging economic times, our current or potential future customers may experience cash flow problems and as a result may modify, delay or cancel plans to purchase our products and services. 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~~affecting our ability to continue our research and development activities or manufacture our products.

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.

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. Political challenges between the United States and countries in which our suppliers are located and changes to trade policies, including tariff rates and customs duties, trade relations between the United States and those countries and other macroeconomic issues could adversely impact our business. During the last few years, including under the new Presidential administration, the United States has imposed tariffs on certain products imported into the United States from China and some other countries, and China and some other countries have imposed tariffs on U.S. imports in response. The U.S. government continues to add additional entities, in China and elsewhere, to restricted party lists ~~impacting~~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. The U.S. government also continues to increase end-use restrictions on the provision of products, technology and services to China and other countries including end-uses related to advanced computing. The new U.S. presidential administration has signaled its intention to use U.S. trade policy, including tariffs and other trade restrictions, as an important foreign policy tool presenting uncertainty regarding the impact of future trade policies on our business. As such, there is also a possibility of future tariffs, trade protection measures or other restrictions imposed on our products or on our customers by the United States, China or other countries that could have a material adverse effect on our business. 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.

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. Changes in any of these policies, laws and regulations could adversely affect the overall economy in China or our Chinese suppliers, which could harm our business through higher supply costs, reduced availability or both.

Also, due to concerns with the security of products and services from certain telecommunications equipment and services companies based in China, U.S. Congress has enacted bans on the use of certain Chinese-origin components or systems either in items sold to the U.S. government or in the internal networks of government contractors and subcontractors (even if those networks are not used for government-related projects). Further, the Chinese government has responded to these U.S. actions by developing an unreliable entity list, which may limit the ability of companies on the list to engage in business with Chinese counterparties.

In June 2022, the import restrictions contained in the Uyghur Forced Labor Prevention Act (“UFLPA”) became effective. The UFLPA creates a rebuttable presumption that any goods mined, produced or manufactured, wholly or in part, in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or produced by a listed entity, were made with forced labor and would therefore not be entitled to entry at any U.S. port. Importers may be required to present clear and convincing evidence that such goods are not made with forced labor. While we do not source items from the XUAR or from listed parties, and we have increased our supply chain diligence, there is risk that our ability to import components and products may be adversely affected by the UFLPA.

Given the relatively fluid regulatory environment in China and the United States and uncertainty regarding how the U.S. government or Chinese and other foreign governments will act with respect to tariffs and international trade agreements and policies, a trade war, further governmental action related to tariffs or international trade policies, or additional tax or other regulatory changes in the future could directly and adversely impact our financial results and results of operations. We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, what products may be subject to such actions or what actions may be taken by the other countries in retaliation. 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.

We may become subject to legal proceedings that could have a material adverse impact on our financial position and results of operations.

From 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. 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. 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. Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any particular verdict, judgment or settlement that may be entered against us, that such coverage will prove to be adequate or that such coverage will continue to remain available on acceptable terms, if at all. 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.

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. The identification of suitable acquisition, strategic investment or strategic partnership candidates can be costly and time consuming and can distract our management team from our current operations. The completion of such transactions also have inherent risks that may have a material adverse effect on our business, financial condition, operating results or prospects, including, but not limited to: (i) failure to successfully integrate the business and financial operations, services, intellectual property, solutions or personnel of an acquired business and to maintain uniform standard controls, policies and procedures; (ii) diversion of management’s attention from other business concerns; (iii) entry into markets in which we have little or no direct prior experience; (iv)) failure to achieve projected synergies and performance targets; (v) loss of clients or key personnel; (vi) incurrence of debt or assumption of known and unknown liabilities; (vii)) write-off of software development costs, goodwill, client lists and amortization of expenses related to intangible assets; (viii) dilutive issuances of equity securities; and (ix) accounting deficiencies that could arise in connection with, or as a result of, such transactions, including issues related to internal control over financial reporting and the time and cost associated with remedying such deficiencies. Even if we successfully complete a strategic transaction, we may not be able to effectively integrate the acquired business, technology, systems, control environment, solutions, personnel or operations into our business or not be able to achieve projected results or support the amount of consideration paid for such acquired businesses or invested in such transactions. In addition, we may incur unexpected costs, claims or liabilities during the strategic transaction or that we assume from the acquired company, or we may discover adverse conditions post- acquisition for which we have limited or no recourse, and we may not achieve the anticipated benefits of any strategic transaction.

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We are in the process of designing and implementing measures to improve our internal controls over financial reporting to remediate the material weaknesses described in Item 9A. Controls and Procedures, primarily by implementing additional review procedures within our accounting and finance department, hiring additional personnel within the Company’s accounting and finance function, designing and implementing information technology and application controls in our financially significant systems, providing internal resources with enhanced access to accounting literature and research materials, engaging additional external accounting experts to supplement our internal resources and increasing communication with third-party professionals with whom we consult regarding the application of accounting standards on complex transactions and instruments.

While we are designing and implementing measures to remediate the material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time. We can give no assurance that these measures will remediate the weaknesses in internal control or that additional material weaknesses or significant deficiencies in our internal controls over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal controls over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations. Further, any failure to implement and maintain effective internal controls over financial reporting, information technology and management processes could adversely affect our financial results and the assessments by our independent registered public accounting firm and their attestation reports, if applicable. Additionally, Astra may not be able to complete our evaluation, testing and any required remediation in a timely fashion. Finally, our current controls and any new controls that we develop may become inadequate because of poor design and changes in our business, including increased complexity resulting from any international expansion.

To comply with the requirements of being a public company, we are undertaking various actions and expect to need to undertake additional actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the Nasdaq Stock Market LLC (“Nasdaq”) or other regulatory authorities, which would require additional financial and management resources.

If we are unable to certify the effectiveness of our internal controls, or if our internal controls have material weaknesses, we may not detect errors in a timely manner, our financial statements could be misstated, we could be subject to regulatory scrutiny and a loss of confidence by stakeholders, which could harm our business, financial condition and results of operations and adversely affect the market price of our securities. 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.

From time to time the global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflation rates higher than historical norms, higher interest rates, bank failures and uncertainty about economic stability. Any volatility or disruptions in market and economic conditions may have adverse consequences on us or the third parties on whom we rely. If the equity and credit markets were to deteriorate, including as a result of political unrest or war, it may make any necessary financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. While inflation rates have during the last 18 months or so have been more in line with historical levels, the higher than anticipated inflation rates experienced in the wake of the COVID-19 pandemic did, and any similar higher than normal and/or unexpectedly high inflation rates in the future, may adversely affect us by increasing our costs, including labor and employee benefit costs, and costs for equipment and system components associated with system development. In addition, higher inflation could also increase our customers’ operating costs, which could result in reduced budgets for our customers and potentially less demand for our products and services. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition. Further, subsequent decreases in inflation and interest rates may not result in a reduction of costs.

1924

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 products, technology and services are subject to U.S. export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. U.S. export control and economic sanctions laws include restrictions or prohibitions on the sale or supply of certain products, technologies, and services to U.S. Government embargoed or sanctioned countries, governments, persons and entities. In addition, certain products and technology may be subject to export licensing or approval requirements. Exports of our products and technology must be made in compliance with export control and sanctions laws and regulations. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines that may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.

In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements and have enacted laws that could limit our ability to distribute our products and technologies or could limit our end customers’ ability to implement our services in those countries. Changes in our products or technologies or changes in applicable export or import laws and regulations also may create delays in the introduction and sale of our products and technologies in international markets or, in some cases, prevent the export or import of our products and technologies to certain countries, governments or persons altogether. Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons or technologies targeted by such laws and regulations could also result in decreased use of our products and services or in our decreased ability to export or sell our products and services to existing or potential customers. Any decreased use of our products and services or limitation on our ability to export or sell our products and services would likely adversely affect our business, financial condition and results of operations.

We expect to incur significant costs in complying with these regulations. Regulations related to quantum computing are currently evolving and we face risks associated with changes to these regulations.

We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

We may become subject to product liability claims, even those without merit, which could harm our business prospects, operating results, and financial condition. We may face inherent risk of exposure to claims in the event that our products do not perform as expected or malfunction. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our quantum computers and business and inhibit or prevent commercialization of other future quantum computers, which would have material adverse effects on our brand, business, prospects and operating results. Any insurance coverage might not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our reputation, business and financial condition. 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.

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.

Our success depends, in significant part, on our ability to obtain, maintain, enforce and defend our intellectual property rights, including patents and trade secrets. We rely upon a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies. 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. Our trade secrets may also be compromised, which could cause us to lose our competitive advantage. Third parties may attempt to copy or otherwise obtain, use or infringe our intellectual property.

Monitoring and detecting unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or take in the future to prevent infringement or misappropriation may not be sufficient. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm our business, results of operations, and financial condition. In addition, existing intellectual property laws and contractual remedies may afford less protection than needed to safeguard our intellectual property portfolio, and third parties may develop competitive offerings in a manner that leaves us with limited means to enforce our intellectual property rights against them.

Patent, copyright, trademark and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the unauthorized use of our intellectual property rights, technology and other proprietary rights may be more expensive and difficult outside of the United States.

Failure to adequately protect our intellectual property rights could result in our competitors using our intellectual property to offer products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, financial condition and operating results.

Our inability to secure patent protection or enforce our patent rights could have a material adverse effect on our ability to prevent others from commercializing similar products or technology.

The application and registration of patents involves complex legal and factual questions. As a result, we cannot be certain that the patent applications that we file will result in patents being issued or that our patents (including licensed patents) and any future patents that do issue will afford protection against competitors with similar technology. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our products and services, and this may make it difficult for us to obtain certain patent coverage on our own. Any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable. Furthermore, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued.

Even if our patent applications succeed, it is still uncertain whether these patents (or any of the issued patents exclusively licensed to us) will be contested, circumvented, invalidated, found to be unenforceable or limited in scope in the future. The rights granted under any issued patents may not provide us with meaningful protection or competitive advantages. The intellectual property rights of others could bar us from licensing and exploiting any patents that issue from our pending applications, and the claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. 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.

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.

Our success depends, in part, on our ability to develop and commercialize our products and services without infringing, misappropriating or otherwise violating the intellectual property rights of third parties. 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.

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. Also, because patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending applications, unknown to us, that later result in issued patents that could cover our current or future products, services or technologies. The strength of our defenses will depend on the rights asserted, the interpretation of these rights, and our ability to invalidate the asserted rights. However, we could be unsuccessful in advancing non-infringement and/or invalidity arguments in our defense.

Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition or results of operations. Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. Further, there could be public announcements of the intellectual property litigation, and if securities analysts, investors or others perceive the potential impact to be negative or risks to be substantial, it could have an adverse effect on the price of our common stock. The occurrence of infringement claims may grow as the market for our products, services and technologies grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources.

Growing our customer base depends upon the effective operation of our applications with operating systems, networks and standards that we do not control.

We will be dependent on the interoperability of our applications with operating systems that we do not control, and any changes in such systems that degrade our potential products’ functionality or give preferential treatment to competitive products could adversely affect the usage of our applications on quantum processing units. Additionally, in order to deliver high quality products, it is important that our products work well with a range of quantum computers, conventional computers, systems, networks and standards that we do not control. We may not be successful in developing relationships with key participants in the quantum computing industry or in developing products that operate effectively with these technologies, systems, networks or standards.

We may not be able to protect our source code from copying if there is an unauthorized disclosure of source code.

Source code, the detailed program commands for our operating systems and other software programs, is critical to our business. While, from time to time, we may license portions of our application and operating system source code to one or more licensees, we take significant measures to protect the secrecy of large portions of our source code. 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.

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.

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”);

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economic, legal and regulatory factors unrelated to our performance;

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any future guidance that we may provide to the public, any changes in such guidance or any difference between our guidance and actual results;

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changes in financial estimates or recommendations by any securities analysts who follow our common stock;

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speculation by the press or investment community regarding our business;

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litigation;

●

changes in key personnel; and

●

future sales of our common stock by our officers, directors and significant stockholders.

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. Furthermore, the market for our common stock historically has been limited and we cannot assure you that an active trading market will ever be developed or maintained. The price at which investors purchase shares of our common stock may not be indicative of the price that will prevail in the trading market. Market fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. As a result, these factors may make it more difficult or impossible for you to sell your shares of our common stock for a positive return on your investment. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

Future sales of shares of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock. In addition, if our significant stockholders sell a large number of shares, or if we issue a large number of shares, the market price of our stock could decline. Any issuance of additional common stock by us in the future, or warrants or options to purchase our common stock, if exercised, would result in dilution to our existing stockholders. Such issuances could be made at a price that reflects a discount or a premium to the then-current trading price of our common stock. Moreover, the perception in the public market that stockholders might sell shares of our stock or that we could make a significant issuance of additional common stock in the future could depress the market for our shares. 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.

~~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.~~28

~~Subsequent~~Delays toin ~~the~~filing ~~issuance~~financial ofreports, ~~our Annual Report~~internal oncontrol ~~Form 10-K for the year ended December 31~~weaknesses, ~~2023,~~ and ~~our~~restatements ~~subsequent~~could ~~retention~~hinder ~~of BPM LLP to replace BF Borgers CPA PC as~~ our ~~independent registered~~ability ~~public accounting firm, management became aware of various adjustments~~ to bemaintain ~~recorded to our consolidated financial statements. On September 11, 2024, we filed Amendment 1 to our Annual Report on~~ Form 10S-K3 ~~for~~eligibility ~~the~~and ~~year~~adversely ~~ended~~affect ~~December 31, 2023, restating~~ our ~~financial statements~~business ~~for the years ended December 31, 2023~~ and ~~2022 to correct errors primarily related to purchase accounting for the QPhoton Merger,~~ stock~~-based compensation, and financing costs. We also amended our financial statements for the nine months ended September 30, 2023,~~ ~~in line with the restatement of our annual financial statements~~price. ~~These corrections impacted net loss, goodwill, intangible assets, liabilities, and stockholders’ equity.~~

~~These~~To ~~restatements~~maintain ~~were~~eligibility ~~necessitated~~to inuse ~~part~~Form byS-3, we must ~~deficiencies~~be intimely ~~our~~and ~~internal~~current ~~control~~in ~~over~~our ~~financial~~public reporting,. ~~which~~There ~~management~~can ~~concluded~~be ~~was~~no ~~not~~guarantees ~~effective~~that aswe ofwill ~~September~~remain ~~30,~~timely ~~2024. Material~~and ~~weaknesses~~current in our ~~controls,~~public ~~including~~reporting in ~~those~~the ~~related~~future. Should we wish to register the ~~timely~~offer ~~detection~~ and ~~correction~~sale of ~~financial~~our ~~reporting~~securities ~~errors,~~to ~~coupled with~~the public without the ~~replacement~~ability ofto ~~our~~use ~~independent~~Form ~~auditor~~S-3, ~~resulted~~both our intransaction ~~delayed~~costs ~~filings~~and the amount of ~~our~~time ~~Quarterly~~required ~~Reports~~to oncomplete ~~Form~~the ~~10-Q~~transaction ~~for~~could ~~the~~increase, ~~periods~~making ~~ended~~it more difficult to execute ~~March~~any ~~31,~~such ~~2024,~~transaction successfully and ~~June~~potentially ~~30,~~harming ~~2024~~our financial condition.

23While we continue to evaluate steps to remediate the material weaknesses in our internal control over financial reporting, as effective internal controls are necessary for us to provide reliable financial reports and prevent fraud, we can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting, circumvention of these controls, or otherwise. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify errors or to facilitate the fair presentation of our consolidated financial statements. 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.

As a result of the failure to timely file our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, we are currently ineligible to register the offer and sale of our securities using a newly filed registration statement on Form S-3. As of December 31, 2024, we have fully utilized the $100 million “shelf” registration statement on Form S-3 that the SEC declared effective on November 8, 2022.

To regain eligibility to use Form S-3, we must be timely and current in our public reporting for a period of 12 months preceding our intended S-3 filing. 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. 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.

While we continue to evaluate steps to remediate the material weaknesses in our internal control over financial reporting, as effective internal controls are necessary for us to provide reliable financial reports and prevent fraud, we can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting, circumvention of these controls, or otherwise. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify errors or to facilitate the fair presentation of our consolidated financial statements. Failure to address and remediate any internal control weaknesses could further delay our ability to regain Form S-3 eligibility and adversely affect our business, operations, and stock price.

“Penny stock” rules may make buying or selling our common stock difficult, which may make our stock less liquid and make it harder for investors to buy and sell our securities.

Trading in our common stock has from time to time been and may continue to be subject to the SEC’s “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the liquidity of, and consequently adversely affect the market price for, 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.

ASome ~~substantial minority~~ of our outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act. In addition, we have issued or obligated to issue options to purchase common stock pursuant to certain employment, director and consultant agreements which shares of common stock, when purchased pursuant to the exercise of such options, would also be considered “restricted securities.” As restricted securities, these shares may be resold only pursuant to an effective registration statement or in accordance with the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and applicable state securities laws. Rule 144 provides in essence that an Affiliate (as such term is defined in Rule 144(a)(1)) of an issuer who has held restricted securities for a period of at least six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of the issuer’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to the sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by a person who is not an Affiliate of the issuer and who has satisfied a one-year holding period. 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~~ 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 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. In addition, in the future we may enter into agreements that prohibit or restrict our ability to declare or pay dividends on our common stock. As a result, your only opportunity to achieve a return on your investment will be if the market price of our common stock appreciates and you sell your shares at a profit.

You may experience dilution of your ownership interest due to the future issuance of additional shares of our common stock.

We are in a capital-intensive business and we do not have sufficient funds to finance the growth of our business or the costs of our development projects or to support our projected capital expenditures indefinitely. As a result, we will very likely require additional funds from future equity or debt financings, which may include the issuance of shares of preferred stock, convertible debt, or warrants to purchase shares of common stock, to purchase capital equipment, complete the development of new products and pay the general and administrative costs of our business. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of holders of our common stock. We are currently authorized to issue 250,000,000 shares of common stock. The potential issuance of additional shares of common stock or of preferred stock or convertible debt may create downward pressure on the market price of our common stock. We may also issue additional shares of common stock or other securities that are convertible into or exercisable for common stock in the future for capital raising purposes or for other business purposes. Our future issuance of a substantial number of shares of common stock or the sale of a substantial number of shares in the public market, or the perception that such issuances or sales could occur, could adversely affect the prevailing market price of our common stock. A decline in the market price of our common stock could make it more difficult to raise funds through future offerings of our common stock or securities convertible into common stock.

In addition, these new securities could contain provisions, such as priorities on distributions and voting rights, that could affect the value of our existing shares of common stock.

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~~February 1827, ~~2025~~2026, our directors and executive officers collectively beneficially own approximately 2012.14% of the shares of our common stock including the beneficial ownership of Dr. Yuping Huang of 1710.29% of the shares of our common stock.

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. This concentrated voting power could discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our stockholders. Furthermore, this concentrated control will limit the practical effect of your influence over our business and affairs, through any stockholder vote or otherwise. Any of these effects could depress the market price of our common stock.

Our articles of incorporation grant the Board the power to issue additional shares of common and preferred shares and to designate other classes of preferred shares, all without stockholder approval.

Our authorized capital consists of 260,000,000 shares of capital stock of which 10,000,000 shares are authorized as preferred stock. The Board, without any action by our stockholders, may designate and issue shares of preferred stock in such series as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights, provided it is consistent with Delaware law. 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.

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. 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.

Not applicable.

ITEM 1C. CYBERSECURITY

A robust and consistent approach to cybersecurity is critical to achieving our strategic business objectives and protecting our intellectual property. As an advanced technology company developing quantum photonic products, we face a wide range of cybersecurity threats such as ransomware and denial-of-service attacks that affect most industry sectors, to attacks from highly sophisticated adversaries, including nation state actors, that target dual-use advanced technologies such as quantum computing. 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. 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~~ the Risk Committee, ~~oversees~~is actively involved in oversight of the Company’s ~~processes~~risk ~~for~~management ~~identifying~~program, and ~~mitigating~~cybersecurity ~~risks,~~represents ~~including~~an important ~~cybersecurity~~component ~~risks.~~of the Company’s ~~management periodically~~overall ~~briefs~~approach ~~the~~to ~~Board~~enterprise onrisk ~~our~~management ~~cybersecurity~~(“ERM”). ~~and~~The ~~information~~Company’s ~~security~~ cybersecurity policies, ~~and plans~~standards, processes and ~~the~~practices ~~Board~~are isintegrated ~~apprised~~into ofthe ~~cybersecurity incidents~~Company’s ~~deemed~~ERM toprogram ~~have~~and aare ~~moderate~~based oron ~~higher~~recognized ~~business~~frameworks established ~~impact.~~by In the ~~event~~National Institute of anStandards ~~incident~~and Technology, the ~~Company~~International ~~has~~Organization ~~developed~~for anStandardization ~~incident~~and ~~response~~other applicable ~~plan,~~industry ~~which~~standards. ~~sets~~In ~~forth~~general, the ~~steps~~Company seeks to beaddress ~~followed~~cybersecurity ~~from~~risks ~~incident~~through ~~detection~~a ~~and~~comprehensive, ~~assessment~~cross-functional toapproach ~~mitigation,~~that is ~~recovery~~focused ~~and~~on ~~notification~~preserving ~~and~~the ~~reporting~~confidentiality, ~~including~~ ~~notifying~~security ~~functional~~and ~~areas~~availability ~~(e.g.~~of ~~legal),~~the asinformation ~~well~~that asthe ~~senior~~Company ~~leadership~~collects and ~~the~~stores ~~Board~~by identifying, preventing asand ~~appropriate~~mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.

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. 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 is coordinating closely with the Board’s Risk ~~Committee~~Management ~~to ensure that the Company will implement the appropriate cybersecurity technologies to protect the Company~~ and ~~its intellectual property.~~Strategy

~~Third parties play an~~As ~~important~~one ~~role~~of inthe ~~our~~critical ~~cybersecurity~~elements ~~program.~~of Wethe ~~engage~~Company’s ~~third-party~~overall ~~services~~ERM toapproach, ~~conduct~~the ~~evaluations~~Company’s ofcybersecurity ~~our~~program ~~security~~is ~~controls,~~focused ~~including penetration testing and consulting~~ on ~~best practices. The third-party services include testing both~~ the ~~design and operational effectiveness~~ offollowing ~~security~~key ~~controls.~~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.

	●	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.

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. 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. 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.

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. 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. 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. 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. 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. 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. In the event of an incident, the Company has developed an incident response plan, which sets forth the steps to be followed from incident detection and assessment to mitigation, recovery and notification and reporting, including notifying functional areas (e.g. legal), as well as senior leadership and the Board, as appropriate.

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.

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.

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. 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.

2631

ITEM 2. PROPERTIES.

We maintain our principal office at 5 Marine View Plaza, Suite 214, Hoboken, NJ 07030. The Company’s ~~leases~~principal 7office is comprised of 16,~~503~~390- square feet of laboratory and office space in a multistory, multi-tenant building ~~in Hoboken, NJ~~ under a ~~five~~multi-year lease, most of which ends on May 31, 2028, with a portion of the lease ending ~~September~~July 3031, ~~2027~~2030. Additionally, the Company leases 9,261 square feet of manufacturing (semiconductor and photonic chip fabrication), laboratory, clean room, and office space in a multi-tenant building in Tempe, AZ for 51-months ending November 30, 2028. The Company also has a short-term agreement for approximately ~~300~~800 square feet in a multi-tenant facility in ~~Arlington~~Tysons, VA that provides 24/7 furnished co-working space, conference room space, and other services on an as-needed basis. 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. Each of the LSI leases contains extension options.

ITEM 3. LEGAL PROCEEDINGS.

Except as listed below, there is no action, suit, or proceeding by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or our subsidiaries, threatened against or affecting the Company, our common stock, our subsidiaries, or the Company’s or its subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect on the Company.

BV Advisory Partners, LLC Proceedings

BV Advisory v. QCi Appraisal Action

BV Advisory Partners, LLC (“BV Advisory”) was ~~purportedly~~ 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~~owned ~~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. 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. 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~~pursuant to ~~the BV Note Purchase Agreement~~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 ~~(the “BV Notes”)~~. The BVnotes ~~Notes all~~ 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 BVnotes ~~Notes~~ and accrued interest through June 16, 2022. On July 14, 2022, BV Advisory returned the cashier’s check and disputed the calculation of the amount paid to settle the ~~BV Notes~~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. 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. After the Delaware ~~Chancery~~ 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~~its ~~BV Note~~ claim to the Superior Court of the state of Delaware (the “Delaware Superior Court”). 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. 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.

2732

QCi v. 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~~their ~~BV Defendants’~~ unauthorized possession and dissemination of certain of the Company’s confidential and privileged documents. The Company ~~seeks~~sought, 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. 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.

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. 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.

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~~New ~~States~~Jersey 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. The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material information about the Company’s customers, contracts and business operations. in its public statements and SEC Tofilings. ~~date~~The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. In June 2025, the New Jersey District Court ~~has~~designated ~~not~~a ~~certified~~lead aplaintiff ~~class~~who filed an amended operative complaint on or ~~designated~~about aAugust ~~lead~~26, ~~plaintiff~~2025. The Company ~~disputes~~filed ~~the~~a ~~allegations~~motion into dismiss the amended operative complaint ~~and~~on November 14, 2025. While the Company’s motion to dismiss was pending, the lead plaintiff filed a motion for leave to file a second amended complaint. The second amended complaint was subsequently filed on February 13, 2026. The Company intends to ~~vigorously~~bring ~~defend~~a ~~against~~motion to dismiss the ~~asserted~~second ~~claims~~amended complaint. The motion is presently due on or before March 13, 2025.

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. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.

On May 6, 2025, a shareholder derivative action (the “May 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, gross mismanagement, waste of corporate assets, unjust enrichment, aiding and abetting breaches of fiduciary duties, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. No pre-litigation demand was made on the Company’s board of directors. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims

On June 19, 2025, a shareholder derivative action (the “June 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the United States District Court for the District of New Jersey, for alleged breaches of fiduciary duties, waste, unjust enrichment, common law fraud, and violations of the Exchange Act. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.

On September 25, 2025, a shareholder derivative action (the “September 2025 Derivative Action”) was filed against certain of the Company’s current and past officers and directors, purportedly on behalf of the Company, in the Superior Court of New Jersey Chancery Division, Hudson County, for alleged breaches of fiduciary duty, unjust enrichment, gross mismanagement, corporate waste, and aiding and abetting fiduciary duties. The Company and its board of directors dispute the allegations in the complaint and intend to vigorously defend against the asserted claims.

Arbitration over Stock Options

InArbitration ~~February~~over ~~2025,~~Stock the Company entered into arbitrations with two former consultants regarding forfeiture of stock options. The Company had issued stock options to the former consultants in 2020 and 2021 and terminated their agreements in March 2024, at which time the Company informed the former consultants that any vested options had to be exercised within three months of the termination date, per the Company’s equity compensation plans. 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.Options

In February 2025, the Company entered into arbitrations with two former consultants regarding forfeiture of stock options. The Company had issued stock options to the former consultants in 2020 and 2021 and terminated their agreements in March 2024, at which time the Company informed the former consultants that any vested options had to be exercised within three months of the termination date, per the Company’s equity compensation plans. 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.

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. 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.

Concluded Proceedings

The Company previously disclosed two legal matters which were concluded during 2024. The defamation action filed by the Company in New Jersey Superior Court in December 2022 against BV Advisory and other parties was dismissed on procedural grounds in May 2024. 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.

2834

PART II

Market Information

Our common stock is listed on the Nasdaq Capital Market under the symbol “QUBT” and commenced trading on July 15, 2021.

Authorized Capital

The Company is authorized by its Certificate of Incorporation to issue an aggregate of 250,000,000 shares of common stock, $0.0001 par value per share, and 10,000,000 shares of preferred stock, of which 1,550,000 shares are designated as Series A Convertible Preferred Stock and 3,079,864 shares are designated as Series B Preferred Stock. As of ~~March~~February 1827, ~~2025~~2026, we had ~~137~~224,~~244~~538,~~545~~254 shares of common stock issued and outstanding and no shares of preferred ~~stock~~ stock issued and outstanding.

Holders of Common Equity

As of ~~March~~February 1827, ~~2025~~2026, there were approximately ~~214~~210 stockholders of record of our common stock. Because shares of our common stock are held by depositaries, brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of stockholders of record.

Dividend Information

We have not paid any cash dividends to our holders of common stock. The declaration of any future cash dividends is at the discretion of the Board and depends upon our earnings, if any, our capital requirements and financial position, our general economic condition, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

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.

Unregistered Sales of Equity Securities and Use of Proceeds

During the year ended December 31, ~~2024~~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.

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.

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. 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 AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of ~~the~~our ~~results of operations and~~ financial condition ~~for~~and ~~the~~results ~~years~~of ~~ended~~operations ~~December 31, 2024 and 2023~~ should be read in conjunction with our consolidated financial statements and ~~the~~related notes included toin ~~those~~this ~~consolidated~~Annual ~~financial~~Report on Form 10-K. This discussion contains forward-looking statements that ~~are~~involve ~~included~~risks ~~elsewhere~~and inuncertainties. Our ~~this~~actual ~~Annual~~results ~~Report.~~could ~~Our~~differ ~~discussion includes~~materially from those anticipated in these forward-looking statements ~~based~~as ~~upon~~a ~~current~~result ~~expectations~~of ~~that~~certain ~~involve~~factors ~~risks~~including, but ~~and~~not ~~uncertainties~~limited to, ~~such~~those asdiscussed ~~our~~under ~~plans,~~Item ~~objectives~~1A, “Risk Factors.” The following analysis generally discusses 2025 and 2024 ~~expectations~~items and ~~intentions.~~year-to-year ~~Actual~~comparisons ~~results~~between 2025 and ~~the~~2024. ~~timing~~Discussions of ~~events~~2023 ~~could~~items ~~differ~~and ~~materially~~year-to-year ~~from~~comparisons ~~those~~between ~~anticipated~~2024 and 2023 that are not included in ~~these~~this ~~forward~~Form 10-~~looking statements~~K ascan abe ~~result~~found in “Management’s Discussion and Analysis of aFinancial ~~number~~Condition and Results of ~~factors.~~Operations” ~~See~~in ~~“Forward~~our Annual Report on Form 10-~~Looking~~K ~~Statements~~for the fiscal year ended December 31, 2024 filed with the SEC on March 20, 2025.”

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. 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. The Company has generated some revenue based on sales of of products and related services to date and is expanding its sales and marketing efforts. The Company’s development team includes optical engineers, technicians, mathematicians, physicists, and software developers.

2936

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”). 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.

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. 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. 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.

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. 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. 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. 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. 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. Trade 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.

Results of Operations

Our results of operations for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 is as follows (in thousands, except percentages):

	Year Ended December 31,
	2024			2023			% Change
	2025			2024			% Change
Revenue:
Total revenue	$	~~373~~682		$	~~358~~373			483	%
Gross profit		~~112~~67			~~162~~112			(3140	)%
Gross profit margin		3010	%		4530	%
Operating expenses:
Research and development		1120,~~318~~473			811,~~891~~318			2781	%
Sales and marketing		13,~~818~~431			1,~~806~~818			189	%
General and administrative		1227,~~913~~240			1512,~~708~~913			~~(18~~111	)%
Total operating expenses		2651,~~049~~144			26,~~405~~049			(196	)%
Loss from operations		(2551,~~937~~077	)		(2625,~~243~~937	)		(197	)%
Non-operating income and (expense):
Interest and other income		423			295			43	%
Interest and other income, net		20,718			423			4,798	%
Interest expense, net		(2,496	)		(1,602	)		56	%
Interest expense		(65	)		(2,496	)		(97	)%
Change in fair value of warrant liabilities		(40,532	)		528			NM
Change in fair value of derivative liability		11,750			(40,532	)		129	%
Total non-operating income (expense)		(42,605	)		(779	)		NM
Total non-operating income (expense), net		32,403			(42,605	)		(176	)%
Net loss	$	(6818,~~542~~674	)	$	(2768,~~022~~542	)		~~154~~(73	)%

Revenues

The Company’s revenues during the years ended December 31, ~~2024~~2025 and ~~2023~~2024 consisted of (in thousands):

	Year Ended December 31,
	2024		2023		% Change
	2025		2024		% Change
Services	$	~~346~~368	$	~~353~~346		(26	)%
Products		27314		527		~~440~~1,063	%
Total	$	~~373~~682	$	~~358~~373		483	%

Revenues for the year ended December 31, ~~2024~~2025 were $~~373~~682 thousand compared to $~~358~~373 thousand for the year ended December 31, ~~2023~~2024, an increase of $15309 thousand, or 483%. Revenue was derived from sales of hardware products and professional services in ~~2024~~2025 and ~~2023~~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. 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. 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~~2025, the Company continued to execute its business strategy to provide quantum-ready solutions for solving real-world problems. While we have made significant progress toward this overarching objective, the generation of revenue from customers has been slow to develop, in part due to the fact that quantum computing is a cutting-edge technology for most potential customers, who are therefore proceeding cautiously with small, exploratory contracts to better understand its applicability to their requirements. Accordingly, the Company has focused on providing professional services and research and development offerings to introduce customers to quantum-based solutions to their operating needs as well as on customer education and building customer awareness as a means to generating sales. We have developed and released multiple products, including commercial and research and development offerings and foundry services for TFLN Optical Chips manufacturing that we are now in the process of marketing. As a result, we expect product revenues to continue to increase going forward. The Company also started to recognize revenue for cloud-based access to the Dirac-3 quantum optimization system during 2025.

Cost of Revenues

Cost of ~~revenues~~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 $~~261~~615 thousand for the year ended December 31, ~~2024~~2025, compared to $~~196~~261 thousand for the prior year, an increase of $65354 thousand, or 33136%. Cost of revenues for each of the years ended December 31, 2025 ~~2024~~ and ~~2023~~2024 consists primarily of salary expense. The increase for ~~2024~~2025 was ~~predominantly~~primarily ~~driven~~due byto 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 ~~2024~~the 2025 compared to the prior year.

Gross Margin

Gross margin for the year ended December 31, ~~2024~~2025 was $~~112~~67 thousand compared to $~~162~~112 thousand for the prior year, a decrease of $5045 thousand, or 3140%. On a percentage basis, gross margin was 3010%, a decrease of 1520% year-over-year. The ~~change~~decrease in gross margin was ~~the~~largely ~~result~~due ofto ahigher ~~new~~than ~~custom~~anticipated ~~hardware~~direct ~~contract~~labor ~~that~~expenses required ~~had~~to ~~lower~~complete ~~margins~~the ~~due~~assembly toand ~~its cost~~test of ~~revenues~~the ~~being~~first ~~comprised~~unit of ~~other~~a ~~direct~~new ~~component~~hardware ~~costs~~product. Cost information from the production of the first unit will be used in ~~addition~~adjusting topricing ~~direct~~of ~~labor~~subsequent ~~expenses~~product sales. 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.

Operating Expenses

Operating expenses of approximately $2651.01 million induring ~~2024~~the ~~decreased~~year ended December 31, 2025 increased as compared to approximately $26.40 million in ~~2023~~2024 primarily as a result of ahigher ~~decrease in general~~ research and ~~administrative~~ development expenses, ~~partially~~sales ~~offset~~and bymarketing anexpenses ~~increase~~and ingeneral ~~research~~ and ~~development~~administrative expenses, as set forth in the below tables (in thousands, ~~except~~ except percentages).

	Year Ended December 31,				%
	2024		2023		Change
	2025		2024		Change
General and administrative	$	12,913	$	15,708		(18	)%
Research and development	$	20,473	$	11,318		81	%

Research and development expenses consist primarily of labor expenses for employees that primarily engage in research and development efforts and non-labor expenses for the development of hardware products and supporting software. We focus the bulk of our research and development activities on the continued development of existing products and the development of new offerings for emerging market opportunities.

Research and development 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. 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.

	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.

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. 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.

	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.

General and administrative expenses induring ~~2024 decreased~~the year ended December 31, 2025 increased $214.83 million or 27111% compared with ~~2023~~2024 primarily due to ~~lower~~higher employee- and advisor-related expenses~~, including stock-based compensation,~~ ~~payroll,~~relating ~~bonus~~to ~~and~~development ~~travel expenses, as well as lower legal fees~~ and ~~consulting~~implementation ~~services~~of ~~driven~~internal byfinancial ~~changes~~controls, ~~made~~expansion ~~within~~of ~~and~~accounting ~~by the Company’s management team~~staff, ~~offset by~~ increased ~~audit~~recruiting fees ~~driven by the Company retaining a new independent registered public accounting firm in~~and ~~May~~legal ~~2024and~~expenses ~~such~~related ~~firm’s~~to ~~re-audit~~multiple offinancings, ~~the~~mergers ~~Company’s~~and ~~consolidated~~acquisition ~~financial statements for the years ended December 31~~activity, ~~2023~~ and ~~2022~~ongoing litigation.

	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. We focus the bulk of our research and development activities on the continued development of existing products and the development of new offerings for emerging market opportunities.

Research and development 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.

	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.

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.

Non-operating Income (Expense)

The following table summarizes our non-operating income (expense) for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 (in thousands, except percentages).

	Year Ended December 31						%
	2024			2023			Change
	2025			2024			Change
Interest and other income	$	423		$	295			43	%
Interest and other income, net	$	20,718		$	423			4,798	%
Interest expense, net		(2,496	)		(1,602	)		56	%
Interest expense		(65	)		(2,496	)		(97	)%
Change in value of derivative and warrant liabilities		(40,532	)		528			NM
Change in fair value of derivative and warrant liability		11,750			(40,532	)		129	%
Other income (expense)	$	(42,605	)	$	(779	)		NM
Other income (expense), net	$	32,403		$	(42,605	)		(176	)%

~~Non-operating~~Interest ~~expense~~and ~~increased~~other toincome, ~~$42.6~~net, ~~million for~~during ~~2024~~the ~~compared~~year toended ~~$779~~December ~~thousand~~31, 2025 ~~for~~increased ~~2023~~$20,295 or 4,798% compared with 2024 primarily asdue to the ~~result~~Company ofmaintaining ahigher ~~$40.5~~cash ~~million~~balances ~~decrease~~ in ~~the~~mutual ~~change~~funds, indeposit and ~~fair~~money ~~value~~market ofaccounts, ~~the~~U.S. ~~derivative liability~~Treasuries ~~for~~and ~~the~~corporate ~~QPhoton~~bonds ~~Warrants,~~during as ~~defined~~a ~~below,~~result ~~during~~of ~~2024~~the ~~compared~~substantial toamount aof ~~$528~~new ~~thousand~~funding ~~increase~~the Company raised in ~~2023~~2025.

~~The~~Interest ~~loss~~expense onduring ~~change~~the inyear ~~value~~ended ~~of warrant liability~~December is31, ~~entirely~~2025 ~~comprised~~decreased ~~of mark-to-market adjustments for the QPhoton Warrants~~$2,431 asor ~~defined~~97% ~~below~~compared inwith ~~the~~2024 ~~accompanying~~primarily ~~notes~~due to ~~our~~a ~~consolidated financial~~decrease ~~statements~~of ~~appearing~~interest ~~elsewhere~~on infinancial ~~this~~liabilities ~~report, which had no carrying value~~ as ofthe ~~December~~related ~~31, 2023. Future mark-to-market adjustments~~borrowings ~~may~~were ~~result~~paid inoff ~~continued~~during ~~losses~~2024. ifInterest ~~the~~expense ~~price~~during of the ~~Company’s~~year ~~common~~ended ~~stock increases above the closing bid price of $16.55 per share at~~ December 31, ~~2024;~~2025 ~~such~~is ~~adjustments~~related ~~may alternatively result in gains if the closing bid share price of the Company’s common stock decreases. See Note 10, Capital Stock, in the accompanying notes~~ to ~~our~~late ~~consolidated~~payroll ~~financial~~tax ~~statements appearing elsewhere in this report for additional information on the QPhoton Warrants~~filings.

InChange ~~addition,~~in ~~interest~~fair ~~expense,~~value ~~net,~~of ~~which~~derivative ~~consists~~and ofwarrant ~~interest~~liability onduring ~~financial~~the ~~liabilities~~year ~~and~~ended ~~amortization~~December ~~of debt issuance costs~~31, 2025 increased $~~128~~52,282 ~~thousand~~ or 43129% incompared with 2024 ~~compared~~as toa ~~2023,~~result ~~which~~of ~~increase~~the ~~was~~change ~~primarily attributable~~in tothe ~~interest~~fair ~~paid~~value onof the ~~secured~~QPhoton ~~convertible~~Warrant Liability ~~promissory~~(as ~~note~~defined below). The change in value of the ~~original~~warrant ~~principal~~liability ~~amount~~is ofa ~~$8.25~~non-cash ~~million~~charge ~~that~~comprised weof ~~issued~~mark-to-market adjustments for the QPhoton Warrants (as defined below). Future mark-to-market ~~Streeterville~~adjustments ~~Capital,~~may ~~LLC~~result in ~~August~~losses ~~2024~~if (the ~~“Streeterville~~Company’s ~~Convertible~~stock ~~Note”),~~price increases ~~which~~above wethe ~~paid~~Company’s inclosing ~~full~~bid asprice of $10.26 per share on December 31, ~~2024~~2025; such adjustments may alternatively result in gains if the closing bid share price of the Company’s common stock decreases. See Note 712, ~~Financial~~Capital ~~Liabilities~~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. Future mark-to-market adjustments may result in continued losses if the price of the Company’s common stock increases above the closing bid price of $16.55 per share at December 31, 2024; such adjustments may alternatively result in gains if the closing bid share price of the Company’s common stock decreases. 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.

Liquidity and Capital Resources

We have incurred net losses and experienced negative cash flows from operations since inception. ~~Through~~During the year ended December 31, ~~2024~~2025, the Company ~~has~~ raised ~~$167.8~~net ~~million~~proceeds ~~through its issuance~~ of ~~common stock and~~ $201,475.1 million through ~~its~~the ~~issuance~~private placement of ~~convertible promissory notes and other debt for a total of $187~~equity.9 ~~million.~~ 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 also expect to incur additional integration and scaling costs associated with the LSI acquisition. As of December 31, ~~2024~~2025, the ~~Company~~ Company had cash and cash equivalents of $78737.9 million and short-term and long-term investments of $782.5 million.

~~Our primary uses of cash are to fund and invest in our operations as we continue to grow our business.~~ We ~~will~~believe ~~require~~that ~~a significant amount of cash for continued investment in~~ our ~~Foundry Services~~existing ~~offering~~cash, ~~including~~cash ~~but not limited to our AZ Chips Facility and any future-identified space for expansion, as well as ongoing~~equivalents ~~research~~ and ~~development~~investments ~~for~~will ~~our~~be ~~non-linear~~sufficient ~~quantum optical products and photonics chips. Until such time as we can generate significant revenue from sales or subscriptions of our hardware offerings, we expect~~ to ~~finance~~meet our ~~operating~~working ~~and~~capital ~~investing needs through our cash~~ and ~~cash equivalents and, equity and/or debt financings or other~~ capital ~~sources,~~expenditure ~~including~~needs ~~but~~for ~~not limited to U.S. government grant and loan programs. We may, however, be unable to raise sufficient funds or enter into such other arrangements, when needed, on favorable terms, or~~ at ~~all.~~least ~~In particular, uncertain and unfavorable conditions in~~ the ~~United~~next ~~States~~twelve ~~and global macroeconomic environment~~months, ~~including inflationary~~although ~~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. To the extent that~~ we ~~raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities~~ may ~~include~~choose liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take ~~specific~~advantage ~~actions,~~of ~~such~~opportunistic ~~as incurring additional debt, making~~ capital ~~expenditures~~raising or ~~declaring~~refinancing ~~dividends.~~transactions Ifat we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially reduce our product development and go-to-market efforts. There can be no assurances that the Company will be able to secure additional equity and/or debt investments or achieve an adequate sales level. 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~~time.

32Our primary uses of cash are to fund and invest in our operations as we continue to grow our business. 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. Until such time as we can generate significant revenue from sales or subscriptions of our hardware offerings, we expect to finance our operating and investing needs through our cash and cash equivalents and, equity and/or debt financings or other capital sources, including but not limited to U.S. government grant and loan programs. We may, however, be unable to raise sufficient funds or enter into such other arrangements, when needed, 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. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially reduce our product development and go-to-market efforts. There can be no assurances that the Company will be able to secure additional equity and/or debt investments or achieve an adequate sales level. 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 table summarizes total current assets, liabilities and working capital at December 31, ~~2024~~2025, compared to December 31, ~~2023~~2024 (in thousands):

December 31, 2024

December 31, 2023

Increase/ (Decrease)

December 31, 2025

December 31, 2024

Increase/ (Decrease)

Current assets

791,~~151~~133,720

279,~~656~~151

761,~~495~~054,569

Current liabilities

411,~~559~~074

4,~~812~~559

~~(253~~6,515

)

Working capital (deficit)

741,~~592~~122,646

(274,~~156~~592

)

761,~~748~~048,054

At December 31, ~~2024~~2025, we had working capital of $741,122.67 million as compared to working capital ~~deficit~~ of $274.26 million at December 31, ~~2023~~2024, an increase of $761,048.80 million. The increase in 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 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~~sales of 2386.73 million shares of common stock for an aggregate of $231,475.81 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~~2025. ~~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.~~

On a long-term basis, our liquidity is dependent on continuation and expansion of operations and receipt of revenues. 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. 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.

Cash Flows

The following table summarizes our cash flow for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 (in thousands):

	Year Ended December 31,
	2024			2023
	2025			2024
Net cash used in operating activities	$	(1630,~~213~~294	)	$	(1816,~~315~~213	)
Net cash used in investing activities		(6788,~~036~~327	)		(26,~~612~~036	)
Net cash provided by financing activities		991,~~135~~477,556			1799,~~678~~135
Net increase (decrease) in cash and cash equivalents	$	76,886		$	(3,249	)
Net increase in cash and cash equivalents	$	658,935		$	76,886

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.41

~~Net~~Cash ~~cash~~Flows ~~used~~from inOperating 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. The increase in 2024 is primarily due to the purchase of additional equipment in connection with establishing the AZ Chip Facility.Activities

33Net 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.

~~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~~Flows ~~provided by financing activities during year ended December 31, 2024 were attributable to proceeds~~ from ~~our~~Investing 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.Activities

OnNet acash ~~long-term~~used ~~basis,~~in ~~our~~investing ~~liquidity~~activities isfor ~~dependent~~the onyears ~~continuation~~ended ~~and~~December ~~expansion~~31, of2025 ~~operations~~ and ~~receipt~~2024 ofwas ~~revenues~~$788.3 ~~Demand~~million ~~for the Company’s products~~ and ~~services~~$6.0 ~~will be dependent on~~million, ~~among other things~~respectively, ~~market~~and ~~acceptance~~was ofattributable to our ~~products~~purchase ~~and~~of ~~services~~computer hardware, ~~the~~laboratory ~~technology~~equipment ~~market in general,~~ and ~~general~~TFLN ~~economic~~Chips ~~conditions~~manufacturing equipment, ~~which~~ ~~are~~as ~~cyclical~~well inas ~~nature. As much revenues will be derived from~~ the ~~sales~~purchase of ~~our products and services~~$1,197.9 ~~our~~million ~~business~~in ~~operations may~~available-for-sale-debt besecurities ~~adversely~~offset ~~affected~~ by ~~the~~$376.3 ~~products~~million ~~and~~in ~~services~~proceeds ~~offered~~from bysales ~~our~~of ~~competitors~~available-for-sale-debt ~~and any prolonged recession periods~~securities.

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.

Critical Accounting Estimates

Certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our consolidated financial statements. In applying these policies, our management uses judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our consolidated financial statements.

Fair Value of Stock-based Compensation

We recognize stock-based compensation expense for all share-based payment awards in accordance with ASC 718, Compensation –- Stock Compensation. Stock-based compensation ~~expense~~ expense for expected-to-vest awards is valued under the single-option approach and amortized on a straight-line basis, accounting for actual forfeitures as they occur. We utilize the Black-Scholes pricing model in order to determine the fair value of stock-based option awards. The Black-Scholes pricing model requires various highly subjective assumptions including volatility, expected option life, and risk-free interest rate. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future.

Fair Value of ~~Warrant~~Derivative ~~Liabilities and Derivatives~~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. The QPhoton Warrants are comprised of warrants to purchase up to 7,028,337 shares of the Company’s common stock at an exercise price of $0.0001 per share (the “QPhoton Warrants”) and are exercisable when and if stock options and warrants issued by the Company and outstanding as of June 15, 2022 are exercised. The Merger Consideration for shareholders Yuping Huang and The Trustees of the Stevens Institute of Technology was issued in 2022. A third alleged shareholder, BV Advisory, rejected the Merger Consideration and commenced litigation in Delaware Chancery Court (see Note 810, 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~~That ~~to date that~~ litigation ~~has~~was ~~not~~resolved ~~been~~in ~~resolved~~2025. Accordingly, as of December 31, ~~2024~~2025 and ~~2023~~2024, we had only issued 6,325,503 of the QPhoton Warrants. 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.

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. 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.42

34An 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. 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.

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. In the absence of market pricing for the intangible assets, the Company relied on independent third-party appraisal experts and comparison with similar transactions to arrive at estimates of value as well as useful life. The Company will perform periodic assessments of the intangible assets for impairment, but if any of the initial estimates are incorrect, that could result in a calculation of amortization expense that is too high or too low.

Valuation Allowances for Deferred Taxes

Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s assessment of estimated current and future income taxes to be paid. We are subject to income taxes in the United States. Significant judgments and estimates are required in determining the consolidated income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits.

Deferred tax assets and liabilities arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which are expected to result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, for all material jurisdictions, we consider all available positive and negative evidence, including scheduled reversals of deferred tax balances, projected future taxable income, tax-planning strategies and results of recent operations. In projecting future taxable income, we begin with historical results and incorporate assumptions about the amount of future state, federal and foreign pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates we use to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating results.

As of December 31, ~~2024~~2025, we had federal and state net operating loss (“NOL”) carryforwards of approximately $89158.41 million, or $1927.61 million on a tax-effected basis. We believe that it is more likely than not that the benefit from these NOL carryforwards will not be realized. Accordingly, we have provided a full valuation allowance on any potential deferred tax assets relating to these NOL carryforwards. 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~~2025, will be accounted for as a reduction of income tax expense.

The calculation of our tax liabilities involves evaluating uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. ASC 740, Income Taxes, states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including the resolution of any related appeals or litigation processes, on the basis of the technical merits.

We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously 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. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is made available.

~~We believe that none of the unrecognized tax benefits may be recognized by the end of 2024.~~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. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~Not~~We ~~applicable~~are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in foreign currency exchange rates, interest rates and inflation.

Interest Rate Risk

As of December 31, 2025, we had cash and cash equivalents of $737.9 million and investments in marketable securities of $379.4 million with maturities of less than one year. The goals of our investment policy are liquidity and capital preservation. We believe that we do not have any material exposure to changes in the fair value of our cash equivalents or marketable securities as a result of changes in interest rates due to the short-term nature of these assets. A hypothetical 100 basis point increase in interest rates as of December 31, 2025 would not have had a material impact on the fair value of our cash equivalents or marketable securities due to their short-term maturities. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

Foreign Currency Exchange Risk

All of our operations are based in the United States and all of our sales transactions are currently denominated in U.S. dollars. However, due to our use of some international vendors, an immaterial portion of our cost of sales and operating expenses are denominated in currencies other than the U.S. dollar, principally the British Pound Sterling. Changes in the exchange rate between the U.S. dollar and foreign currencies in which we incur expenses affect the translated value and relative level of sales and net income that we report from one period to the next. During the year ended December 31, we incurred a loss on foreign exchange transactions of $9 thousand as compared to $0 in 2024. This amount was not material to our consolidated financial statements.

Impact of Inflation

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures it could diminish our margin thereby limiting our profits, especially if we are not able to fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition, and results of operations.

Other Risks

We do not have material exposure to commodity price risk, equity price risk, or other significant market risks.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

~~Our~~The ~~consolidated~~ financial statements ~~are~~and ~~contained~~supplementary data inrequired ~~pages~~by ~~F-1~~this ~~through~~item, ~~F-29~~including ~~which~~the ~~appear~~report atof our independent registered public accounting firm and the ~~end~~notes thereto, are included commencing at page F-1 of this Annual Report on Form 10-K and incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures. Based on such evaluation, our principal executive officer and principal financial officer concluded that as of December 31, 2024, our disclosure controls and procedures were not effective to provide reasonable assurance that (i) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. 44

Report of Management on Internal Control over Financial Reporting

Company management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Company management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on this assessment, management has determined that the Company’s internal control over financial reporting was not effective as of December 31, 2025 due to the material weaknesses noted below.

Material Weakness in Internal Control over Financial Reporting

Company management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on this assessment, management has determined that the Company’s internal control over financial reporting was not effective.

A material weakness, as defined by the Public Company Accounting Oversight Board, is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses, which are common to many small companies with limited staff:

~~(i)~~● ~~inadequate~~We ~~segregation~~did ofnot ~~duties~~design ~~consistent~~and ~~with~~maintain an effective control ~~objectives;~~environment ~~(ii)~~commensurate ~~inadequate~~with ~~controls~~our ~~related~~financial toreporting ~~revenue~~requirements. ~~recognition;~~During the year, we lacked a sufficient number of trained professionals with (~~iii~~i) ~~insufficient~~an ~~written~~appropriate ~~policies~~level of accounting knowledge, training and ~~procedures~~experience ~~for~~to appropriately analyze, record and disclose accounting matters timely and ~~financial~~accurately, ~~reporting~~and ~~with~~(ii) ~~respect~~an toappropriate ~~the~~level ~~requirements~~of knowledge and ~~application~~experience ofto ~~both~~establish ~~accounting~~effective ~~principles~~processes ~~generally~~and ~~accepted~~controls. inAdditionally, the ~~United~~limited ~~States~~personnel ofresulted ~~America~~in ~~and~~an ~~SEC~~inability ~~Guidelines;~~to consistently establish appropriate authorities and ~~(iv)~~responsibilities ~~inadequate~~in ~~information~~pursuit ~~technology~~of ~~general~~financial ~~controls~~reporting ~~specifically~~objectives, ~~related~~as todemonstrated ~~security~~by, among other things, insufficient segregation of duties, ~~user~~in ~~access,~~our ~~restricted~~finance ~~access~~ and ~~change~~accounting ~~management~~functions.

~~Management’s Plan to Remediate the Material Weakness~~ 45

The ~~Company has been~~ ~~implementing and continues to implement measures designed to ensure that control deficiencies contributing to the~~ material ~~weaknesses are~~weakness ~~remediated, such that these controls are designed, implemented, and operating effectively. In addition to identifying and remediating design deficiencies~~ in ~~its processes,~~ the ~~Company~~control ~~has~~environment ~~formally~~contributed ~~documented~~to ~~its procedures for many of~~ the ~~significant~~following ~~accounting~~additional ~~and~~material ~~financial reporting processes, including implementation of procedures for revenue recognition and segregation of duties. The other remediation actions planned include~~weaknesses:

~~(i)~~● ~~further~~We ~~documentation~~did not design and ~~implementation~~maintain ofan ~~control~~effective ~~procedures~~risk ~~and~~assessment ~~the~~process ~~implementation~~at ofa ~~control~~precise ~~monitoring;~~enough ~~and~~level ~~(ii)~~to identify new and ~~remedy~~evolving ~~gaps~~risks of material misstatement in our ~~information~~financial ~~technology~~statements. ~~general~~Specifically, changes to existing controls ~~specifically~~or ~~related~~the implementation of new controls have not been sufficient to respond to changes to the ~~areas~~risks of ~~security,~~material ~~user~~misstatement ~~access,~~to ~~restricted~~financial ~~access~~reporting; and ~~change management.~~

●

We did not design and maintain effective controls over IT general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain:

user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel;

program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;

computer operations controls to ensure that data backups are authorized and monitored; and

review of reports for third-party service organizations associated with IT systems and related complementary user entity controls maintained by management.

The material weaknesses above did not result in a material misstatement to the consolidated financial statements as presented in this Annual Report on Form 10-K.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, has been audited by BPM LLP, the Company's independent registered public accounting firm, as stated in their report which appears in Part IV, Item 15 of this Annual Report on Form 10-K.

Management’s Plan to Remediate the Material Weaknesses

The Company has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. During 2025, the Company strengthened its accounting function through the hiring of five full-time accounting professionals, including a Controller and Manager of Technical Accounting, to enhance oversight, technical expertise, and execution of key financial reporting processes. In addition to identifying and remediating design deficiencies in its processes, the Company has formally documented its procedures for many of the significant accounting and financial reporting processes, including implementation of procedures for revenue recognition and segregation of duties. The other remediation actions planned include:

	(i)	further documentation and implementation of control procedures and the implementation of control monitoring;

	(ii)	identify and remedy gaps in our information technology general controls specifically related to the areas of security, user access, restricted access and change management; and

	(iii)	design and implement risk assessment processes to identify and address new and evolving risks associated with financial reporting.

We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Management’s report on internal control over financial reporting was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit a Smaller Reporting Company to provide only Management’s report in this annual report, which may increase the risk that weaknesses or deficiencies in our internal control over financial reporting go undetected.46

Remediation of Previously Identified Material Weakness

The previously identified material weaknesses over inadequate controls related to revenue recognition and insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both accounting principles generally accepted in the United States of America and SEC Guidelines have been remediated.

Attestation Report of Independent Registered Public Accounting Firm

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, has been audited by BPM, an independent registered public accounting firm, as stated in its report included herein.

Changes in Internal Control over Financial Reporting

As discussed above, we are implementing certain measures to remediate the remaining material weaknesses identified in the design and operation of our internal ~~control~~ control over financial reporting. Other than those measures, except for the changes discussed above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

Rule 10b5-1 Trading Plans

During the three months ended December 31, ~~2024~~2025, ~~none~~certain ofexecutive ~~our directors or~~ officers ~~(as~~and ~~defined~~directors ~~in Rule 16a-1(f)~~ of the ~~Exchange~~Company ~~Act) adopted~~(each, ~~terminated~~a or“Plan ~~modified~~Participant”) entered ~~the~~into ~~amount,~~Rule ~~pricing~~10b5-1 ortrading ~~timing~~plan ~~provisions of~~ (a “Rule 10b5-1 Trading ~~trading arrangement,~~Plan”) asto ~~defined~~sell inshares ~~Item~~of ~~408(a)~~the ofCompany’s ~~Regulation~~common ~~S-K~~stock, in each orcase, asubject ~~“non-Rule~~to ~~10b5-1~~any ~~trading~~applicable ~~arrangement,”~~volume aslimitations. ~~defined~~No inshares ~~Item~~were ~~408(c)~~traded ofunder ~~Regulation~~the ~~S-K~~Trading Plan during the year ended December 31, 2025.

The table below provides certain information regarding each Plan Participant’s Rule 10b5-1 Trading Plan.

Name		Title		Plan Date		Earliest Selling Start Date		Maximum Shares That May Be Sold Under the Plan		Plan Expiration Date
Carl Weimer		Director		November 18, 2025		March 19, 2026		100,000	⁽¹⁾	September 30, 2026

(1)

The plan was established for the purposes of facilitating the potential exercise of vested stock options that are due to expire in January 2028, and the associated sale of shares.

A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amounts, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of the Company’s common stock, including, if applicable, shares issued upon exercise of stock options or vesting of restricted stock units.

Each Plan Participant’s Rule 10b5-1 Trading Plan was adopted during an authorized trading period and when such Plan Participant was not in possession of material non-public information and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.

The information set forth below is included for the purpose of providing disclosure under Item 5.02(e) of Form 8-K.

2026 Executive Compensation Plan

On February 17, 2021, the Board established an executive compensation framework for fiscal year 2026 (the “2026 Executive Compensation Framework”) as part of its review of target incentive compensation for our executive officers.

Under the terms of the 2026 Executive Compensation Framework, each of the eligible executive officers are expected to have their salary targeted at the 25^th percentile average of comparable companies, as determined by our compensation consultant, Pearl Meyer & Partners, LLC. Eligible executive officers may be eligible to receive a cash bonus that will vary in amount depending on our success in achieving certain performance targets including with respect to achieving $30 million in revenue. In addition, eligible executive officers may also be eligible to receive long term incentive equity grants comprised of 50% restricted stock units, 30% performance stock units (“PSU’s”) and 20% stock options. PSU’s are based on three year targets comprised 50% of revenue and backlog and 50% total shareholder return. Individual bonuses are computed based 50% on the company goal, 50% on individual goals. Our Board and/or our compensation committee retains full discretion to modify or deviate from the framework described above. The foregoing description is intended to summarize our Board’s current compensation framework and is not intended to constitute a binding compensatory plan or arrangement.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

3747

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

~~Directors~~The ~~and~~information ~~Executive~~required ~~Officers~~by this item is incorporated by reference to our definitive proxy statement for our 2026 annual meeting of stockholders. The definitive proxy statement will be filed with the SEC within 120 days after December 31, 2025.

The following table contains information with respect to our directors and executive officers. To the best of our knowledge, none of our directors or executive officers have an arrangement or understanding with any other person pursuant to which he or she was selected as a director or officer. There are no family relationships between any of our directors or executive officers. Directors serve one-year terms. Our executive officers are appointed by and serve at the pleasure of the Board.

Name	Current Age	Position
Dr. William McGann (1)	67	Chief Executive Officer (CEO) and President (Principal Executive Officer)
Christopher Boehmler	46	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Dr. Yuping Huang	45	Chairman of the Board and Chief Quantum Officer
Robert Fagenson	76	Vice Chairman of the Board
Michael Turmelle	65	Director
Dr. Carl Weimer	63	Director
Dr. Javad Shabani	43	Director

Dr. McGann has served as the Company’s CEO and President since February 1, 2024. Prior to that, he had served as the Company’s Chief Technology Officer and Chief Operations Officer since January 2022 and as a Director of the Company from September 2021 to December 2021. Prior to joining Quantum Computing, Dr. McGann was the Chief Technology Officer for the Security, Detection and Automation business at Leidos Holdings, Inc., a provider of technical services, primarily to the U.S. government, from May 2019 to January 2022. Dr. McGann has a strong, directed passion for transforming credible science into practical technology solutions in solving some of the world’s greatest challenges. Prior to joining Leidos, Dr. McGann held numerous business and technology leadership positions and roles including (a) Founder of the first explosives trace detection company, Ion Track Instruments, (b) Chief Technology Officer for GE Security, (c) VP of Engineering for United Technologies Fire and Security business, (d) CEO and board member of Implant Sciences Corp., and (e) Chief Technology Officer at L3Harris Aviation Security and Detection business. Dr. McGann holds a Ph.D. in Chemical Physics from the University of Connecticut and undergraduate degrees in Chemistry and Biology.

Mr. Boehmler has served as the Company’s Chief Financial Officer since July 1, 2023. Mr. Boehmler joined Quantum Computing Inc. as Controller in March 2022. He worked as an independent consultant from June 2018 until March 2022, serving both private and non-profit organizations. Previous to June 2018, his corporate finance experience includes 12 years in senior management positions for private and public technology-driven and financial institutions, primarily at Bridgewater Associates, LP and Intelsat. During this time, he also led the finance functions for two start-ups where he was instrumental in raising private equity and performing due diligence on acquisition targets. His financial expertise spans capital markets, planning & analysis, accounting operations, management and regulatory reporting, financial systems integrations, and financial risks and controls. He started his career working in the investment banking division of Credit Suisse First Boston, followed by strategic management consulting for Booz Allen Hamilton. Mr. Boehmler has an undergraduate degree in Economics with a minor in Germanic Studies from the University of Chicago.

Dr. Huang has served as the Company’s Chairman of the Board since December 10, 2024 and as Chief Quantum Officer and a Director since June 14, 2022. Dr. Huang has over 20 years of experience in commercial and academic settings, with pioneering research in a wide spectrum of quantum physics, optics, and technology. Prior to joining the Company, Dr. Yuping founded QPhoton, Inc., where he served as Chairman of the Board and Chief Executive Officer from 2020 until its acquisition by the Company in 2022. QPhoton was a development stage company commercializing quantum photonic technology and devices to provide innovative and practical quantum solutions for critical challenges facing big data, cyber, remote sensing, and healthcare industries. Dr. Huang worked as a postdoctoral fellow, a research faculty member, and principal investigator at Northwestern University from 2009-2014. Dr. Huang has been a Professor of Physics at the Stevens Institute of Technology, a private research technological university in Hoboken, New Jersey, since 2014 (from 2014 to 2019 as assistant professor, from 2019-2023 as associate professor and as a full professor since 2023). Dr. Huang is the founding director of the Center for Quantum Science and Engineering and Gallagher Associate Professor of Physics at the Stevens Institute of Technology. He received a Bachelor of Science in modern physics from the University of Science and Technology of China in 2004 and a PhD in quantum AMO physics in 2009 from Michigan State University. Dr. Huang’s expertise in quantum physics and optics and leadership experience in quantum research qualifies him to serve as a member of the Board.

Mr. Fagenson has served as a Director of the Company since March 2021 and as Vice Chairman since December 10, 2024. Mr. Fagenson has served as a member of the board of directors of National Holdings Corporation (“NHC”), a broker-dealer, since March 2012. He has served as Vice Chairman of the board of directors of NHC since September 2016. Mr. Fagenson previously served as Co-Chief Executive Officer of NHC from January 3, 2017 to January 31, 2017, as Chief Executive Officer and Chairman of the board of directors of NHC from December 2014 to September 2016, and as Executive Vice Chairman of the board of directors of NHC from July 2012 to December 2014. NHC was acquired by B. Riley Financial in February 2024. Mr. Fagenson has been a branch owner at National Securities Corp, an operating company of NHC, since 2012, and president of Fagenson & Co., Inc., a family investment company, since 1982. Mr. Fagenson spent the majority of his career at the New York Stock Exchange (“NYSE”), where he was managing partner of one of the exchange’s largest specialist firms. While at the NYSE, Mr. Fagenson served as a governor on the trading floor and was elected to the NYSE board of directors in 1993, where he served for six years, eventually becoming vice chairman of the NYSE board of directors from 1998 to 1999 and 2003 to 2004. Mr. Fagenson has served as director of the New York City Police Museum since 2005 and as director of the Federal Law Enforcement Officers Association Foundation since 2009. He has also served on the board of directors of Sigma Alpha Mu Foundation since 2011 and on the board of directors of New York Edge since 2015. In addition, Mr. Fagenson served as the non-executive chairman of Document Security Systems, Inc. from 2012 to 2018 (NYSEMKT: DSS). He is currently a member of the alumni boards of the Whitman School of Business at Syracuse University. Mr. Fagenson received his B.S. in Transportation Sciences & Finance from Syracuse University in 1970. Mr. Fagenson’s experience in the financial services industry and in senior leadership positions qualifies him to serve as a member of the board and as chairman of the compensation committee.

Mr. Turmelle has served as a Director of the Company since January 2022. Mr. Turmelle has served on the board of directors of Ideal Power Inc. since December 2017 and as chairman of the Ideal Power board since 2021. From January 2018 through January 2024, Mr. Turmelle served as the Managing Director of Hayward Tyler, a United Kingdom private equity-backed manufacturer and service provider of pumps and motors, which he joined in February 2015. Mr. Turmelle also served on the boards of Hayward Tyler and Energy Steel (a Hayward Tyler subsidiary) from 2017 until January 2024. Hayward Tyler designs, manufactures, and services performance-critical electric motors and pumps to meet the most demanding of applications for the global energy industry, as both an original equipment manufacturer supplier and trusted partner. Previously, Mr. Turmelle ran his own consulting company, working with start-ups and turn-arounds in the areas of renewable energy, medical, and other advanced technologies. Mr. Turmelle has served on numerous Boards of Directors including the Board of Directors of Implant Sciences Corp., an explosive and narcotic trace detection company, where he served as Chairman of the Board from 2015 to 2017. Mr. Turmelle was Chief Financial Officer and Chief Operating Officer and a member of the Board of Directors of SatCon Technology Corporation, a maker of energy management systems, from 1992 to 2005. Mr. Turmelle was also on the Board of Directors of Beacon Power, a SatCon spin-off company dealing in flywheel energy storage, from 1996 to 2000. Mr. Turmelle has a BA in Economics from Amherst College and is a graduate of General Electric’s Financial Management Program. Mr. Turmelle’s experience as a public company director and executive as well as extensive experience in finance, business operations and technology, qualifies him to serve as a member of the Board and as chairman of the audit committee.

Dr. Weimer has served as a director of the Company since January 14, 2023. Dr. Weimer has over 25 years of experience in the aerospace industry. He has previously been involved in two companies in the aerospace industry, holding positions including Director of Research, Principal Investigator, Chief Systems Engineer, and Chief Technologist. From 1994 through 2000, Dr. Weimer was a Director Research for Ophir Corporation, an aerospace optics company. From 2000 to 2025 he was Technical Leader for Ball Aerospace & Technologies Corp. (now BAE Systems SMS) developing advanced high-reliability instrumentation, and in 2008 he was awarded a NASA Distinguished Public Service Medal for space-based lidar technologies. Since 2014 he’s been the Chief Technologist for the Civil Business Unit Leading a team performing R&D for future space missions. In addition, Dr. Weimer has been a Principal Investigator for the NASA Earth Science Technology Office since 2008, and he holds seven U.S. patents in optical systems. Dr. Weimer received a Bachelor of Science degree from Harvey Mudd College (1984) and a Master of Science (1987) and a PhD (1992) from Colorado State University, all in experimental Physics. He did his graduate and postdoctoral research in the Ion Storage Group at NIST Boulder and a second postdoc in the Optical Standards Group. Dr. Weimer’s expertise in advanced optics and leadership experience in the aerospace industry qualifies him to serve as a member of the Board.

Dr. Shabani has served as a director of the Company since April 19, 2024. Dr. Shabani has over 13 years of experience in advanced physics and quantum information physics. Dr. Shabani has been a professor in the New York University Physics Department and director of the NYU Center for Quantum Information Physics since 2024. From 2022 to 2024, he was an Associate Professor at the NYU Physics Department. From 2017 to 2022, he was an Assistant Professor at the NYU Physics Department. From 2015 to 2017, Dr. Shabani was an Assistant Professor at the City College of New York Physics Department. From 2014 to 2015, he was a Project Scientist in the California Nanosystems Institute at the University of California Santa Barbara. He was a Postdoctoral Fellow at the Harvard University Physics Department from 2011 to 2012 and the California Nanosystems Institute at the University of California Santa Barbara from 2012 to 2014. He was awarded the IBM Q Scholar Award in 2021, and the US Air Force Young Investigator Program Award and the US Army Young Investigator Award in 2016. Dr. Shabani holds four patents in quantum physics applications and has published over 85 papers. Dr. Shabani received Bachelor of Science degrees in physics and electrical engineering from Sharif University of Technology (2004) a Master of Science in Electrical Engineering from the University of California, Santa Cruz (2005), a Master of Arts in Electrical Engineering from Princeton University (2007) and a PhD in Electrical Engineering from Princeton University (2011). Dr. Shabani’s scholarship and experience in physics and electrical engineering qualifies him to serve on the Board to help lead the Company towards continued growth and success.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the fiscal year ended December 31, 2023, including those reports that we have filed on behalf of our directors and Section 16 officers, no director, Section 16 officer, beneficial owner of more than 10% of the outstanding common stock, or any other person subject to Section 16 of the Exchange Act, failed to file with the SEC on a timely basis during the fiscal year ended December 31, 2023, except (i) as previously disclosed by the Company, (ii) Robert Liscouski filed a Form 4 on July 7, 2023, which was delinquent, in connection with his sale of common stock, the earliest of which occurred on November 25, 2022.

Code of Ethics

The Company currently maintains a code of ethics that applies to all directors, officers, and employees. A copy of our code of ethics can be found on our website at www.quantumcomputinginc.com. We expect that any amendments to such code, or any waivers of its requirements, will be disclosed on our website.

Insider Trading Policy

The Company has adopted an insider trading policy that governs the purchase, sale and other dispositions of our securities that applies to our officers and directors, as well as our employees that have regular access to material, nonpublic information about the Company in the normal course of their duties. We believe that our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Form 10-K.

Board Composition and Director Independence

The Board is authorized to have up to seven members and currently consists of five members. The nominees elected as directors at the Annual Meeting will serve until our next annual meeting and until their successors are duly elected and qualified. Nasdaq Listing Rule 5605(a)(2) requires a majority of a listed company’s board of directors be composed of independent directors. In addition, Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating committees be independent, and that compensation and audit committee members also satisfy additional independence criteria under the Exchange Act. Compensation committee members also should qualify as “non-employee directors” under Rule 16b-3 of the Exchange Act.

In making the determination of whether a member of the board is independent, the Board considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “Certain Relationships and Related-Party Transactions.” The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, the Board affirmatively determined that Robert Fagenson, Michael Turmelle, Carl Weimer and Javad Shabani are qualified as independent and that they have no material relationship with us that might interfere with his exercise of independent judgment.

Board Committees; Audit Committee Financial Expert; Stockholder Nominations

The Board has established an audit committee, a compensation committee and a nominating and corporate governance committee. Each such committee has its own charter, which is available on our website at www.quantumcomputing.com. Each of such Board committees has the composition and responsibilities described below.

The following table identifies the committee members:

Name Audit Compensation Nominating and Corporate Governance Independent Robert Fagenson X Chairman X X Michael Turmelle Chairman X X X Javad Shabani X X X Carl Weimer X Chairman X Yuping Huang

The Board has determined that Michael Turmelle is an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of SEC Regulation S-K.

Members will serve on these committees until their resignation or until otherwise determined by the Board.

Involvement in Certain Legal Proceedings.

Our Chief Executive Officer, Dr. McGann, was the Chief Executive Officer of Implant Sciences Corporation, when it filed a petition for bankruptcy on October 11, 2016 in the Delaware Bankruptcy Court.

With the exception of the foregoing, to the best of our knowledge, none of our directors or executive officers has, during the past ten years:

● been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; ● been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; ● been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

	●	been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
	●	been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

ITEM 11. EXECUTIVE COMPENSATION

~~Summary~~The ~~Compensation~~information ~~Table~~required by this item is incorporated by reference to our definitive proxy statement for our 2026 annual meeting of stockholders. The definitive proxy statement will be filed with the SEC within 120 days after December 31, 2025.

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2024 and 2023.

2024 EXECUTIVE OFFICER COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
William McGann(1)	2024	402,216	42,188	0	151,911	0	596,314
Chief Executive Officer and President	2023	403,074	0	207,488	0	0	610,562
Chris Boehmler(2)	2024	300,451	70,313	174,000	313,062	0	857,826
Chief Financial Officer	2023	260,246	5,000	75,648	163,101	0	503,995
Robert Liscouski(3)(4)	2024	33,490	0	193,200	0	366,667	593,357
Chairman	2023	403,130	0	0	75,263	0	478,393
Yuping Huang	2024	380,369	33,751	0	0	0	414,120
Chief Quantum Officer	2023	400,300	0	106,496	0	0	506,796

(1) Dr. McGann was appointed CEO and President effective February 1, 2024; prior to that time, he served as the Company’s Chief Operating Officer and Chief Technology Officer.

(2) Mr. Boehmler was appointed Chief Financial Officer of the Company on July 1, 2023.

(3) Mr. Liscouski was terminated as CEO and President effective January 31, 2024.

(4) All other compensation amounts for 2024 consist of severance payments, per Mr. Liscouski’s Separation Agreement and General Release.

Employment Agreements and Change-in-Control Provisions

Executive Employment Agreements

Dr. McGann Employment Agreement

We entered into an employment agreement with Dr. William J. McGann, our Chief Executive Officer and President, on January 3, 2022, as amended on February 1, 2024 and December 30, 2024. Dr. McGann’s employment agreement, as amended, is for a term ending on December 31, 2025. Dr. McGann’s employment agreement, as amended, provides for an annual base salary of $420,000, subject to annual review and adjustment as determined by the Board or its compensation committee. Dr. McGann is also eligible to earn an annual cash bonus in an amount of up to 37.5% of his base salary, subject to achieving certain performance milestones established and approved by the Board, with a minimum annual cash bonus of 5%. Pursuant to the agreement, on January 3, 2022, Dr. McGann was granted options to purchase up to 535,000 shares of our common stock, with one-third of the options vesting immediately upon grant and one-third vesting upon each of the first and second anniversary of the date of grant.

Pursuant to the terms of his employment agreement, the Company may terminate Dr. McGann’s employment with or without Cause, as defined in the agreement, and Dr. McGann may terminate his employment with or without Good Reason, as defined in the agreement, upon written notice to the Company as set forth in the agreement. Upon termination of Dr. McGann’s employment by the Company without Cause or by Dr. McGann for Good Reason, the Company shall continue to pay Dr. McGann his then current monthly base salary for 12 months from the date of termination. The Company must also continue Dr. McGann’s coverage under and its contributions to his health care, dental, and life insurance benefits for six months, unless he is or becomes covered by an equivalent benefit, and pay him a pro rata portion of any bonus he has earned prior to his termination. In addition, if the Company terminates Dr. McGann’s employment without Cause or he terminates his employment for Good Reason within 12 months after a Change of Control, as define in the agreement, or an acquisition, then the Company must pay to Dr. McGann an additional sum equal to 12 months of his base salary.

As a full-time employee of the Company, Dr. McGann is eligible to participate in all of the Company’s bonus and benefit programs.

Mr. Boehmler Employment Agreement

We entered into an employment agreement with Mr. Christopher Boehmler, our Chief Financial Officer, dated as of June 26, 2023, pursuant to which Mr. Boehmler serves as our Chief Financial Officer. The agreement provides for an indefinite term, that Mr. Boehmler’s employment is at-will, and that either the Company or Mr. Boehmler can terminate his employment for any reason. Mr. Boehmler’s employment agreement provides for an annual base salary of $300,000 per year, subject to annual review and adjustment as determined by the Board or its compensation committee. Under his employment agreement, Mr. Boehmler is also eligible for an annual incentive bonus in the amount of up to 50% of his base salary, subject to Mr. Boehmler achieving certain performance milestones established by the Board or its compensation committee, and, subject to Board approval, an annual grant of options to purchase 125,000 shares of our common stock at an exercise price equal to 110% of the grant date fair market value, one-third of which shall vest on the grant date and the remainder becoming exercisable in equal monthly installments over the following three years. Pursuant to the agreement, Mr. Boehmler was issued options to purchase 300,000 shares of the Company’s common stock in 2023, 100,000 of which vested on the grant date and 100,000 of which shall vest on each of the 12- and 24-month anniversary of the grant date.

If the Company terminates Mr. Boehmler’s employment without Cause, as defined in the agreement, or Mr. Boehmler terminates his employment for Good Reason, as defined in the agreement, with 90 days prior notice to the Company and subject to his execution of a release in favor of the Company, the Company shall pay Mr. Boehmler an amount equal to his then current monthly base salary for 12 months from the date of termination. The Company must also, subject to his timely election of continuation coverage under COBRA, continue payment or reimbursement of 100% of Mr. Boehmler’s premiums for such health insurance coverage for six months following his termination or until he becomes covered by an equivalent benefit, and pay him a pro rata portion of any bonus he has earned prior to his termination. In addition, if the Company terminates Mr. Boehmler’s employment without Cause or he terminates his employment for Good Reason within 12 months after a Change of Control, as define in the agreement, then the Company must pay to Mr. Boehmler an additional sum equal to 12 months of his base salary.

As a full-time employee of the Company, Mr. Boehmler is eligible to participate in all of the Company’s benefit programs.

Mr. Liscouski Employment Agreement

The Company and Mr. Robert Liscouski were parties to an amended and restated employment agreement dated as of April 26, 2021, pursuant to which Mr. Liscouski served as our Chief Executive Officer during the fiscal years ended December 31, 2022 and 2023 (the “Liscouski Employment Agreement”). The Liscouski Employment Agreement provided for an initial term of three years and would be automatically renewed for consecutive one-year terms at the end of the initial term unless terminated or either party provided notice of non-renewal to the other. The agreement provided that Mr. Liscouski would receive an annual base salary of $400,000, subject to review and increases (but not decreases) by the Board or its compensation committee and be eligible to earn a performance bonus of up to 50% of his base salary subject to his achieving certain performance milestones established by the Board. The agreement also provided that, beginning on the first anniversary thereof, Mr. Liscouski would receive an annual grant of options to purchase 150,000 shares of our common stock at an exercise price equal to 110% of the grant date fair market value, with one-third vesting on the date of grant and the remainder vesting in equal monthly installments thereafter. Pursuant to the Liscouski Employment Agreement, Mr. Liscouski also received (i) options to purchase 250,000 shares of common stock of the Company upon execution of the agreement and (ii) 250,000 options to purchase shares of common stock of the Company upon the Company’s listing on Nasdaq.

In connection with the termination of Mr. Liscouski employment as our Chief Executive Officer on January 31 2024, the Company and Mr. Liscouski entered into a Separation Agreement and General Release. Pursuant to the separation agreement, the Company agreed to pay Mr. Liscouski $400,000, representing 12 months of his base salary, on the Company’s regular payroll dates for 12 months following his termination, to grant him 168,000 shares of Company common stock, and, subject to his timely election of continuation coverage under COBRA, to continue to pay or reimburse 100% of his premiums for such health insurance coverage for 12 months following his termination or until he becomes covered by an equivalent benefit. The separation agreement also provides that Mr. Liscouski’s unvested options and restricted stock grants vested as of his termination date.

We also entered into an agreement with Mr. Liscouski, effective as of February 1, 2024, which provides that the Company will pay him a monthly fee of $12,500 for his service as a Director of the Company (including as Chairman of the Board). Such monthly fee will be in lieu of the standard compensation we pay to our directors. Mr. Liscouski served on the Board of Directors from February 2018 to December 2024.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information regarding equity awards held by our named executive officers as of December 31, 2024:

	Option Awards							Stock Awards
Name	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Option exercise price ($)		Option expiration date	Number of shares or units of stock that have not vested (#)		Market value of shares or units of stock that have not vested ($)
William J. McGann(1)		535,000		0		2.40	January 24, 2027		0		0
William J. McGann		1,000,000		0		2.37	October 17, 2027
Chris Boehmler(2)		60,834		30,416		2.56	March 28, 2027		129,850		2,149,018
Chris Boehmler		5,834		2,916		2.37	October 12, 2027
Chris Boehmler		200,000		100,000		1.18	December 27, 2028
Chris Boehmler		53,241		71,759		0.46	October 4, 2029		-		-
Robert Liscouski(3)		75,000		0		1.00	May 22 2025		0		0
Robert Liscouski		250,000		0		6.85	April 26, 2026
Robert Liscouski		250,000		0		2.40	January 24, 2027
Robert Liscouski		1,500,000		0		2.37	October 17, 2027
Robert Liscouski		150,000		0		2.61	October 17, 2027
Robert Liscouski		150,000		0		1.44	December 27, 2028

(1) Dr. McGann’s stock options expiring January 24, 2027 vested as follows: (i) 178,333 options vested on January 24, 2022; (ii) 178,333 options vested on January 24, 2023; and (iii) 178,334 options vested on January 24, 2024. Dr. McGann’s stock options expiring on October 17, 2027 vested as follows: (i) 750,000 options vested on October 17, 2022; and (ii) 250,000 options vested on December 31, 2022.

(2) Mr. Boehmler’s stock options expiring March 28, 2027 and October 12, 2027 vest as follows: (i) 33,334 options vested on March 28, 2023; (ii) 33,334 options vested on March 28, 2024; and (iii) 33,332 options vest on March 28, 2025. Mr. Boehmler’s stock options expiring on December 27, 2028 vest as follows: (i) 100,000 options vested on July 1, 2023; (ii) 100,000 options vested on July 1, 2024; and (iii) 100,000 options vest on July 1, 2025. Mr. Boehmler’s stock options expiring October 4, 2029 vest as follows: (i) 48,611 vested as of October 4, 2024; and (ii) the remainder vest in equal monthly increments of 2,315 shares through July 1, 2027, with the final month vesting 2,309 shares. Mr. Boehmler’s 129,850 shares of stock vest on December 31, 2025.

(3) 25,000 of Mr. Liscouski’s stock options expiring May 22, 2025 vested on each of April 8, 2021; April 8, 2022; and April 8, 2023. Mr. Liscouski’s stock options expiring April 26, 2026 vested on April 26, 2021. Mr. Liscouski’s stock options expiring January 27, 2022 vested as follows: (i) 83,333 options vested on July 15, 2022; (ii) 83,333 options vested on July 15, 2023; and (iii) 83,334 options vested on March 15, 2024, pursuant to this separation agreement. Mr. Liscouski’s stock options expiring October 17, 2027 with an exercise price of $2.37 vested as follows: (i) 1,000,000 options vested on October 17, 2022; and (ii) 500,000 options vested on December 31, 2022. Mr. Liscouski’s stock options expiring October 17, 2027 with an exercise price of $2.61 vested as follows: (i) 63,890 options vested on October 17, 2022; and (ii) 47,226 vested in equal monthly increments of 2,778 shares through February 26, 2024, with the remaining 38,884 options vested March 15, 2024. Mr. Liscouski’s stock options expiring December 27, 2028 vested as follows: (i) 72,224 vested as of December 31, 2023; and (ii) 5,556 vested in equal monthly increments of 2,778 shares through February 26, 2024, with the remaining 72,220 options vested March 15, 2024. Pursuant to Mr. Liscouski’s Separation Agreement all unvested options at the time of Mr. Liscouski’s Separation Agreement vested effective March 15, 2024.

Action to Recover Erroneously Awarded Compensation

Subsequent to the issuance of our Annual Report on Form 10-K for the year ended December 31, 2023, and our subsequent retention of BPM LLP to replace BF Borgers CPA PC as our independent registered public accounting firm, management became aware of various adjustments to be recorded to our consolidated financial statements. On September 11, 2024, we filed Amendment 1 to our Annual Report on Form 10-K for the year ended December 31, 2023, restating our financial statements for the years ended December 31, 2023 and 2022 to correct errors primarily related to purchase accounting for the QPhoton Merger, stock-based compensation, and financing costs. We also amended our financial statements for the nine months ended September 30, 2023, in line with the restatement of our audited consolidated financial statements. These corrections impacted net loss, goodwill, intangible assets, liabilities, and stockholders’ equity.

As the Company does not award incentive-based compensation that would have been subject to recovery based on financial metrics, no recovery was required or sought from any of our executive officers under the Company’s Compensation Recovery Policy.

Director Compensation

During the year ended December 31, 2024, the Company’s non-employee directors each received compensation of $9,000 per quarter for their services as directors, plus an additional $4,000 per quarter if they also served as a committee Chair. Amounts are prorated to the amount of service per quarter.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Stock Options ($)		Total ($)
Robert Liscouski (1)		129,032		0		0		129,032
Michael Turmelle		52,000		0		32,492		84,492
Carl Weimer		36,913		0		32,492		69,405
Robert Fagenson		52,000		0		32,492		84,492
Javad Shabani		27,320		12,376		27,433		67,129

(1) Upon Mr. Liscouski’s termination as CEO, the Board approved a separate compensation arrangement for his service as Chairman of $12,500 per month, effective February 1, 2024 through December 10, 2024.

In 2025, the Board approved an increase in the non-employee director compensation to a base annual stipend of $60,000, with an annual stipend of $12,000 each to the Vice Chairman and the Chair of the Audit Committee, and annual stipends of $6,000 each to the Chairs of the Risk, Compensation, and Nominating and Governance committees, all cash stipends to be paid in equal quarterly installments.

Policies And Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

We do not grant equity awards in anticipation of the release of material nonpublic information, and we do not time the release of material nonpublic information based on equity award grant dates or for the purpose of affecting the value of executive compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The ~~following table sets forth certain~~ information as ofrequired ~~March~~by ~~18,~~this ~~2025~~item concerning the beneficial ownership of common stock for: (i) each of our directors, (ii) each named executive officer as included in the Summary Compensation Table under “Executive Compensation” above, (iii) all executive officers and directors as a group, and (iv) each person (including any “group” as that term is ~~used in Section 13(d)(3) of the Exchange Act) known~~incorporated by usreference to beour ~~the~~definitive ~~beneficial~~proxy ~~owner~~statement offor 5%our or2026 ~~more~~annual meeting of ~~our common stock~~stockholders. The ~~address~~definitive ~~for~~proxy ~~each~~statement ofwill ~~the~~be ~~persons below who are beneficial owners~~filed ofwith 5%the orSEC ~~more~~within of120 ~~our~~days ~~common~~after ~~stock~~December ~~is our corporate address at 5 Marine View Plaza~~31, ~~Suite 214, Hoboken, NJ 07030~~2025.

Beneficial ownership has been determined in accordance with the rules of the SEC and is calculated based on 137,244,545 shares of our common stock issued and outstanding as of March 18, 2025. Shares of common stock subject to options, warrants, preferred stock or other securities convertible into common stock that are currently exercisable or convertible, or exercisable or convertible within 60 days of March 18, 2024, are deemed outstanding for computing the percentage of the person holding the option, warrant, preferred stock, or convertible security but are not deemed outstanding for computing the percentage of any other person. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Unless otherwise indicated, each of the stockholders named in the table below, or his or her family members, has sole voting and investment power with respect to such shares of our common stock.

Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own.

Name and Address of Beneficial Owner	Common Stock Owned Beneficially		Percent of Class
Named Executive Officers and Directors
Dr. William McGann, Chief Executive Officer(1)		1,722,930		1.2	%
Chris Boehmler, Chief Financial Officer(2)		727,876		0.5
Dr. Yuping Huang(3)		24,251,256		17.2
Robert Fagenson(4)		775,000		0.6
Michael Turmelle(5)		575,000		0.4
Dr. Carl Weimer(6)		225,000		0.2
Dr. Javad Shabani(7)		120,219		0.1
All directors and officers as a group (8 persons)		28,397,281		20.1
Other 5% shareholders		0		0
Total		28,158,959		20.00	%

(1) Consists of 162,100 shares of common stock owned currently and 1,560,830 shares of common stock underlying vested options to purchase shares of common stock.

(2) Consists of 320,010 shares of common stock owned currently and 407,866 shares of common stock underlying vested options to purchase shares of common stock

(3) Consists of 23,936,906 shares of common stock owned currently and 314,350 shares of common stock underlying vested options to purchase shares of common stock. This does not include any shares that could be purchased upon exercise of unvested warrants received as consideration in the QPhoton Merger that may vest upon the exercise of outstanding options and other warrants held by officers, employees, directors and investors.

(4) Consists of 100,000 shares of common stock owned currently and 675,000 shares of common stock underlying vested options to purchase shares of common stock.

(5) Consists of 575,000 shares of common stock underlying vested options to purchase shares of common stock.

(6) Consists of 225,000 shares of common stock underlying vested options to purchase shares of common stock.

(7) Consists of 12,500 shares of common stock owned currently and 107,719 shares of common stock underlying vested options to purchase shares of common stock.

Changes in Control

We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

Equity Compensation Plan Information

On July 5, 2022, the Board adopted the Quantum Computing Inc. 2022 Equity and Incentive Plan (the “2022 Plan”), which includes provisions for annual automatic evergreen increases of 1,000,000 shares of common stock. The total number of shares of our common stock reserved for issuance under the 2022 Plan, as of March 18, 2025, is 19.0 million. The principal purpose of the 2022 Plan is to provide an incentive to designated employees, certain consultants and advisors who perform services for us and non-employee directors to contribute to our growth by continuing to align the interests of participants with the interests of our stockholders. The 2022 Plan was approved by a majority of the shareholders in September 2022.

The table below sets forth certain information as of our fiscal year ended December 31, 2024 regarding the shares of our common stock available for grant or granted under our equity compensation plan.

Plan Category	Number of securities to be issued upon exercise of outstanding options (2)		Weighted- average exercise price of outstanding options		Number of securities available for future issuance under equity compensation plans
Equity compensation plan approved by security holders – 2022 Quantum Computing Inc. Equity Incentive Plan, as amended		10,454,781	$	1.78		2,348,425
Equity compensation plan approved by security holders – 2019 Quantum Computing Inc. Equity Incentive Plan, as amended		1,760,500	$	3.90		0
Equity compensation not approved by shareholders (1)		767,500	$	6.28		0

(1) The total number of stock options issued and outstanding as of March 18, 2025 is 13,555,511.

~~There~~The ~~have~~information ~~been~~required noby ~~transactions~~this ~~involving~~item ~~the Company since January 1, 2024, or any currently proposed transactions, in which the Company was or~~ is ~~to be a participant and the amount~~incorporated ~~involved~~by ~~exceeds~~reference ~~$120,000,~~to ~~and in which any of~~ our ~~directors,~~definitive ~~executive~~proxy ~~officers~~statement orfor ~~beneficial holders of more than 5% of~~ our ~~common~~2026 ~~stock, or~~annual ~~any~~meeting ~~immediate family member~~ of, orstockholders. ~~person~~The ~~sharing~~definitive aproxy ~~household~~statement ~~with, any of these individuals, had or~~ will ~~have~~be ~~a direct or indirect~~filed ~~material~~with ~~interest,~~the ~~other~~SEC ~~than~~within ~~compensation~~120 ~~arrangements~~days ~~that~~after ~~are~~December ~~described~~31, ~~under the section captioned “Executive Compensation~~2025.”

Please see “Board Composition and Director Independence” under “Item 10, Directors, Executive Officers and Corporate Governance” for a discussion of our independent directors.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

~~BPM~~The ~~LLP~~information ~~served~~required asby ~~our~~this ~~independent~~item ~~registered~~is ~~public~~incorporated ~~accountants~~by reference to our definitive proxy statement for our 2026 annual meeting of stockholders. The definitive proxy statement will be filed with the ~~years~~SEC ~~ended~~within 120 days after December 31, ~~2024 and 2023~~2025.

Audit Fees

The Company originally retained BF Borgers CPA PC (“BF Borgers”) as its independent registered public accounting firm for the Company’s fiscal years ended December 31, 2024 and 2023, then following an order by the SEC on May 3, 2024 suspending BF Borgers from appearing and practicing as an accountant before the SEC, the Company subsequently retained BPM LLP as its independent registered public accounting firm to replace BF Borgers.

For such professional services rendered by BPM LLP for the audit of our restated consolidated financial statements, we incurred approximately $332 thousand and $337 thousand, respectively, for the Company’s fiscal years ended December 31, 2024 and 2023.

For such professional services rendered by BF Borgers for its original audit of our consolidated financial statements, we were billed approximately $110 thousand and $132 thousand, respectively, for the Company’s fiscal years ended December 31, 2024 and 2023.

For the Company’s fiscal years ended December 31, 2024 and 2023, we were billed in fiscal year ended December 31, 2024 approximately $27 thousand for professional services rendered by BF Borgers and $105 thousand by BPM LLP, respectively, related to the Company’s Registration Statements on Form S-3 and Form S-1 and amendments thereto filed with the SEC in those years.

Tax Fees

We were billed approximately $33 thousand by BPM LLP for the Company’s fiscal year ended December 31, 2024 and $9 thousand by BF Borgers for the Company’s fiscal year ended December 31, 2023 for professional services rendered for tax compliance, tax advice, and tax planning.

Pre-Approval Policies

All of the above services and fees were reviewed and approved by the Audit Committee. No services were performed before or without approval.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit		Reference		Filed or Furnished
Number	Exhibit Description	Form	Exhibit	Filing Date	Herewith
2.1	Agreement and Plan of Merger by and among Quantum Computing Inc., Project Alpha Merger Sub I, Inc., Project Alpha Merger Sub II, LLC, QPhoton, Inc., and Yuping Huang, dated as of May 18, 2022	8-K	10.1	05/23/2022
3.1(i)	Amended and Restated Certificate of Incorporation	10-K/A	3.1(i)	07/10/2023
3.1(ii)	Certificate of Designations of the Series A Convertible Preferred Stock	8-K	3.1	11/17/2021
3.1(iii)	Certificate of Amendment of Certificate of Designations of Series A Convertible Preferred Stock of Quantum Computing Inc., filed with the Delaware Secretary of State on December 16, 2021	8-K	3.1	12/17/2021
3.1(iv)	Certificate of Designation with respect to the Series B Preferred Stock, par value $0.0001 per share, dated June 14, 2022	8-K	3.1	06/21/2022
3.2	Amended and Restated By-laws	10-K/A	3.2	07/10/2023
4.1	Common Stock Specimen	10-12(g)	4.1	01/09/2019
4.2	Description of Securities	10-K	4.4	04/01/2024
4.3	Form of Placement Agent Warrant	8-K	4.1	12/12/2024
4.4	Form of Placement Agent Warrant	8-K	4.1	01/08/2025
4.5	Form of Placement Agent Warrant	10-K	4.5	03/20/2025	X
4.6	Unsecured Promissory Note issued by QPhoton, Inc. to Quantum Computing, Inc., in the amount of $1,250,000, dated February 18, 2022	8-K	10.2	02/23/2022
10.1*	2019 Quantum Computing Inc. Equity and Incentive Plan	S-1	10.8	11/22/2019
10.2*	Form Director Agreement	8-K	10.1	02/23/2021
10.3*	Amended and Restated Employment Agreement, dated as of April 26, 2021, by and between Quantum Computing Inc. and Robert Liscouski	8-K	10.1	04/30/2021
10.4*	Employment Agreement between Christopher Roberts and Quantum Computing, Inc., dated as of April 26, 2021	8-K	10.2	04/30/2021
10.5*	Employment Agreement between by and between Quantum Computing Inc. and William McGann, dated as of January 3, 2022	8-K	10.2	01/03/2022

10.6	Note Purchase Agreement, dated as of February 18, 2022, between Quantum Computing Inc. and QPhoton, Inc.	8-K	10.1	02/23/2022
10.3	Note Purchase Agreement, dated as of February 18, 2022, between Quantum Computing Inc. and QPhoton, Inc.	8-K	10.1	02/23/2022
10.7	Escrow Agreement, dated as of June 16, 2022, by and among Quantum Computing Inc., Yuping Huang and Worldwide Stock Transfer, LLC	8-K	10.2	06/21/2022
10.4	Escrow Agreement, dated as of June 16, 2022, by and among Quantum Computing Inc., Yuping Huang and Worldwide Stock Transfer, LLC	8-K	10.2	06/21/2022
10.8	Stockholders Agreement by and among Quantum Computing, Inc. and each of the Stockholders set forth on Exhibit A thereto, dated as of June 16, 2022	8-K	10.3	06/21/2022
10.5	Stockholders Agreement by and among Quantum Computing, Inc. and each of the Stockholders set forth on Exhibit A thereto, dated as of June 16, 2022	8-K	10.3	06/21/2022
10.9	Form Registration Rights Agreement	8-K	10.4	06/21/2022
10.6	Form Registration Rights Agreement	8-K	10.4	06/21/2022
10.10*	Employment Agreement, dated as of June 15, 2022, by and between Quantum Computing Inc. and Yuping Huang	8-K	10.5	06/21/2022
10.7*	Quantum Computing Inc. 2022 Equity and Incentive Plan	10-K/A	10.42	07/10/2023
10.11	ATM Agreement, dated as of December 5, 2022, between Quantum Computing Inc. and Ascendiant Capital Markets, LLC	8-K	1.1	12/06/2022
10.8	Series A Preferred Redemption and Waiver Agreement, dated as of March 19, 2024	8-K	10.1	03/25/2024
10.12*	Director Agreement between Quantum Computing Inc. and Dr. Carl Weimer, dated January 6, 2023	8-K	10.1	01/09/2023
10.9	Secured Promissory Note issued to Streeterville Capital, LLC, dated August 6, 2024	8-K	4.1	08/12/2024
10.13	Employment Agreement between Quantum Computing Inc. and Christopher Boehmler, dated as of June 26, 2023	8-K	10.1	06/26/2023
10.10	Guaranty by QPhoton, LLC, Qubittech International, Inc., Qubittech, Inc., and QI Solutions, Inc., dated August 6, 2024	8-K	10.4	08/12/2024
10.14*	Quantum Computing Inc. 2022 Equity and Incentive Plan	10-K/A	10.42	07/10/2023
10.11	Separation Agreement and General Release dated April 15, 2025, by and between Quantum Computing, Inc. and Dr. William McGann	8-K	10.1	04/16/2025
10.15	First Amendment to ATM Agreement, dated as of August 17, 2023, between Quantum Computing Inc. and Ascendiant Capital Markets, LLC	8-K	1.1	08/21/2023
10.12*	Employment Agreement between Christopher Roberts and Quantum Computing, Inc., dated as of June 20, 2025	8-K	10.1	06/20/2025
10.16	Series A Preferred Redemption and Waiver Agreement, dated as of March 19, 2024	8-K	10.1	03/25/2024
10.13*	Quantum Computing, Inc. Non-Employee Director Compensation Policy				X
10.17	Separation Agreement, dated as of March 15, 2024, by and between Quantum Computing, Inc. and Robert Liscouski	10-K	10.26	04/01/2024
10.14	Stock Purchase Agreement, dated as of December 15, 2025, by and among the Company, Luminar Technologies, Inc. and Luminar Semiconductor, Inc.	8-K	2.1	12/15/2025
10.18*	Director Agreement, dated as of March 8, 2024, by and between Quantum Computing, Inc. and Robert Liscouski	10-K	10.27	04/01/2024
10.15*	Employment Agreement, dated as of December 16, 2025, by and between Quantum Computing Inc. and Yuping Huang	8-K	10.1	12/17/2025
10.19	Director Agreement between Quantum Computing Inc. and Dr. Javad Shabani, dated April 19, 2024	8-K	10.1	04/25/2024
14.1	Quantum Computing Inc. Code of Ethics	8-K	14.1	09/25/2024
10.20	Modification 2 to Consulting Services Agreement, dated as of June 18, 2024, by and between Quantum Computing, Inc. and Christopher Roberts				X
19.1	Quantum Computing Inc. Insider Trading Policy	10-K	19.1	03/20/2025
10.21	Secured Promissory Note issued to Streeterville Capital, LLC, dated August 6, 2024	8-K	4.1	08/12/2024
21.1	List of Subsidiaries				X
10.22	Securities Purchase Agreement between Quantum Computing Inc. and Streeterville Capital, LLC, dated August 6, 2024	8-K	10.1	08/12/2024
23.1	Consent of BPM LLP, Independent Registered Public Accounting Firm				X
10.23	Security Agreement between Quantum Computing Inc. and Streeterville Capital, LLC, dated August 6, 2024	8-K	10.2	08/12/2024
31.1	Principal Executive Officer Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
10.24	IP Security Agreement between Quantum Computing Inc. and Streeterville Capital, LLC, dated August 6, 2024	8-K	10.3	08/12/2024
31.2	Principal Financial Officer Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
10.25	Guaranty by QPhoton, LLC, Qubittech International, Inc., Qubittech, Inc., and QI Solutions, Inc., dated August 6, 2024	8-K	10.4	08/12/2024
32.1	Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
10.26	Form of Securities Purchase Agreement, dated as of November 14, 2024, between Quantum Computing Inc. and each Purchaser (as defined therein)	8-K	10.1	11/15/2024
32.2	Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley				X
97.1	Policy relating to recovery of erroneously awarded compensation.	10-K	97.1	04/01/2024
101.INS	Inline XBRL Instance Document				X
101.SCH	Inline XBRL Taxonomy Extension Schema Linkbase Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)				X

10.27	Placement Agency Agreement, dated November 14, 2024, between Quantum Computing Inc. and Titan Partners Group LLC, a division of American Capital Partners, LLC	8-K	10.2	11/15/2024
10.28	Form of Lock-Up Agreement dated November 14, 2024	8-K	10.3	11/15/2024
10.29	Amendment to Employment Agreement by and between Quantum Computing Inc. and Yuping Huang, dated as of September 1, 2024	10-Q	10.5	11/06/2024
10.30	Modification 3 to Consulting Services Agreement, dated as of December 20, 2024, by and between Quantum Computing, Inc. and Christopher Roberts				X
10.31	Form of Registered Offering Purchase Agreement, dated as of December 10, 2024, between Quantum Computing Inc. and each Purchaser (as defined therein)	8-K	10.1	12/12/2024
10.32	Form of Placement Purchase Agreement, dated as of December 10, 2024, between Quantum Computing Inc. and each Purchaser (as defined therein)	8-K	10.2	12/12/2024
10.33	Placement Agency Agreement, dated December 10, 2024, between Quantum Computing Inc. and Titan Partners Group LLC, a division of American Capital Partners, LLC	8-K	10.3	12/12/2024
10.34	Form of Lock-Up Agreement dated December 12, 2024	8-K	10.4	12/12/2024
10.35	Second Amendment to Employment Agreement between Quantum Computing Inc. and William J. McGann, dated as of December 30, 2024	8-K	10.1	12/31/2024
10.36	Form of Purchase Agreement, dated as of January 7, 2025, between Quantum Computing Inc. and each Purchaser (as defined therein)	8-K	10.1	01/08/2025
10.37	Placement Agency Agreement, dated January 7, 2025, between Quantum Computing Inc. and Titan Partners Group LLC, a division of American Capital Partners, LLC	8-K	10.2	01/08/2025
10.38	Form of Lock-Up Agreement dated January 7, 2025	8-K	10.3	01/08/2025
10.39	First Amendment to Employment Agreement between Quantum Computing Inc. and William J. McGann, dated as of February 1, 2024	S-1	10.7	01/22/2025
14.1	Quantum Computing Inc. Code of Ethics	8-K	14.1	09/25/2024
19.1	Quantum Computing Inc. Insider Trading Policy				X
21.1	List of Subsidiaries				X
23.1	Consent of BPM LLP, Independent Registered Public Accounting Firm				X
31.1	Principal Executive Officer Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Principal Financial Officer Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Principal Executive Officer Certification Pursuant to Item 601(b)(32) of Regulation S-K, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2	Principal Financial Officer Certification Pursuant to Item 601(b)(32) of Regulation S-K, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
97.1	Policy relating to recovery of erroneously awarded compensation.	10-K	97.1	04/01/2024
101.INS	Inline XBRL Instance Document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Linkbase Document.				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).				X

*	Indicates a management contract or compensatory plan or arrangement.

5150

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 20, 2025	Quantum Computing Inc.
Date: March 2, 2026	Quantum Computing Inc.
	By:	/s/ Dr. ~~William~~Yuping ~~McGann~~Huang
		Dr. Willan McGann
		Dr. Yuping Huang
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

Name	Capacity	Date
/s/ Yuping Huang	Chairman of the Board of Directors and Chief ~~Quantum~~Executive Officer	March 202, ~~2025~~2026
Yuping Huang	(Principal Executive Officer)
/s/ Dr. William McGann	Chief Executive Officer	March 20, 2025
/s/ Christopher Roberts	Chief Financial Officer, Treasurer	March 2, 2026
Dr. Willan McGann	(Principal Executive Officer)
Christopher Roberts	(Principal Financial Officer and Principal Accounting Officer)
/s/ Christopher Boehmler	Chief Financial Officer, Treasurer	March 20, 2025
/s/ Michael Turmelle	Director	March 2, 2026
Christopher Boehmler	(Principal Financial Officer and Principal Accounting Officer)
/s/ Michael Turmelle	Director	March 20, 2025
Michael Turmelle
/s/ Robert Fagenson	Vice Chairman of the Board of Directors	March 202, ~~2025~~2026
Robert Fagenson
/s/ Dr. Carl Weimer	Director	March 202, ~~2025~~2026
Dr. Carl Weimer
/s/ Dr. Javad Shabani	Director	March 202, ~~2025~~2026
Dr. Javad Shabani
/s/ Eric Schwartz	Director	March 2, 2026
Eric Schwartz

5251

QUANTUM COMPUTING INC.

Index to the Consolidated Financial Statements

Description		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:207)		F-2
Reports of Independent Registered Public Accounting Firm (PCAOB ID 207)		F-2
Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023		F-3
Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024		F-5
Consolidated Statement of Operations for the Year Ended December 31, 2024 and 2023		F-4
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025, 2024 and 2023		F-6
Consolidated Statement of Stockholders’ Equity for the Year Ended December 31, 2024 and 2023		F-5
Consolidated Statements of Mezzanine and Stockholders’ Equity for the Years Ended December 31, 2025, 2024 and 2023		F-7
Consolidated Statement of Cash Flows for the Year Ended December 31, 2024 and 2023		F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023		F-8
Notes to the Consolidated Financial Statements		F-79

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Quantum Computing, Inc.

Quantum Computing Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying ~~consolidated~~ consolidated balance sheets of Quantum Computing, Inc. (a Delaware Corporation) and its subsidiaries (~~collectively,~~ the “Company”) as of of December 31, ~~2024~~2025 and ~~2023~~2024, and the related consolidated statements of operations, and comprehensive loss, mezzanine and stockholders’ equity, and cash flows for each of the ~~two~~three years in the period ended December 31, ~~2024~~2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for ~~the~~ each of the ~~two~~three years in the period ended December 31, ~~2024~~2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 2, 2026, expressed an adverse opinion.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (“~~PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. ~~The~~Our ~~Company~~audits isincluded ~~not~~performing ~~required~~procedures to ~~have,~~assess the ~~nor~~risks ~~were~~of ~~we engaged~~material tomisstatement ~~perform~~of the consolidated financial statements, anwhether ~~audit~~due ofto ~~its~~error ~~internal~~or ~~control~~fraud, ~~over~~and ~~financial~~performing ~~reporting.~~procedures that Asrespond ~~part~~to ofthose ~~our~~risks. ~~audits~~Such procedures included examining, weon ~~are~~a ~~required~~test tobasis, ~~obtain~~evidence anregarding ~~understanding of~~the ~~internal~~amounts ~~control~~and ~~over~~disclosures in the consolidated financial ~~reporting~~statements. ~~but~~Our ~~not~~audits ~~for~~also included evaluating the ~~purpose~~accounting ofprinciples ~~expressing~~used anand ~~opinion~~significant onestimates made by management, as well as evaluating the ~~effectiveness~~overall presentation of the ~~Company’s internal~~consolidated ~~control~~financial ~~over~~statements. ~~financing~~We ~~reporting.~~believe ~~Accordingly,~~that weour ~~express~~audits noprovide a ~~such~~reasonable basis for our opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of ~~the~~ critical audit ~~matter~~matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Warrant Liabilities

As described in ~~Notes 1 and~~ Note 1012, on June 16, 2022, the Company merged with QPhoton, Inc., which was accounted for as a business combination using the acquisition method of accounting. In conjunction with the merger, the Company issued warrants that become exercisable when and if stock options and warrants outstanding as of the time of the merger are exercised. The Company is accounting for these warrants as a derivative liability and is valued at $407.58 million as of December 31, ~~2024~~2025 and resulted in a mark-to-market ~~loss~~gain of $4011.58 million in the year ended December 31, ~~2024~~2025.

The principal considerations for our determination that performing procedures relating to the valuation of the derivative liability is a critical audit matter due to the significant ~~amount~~ amount of judgment by management required in estimating the fair value of the warrants, including the use of valuation methodologies that ~~were~~ were sensitive to significant assumptions, specifically the probability of the underlying options and warrants being exercised, which is affected by expected future market or economic conditions, which in turn led to significant auditor judgment, subjectivity and effort in performing audit procedures and evaluating audit evidence relating to the analysis..

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, assessing the appropriateness of the valuation methodologies and testing the significant assumptions discussed above, specifically the probability of the underlying options and warrants being exercise, and other factors considered by management in developing the model.

/s/ BPM LLP

We have served as the Company’s auditor since 2024.

/s/ BPM LLP

San Jose, California

March 202, ~~2025~~2026

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Quantum Computing, Inc

Opinion on Internal Control Over Financial Reporting

We have audited the internal control over financial reporting of Quantum Computing, Inc (a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2025 based on Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2025 and 2024 and the related consolidated statements of operations and comprehensive loss, mezzanine and stockholders equity, and cash flows for each of the three years in the period ended December 31, 2025 and the related notes (collectively referred to as the “consolidated financial statements”) of the Company, and our report dated March 2, 2026 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in Report of Management on Internal Control over Financial Reporting appearing under Item 9A:

The Company did not design and maintain an effective control environment commensurate with its financial reporting requirements. During the year, the Company lacked a sufficient number of trained professionals with (a) an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (b) an appropriate level of knowledge and experience to establish effective processes and controls. Additionally, the limited personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in the Company’s finance and accounting functions;

ii.

The Company did not design and maintain an effective risk assessment process at a precise enough level to identify new and evolving risks of material misstatement in their financial statements. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting; and

iii.

The Company did not design and maintain effective controls over information technology general controls for information systems that are relevant to the preparation of its consolidated financial statements. Specifically, the Company did not design and maintain:

program change management controls to ensure that information technology program and data changes affecting financial information technology applications and underlying accounting records are identified, tested, authorized, and implemented appropriately;

computer operations controls to ensure that data backups are authorized and monitored; and

review of reports for third-party service organizations associated with IT systems and related complementary user entity controls maintained by management.

F-3

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BPM LLP

San Jose, California

March 2, 2026

F-4

QUANTUM COMPUTING INC.

Consolidated Balance Sheets

(In thousands, except par value)

	December 31,			December 31,
	2024			2023
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	78737,~~945~~880		$	278,~~059~~945
Accounts receivable, net		27519			6527
Inventory		18352			7318
Loans receivable, net		-			~~279~~-
Prepaid expenses and other current assets		161			180
Short Term Investments		379,421			-
Total current assets		79,151			2,656
Accrued interest receivable		3,634			-
Property and equipment, net		8,212			2,870
Prepaid expenses and other current assets		11,914			161
Operating lease right-of-use assets		1,522			1,051
Total current assets		1,133,720			79,151
Intangible assets, net		8,972			12,076
Property and equipment, net		12,971			8,212
Operating lease right-of-use assets		2,353			1,522
Intangible assets, net		6,500			8,972
Goodwill		55,573			55,573
Other non-current assets		129			129
Long-term investments		403,121			-
Total assets	$	153,559		$	74,355
Accrued interest receivable - long term		4,551			-
Other non-current assets		131			129
Total assets	$	1,618,920		$	153,559
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	~~1,372~~778		$	1,~~462~~372
Accrued expenses		29,~~134~~135			~~639~~2,134
Financial liabilities, net of issuance costs		-			1,925
Deferred revenue		395			79
Deferred revenue		79			-
Other current liabilities		766			974
Other current liabilities		974			786
Total current liabilities		11,074			4,559
Total current liabilities		4,559			4,812
Derivative liability		7,773			40,532
Derivative liability		40,532			-
Operating lease liabilities		1,808			1,181
Operating lease liabilities		1,181			840
Total liabilities		20,655			46,272
Total liabilities		46,272			5,652
Contingencies (see Note 10)
Contingencies (see Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 1,550 shares Series A Preferred authorized; no shares and 1,490 thousand shares issued and outstanding as of December 31, 2024 and 2023, respectively; 3,080 thousand shares of Series B Preferred Stock authorized; no shares issued and outstanding as of December 31, 2024 and 2023		-			-
Preferred stock, $0.0001 par value, 1,550 shares Series A Preferred authorized; no shares issued and outstanding as of December 31, 2025 and 2024, respectively; 3,080 thousand shares of Series B Preferred Stock authorized; no shares issued and outstanding as of December 31, 2025 and 2024, respectively		-			-
Common stock, $0.0001 par value, 250,000 thousand shares authorized; 129,012 thousand and 77,451 thousand shares issued and outstanding as of December 31, 2024 and 2023, respectively		13			8
Common stock, $0.0001 par value, 250,000 thousand shares authorized; 224,165 and 129,012 shares issued and outstanding as of December 31, 2025 and 2024, respectively		22			13
Additional paid-in capital		~~307~~1,~~756~~816,494			~~200~~307,~~635~~756
Accumulated deficit		(~~200~~219,~~482~~156	)		(~~131~~200,~~940~~482	)
Total stockholders’ equity		107,287			68,703
Accumulated other comprehensive income		905			-
Total liabilities and stockholders’ equity	$	153,559		$	74,355
Total stockholders’ equity		1,598,265			107,287
Total liabilities and mezzanine and stockholders’ equity	$	1,618,920		$	153,559

The accompanying notes are an integral part of these consolidated financial statements.

F-35

QUANTUM COMPUTING INC.

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

	Year Ended
	December 31,
	2024			2023
	2025			2024			2023
Total revenue	$	~~373~~682		$	~~358~~373		$	358
Cost of revenue		~~261~~615			~~196~~261			196
Gross profit		~~112~~67			~~162~~112			162
Operating expenses
Research and development		1120,~~318~~473			811,~~891~~318			8,891
Sales and marketing		13,~~818~~431			1,~~806~~818			1,806
General and administrative		1227,~~913~~240			1512,~~708~~913			15,708
Total operating expenses		2651,~~049~~144			26,~~405~~049			26,405
Loss from operations		(2551,~~937~~077	)		(2625,~~243~~937	)		(26,243	)
Non-operating income (expense)
Interest and other income		423			295
Interest and other income, net		20,718			423			295
Interest expense, net		(2,496	)		(1,602	)
Interest expense		(65	)		(2,496	)		(1,602	)
Change in fair value of warrant liabilities		(40,532	)		528
Change in fair value of derivative liability		11,750			(40,532	)		528
Loss before income tax provision		(6818,~~542~~674	)		(2768,~~022~~542	)		(27,022	)
Income tax provision		-			-			-
Net loss		(68,542	)		(27,022	)
Net Loss		(18,674	)		(68,542	)		(27,022	)
Less: Series A convertible preferred stock dividends		-			~~861~~-			861
Net loss attributable to common stockholders	$	(6818,~~542~~674	)	$	(2768,~~883~~542	)		(27,883	)
Loss per share – basic and diluted	$	(0.73	)	$	(0.42	)
Other comprehensive income (loss):
Weighted average shares used in computing net loss per common share – basic and dilutive		93,881			66,611
Unrealized gain on available-for-sale debt securities (net of tax)		905			-			-
Total comprehensive income (loss)	$	(17,769	)	$	(68,542	)	$	(27,883	)
Loss per share:
Basic and Diluted	$	(0.11	)	$	(0.73	)	$	(0.42	)
Weighted average shares used in computing net loss per common share:
Basic and Diluted		164,492			93,881			66,611

The accompanying notes are an integral part of these consolidated financial statements.

F-46

QUANTUM COMPUTING INC.

Consolidated Statements of Mezzanine and Stockholders’ Equity

(In thousands, except ~~par~~per ~~value~~share data)

	Mezzanine			Series A Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Year Ended December 31,
	Equity			Shares			Amount		Shares		Amount		Capital			Deficit			Equity
				Series A									Additional						Accumulated Other			Total
Balances, January 1, 2023	$	-			1,500		$	-		55,963	$	6	$	169,175		$	(104,057	)	$	65,124
	Mezzanine			Preferred Stock					Common Stock				Paid-In			Accumulated			Comprehensive			Stockholders’
Issuance of shares for cash		-						-		17,572		2		24,728			-			24,730
	Equity			Shares			Amount		Shares		Amount		Capital			Deficit			(Loss) Income			Equity
Conversion of preferred stock		-			(10	)		-		11		-		1			-			1
Balances, January 1, 2023	$	-			1,500		$	-		55,963	$	6	$	169,175		$	(104,057	)	$	-		$	65,124
Preferred stock dividends		-			-			-		-		-		-			(861	)		(861	)
Issuance of shares for cash		-			-			-		17,572		2		24,728			-			-			24,730
Stock-based compensation		-			-			-		2,330		-		4,238			-			4,238
Conversion of preferred stock		-			(10	)		-		11		-		1			-			-			1
Stock-based compensation for services		-			-			-		1,575		-		2,493			-			2,493
Preferred stock dividends		-			-			-		-		-		-			(861	)		-			(861	)
Net loss		-			-			-		-		-		-			(27,022	)		(27,022	)
Stock-based compensation		-			-			-		2,330		-		4,238			-			-			4,238
Balances, December 31, 2023		-			1,490			-		77,451		8		200,635			(131,940	)		68,703
Stock-based compensation for services		-			-			-		1,575		-		2,493			-			-			2,493
Issuance of shares for cash		-			-			-		49,679		5		106,761			-			106,766
Net loss		-			-			-		-		-		-			(27,022	)		-			(27,022	)
Conversion of Series A preferred stock to common stock		(4,097	)		(745	)		-		745		-		4,097			-			4,097
Balances, December 31, 2023		-			1,490			-		77,451		8		200,635			(131,940	)		-			68,703
Reclassification of Series A preferred stock to mezzanine equity		8,195			-			-		-		-		(8,195	)		-			(8,195	)
Issuance of shares for cash		-			-			-		49,679		5		106,761			-			-			106,766
Repurchase of redeemable shares		(4,098	)		(745	)		-		-		-		-			-			-
Conversion of Series A preferred stock to common stock		(4,097	)		(745	)		-		745		-		4,097			-			-			4,097
Stock-based compensation		-			-			-		995		-		4,322			-			4,322
Reclassification of Series A preferred stock to mezzanine equity		8,195			-			-		-		-		(8,195	)		-			-			(8,195	)
Stock-based compensation for services		-			-			-		142		-		136			-			136
Repurchase of redeemable shares		(4,098	)		(745	)		-		-		-		-			-			-			-
Net loss		-			-			-		-		-		-			(68,542	)		(68,542	)
Stock-based compensation		-			-			-		995		-		4,322			-			-			4,322
Balances, December 31, 2024	$	-			-		$	-		129,012	$	13	$	307,756		$	(200,482	)	$	107,287
Stock-based compensation for services		-			-			-		142		-		136			-			-			136
Net loss		-			-			-		-		-		-			(68,542	)		-			(68,542	)
Balances, December 31, 2024		-			-			-		129,012		13		307,756			(200,482	)		-			107,287
Issuance of shares for cash		-			-			-		86,250		8		1,475,136			-			-			1,475,144
Issuance of shares related to exercise of warrants		-			-			-		3,477		1		23,420			-			-			23,421
Stock-based compensation		-			-			-		5,426		-		10,163			-			-			10,163
Stock-based compensation for services		-			-			-		-		-		19			-			-			19
Issuance of shares related to stock option exercises		-			-			-		-		-		-			-			-			-
Net income		-			-			-		-		-		-			(18,674	)		-			(18,674	)
Unrealized gains on available-for-sale debt securities		-			-			-		-		-		-			-			905			905
Balances, December 31, 2025	$	-			-		$	-		224,165	$	22	$	1,816,494		$	(219,156	)	$	905		$	1,598,265

The accompanying notes are an integral part of these consolidated financial statements.

F-57

QUANTUM COMPUTING INC.

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended
	Year Ended December 31,
	December 31,
	2025			2024			2023
	2024			2023
Cash flows from operating activities:
Cash flows from operating activities:
Net loss	$	(18,674	)	$	(68,542	)	$	(27,022	)
Net loss	$	(68,542	)	$	(27,022	)
Adjustments to reconcile net loss to net cash used in operations
Adjustments to reconcile net loss to net cash used in operations
Depreciation and intangibles amortization		4,403			3,798			3,307
Depreciation and intangibles amortization		3,798			3,307
Amortization of issuance costs		-			2,059			925
Amortization of issuance costs		2,059			925
Change in fair value of derivative liability		(11,750	)		40,532			(528	)
Change in fair value of warrant liability		40,532			(528	)
Change in value of derivative		-			(666	)		-
Change in value of derivative		(666	)		-
Provision for credit losses		-			279			279
Provision for credit losses		279			279
Amortization of operating lease right-of-use assets		540			294			222
Other recognized losses (gains)		4			5
Stock-based compensation expense		8,659			5,782			4,271
Stock-based compensation expense		5,782			4,271
Stock-based compensation expense for services		18			23			284
Stock-based compensation expense for services		23			284
Change in operating assets and liabilities
Changes in operating assets and liabilities
Accounts receivable		(492	)		38			(52	)
Accounts receivable		38			(52	)
Inventory		(334	)		55			(70	)
Inventories		55			(70	)
Accrued interest receivable		(8,185	)		-			-
Prepaid expenses and other current assets		16(11,753	)		~~(110~~16	)		(110	)
Other non-current assets		-(2	)		~~(69~~-	)		(69	)
Accounts payable		(90594	)		~~596~~(90	)		596
Deferred revenue		79316			-79			-
Accrued expenses and other current liabilities		~~550~~7,966			~~110~~362			(112	)
Other long-term liabilities		(130	)		(241	)
Operating lease liabilities		(412	)		(236	)		(241	)
Net cash used in operating activities		(1630,~~213~~294	)		(1816,~~315~~213	)		(18,315	)
Cash flows from investing activities:
Purchase of property and equipment		(6,~~036~~690	)		(26,~~112~~036	)		(2,112	)
Issuance of loan receivable		-			~~(500~~-	)		(500	)
Net cash used in investing activities		(6,036	)		(2,612	)
Purchases of available-for-sale debt securities		(1,197,865	)		-			-
Cash flows from financing activities:
Proceeds from sales of available-for-sale debt securities		376,331			-			-
Proceeds raised from financial liabilities, net of issuance costs		6,995			-
Proceeds from maturities of available-for-sale debt securities		39,904			-			-
Payments of financial liabilities		(10,313	)		(6,187	)
Other recognized losses (gains)		(7	)		-			-
Series A Preferred stock dividend payments		(215	)		(865	)
Net cash used in investing activities		(788,327	)		(6,036	)		(2,612	)
Repurchase of Series A preferred stock		(4,098	)		-
Cash flows from financing activities:
Proceeds from issuance of common stock		106,766			24,730
Proceeds raised from financial liabilities, net of issuance costs		-			6,995			-
Net cash provided by financing activities		99,135			17,678
Payments of financial liabilities, net of interest		-			(10,313	)		(6,187	)
Net increase (decrease) in cash		76,886			(3,249	)
Series A Preferred stock dividend payments		-			(215	)		(865	)
Cash and cash equivalents, beginning of period		2,059			5,308
Repurchase of Series A preferred stock		-			(4,098	)		-
Cash and cash equivalents, end of period	$	78,945		$	2,059
Proceeds from stock issuance related to ATM facility		-			-			-
Supplemental disclosures of cash flow information:
Net proceeds from exercise of warrants		2,412			-			-
Cash paid for interest	$	268		$	813
Net proceeds from issuance of common stock		1,475,144			106,766			24,730
Non-cash investing and financing activities:
Net cash provided by financing activities		1,477,556			99,135			17,678
Reclassification of Series A preferred stock to mezzanine equity	$	8,195		$	-
Net increase (decrease) in cash		658,935			76,886			(3,249	)
Valuation of derivative associated with convertible financial liability	$	666		$	-
Cash and cash equivalents, beginning of period		78,945			2,059			5,308
Conversion of Series A preferred to common stock	$	4,097		$	-
Cash and cash equivalents, end of period	$	737,880		$	78,945		$	2,059
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	765		$	-
Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	268		$	813
Non-cash investing and financing activities:
Fair value of derivative liability reclassed to additional paid-in capital due to exercise of warrants	$	21,009		$	-		$	-
Issuance of stock expensed from 2024, awarded in 2025	$	1,507		$	-		$	-
Leased assets obtained in exchange for new operating lease liabilities	$	1,371		$	765		$	-
Reclassification of Series A preferred stock to mezzanine equity	$	-		$	8,195		$	-
Valuation of derivative associated with convertible financial liability	$	-		$	666		$	-
Conversion of Series A preferred to common stock	$	-		$	4,097		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-68

QUANTUM COMPUTING INC.

Notes to Consolidated Financial Statements

December 31, ~~2024~~2025

Note 1 – Nature of the Organization and Business

Corporate History

Quantum Computing Inc. (“QCi” or the “Company”) was formed in the State of Nevada on July 25, 2001, under its original name, Ticketcart, Inc., which was changed to Innovative Beverage Group Holdings, Inc. in 2009. The Company redomiciled to Delaware on February 22, 2018 and changed its name to Quantum Computing Inc. Effective July 20, 2018, the trading symbol for the Company’s common stock, par value $0.0001, on the OTC Market changed from “IBGH” to “QUBT”. On July 15, 2021, the Company uplisted to The Nasdaq Stock Market LLC. On June 16, 2022, the Company merged (the “QPhoton Merger”) with QPhoton, Inc. (“QPhoton”), a developer of quantum photonic systems and related technologies and applications. The QPhoton Merger enabled us to develop hardware applications integrated with the Company’s software platform, Qatalyst, that existed before the QPhoton Merger.

Nature of Business

QCi 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 based on patented and proprietary photonics technology. QCi’s products are designed to operate at room temperature and at very low power levels compared to other quantum systems currently available in the market, such as superconducting, ion-trap, or annealing architectures. Our core photonics technology enables the execution of a go-to-market strategy which emphasizes scalability, accessibility and affordability. Our quantum machines, supported by professional services through our “Quantum Solutions” offering, enable subject matter experts (SMEs) and end users to deliver critical business solutions involving highly complex optimization problems.

The leading application of our quantum offerings today is our Entropy Quantum Computing (“EQC”). Our longer-term product development plan is to migrate the EQC’s current design, as well as other product designs based on discrete components, to a set of TFLN optical integrated circuits ~~(TFLN Optical Chips)~~ built on TFLN wafers.

Liquidity

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets, and the satisfaction of liabilities in the normal course of business. We have not achieved a level of sales adequate to support the Company’s cost structure. Cash and cash equivalents on hand were $737.9 million and $790.7 million in investments and accrued interest as of December 31, 2025. The Company has historically incurred losses and negative cash flows from operations. During the year ended December 31, ~~2024~~2025, the Company issued 86.3 ~~49,679~~million shares of common stock for net proceeds of $~~106~~1,475.81 million. ~~Cash and cash equivalents on hand were $78.9 million as of December 31, 2024.~~ As of December 31, ~~2024~~2025, the Company also had an accumulated deficit of $~~200~~219.52 million and working capital of $~~74.6 million. In January 2025~~1, ~~the Company issued 8,163,266 shares of common stock for net proceeds of $93~~122.37 million. As a result, the Company has adequate cash and cash equivalents on hand to meet its obligations over the next 12 months.

Note 2 – Significant Accounting Policies:

Basis of Presentation and Principles of Consolidation:

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”), including ASC 810, Consolidation. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year end is December 31.

F-79

Risk and Uncertainties

The Company is subject to certain risks and uncertainties and believes changes in any of the following areas could have a material adverse effect on the Company’s future consolidated financial position or consolidated results of operations or cash flows: new product development, including market receptivity; litigation or claims against the Company based on intellectual property, patent, product regulation or other factors; competition from other products; general economic conditions; the ability to attract and retain qualified employees; and, ultimately, to sustain profitable operations.

Reclassifications

Certain reclassifications have been made to the fiscal year 2024 and 2023 consolidated financial statements to conform otto the fiscal year ~~2024~~2025 presentation. The reclassifications had no impact on net loss, total assets, total liabilities, or stockholders’ equity.

Use of Estimates

These consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the valuation of goodwill and intangible assets, deferred tax assets, equity-based transactions and liquidity assessment. Actual results may differ from these estimates.

Segments

Our Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, our CODM uses consolidated net loss to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes natural expenses, such as employee wages and benefits at a consolidated level, to manage the Company’s operations and strategic growth initiatives. Other segment items include interest income, interest expense, deferred offering costs, changes in fair value of derivative warrant liabilities and other operational expenses which are reflected in the consolidated statements of operations.

Cash and Cash Equivalents

Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. The Company maintains its cash in mutual funds and deposit and money market accounts with high quality financial institutions which, at times, may exceed federally insured limits. As of December 31, ~~2024~~2025 and December 31, ~~2023~~2024, the Company had $78720.96 million and $~~960~~78.9 ~~thousand~~million, respectively, in cash equivalents invested in mutual funds. The Company has not experienced any losses on these deposits and believes it is not exposed to significant credit risk on cash.

Marketable Securities: Available-For-Sale Debt Securities

The Company invests excess cash balances in marketable debt securities. The Company classifies investments in marketable debt securities as available-for-sale. Management determines the appropriate classification of its investments in available-for-sale debt securities at the time of purchase and reevaluates such designation as of each reporting date. The Company reports available-for-sale debt securities at fair value at each balance sheet date, and includes any unrealized holding gains and losses (the adjustment to fair value) in accumulated other comprehensive income (loss), a component of shareholders’ equity. Realized gains and losses are determined using the specific-identification method, and are included in interest and other income, net in the consolidated statements of operations and comprehensive loss. The Company classifies available-for-sale debt securities as current or non-current based on management’s intentions or maturity of the securities.

The Company evaluates securities for impairment at the end of each reporting period. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investment to allow for an anticipated recovery in fair value. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit- related is recognized in other comprehensive income (loss), net of applicable taxes.

Revenue

The Company recognizes revenue in accordance with ASC 606 – Revenue from Contracts with Customers, by analyzing contracts with its customers using a five-step approach:

1. Identify the contract~~; 2. Identify the performance obligations; 3. Determine the transaction price;~~

	4.	Allocate the transaction price to the performance obligations; and
	5.	Recognize revenue when performance obligations are satisfied.

Identify the performance obligations

F-810

~~The revenue the Company has recognized in the years ended December 31, 2024 and 2023 were primarily derived from contracts to perform professional services~~3. ~~Revenue~~Determine ~~from time and materials-based contracts is recognized as~~ the ~~direct~~transaction ~~hours~~price ~~worked during the period times the contractual hourly rate, plus direct materials and other direct costs as appropriate, plus negotiated materials handling burdens, if any~~4. ~~Revenue~~Allocate ~~from units-based contracts is recognized as~~ the ~~number~~ oftransaction ~~units~~price ~~delivered~~to ~~or performed during~~ the ~~period~~performance ~~times~~obligations ~~the contractual unit price~~5. ~~Revenue~~Recognize ~~from~~revenue ~~fixed~~when ~~price~~performance ~~contracts~~obligations isare ~~recognized as work is performed with estimated profits recorded on a percentage of completion basis. The Company has no cost-plus type contracts at this time.~~satisfied

The revenue the Company has recognized in the years ended December 31, 2025, 2024 and 2023 were primarily derived from contracts to perform professional services. Revenue from time and materials-based contracts is recognized as the direct hours worked during the period times the contractual hourly rate, plus direct materials and other direct costs as appropriate, plus negotiated materials handling burdens, if any. Revenue from units-based contracts is recognized as the number of units delivered or performed during the period times the contractual unit price. Revenue from fixed price contracts is recognized as work is performed with estimated profits recorded on a percentage of completion basis. The Company has no cost-plus type contracts at this time.

The Company includes depreciation and amortization expenses in manufacturing overhead, which is a component of cost of revenue. However, at the present time manufacturing overhead, including depreciation and amortization expense related to production equipment, is not material and the primary components of cost of revenue are direct labor and direct materials, with a small amount of shipping expenses.

The Company’s ~~revenues~~revenue ~~consist~~consists of (in thousands):

	Year Ended December 31,
	2024		2023		% Change
	2025		2024		2023
Services	$	~~346~~368	$	~~353~~346	$	(2353	)%
Products		27314		527		~~440~~5	%
Total	$	~~373~~682	$	~~358~~373	$	4358	%

The Company disaggregates revenue from contracts with customers based on the timing of transfer of goods or services to customers (point-in-time or over time) and geographic region based on the shipping location of the customer. The geographic regions that are tracked for the years ended December 31, 2025, 2024 and ~~2025~~ 2023 are the Americas and Europe.

Total net sales based on the disaggregation criteria described above are as follows (in thousands):

	Year Ended December 31,
	2024						2023
	2025						2024						2023
	Point-in-Time		Over Time		Total		Point-in-Time		Over Time		Total		Point-in-Time		Over Time		Total
Americas	$	2721	$	~~346~~571	$	~~373~~592	$	527	$	~~337~~346	$	~~342~~373	$	5	$	337	$	342
Europe		-53		-12		-65		-		16-		16-		-		16		16
Total	$	27	$	346	$	373	$	5	$	353	$	358
Asia		23		2		25		-		-		-		-		-		-
Total	$	97	$	585	$	682	$	27	$	346	$	373	$	5	$	353	$	358

F-11

Accounts Receivable

Accounts receivable consists of amounts due from customers for work performed on contracts. The Company records accounts receivable at their net realizable value. Periodically, the Company evaluates its accounts receivable to establish a provision for credit losses, when deemed necessary, based on the history of past write-offs, collections and current credit conditions. The customer accounts receivable ~~as of December 31, 2024~~ are considered ~~not~~ fully collectible ~~and~~ ~~thus~~in the ~~Company~~years ~~has~~ended ~~recorded~~December 31, a2025, ~~provision~~December ~~for~~31, ~~credit~~2024 ~~losses~~and ~~of $3.5 thousand; the customer accounts receivable as of~~ December 31, ~~2023~~ ~~were considered fully collectible~~2023.

F-9

Provision for Credit Losses

The Company estimates losses on loans and other financial instruments in accordance with Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces the current expected credit losses (“CECL”) methodology for estimating allowances for credit losses. The CECL framework requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supporting forecasts. Under CECL, the allowance for credit losses is measured as the difference between the financial asset’s cost basis and the net amount expected to be collected on the financial asset. CECL allows us to use information about past events including historical loan loss experience, current conditions, and reasonable and supportable forecasts to assess the collectability of the financial assets. The receivables for financial assets as of December 31, ~~2024~~2025 and ~~2023~~2024 are not considered fully collectible and thus management has recorded a provision for credit losses. See Note 911, Loan Receivable, for additional information.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined on a standard cost basis which approximates actual cost on a first in-first out method. Lower of cost or net realizable value is evaluated by considering obsolescence, excessive levels of inventory, deterioration and other factors. Adjustments to reduce the cost of inventory to its net realizable value, if required, are made for estimated excess, obsolescence or impaired inventory and are charged to cost of revenue. Once the cost of the inventory is reduced, a new lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Factors influencing these adjustments include changes in demand, product life cycle and development plans, component cost trends, product pricing, physical deterioration and quality issues. Revisions to these adjustments would be required if these factors differ from our estimates.

Operating Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in right-of-use assets, net on the consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current operating lease liabilities and non-current operating lease liabilities, respectively, on the consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. All of our operating leases are comprised of office space leases, and as of December 31, ~~2024~~2025 and ~~2023~~2024, we had no finance leases.

~~Business Combinations and~~ Valuation of Goodwill

WeThe ~~account~~Company reviews goodwill for ~~business~~impairment ~~combinations~~on ~~under~~an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs an annual impairment test ~~acquisition~~by ~~method~~comparing the fair value of ~~accounting~~a reporting unit with its carrying amount. ~~This~~An ~~method~~impairment ~~requires~~charge should be recognized for the ~~recording~~amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of ~~acquired~~goodwill ~~assets~~allocated ~~and~~to ~~assumed~~that ~~liabilities~~reporting atunit. ~~their~~In ~~acquisition~~addition, ~~date~~income tax effects from any tax-deductible goodwill carrying amount of the ~~fair~~reporting ~~values~~unit should be considered when measuring the goodwill impairment loss, if applicable. The ~~excess~~Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the ~~purchase~~Company uses the market approach to assess impairment, its common stock price ~~over~~is an important component of the fair value ofcalculation. ~~assets~~If ~~acquired~~the Company’s stock price continues to experience significant price and ~~liabilities~~volume ~~assumed~~fluctuations, isthis ~~recorded~~will asimpact ~~goodwill. Results~~the fair value of ~~operations~~the ~~related~~reporting unit and can lead to ~~business~~potential ~~combinations~~impairment in ~~are~~future ~~included~~periods. ~~prospectively~~The ~~beginning~~Company ~~with~~performed its annual impairment test during the ~~date~~fourth quarter of ~~acquisition~~fiscal 2025 and ~~transaction~~2024 and determined that ~~costs~~its ~~related~~goodwill towas ~~business~~not ~~combinations~~impaired. ~~are~~As ~~recorded~~of ~~withing~~December ~~general~~31, 2025 and ~~administrative~~2024, ~~expenses~~we had not identified any factors that indicated there was an impairment of our goodwill and determined that no additional impairment analysis was then required. There were no impairments recorded for any period presented.

The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company performs an annual impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any taxF-deductible goodwill carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performed its annual impairment test during the second quarter of fiscal 2024 and 2023 and determined that its goodwill was not impaired. As of December 31, 2024 and 2023, we had not identified any factors that indicated there was an impairment of our goodwill and determined that no additional impairment analysis was then required.12

F-10

Property and Equipment

Property and equipment are stated at cost or contributed value. Depreciation of furniture, software and equipment is calculated using the straight-line method over their estimated useful lives, and leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as a gain or loss on sale of equipment. Maintenance and repairs are charged against expense as incurred.

Impairment of Long-Lived Assets

The Company has long-lived assets such as tangible property and equipment, identified intangible assets consisting of acquired patents and core technology. When events or changes in circumstances occur that could indicate the carrying value of long-lived assets may not be recoverable, the Company assesses recoverability by determining whether the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If the undiscounted cash flow is less, an impairment charge is recognized for the excess of the carrying amounts of these assets over the fair values. Fair values are determined by discounted future cash flows, appraisals or other methods.

During years ended December 31, 2025, 2024 and 2023, the Company did not record any impairment from long-lived assets.

Fair Value of Financial Instruments

The carrying amount of certain financial instruments held by the Company, such as cash equivalents, accounts receivable, contract assets and liabilities, accounts payable, and accrued and other current liabilities, approximate fair value due to their short maturities. The carrying amount of the liabilities for the convertible preferred stock warrants represent their fair value. The carrying amounts of the Company’s borrowings and lease liabilities approximate fair value due to the market interest rates that these obligations bear and interest rates currently available to the Company.

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. As of December 31, 2024 and 2023, the Company had $78.9 million of the $78.9 million cash and cash equivalents and $960 thousand of the $2.1 million cash and cash equivalents, respectively, in Level 1 assets, comprised of U.S. Government mutual funds, and $40.5 million and no carrying value, respectively, for Level 3 liabilities, which are comprised of derivative and warrant liabilities. See Note 10, Capital Stock, for a full discussion of the warrant liability.

F-11

Research and Development Costs

Research and development costs include costs directly attributable to the conduct of research and development programs, including the cost of services provided by outside contractors, acquiring work-in-progress intellectual property, development, and mandatory compliance fees and contractual obligations. All costs associated with research and development are expensed as incurred.

Software Development Costs

Software development costs incurred subsequent to the establishment of technological feasibility for software intended to be sold, licensed or otherwise marketed to customers will be capitalized, but development costs not meeting the criteria for capitalization are expensed as incurred. With respect to internal use software, the Company will capitalize such development costs incurred during the application development stage, but development costs incurred prior to that stage will be expensed as incurred. No amortization expense will be recorded until the software is ready for its intended use. To date, the Company has not incurred any material capitalizable software development costs.

Stock-based Compensation

Stock-based compensation expense for awards expected- to- vest ~~awards~~ is ~~valued~~recognized ~~under~~using the ~~single~~straight-~~option~~line ~~approach~~attribution ~~and~~method ~~amortized~~over onthe arequisite ~~straight-line~~service ~~basis,~~period ~~accounting~~and ~~for~~reflects actual forfeitures as they occur. We ~~utilize~~estimate the ~~Black~~fair ~~Scholes~~value ~~pricing~~of ~~model~~stock inoption ~~order~~awards toon ~~determine~~ the ~~fair~~grant ~~value~~date ofusing ~~stock~~the Black-~~based~~Scholes option ~~awards~~pricing model. The Black -Scholes ~~pricing~~ model requires ~~various~~the use of several highly subjective assumptions, including expected volatility, expected option life, and the risk-free interest rate. ~~The~~These assumptions ~~used~~ ~~in calculating the fair value of share-based payment awards~~ represent management’s best estimates., ~~These estimates involve inherent uncertainties~~ and ~~the~~changes ~~application~~in ofthese ~~management~~estimates ~~judgment.~~could Ifhave ~~factors~~a ~~change~~material ~~and~~impact on ~~different~~the ~~assumptions~~amount ~~are~~of ~~used, our~~ stock-based compensation expense ~~could~~recognized ~~be materially different~~ in ~~the~~ future periods.

F-13

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets where, based upon the available evidence, management concludes that it is more-likely-than-not that the deferred tax assets will not be realized. Realization of deferred tax assets is also dependent upon future earnings, if any, the timing and amount of which are uncertain.

The Company records a liability for the uncertain tax positions taken or expected to be taken on the Company’s tax return when it is more-likely-than-not that the tax position might be challenged despite the Company’s belief that the tax return positions are fully supportable, and additional taxes will be due as a result. To the extent that the assessment of such tax positions changes, for example, based on the outcome of a tax audit, the change in estimate is recorded in the period in which the determination is made. The provision for income taxes includes the impact of provisions for uncertain tax positions.

Net Loss Per Share:

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the “If-Converted” method), unless the effect of such issuances would have been anti-dilutive.

F-12

The following table sets forth the computation of basic and diluted loss per share (in thousands, except for per share data):

	Year Ended December 31,
	2024			2023
	2025			2024			2023
Numerator:
Basic net income (loss) per common share:
Net loss	$	(68,542	)	$	(27,022	)
Numerator:
Less: Series A convertible preferred stock dividends		-			861
Net loss	$	(18,674	)	$	(68,542	)	$	(27,022	)
Net loss attributable to common stockholders – basic and diluted	$	(68,542	)	$	(27,883	)
Less: Series A convertible preferred stock dividends		-			-			861
Denominator:
Net loss available to common stockholders		(18,674	)		(68,542	)		(27,883	)
Weighted average shares used in computing net loss per common share – basic and diluted		93,881			66,611
Denominator:
Net loss per common share – basic and diluted	$	(0.73	)	$	(0.42	)
Weighted average outstanding shares of common share - basic		164,492			93,881			66,611
Loss per common share – basic and diluted	$	(0.11	)	$	(0.73	)	$	(0.42	)

Net loss per share is based on the weighted average number of common shares and common share equivalents outstanding during the period.

~~In periods with a reported net loss, the effect of anti~~F-dilutive stock options, unvested restricted common stock and warrants are excluded and diluted loss per share is equal to basic loss per share. Due to a net loss in the years ended December 31, 2024 and 2023, there were therefore no dilutive securities and hence basic and diluted loss per share were the same. The following is a summary of the weighted average common stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive (in thousands):14

	Year Ended December 31,
	2024		2023
Warrants		2,583		6,053
Options		12,907		12,280
Unvested restricted common stock		2,997		1,192
Total potentially dilutive shares		18,487		19,525

In periods with a reported net loss, the effect of anti-dilutive stock options, unvested restricted common stock and warrants are excluded and diluted loss per share is equal to basic loss per share. Due to a net loss in the years ended December 31, 2025, 2024 and 2023, there were no dilutive securities and hence basic and diluted loss per share were the same. The following is a summary of the weighted average common stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive (in thousands):

As all potentially dilutive securities are anti-dilutive as of December 31, 2024 and 2023, diluted net loss per share is the same as basic net loss per share for each period.

	Year Ended December 31,
	2025		2024		2023
Warrants		1,599		2,583		6,053
Options		5,510		12,907		12,280
Unvested restricted common stock		1,200		2,997		1,192
Total potentially dilutive shares		8,309		18,487		19,525

As all potentially dilutive securities are anti-dilutive as of December 31, 2025, 2024 and 2023, diluted net loss per share is the same as basic net loss per share for each period.

Recently Adopted Accounting Standards

InOn ~~November~~December 14, 2023, the FASB issued ~~ASU~~Accounting ~~No.~~Standard Update (“ASU”) 2023-0709, ~~Segment~~ ~~Reporting~~Income Taxes (Topic ~~280~~740): Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures,. ~~which~~Under ~~amends~~ASU ~~reportable~~2023-09, ~~segment~~entities ~~requirements,~~are ~~primarily through~~required ~~enhanced~~to ~~disclosures~~uniformly ~~about~~classify and ~~significant~~present ~~segment~~greater ~~expenses,~~disaggregation ~~including~~of ~~for~~information ~~public~~in ~~entities~~the ~~that~~rate ~~have~~reconciliation aand ~~single~~income ~~reportable~~taxes ~~segment~~paid. ~~The~~ ~~standard~~ASU 2023-09 is ~~effective~~intended ~~for~~to ~~fiscal~~benefit users ~~years~~of ~~beginning~~the ~~after~~consolidated ~~December~~financial ~~15,~~statements ~~2023~~by improving transparency and ~~interim~~decision ~~periods~~usefulness ~~within~~of ~~fiscal~~income ~~years~~tax disclosures. The new standard is effective for annual periods beginning after December 15, 2024 for public companies. The Company adopted ASU 2023-0709 onas ~~January~~of January 1, ~~2024~~2025. ~~and~~The ~~have~~standard ~~made~~did ~~the~~not ~~necessary~~have ~~reportable~~a ~~segment~~material ~~disclosures~~effect ~~(See~~on ~~Note~~the 3,Company’s ~~Segment Reporting)~~consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our ~~consolidated~~ financial position or results of operations upon adoption.

OnIn ~~December~~November 142024, ~~2023,~~ the FASB issued ASU ~~2023~~2024-0903, Income ~~Taxes~~Statement – Reporting Comprehensive Income (Topic ~~740~~220): ~~Improvements~~Disaggregation toof Income ~~Tax~~Statement ~~Disclosures.~~Expenses ~~Under~~ (“ASU ~~2023~~2024-0903”), which ~~entities~~requires ~~are~~public ~~required~~entities to ~~uniformly~~provide ~~classify and~~disaggregated ~~present~~disclosures ~~greater~~of ~~disaggregation~~certain ofexpense ~~information~~captions inpresented on the ~~rate~~face ~~reconciliation~~of ~~and~~the income ~~taxes~~statement into ~~paid.~~specific ~~ASU~~categories ~~2023-09~~within isthe ~~intended~~notes to ~~benefit users~~the ~~of our~~ consolidated financial statements. byASU ~~improving~~2024-03 ~~transparency~~is ~~and~~effective ~~decision~~for ~~usefulness~~the ofCompany’s ~~income~~annual periods ~~tax~~beginning ~~disclosures.~~after ~~The~~December ~~new~~15, ~~standard is~~2026, ~~effective~~and ~~for~~interim ~~annual~~ periods within fiscal years beginning after December 15, ~~2024~~2027, with early adoption permitted. The ~~Company~~ASU ~~does~~may ~~not~~be ~~expect~~applied ~~the~~either ~~adoption~~on ofa ~~this~~prospective ~~new~~or ~~guidance~~retrospective tobasis. ~~have a~~The ~~material~~Company ~~impact~~is oncurrently ~~our~~evaluating ~~consolidated~~the ~~financial~~impact ~~statements~~of ~~and~~the adoption ~~have~~of ~~decided~~ASU ~~not~~2024-03 toon ~~early~~its ~~adopt~~consolidated ~~ASU~~financial ~~2023-09~~statements and related disclosures.

FOn July 30, 2025, the FASB issued ASU 2025-1305, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods, and allows for early adoption. The Company is currently evaluating the impact on its consolidated financial statements and related disclosures.

Note 3 - Segment Reporting

The Company operates as one operating segment as its CODM reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. In addition to consolidated net loss, our CODM reviews and utilizes natural expenses, such as employee wages and benefits at a consolidated level, to manage the Company’s operations and strategic growth initiatives. The following table presents segment information of revenue, significant expenses and net loss (in thousands):

	Year Ended December 31,
	2024			2023
Revenue	$	373		$	358
Less:
Salaries and employee related costs		9,534			9,745
Stock-based compensation		5,805			4,555
Rent and facilities		751			575
Professional services and legal fees		2,959			3,963
Technology & IT costs		1,062			1,198
Other sales and marketing costs		734			1,471
Direct and indirect materials		99			39
Depreciation and amortization expense		3,798			3,307
Other operational expenses		1,568			1,748
Operating loss		(25,937	)		(26,243	)
Other income (expense)
Interest expense		(254	)		(602	)
Interest and other income (expense) (1)		(1,819	)		(705	)
(Gain) loss on change in fair value of warrant liabilities		(40,532	)		528
Segment and net loss	$	(68,542	)	$	(27,022	)

(1) Includes interest income of $423 thousand and $295 thousand for the years ended December 31, 2024 and 2023, respectively.

Note 4 – Intangible Assets, net

As a result of the merger with QPhoton in June 2022, the Company has the following amounts related to intangible assets, net (in thousands):

	December 31, 2024							December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-compete agreement with founder	$	3,251	$	(2,800	)	$	451	$	3,251	$	(1,715	)	$	1,536
Website domain name and trademark		1,009		(521	)		488		1,009		(320	)		689
Technology and licensed patents		12,731		(4,698	)		8,033		12,731		(2,880	)		9,851
Total	$	16,991	$	(8,019	)	$	8,972	$	16,991	$	(4,915	)	$	12,076

F-14

The amortization expense of the Company’s intangible assets for both the years ended December 31, 2024 and 2023 was approximately $3.1 million. The Company expects future amortization expense to be the following (in thousands):

	Amortization
2025	$	2,472
2026		2,021
2027		1,903
2028		1,819
2029		757
Thereafter		-
Total	$	8,972

Note 5 – Income Taxes

The Company’s provision for income taxes differs from the amount determined by applying the applicable federal statutory tax rate to the loss before income taxes due to the valuation allowance for the net deferred income tax assets. A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below:

	Year Ended December, 31
	2024			2023			2022
Federal statutory income tax rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal benefit		(3.1	)%		0.0	%		0.0	%
Warrant mark-to-market adjustments		(12.4	)%		2.0	%		2.7	%
Change in business credits		0.5	%		0.0	%		0.0	%
Other permanent differences		(0.1	)%		(0.3	)%		(0.1	)%
True-ups		0.0	%		0.0	%		0.0	%
Change in deferred tax asset valuation allowance		(6.0	)%		(22.3	)%		(23.7	)%
Effective income tax rate		0.0	%		0.4	%		0.0	%

Income tax expense attributable to pretax loss from continuing operations differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pretax loss from continuing operations as a result of both temporary and permanent differences in the U.S. GAAP vs tax treatment of certain types of expenses, including stock-based compensation, depreciation and amortization, research and development and meals and entertainment. Additionally, the Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2024, the Company had no interest related to unrecognized tax benefits, and no amounts for penalties related to unrecognized tax benefits were recognized in the provision for income taxes. We do not anticipate any significant change within twelve months of this reporting date.

As of December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $89 million and $7 million, respectively. All of the federal NOL carryforwards were generated during 2018 or later and will carryforward indefinitely but will be subject to 80% taxable income limitation beginning tax years after December 31, 2021, as provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (PL 116-136). State net operating loss will begin to expire in 2043 for state tax purposes. Furthermore, the utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code, a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has determined that ownership changes have occurred, primarily driven by the Transactions, and hence the Company’s ability to use its NOLs or tax credit carryforwards may be restricted.

As of December 31, 2024, in addition to the $89.4 million in tax-effected NOL carryforwards, at an assumed tax rate of 30%, the significant components of the Company’s net deferred tax assets included stock-based compensation of $14 million, capitalized research and development expenditures of approximately $3 million. As of December 31, 2023, in addition to the $13 million in tax-effected NOL carryforwards, also at an assumed tax rate of 26%, the significant components of the Company’s net deferred tax assets included stock-based compensation of $11 million and capitalized research and development expenditures of approximately $2 million. The Company believes that it is more likely than not that the benefit from the net deferred tax assets will not be realized. Accordingly, it has provided a full valuation allowance on any potential deferred tax assets The valuation allowance increased by approximately $16 million for the period ended December 31, 2024. The provision for income taxes is not material in the years presented due to there being no taxable income.

F-15

~~The~~In ~~Company~~December ~~has~~2025, ~~federal~~the ~~R&D~~FASB ~~credit~~issued ~~carryforwards~~ASU No. 2025-11, Interim ofReporting ~~approximately~~(Topic ~~$878~~270): ~~thousand~~Narrow-Scope Improvements (ASU 2025-11), which clarifies interim disclosure requirements and the applicability of Topic 270. The ~~Company~~guidance ~~has~~will nobe ~~state~~effective ~~R&D~~for ~~credit~~interim ~~carryforwards~~periods beginning January 1, 2028. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

~~The~~Note ~~Company~~3 ~~files~~– ~~income~~Segment tax returns in the U.S. federal jurisdiction and various state jurisdictions, with varying statutes of limitations. The tax years from inception through 2024 remain open to examination due to the carryover of unused net operating losses that are being carried forward for tax purposes. Reporting

The following table presents segment information of revenue, significant expenses and net loss (in thousands):

	Year Ended December 31,
	2025			2024			2023
Revenue	$	682		$	373		$	358
Less:
Salaries and employee related costs		14,609			9,534			9,745
Stock-based compensation		8,677			5,805			4,555
Rent and facilities		1,574			751			575
Professional services and legal fees		14,483			2,959			3,963
Technology & IT costs		3,067			1,062			1,198
Other sales and marketing costs		2,457			734			1,471
Direct and indirect materials		-			99			39
Depreciation and amortization expense		4,404			3,798			3,307
Other operational expense		2,488			1,667			1,787
Operating loss		(51,077	)		(25,937	)		(26,243	)
Other income (loss)
Interest and other income (expense), net		20,718			423			295
Interest expense		(65	)		(2,496	)		(1,602	)
Change in fair value of derivative liability		11,750			(40,532	)		528
Segment net loss	$	(18,674	)	$	(68,542	)	$	(27,022	)

Note 4 – Fair Value Measurements

F-16

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2

Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3

Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

See Note 12, Capital Stock, for a full discussion of the warrant liability.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

	December 31, 2025
			Quoted Prices in Active Markets for		Significant Other		Significant
	Aggregate Estimated Fair Value		Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets classified as cash equivalents:
Mutual funds	$	720,579	$	720,579	$	-	$	-
	$	720,579	$	720,579	$	-	$	-

Assets classified as marketable securities: available-for-sale debt securities

U.S. Treasuries	$	426,446	$	426,446	$	-	$	-
Corporate debt securities		356,096		-		356,096		-
	$	782,542	$	426,446	$	356,096	$	-

	December 31, 2024
			Quoted Prices in Active Markets for		Significant Other		Significant
	Aggregate Estimated Fair Value		Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets classified as cash equivalents:
Mutual funds	$	78,945	$	78,945	$	-	$	-
	$	78,945	$	78,945	$	-	$	-

The Company estimates the fair value of available-for-sale debt securities using actual trade and indicative prices sourced from third-party providers on a daily basis to estimate the fair value. If observed market prices are not available (for example securities with short maturities and infrequent secondary market trades), the securities are priced using a valuation model maximizing observable inputs, including market interest rates.

As of December 31, 2025 and 2024, the Company did not have any non-financial assets measured at fair value on a recurring basis. During the years ended December 31, 2025, 2024 and 2023, there were no transfers between levels.

F-17

Note 5 – Available-For-Sale Debt Securities

The following table summarizes available-for sale debt securities held by the Company as of December 31, 2025:

	Remaining			Gross		Gross
	Contractual	Amortized		Unrealized		Unrealized
	Maturity	Cost		Gains		Losses			Fair Value
U.S. Treasuries	< 1 year	$	274,232	$	117	$	-		$	274,349
	1 - 3 years		151,844		253		-			152,097
	3 - 5 years		-		-		-			-
Corporate debt securities	< 1 year		104,890		182		-			105,072
	1 - 3 years		244,250		361		-			244,611
	3 - 5 years		6,421		-		(8	)		6,413
Total available-for-sale debt securities		$	781,637	$	913	$	(8	)	$	782,542

The Company may from time to time sell its available-for-sale debt securities. There were $7 thousand in realized gains on sales of available-for-sale debt securities for the year ended December 31, 2025. The Company’s investment portfolio includes callable securities that may be called prior to maturity.

The aggregated net unrealized gain on available-for-sale debt securities in the amount of $905 thousand has been recognized in accumulated other comprehensive loss in the Company’s consolidated balance sheet as of December 31, 2025.

As of December 31, 2024, the Company held no available-for-sale debt securities and therefore there were no amounts reclassified out of other comprehensive income (loss), net of tax during the year ended December 31, 2025.

Note 6 – Intangible Assets, net

As a result of the merger with QPhoton in June 2022, the Company has the following amounts related to intangible assets, net (in thousands):

	December 31, 2025							December 31, 2024
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Non-compete agreement with founder	$	3,251	$	(3,251	)	$	-	$	3,251	$	(2,800	)	$	451
Website domain name and trademark		1,009		(724	)		285		1,009		(521	)		488
Technology and licensed patents		12,731		(6,516	)		6,215		12,731		(4,698	)		8,033
Total	$	16,991	$	(8,019	)	$	6,500	$	16,991	$	(8,019	)	$	8,972

The amortization expense of the Company’s intangible assets for the years ended December 31, 2025, 2024 and 2023 was approximately $2.5 million, $3.1 million and $3.1 million, respectively. The Company expects future amortization expense to be the following (in thousands):

	Amortization
2026	$	2,021
2027		1,903
2028		1,819
2029		757
Total	$	6,500

F-18

Note 7 – Income Taxes

The Company has no material income tax paid or accrued for year ended December 31, 2025 and December 31, 2024.

The Company’s effective tax rate differs from the federal statutory tax rate mainly due to non deductible officer compensation, stock based compensation and non taxable mark to market warrant adjustment and valuation allowance against the net deferred tax assets. As of December 31, 2025, the company has adopted ASU 2023-09 prospectively. A reconciliation of the U.S. statutory tax rate to our effective tax rate as of December 31, 2025 according to the new standard is presented below:

	December 31, 2025
Tax at Statutory Rate	$	(3,731,486	)	21	%
State income taxes, net of federal benefit		—		0	%
Tax Credits:
R&D credits		(470,761	)	3	%
Non taxable or non deductible items:
Section 162(m) officer compensation limitation		6,461,438		-36	%
Stock based compensation windfall		(9,088,130	)	51	%
Warrant mark-to-market adjustments		(2,467,450	)	14	%
Other permanent differences		47,686		0	%
Change in valuation allowance		3,670,897		-21	%
Other:
True up of prior year deferred tax items		3,528		0	%
True up of stock based compensation		5,574,279		-31	%
Tax Expense	$	0		0	%

The reconciliation of the U.S. statutory tax rate to our effective tax rate as of December 31, 2024 and December 31, 2023 according to the standard before ASU 2023-09 is presented below:

	2024			2023
Federal statutory income tax rate		21.0	%		21.0	%
State income taxes, net of federal benefit		(3.1	)%		0.0	%
Warrant mark-to-market adjustments		(12.4	)%		2.0	%
Change in business credits		0.5	%		0.0	%
Other permanent differences		(0.1	)%		(0.3	)%
True-ups		0.0	%		0.0	%
Change in deferred tax asset valuation allowance		(6.0	)%		(22.3	)%
Effective income tax rate		0.0	%		0.4	%

The Company has deferred tax assets and liabilities as follows:

	Year Ended December, 31
	2025			2024
Deferred Tax Assets
Accrued Expenses		1,617			95
Lease Liability		658			356
Allowance for Bad Debts		142			123
Other		19			17
NOLs		27,083			18,833
Research and Development Credits		1,086			615
Capitalized Research and Development Expenses		6,244			2,559
Stock Based Compensation		3,708			10,538
Gross Deferred Tax Assets		40,557			33,136

Deferred Tax Liabilities
Unrealized Gain and loss		(244	)		-
Intangibles		(1,856	)		(1,885	)
ROU		(601	)		(334	)
Total Deferred Tax Liabilities		(2,700	)		(2,220	)

Net Deferred Tax Assets and Liabilities		37,857			30,916
Valuation Allowance		(37,857	)		(30,916	)
Net Deferred Tax Assets & Liabilities		-			-

F-19

As of December 31, 2025, the Company had federal and state net operating loss carryforwards of approximately $118.9 million and $39.2 million, respectively. All of the federal NOL carryforwards were generated during 2018 or later and will carryforward indefinitely but will be subject to 80% taxable income limitation beginning tax years after December 31, 2021, as provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (PL 116-136). State net operating loss will begin to expire in 2043 for state tax purposes. The Company had federal research and development tax credits of approximately $1.6 million, which begins to expire in 2043. The Company had no state tax credits. Furthermore, the utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code, a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company’s ability to use its NOLs or tax credit carryforwards may be restricted.

As of December 31, 2025, the significant components of the Company’s net deferred tax assets included stock-based compensation of $3.7 million, capitalized research and development expenditures of approximately $6.2 million, and accrued expenses of $1.6 million. The most significant component of deferred tax liability which was used to offset gross deferred tax asset includes deferred tax liability of $1.9 million related to intangibles. The Company believes that it is more likely than not that the benefit from the net deferred tax assets will not be realized. Accordingly, it has provided a full valuation allowance on any potential deferred tax assets. The Company has valuation allowance against the net deferred tax assets of $37.9 million. The valuation allowance increased by approximately $6.9 million for the period ending December 31, 2025. The provision for income taxes is not material in the years presented due to there being no taxable income.

As of December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $89.3 million and $7 million, respectively. The Company has federal R&D credit carryforwards of approximately $878 thousand. The Company has no state R&D credit carryforwards. The significant components of the Company’s net deferred tax assets included stock-based compensation of $14 million, and capitalized research and development expenditure of approximately $3 million. The Company believes that it was more likely than not that the benefit from the net deferred tax assets will not be realized. Accordingly, the Company assessed a valuation allowance of $31 million in the period ended December 31, 2024.

Uncertain Tax Positions

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, with varying statutes of limitations. All tax years remain open to examination due to the carryover of unused net operating losses that are being carried forward for tax purposes.

The Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2025, the Company had no interest related to unrecognized tax benefits, and no amounts for penalties related to unrecognized tax benefits were recognized in the provision for income taxes. We do not anticipate any significant change of the Company’s unrecognized tax benefits within twelve months of this reporting date.

The Company has unrecognized tax benefits related to research and development credit carryforwards. A full valuation allowance has been provided against the Company’s research and development credits. Therefore, any adjustments to these unrecognized tax benefits would be offset by corresponding adjustments to the valuation allowance, resulting in no impact on the consolidated balance sheet or statement of operations.

	December 31, 2024
	Year end December 31
Beginning balance as of December 31, 2023	$	-
	2025		2024
Changes related to tax positions taken in the prior year		96,767
Beginning balance	$	263,541	$
Changes related to tax positions taken in the current year		167,774
Changes related to tax positions taken in the prior year				95,767
Ending balance as of December 31, 2024	$	263,541
Changes related to tax positions taken in the current year		201,755		167,774
Ending balance	$	465,296	$	263,541

~~Note 6 – Property and Equipment, net~~F-20

Note 8 – Property and Equipment, net

The Company’s property and equipment, net are primarily located at the Company’s leased facilities in Hoboken, NJ and Tempe, AZ and consist of (in thousands):

	December 31,
Classification	~~2024~~2025			~~2023~~2024
Computer and laboratory equipment	$	813,~~438~~070		$	28,~~999~~438
Network equipment		2935			29
Furniture and fixtures		3799			3237
Software		77374			4977
Leasehold improvements		~~597~~2,303			33597
Total cost of property and equipment		915,~~178~~881			39,~~142~~178
Accumulated depreciation		~~966~~(2,910	)		~~272~~(966	)
Property and equipment, net	$	812,~~212~~971		$	28,~~870~~212

The ~~approximate~~Company recorded depreciation expense of $61.09 million, ~~increase~~$694 inthousand ~~property~~ and ~~equipment~~$203 isthousand ~~primarily~~during ~~driven~~the byyears ~~purchases~~ended ofDecember ~~laboratory~~31, ~~equipment~~2025, as2024 ~~well~~and as2023, ~~leasehold improvements~~respectively, inusing ~~establishing~~useful lives of the AZCompany’s ~~Chips Facility.~~long-lived assets as follows:

The Company began depreciating select property and equipment at the AZ Chips Facility as they were put in service during the year ended December 31, 2024, and recorded total depreciation expense of $694 thousand and $203 thousand during the years ended December 31, 2024 and 2023, respectively, using useful lives of the Company’s long-lived assets as follows:

		Estimated Useful Life (Years)
Computer and laboratory equipment		5
Network equipment		4
Furniture and fixtures		7
Software		3
Leasehold improvements		Lessor of lease term or 5

~~$5.4~~Maintenance ~~million~~and ofrepairs are charged to operations when incurred. When property and equipment ~~have~~are ~~yet~~sold or otherwise disposed, the asset account and related accumulated depreciation and toamortization beaccounts ~~placed~~are relieved, and any gain or loss is included in ~~service~~other ~~and~~income ~~have~~or ~~not~~expense. ~~started~~There ~~depreciating~~were no significant gains or losses during the years ended December 31, 2025, 2024 and 2023, respectively.

Maintenance and repairs are charged to operations when incurred. When property and equipment are sold or otherwise disposed, the asset account and related accumulated depreciation and amortization accounts are relieved, and any gain or loss is included in other income or expense. There were no significant gains or losses in the year ended December 31, 2024 and 2023, respectively.F-21

~~F-16~~Note 9 – Financial Liabilities

Note 7 – Financial Liabilities

The Company has the following amounts related to financial liabilities (in thousands):

	December 31,
	2024		2023
Remaining loan balances	$	-	$	2,063
Remaining unamortized debt issuance costs		-		(138	)
Financial liabilities, net	$	-	$	1,925

Additionally, the Company has no and $14 thousand of accrued interest as of December 31, 2024 and 2023, respectively, which is included in Other Current Liabilities.

Secured Promissory Note

On August 6, 2024, the Company entered into a Securities Purchase Agreement (the “Secured SPA”) with Streeterville Capital, LLC (“Streeterville”), pursuant to which the Company issued and sold to Streeterville a Secured Convertible Promissory Note (the “Streeterville Convertible Note”) in the original principal amount of $8.25 million. The principal amount includes an original issue discount of $750 thousand. Streeterville paid $7.5 million in cash for the Streeterville Convertible Note. The Streeterville Convertible Note accrues interest at a rate of 10% per annum and has a maturity date of February 6, 2026, unless earlier prepaid, redeemed or accelerated in accordance with its terms prior to such date. The Company intends to use the net proceeds from the sale of the Streeterville Convertible Note primarily for general working capital purposes, including for (i) operations as the Company increases its sales and marketing efforts; (ii) capital expenditures in outfitting its chip fabrication facility in Tempe, AZ; and (iii) for any other planned or unplanned expenditures that might arise in support of the Company’s business plan. Ascendiant Capital Markets, LLC served as the placement agent on the transaction and received a fee of $450 thousand, and the Company recognized $55 thousand in other issuance costs, primarily for legal services. The Company repaid the Streeterville Convertible Note on November 18, 2024. As of December 31, ~~2024~~2025, there was no outstanding balance and the Company has no further obligations with respect to the Secured SPA or Streeterville Convertible Note.

Unsecured Promissory Note

On September 23, 2022, the Company entered into a note purchase agreement (the “Unsecured NPA”) with Streeterville Capital, LLC (“Streeterville”), pursuant to which Streeterville purchased an unsecured promissory note (the “Note” or the “Streeterville Unsecured Note”) in the initial principal amount of $8.25 million. The Streeterville Unsecured Note bore interest at 10% per annum. The maturity date of the Note was defined as 18 months from the date of its issuance (the “Maturity Date”). The Streeterville Unsecured Note carried an original issue discount of $750 thousand, which was included in the principal balance of the Note. If the Company had elected to prepay the Streeterville Unsecured Note prior to the Maturity Date, it would have paid to Streeterville 120% of the portion of the Outstanding Balance the Company would have elected to prepay. ~~As of December 31, 2024, Streeterville has redeemed the full principal amount of the Unsecured NPA.~~ There was an outstanding balance of $1.9 million as of December 31, 2023. As of December 31, 2024, Streeterville had redeemed the full principal amount of the Unsecured NPA, there was no outstanding balance and the Company has no further obligations with respect to the Unsecured NPA or Streeterville Unsecured Note.

Note Purchase Agreement – the Company and Wholly-Owned Subsidiary QPhoton

On February 18, 2022, the Company entered into a Note Purchase Agreement (the “QCi Note Purchase Agreement”) with QPhoton, pursuant to which the Company agreed to loan money to QPhoton using two unsecured promissory notes (each, a “QCi Note”), each in the principal amount of $1.25 million, subject to the terms and conditions of the QCi Note Purchase Agreement. Also, on February 18, 2022, pursuant to the terms of the QCi Note Purchase Agreement, the Company loaned the principal amount of $1.25 million to QPhoton. On April 1, 2022, pursuant to the terms of the QCi Note Purchase Agreement, the Company loaned the principal amount of $1.25 million to QPhoton, for a total loan under the two QCi Notes of $2.5 million.

The QCi Note Purchase Agreement contains customary ~~representations~~ representations and warranties by QPhoton and the Company, as well as a “most favored nations” provision for the benefit of the Company. The QCi Notes issued under the QCi Note Purchase Agreement, including the QCi Notes issued on February 18, 2022 and April 1, 2022, provide that the indebtedness evidenced by the applicable QCi Note bears simple interest at the rate of 6% per annum (or 15% per annum during the occurrence of an event of default, as defined in the QCi Notes), and becomes due and payable in full on the earlier of (i) March 1, 2023, subject to extension by one year at the option of QPhoton, (ii) a change of control (as defined in the QCi Notes) of QPhoton or (iii) an event of default. As a result of the merger, the QCi Note and accrued interest is eliminated through consolidation. However, the two QCi Notes were not forgiven or converted to equity, remain outstanding under the terms and conditions of the QCi Note ~~Purchase~~ Purchase Agreement, and are eliminated in consolidation for presentation purposes in these consolidated financial statements.

F-1722

Note 810 – Contingencies

Indemnification Arrangements

We enter into standard indemnification arrangements in our ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless, and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified parties (generally our business partners or customers) in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to our products. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these agreements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal.

We have entered into indemnification agreements with our directors and officers that may require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature. These agreements also require us to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified and to make good faith determination whether or not it is practicable for us to obtain directors and officers insurance. We currently have directors and officers liability insurance.

Legal Proceedings

From time to time, we may be involved in legal proceedings arising in the ordinary course of business. In general, management believes that ordinary course of business matters will not have a material adverse effect on our ~~consolidated~~ financial position or ~~consolidated~~ results of operations and are adequately covered by our liability insurance. However, it is possible that consolidated cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one of more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.

See Part I, Item 3, Legal Proceedings, in this Form 10-K for additional details on the status of motions on the following proceedings.

BV Advisory v. QCi Breach Lawsuit

At the time of the QPhoton Merger in June 2022, QPhoton had an outstanding balance of principal and interest due to BV Advisory Partners LLC (“BV Advisory”) based on a note purchase agreement that QPhoton had entered into with BV Advisory on March 1, 2021 (the “BV Note Purchase Agreement”). Accordingly, the Company ~~has~~had recorded an estimated ~~payable~~ ~~(the “BV Advisory Payable”)~~payable, recognized as other current liabilities on the condensed consolidated financial statements, ~~based~~ based on best available information in the amount of $536 thousand as of December 31, 2024. ~~and~~During ~~2023~~the quarter ended September 30, 2025, this amount was repaid in full.

On August 16, 2022, BV Advisory filed a complaint ~~Delaware~~ ~~Chancery~~in the Court of Chancery of the State of Delaware naming QPhoton, the Company and certain of ~~its~~the Company’s directors and officers (among others) as defendants seeking, among other relief, monetary damages for an alleged breach of the BV Note Purchase Agreement. During the year ended December 31, 2024, BV Advisory’s other claims were dismissed by the Delaware Chancery Court and BV Advisory transferred its claim for breach of the BV Note Purchase Agreement to the Delaware Superior Court. ~~The~~On ~~Company~~July ~~believes~~17, ~~that~~2025, BVthe ~~Advisory’s~~Company, ~~claims~~Keith ~~have~~Barksdale no(“Barksdale” the ~~merit~~managing ~~and~~member ~~intends~~of toBV ~~defend~~Advisory), ~~itself~~and ~~vigorously.~~ BV Advisory’s ~~claims~~entered ~~are~~into ~~not~~a ~~covered~~settlement byagreement (the ~~Company’s~~“Settlement ~~liability~~Agreement”) ~~insurance~~pursuant to which BV Advisory, ~~nor~~dismissed ~~does~~its ~~the~~claims ~~Company~~under ~~believe~~the itBV isNote ~~necessary~~Purchase ~~to accrue~~Agreement anwith ~~amount~~prejudice. inThe ~~addition~~terms toof the BVsettlement ~~Advisory~~agreement are ~~Payable~~summarized atin ~~this~~Part ~~time~~I, Item 3, Legal Proceedings.

F-23

BV Advisory v. QCi Appraisal Action

BV Advisory ~~was~~Partners, ~~purportedly~~LLC (“BV Advisory”) was a shareholder of QPhoton, Inc., the predecessor in interest to ~~QPhoton,~~the ~~LLC,~~Company’s ~~a wholly owned~~ subsidiary, ofQPhoton, ~~the~~LLC ~~Company~~ (both referred to as “QPhoton” in this Legal Proceedings discussion). On BVOctober ~~Advisory~~13, ~~rejected~~2022, ~~the~~BV ~~Merger~~Advisory ~~Consideration~~filed ~~(as~~a ~~defined~~petition ~~below)~~in ~~and~~the onCourt ~~October~~of ~~13,~~Chancery ~~2022~~of ~~filed a~~the ~~petition~~State inof Delaware (the “Delaware Chancery Court ”) seeking appraisal ofrights on the shares of common stock of QPhoton it ~~allegedly~~ owned (which shares represented 10% of the shares of common stock of QPhoton outstanding immediately prior to the Company’s acquisition of QPhoton). ~~The~~pursuant ~~Appraisal~~to ~~Petition~~Section is262 ~~currently pending~~of inthe Delaware ~~Chancery~~General Corporation ~~Court~~Law. ~~The~~Pursuant to the Settlement Agreement, the Company ~~included~~agreed BVto ~~Advisory~~issue to Barksdale or his designees 1.9 million shares of the Company’s ~~purported~~common ~~ownership~~stock ofand ~~QPhoton~~BV inAdvisory dismissed its claims under the ~~purchase~~appraisal ~~price~~action ~~accounting for~~with prejudice. The terms of the ~~QPhoton~~settlement agreement ~~Merger~~are summarized in Part I, Item 3, Legal Proceedings.

F-18

The Company’s total purchase price of QPhoton was approximately $71.0 million, or $69.9 million net of cash acquired, consisting of Company common stock, Series B Preferred Stock and QPhoton Warrants (as defined below). While the total shares of the Company’s common stock on an as-converted basis offered in the QPhoton Merger was 36,600,823 (the “Merger Consideration”), the fair market valuation contemplated 31,299,417 of the shares, which assumed full conversion of the 2,377,028 shares of Series B Preferred Stock to common stock at the 10:1 ratio, and that only 1,726,931 of the warrants to purchase up to 7,028,337 shares of the Company’s common stock (the “QPhoton Warrants”) would eventually be exercised (specifically only the QPhoton Warrants for which the associated Company options and/or warrants had an exercise price at or below $2.27 at the time of the QPhoton Merger).

Accordingly, as of December 31, 2024 and 2023, the Company has neither issued 2,957,251 shares of the Company’s common stock on an as converted basis (the “Unissued QPhoton Shares”) nor 702,834 warrants to purchase shares of the Company’s common stock (the “Unissued QPhoton Warrants”) that were included in the Merger Consideration. The Unissued QPhoton Shares are included in the statement of stockholder’s equity as additional paid in capital as of as of December 31, 2024 and 2023, and the Unissued QPhoton Warrants have a carrying value of $40.5 million as a liability on the Company’s consolidated balance sheet as of December 31, 2024, and no carrying value as a liability on the Company’s consolidated balance sheet as of December 31, 2023.

QCi v. BV Advisory Injunction Lawsuit

On January 31, 2025, the Company filed a complaint in Delaware Chancery Court against BV Defendants (BV Advisory and its principal Keith Barksdale) 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. The Company ~~seeks~~sought, among other relief, injunctive relief and damages. On February 11, 2025, the Court granted the Company’s motion for temporary restraining order and instructed the parties to negotiate an expedited case schedule. On ~~February~~July 1317, 2025, the ~~Court~~Company, ~~entered~~Barksdale aand ~~stipulated~~BV ~~case~~Advisory ~~schedule~~entered ~~that set~~into athe ~~trial~~Settlement ~~for~~Agreement pursuant ~~April~~to 8which ~~and 9, 2025 on~~ the Company’s dismissed its claims ~~for~~against ~~conversion,~~BV ~~aiding~~Advisory ~~and~~with ~~abetting~~prejudice. ~~conversion,~~The ~~and~~terms ~~misappropriation~~ of ~~trade~~the ~~secrets.~~settlement ~~The~~agreement ~~parties~~ are ~~currently engaged~~ summarized in ~~discovery.~~Part ~~The~~I, ~~Company~~Item ~~does~~3, ~~not~~Legal ~~believe it is necessary to accrue a litigation reserve at this time~~Proceedings.

Securities Class Action Lawsuit

On February 25, 2025, a class action lawsuit was filed against the Company and certain of its current and past officers in the New Jersey District Court, by a plaintiff seeking to represent a class of all persons who purchased the Company’s securities between March 30, 2020 and January 15, 2025, alleging violations of Section 10(b) and 20(a) of the ~~Securities~~ Exchange Act ~~of 1934~~. The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material information about the Company’s customers, contracts and business operations in its public statements and SEC filings. ToThe ~~date~~plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. In June 2025, the New Jersey District Court ~~has~~designated ~~not~~a ~~certified~~lead aplaintiff ~~class~~who filed an amended operative complaint on or ~~designated~~about August 26, 2025. The Company filed a motion to dismiss the amended operative complaint on November 14, 2025. While the Company’s motion to dismiss was pending, the lead plaintiff filed a motion for leave to file a second amended complaint. The second amended complaint was subsequently filed on February 13, 2026. The Company intends to bring a motion to dismiss the second amended complaint. The motion is presently due on or before March 13, 2025. The Company disputes the allegations in the amended complaint, intends to vigorously defend against the claims asserted, and does not believe it is necessary to accrue a litigation reserve at this time.

Shareholder Derivative Action Lawsuits

F-24

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. The Company disputes the allegations in the amended complaint, intends to vigorously defend against the claims asserted, and does not believe it is necessary to accrue a litigation reserve at this time.

Arbitration over Stock Options

In February 2025, the Company entered into arbitrations with ~~Former Consultants (~~two ~~individuals)~~former consultants regarding forfeiture of stock options. The Company had issued stock options to the former consultants in 2020 and 2021 and terminated ~~the~~their ~~Former~~consulting ~~Consultants’~~ agreements in March 2024, at which time the Company informed the ~~Former Consultants~~former consultants that any vested options had to be exercised within three months of the termination date, per the Company’s ~~Equity~~equity ~~and Incentive~~compensation ~~Plans~~plans. The former ~~Former~~consultants ~~Consultants~~ did not exercise their vested options, and the options were ~~duly~~ forfeited. In December 2024, the ~~Former~~former ~~Consultants~~consultants ~~claim~~ claimed that they still ~~retain~~retained the right to exercise the options, which the Company ~~has~~ rejected. ~~The Company believes these claims are without merit, intends to defend itself vigorously, and does not believe it is necessary to accrue a litigation reserve at this time.~~

~~F-19~~On February 23, 2026, with respect to the claims 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. The amount of award is confidential, however, the Company has accrued for the judgment as of December 31, 2025 and the award is 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.

~~Note 9 – Loan Receivable~~F-25

Note 11 – Loan Receivable

On May 16, 2023, the Company entered into a Summary of Proposed Terms (the “Letter of Intent”) with millionways, Inc (“millionways”) to provide bridge loans to millionways and enter into due diligence to acquire up to 100% of the AI firm. On June 6, 2023, the Company entered into a note purchase agreement (the “MW Agreement”) with millionways, pursuant to which the Company agreed to purchase from millionways up to three unsecured promissory notes (each, a “MW Note”), in an aggregate principal amount of up to $2.0 million, subject to the terms and conditions of the MW Agreement. Also on June 6, 2023, pursuant to the terms of the MW Agreement, the Company purchased the MW Notes from millionways and loaned an aggregate principal amount of $500 thousand to millionways.

The MW Agreement contains customary representations and warranties by millionways and the Company, as well as a “most favored nations” provision for the benefit of the Company. The MW Notes issued under the MW Agreement, including the MW Notes issued on June 6, 2023, provide that the indebtedness evidenced by the applicable MW Note bears simple interest at the rate of 10% per annum (or 15% per annum during the occurrence of an event of default, as defined in the MW Notes), and becomes due and payable in full on the earlier of (i) May 16, 2024, (ii) a change of control (as defined in the MW Notes) of millionways, (iii) dollar-for-dollar prepayment for additional capital received through any vehicle from a third party or (iv) an event of default.

The Company reserved $558 thousand of the outstanding $558 thousand receivable as uncollectible based on credit risk in the consolidated financial statements as of December 31, ~~2024,~~2025 ~~however, as~~and of2024. ~~March 18~~However, ~~2025,~~the Company is actively seeking collection of ~~$658~~the ~~thousand~~entire balance, including principal and interest.

Note 1012 – Capital Stock

Authorized Classes of Stock

As of December, ~~2024~~2025, the Company’s Board of Directors has authorized two classes of preferred stock. The Board has authorized 1,550,000 shares of preferred stock as Series A preferred stock, par value $0.0001 per share, none of which are issued and outstanding at December 31, ~~2024,~~2025 and ~~1,490,004 of which were issued and outstanding as of December 31, 2023~~2024. The Board has also authorized 3,079,864 shares of preferred stock as Series B preferred stock, par value $0.0001 per share, none of which are issued and outstanding at December 31, ~~2024~~2025 and ~~2023~~2024.

Series A Convertible Preferred Offering

From November 10, 2021 through November 17, 2021, the Company conducted a private placement offering (the “Private Placement”) pursuant to securities purchase agreements ~~with~~(the “Preferred Stock SPAs”) with 7 accredited investors (the “Series A Investors”), whereby the Series A Investors purchased from the Company an aggregate of 1,545,459 shares of the Company’s newly created Series A convertible preferred stock, par value $0.0001 per share (the “Series A Preferred Stock”) and warrants to purchase 1,545,459 shares of the Company’s common stock (the “Preferred Warrants”) for an aggregate purchase price of $8.5 million. The Private Placement was completed and closed to further investment on November 17, 2021.

The ~~Series A~~ Preferred ~~Stock~~Warrants ~~ranks~~were ~~senior~~two-year ~~to common~~warrants ~~stock with respect~~ to ~~the~~purchase ~~payment~~shares of dividends and liquidation rights. Each holder of Series A Preferred Stock is entitled to receive, with respect to each share of Series A Preferred Stock then outstanding and held by such holder, dividends at the ~~rate of 10% per annum (the “Preferred Dividends.”) The~~ Company’s ~~is obligated to pay the Preferred Dividends quarterly, in arrears, within 15 days of the end of each quarter. The Company has the option to pay the Preferred Dividends in cash or in~~ common stock, at aan ~~price~~exercise ~~per share of common stock equal to the average of the closing sale~~ price of ~~the common stock for the 5 trading days preceding the applicable dividend payment date~~$7.00 ~~The~~per ~~Preferred Dividends are accrued monthly~~share, ~~but~~subject ~~not~~to ~~compounded~~adjustment, and ~~are recorded~~ as ~~interest~~of ~~expense~~December 31, ~~because~~2023, ~~the~~all ~~Preferred Dividends~~of ~~are mandatory and not declared at~~ the ~~discretion~~Preferred ofWarrants ~~the~~had ~~Board~~expired ~~of Directors~~unexercised.

~~The~~In ~~number~~connection ofwith ~~shares of~~ the ~~Company’s common stock issuable upon conversion of any share of Series A~~ Preferred Stock ~~shall~~SPAs, ~~be determined by dividing (x)~~ the ~~Conversion Amount of such~~ ~~share~~Company ofand the Series A ~~Preferred~~Investors ~~Stock~~entered byinto ~~(y)~~a ~~the~~registration ~~Conversion~~rights ~~Price.~~agreement ~~“Conversion~~pursuant ~~Amount”~~to ~~means,~~which ~~with~~on ~~respect~~April to27, ~~each~~2022 ~~share~~the ofCompany ~~Series~~filed Aa ~~Preferred~~Registration ~~Stock,~~Statement ason ofForm ~~the~~S-3 ~~applicable~~to ~~date~~register ~~of determination,~~ the ~~sum~~resale of ~~(1)~~ the ~~stated~~shares ~~value~~of ~~thereof~~common ~~plus (2) any accrued dividends~~stock. ~~“Conversion~~ ~~Price”~~The ~~means,~~SEC ~~with~~declared ~~respect~~the toForm ~~each~~S-3 ~~share~~effective ~~of Series A Preferred Stock, as of any optional conversion date, Mandatory~~on ~~Conversion~~June ~~Date or other date of determination~~2, $52022.~~50, subject to adjustment for stock splits, dividends, recapitalizations and similar corporate events.~~

FOn March 19, 2024, the Company entered into a Redemption and Waiver Agreement (the “Series A Redemption Agreement”) with the current holders (the “Series A Holders”) of the Series A Preferred Stock. Accordingly, $8.195 million of additional paid in capital was reclassified from shareholders’ equity to mezzanine equity (the “Mezzanine Equity”) on the Company’s condensed consolidated balance sheet as of March 31, 2024, in accordance with Accounting Series Release No. 268, Presentation in Financial Statements of “Redeemable Preferred Stocks”. The Mezzanine Equity is valued at the date of the Private Placement issuance. Pursuant to the Series A Redemption Agreement, the Company agreed to redeem all outstanding shares of Series A Preferred Stock for an aggregate cash purchase price of $8,195,000, or $5.50 per share, at its sole discretion, in 18 monthly payments. In addition, the Series A Holders agreed to waive, on a month-20by-month basis following each monthly payment, certain rights granted to them in (i) the Certificate of Designations of the Series A Preferred Stock, including for the accrual and payment of accrued and future dividends; and (ii) the Preferred Stock SPA. As of December 31, 2024 and December 31, 2025, there were no shares of Series A Preferred Stock outstanding. During the year ended December 31, 2024, the Company redeemed 745,047 shares of Series A Preferred Stock for approximately $4.1 million in cash paid to the Series A Holders.

~~The~~During ~~Preferred~~November ~~Warrants~~2024 ~~were~~and ~~two-year~~December ~~warrants to~~2024, ~~purchase shares of~~ the ~~Company’s~~Series A ~~common~~Holders ~~stock~~converted at744,957 anshares ~~exercise price~~ of ~~$7.00~~Series ~~per~~A ~~share,~~Preferred ~~subject~~Stock tointo ~~adjustment~~744,957 ~~were~~shares ~~exercisable at~~of ~~any time on or after~~ the ~~date~~Company’s ~~that~~common ~~was~~stock. ~~six~~As ~~months~~of ~~following the issuance date~~December, 2024, ~~and~~there ~~provided~~were ~~for~~no ~~cashless exercise in the event the underlying~~ shares of ~~the~~Series ~~Company’s~~A ~~common~~Preferred ~~stock~~Stock ~~are~~issued ~~not~~and ~~registered.~~outstanding Asand ofthe ~~December~~Mezzanine ~~31,~~Equity ~~2023,~~valuation ~~all~~was ofreduced ~~the~~to ~~Preferred Warrants had expired unexercised~~zero.

In connection with the Purchase Agreement, the Company and the Series A Investors entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to file a registration statement to register the shares of the Company’s common stock underlying the Series A Preferred Stock and warrants within 180 days. Pursuant to the Registration Rights Agreement, the Series A Investors received certain rights, including but not limited to piggyback registration rights, providing that the holder be given notice of any proposed registration of securities by the Company, and requiring that the Company register all or any portion of the registrable securities that the holders request to be registered, in each case, subject to the terms and conditions of the Registration Rights Agreement. On April 27, 2022 the Company filed a Registration Statement on Form SF-~~3 to register the resale of the shares of common stock as required by the Registration Rights Agreement. The Form S-3 went effective on June 2, 2022.~~26

On June 13, 2022, one of the Series A Investors, Falcon Capital Partners, converted 45,455 shares of Series A Preferred Stock into 47,728 shares of the Company’s common stock.

On February 9, 2023, one of the Series A Investors, Greenfield Children, LLC, converted 10,000 shares of Series A Preferred Stock plus accrued dividends into 11,096 shares of the Company’s common stock.

On March 19, 2024, the Company entered into a Redemption and Waiver Agreement (the “Series A Redemption Agreement”) with the current holders (the “Series A Holders”) of its Series A Preferred Stock. Accordingly, $8.125 million of additional paid in capital was reclassified from shareholders’ equity to mezzanine equity (the “Mezzanine Equity”) on the Company’s consolidated balance sheet in accordance with Accounting Series Release No. 268, Presentation in Financial Statements of “Redeemable Preferred Stocks”. The Mezzanine Equity was valued at the date of the Private Placement issuance. Pursuant to the Series A Redemption Agreement, the Company agreed to redeem all outstanding shares of the Series A Preferred Stock for an aggregate cash purchase price of $8,195,000, or $5.50 per share, at its sole discretion, in 18 monthly payments (each a “Monthly Redemption Threshold” payment), which may be accelerated at the Company’s sole discretion and which does not prevent the Series A Holders from converting outstanding shares of Series A Preferred Stock at a conversion price of $5.50 per share. In addition, the Series A Holders agreed to waive (the “Waivers”), on a month-by-month basis following each monthly payment, certain rights granted to them in (i) the Preferred Stock Certificate of Designation (the “Preferred Stock COD”), including for the accrual and payment of accrued and future dividends; and (ii) the Preferred Stock Securities Purchase Agreement (the “Preferred Stock SPA”). In the event the Company opts to not make a Monthly Redemption Threshold payment, the Waivers are forfeited and the terms revert to those detailed in the Preferred Stock COD and Preferred Stock SPA. During the year ended December 31, 2024, the Company redeemed 745,047 shares of Series A Preferred Stock for approximately $4.1 million in cash paid to the Series A Holders.

During November 2024 and December 2024, the Series A Holders converted 744,957 shares of Series A Preferred Stock into 744,957 shares of the Company’s common stock. As of December 31, 2024, there were no shares of Series A Preferred Stock issued and outstanding and the Mezzanine Equity valuation was reduced to zero.

At-the-Market Facility

~~During~~On October 28, 2022, the ~~years~~Company ~~ended~~filed ~~December~~a 31shelf registration statement on Form S-3 under the Securities Act of 1933, ~~2024~~as ~~and~~amended, ~~2023~~which the SEC declared effective on November 8, 2022 (the “2022 shelf”). Under the 2022 Shelf at the time of effectiveness, the Company ~~sold~~had 23the ability to raise up to $100 million by selling common stock,~~679~~ preferred stock,~~391~~ ~~and~~debt 17securities,~~571,926~~ ~~shares~~warrants ofand ~~common~~units. ~~stock~~On December 5, ~~respectively~~2022, ~~through~~the ~~its~~Company entered into an At-~~The~~the-Market Issuance Sales Agreement (the “ATM Agreement”) ~~facility,~~with ~~managed by~~ Ascendiant Capital Markets, LLC (“Ascendiant”) whereby the Company may, atbut anis ~~average~~not ~~price~~obligated to, offer and sell, from time to time, shares of $1its common stock (the “ATM Facility”), and incorporated the ATM Agreement into the 2022 Shelf by amendment that the SEC declared effective January 10, 2023.~~21.~~ ~~The~~On August 17, 2023, the Company ~~received~~and ~~net~~Ascendiant ~~aggregate~~entered ~~proceeds~~into ofan ~~$48.5~~amendment ~~million~~to the ATM Agreement, increasing the amount of ~~which~~common stock that the Company could offer and sell via the ATM Facility from $~~23.8~~25 million ~~and~~to $~~24.7~~50 million (the “ATM Upsize”). Following the ATM Upsize, ~~respectively~~the Company filed a prospectus supplement, ~~was~~dated ~~received~~August ~~during~~18, 2023, with the ~~years~~SEC ~~ended~~and ~~December~~became ~~31,~~able ~~2024~~to offer and ~~2023~~sell shares of the Company’s common stock having an aggregate offering price of up to $27,362,717 via the ATM Facility.

FThe Company did not sell any shares through the ATM Facility during the year ended December 31, 2025. During the years ended December 31, 2024 and 2023, the Company sold 23,679,391 and 17,571,926 shares of common stock, respectively, through its At-The-Market (ATM) facility, managed by Ascendiant Capital Markets, LLC, at an average price of $1.21. The Company received net proceeds of $48.5 million, of which $23.8 million and $24.7 was received during the years ended December 31, 2024 and 2023, respectively.

Private Placement Offering

On January 7, 2025, the Company entered into securities purchase agreements (the “January SPAs”) for a private placement offering (the “January Private Placement”) to sell an aggregate of 8,163,266 shares (the “January Placement Shares”) of the Company’s common stock at a purchase price of $12.25 per share. The January Private Placement closed on January 9, 2025, and resulted in gross proceeds of $100 million before deducting placement agent commissions and other offering expenses of $6.4 million. Furthermore, the Company filed a registration statement registering the resale of the January Placement Shares on January 2, 2025, which the SEC declared effective February 3, 2025.

In conjunction with the January SPAs, the Company also entered into a placement agency agreement with Titan Partners Group LLC, a division of American Capital Partners, LLC (“Titan”), dated January 7, 2025, pursuant to which Titan acted as the exclusive placement agent for the Company in connection with the January SPAs. The Company agreed to pay Titan a cash fee of 6% of the gross proceeds from the January SPAs and to issue to the December Placement Agent (or its designees) 326,531 five-year warrants (representing 4% of the securities sold in the Offerings), which will be exercisable beginning on July 6, 2025, and have an initial exercise price per share of the Company’s common stock of $14.0875.

On June 22, 2025, the “Company entered into securities purchase agreements (the “Purchase Agreements”) pursuant to which the Company agreed to issue to the Purchasers (as defined therein), in a private placement (the “Placement”), an aggregate of 14,035,089 shares (the “Placement Shares”) of the Company’s common stock at a purchase price of $14.25 per share. The closing of the Placement occurred on June 24, 2025. The Placement resulted in gross proceeds of approximately $200 million before deducting placement agent commissions and other offering expenses of $12 million.

The Company was required to file a registration statement providing for the resale of the Placement Shares by July 9, 2025, and it filed the registration statement on Form S-1 on July 3, 2025, which the SEC declared effective on July 14, 2025.

Pursuant to the Purchase Agreements and the Placement Agency Agreement (as defined below), the Company agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of its common stock or common stock equivalents, or file any registration statement or any amendment or supplement thereto, through September 7, 2025, subject to certain customary exceptions, without the consent of the Placement Agent.

F-27

Placement Agency Agreement

The Company also entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Titan, dated June 22, 2025, pursuant to which Titan acted as the exclusive placement agent for the Company in connection with the Placement. The Company agreed to pay Titan a cash fee based on the total size of the Placement according to a formula set forth in the Placement Agency Agreement. In addition, the Company agreed to reimburse Titan for up to $100,000 of its fees and expenses in connection with the Placement.

The Placement Agency Agreement contains customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties, and termination provisions.

Lock-Up Agreements

Pursuant to Lock-Up Agreements with the Company, the Company’s directors and executive officers agreed for a period of 60 days after the closing date of the Placement, subject to certain exceptions, not to directly or indirectly offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any shares of the Company’s common stock or securities convertible, exchangeable or exercisable into common stock, that they beneficially own, hold, or thereafter acquire, or make any demand for or exercise any right or cause to be filed a registration, including any amendments thereto, with respect to the registration of any common stock or common stock equivalents or publicly disclose the intention to do any of the foregoing.

Private Placement Offering

On September 21, 2025, the Company entered into securities purchase agreements (the “September Purchase Agreements”) pursuant to which the Company agreed to issue to the Purchasers (as defined therein), in a private placement (the “September Placement”), an aggregate of 26,867,276 shares (the “September Placement Shares”) of the Company’s common stock. The closing of the September Placement occurred on September 24, 2025. The September Placement resulted in gross proceeds of approximately $500 million before deducting placement agent commissions and other offering expenses.

The Company was required to file a registration statement providing for the resale of the September Placement Shares by October 9, 2025. The Company filed a registration statement on Form S-3ASR on October 1, 2025.

Pursuant to the September Purchase Agreements and the September Placement Agency Agreement (as defined below), the Company has agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents, or file any registration statement or any amendment or supplement thereto, for a period of 75 days after the closing date of the September Placement, subject to certain customary exceptions, without the consent of the Placement Agent and the Purchasers.

Placement Agency Agreement

The Company also entered into a Placement Agency Agreement (the “September Placement Agency Agreement”) with Titan dated September 21, 2025, pursuant to which Titan acted as the exclusive placement agent for the Company in connection with the September Placement. The Company agreed to pay Titan a 5% cash fee based on the total size of the September Placement, as set forth in the September Placement Agency Agreement. In addition, the Company agreed to reimburse Titan for up to $100,000 of its fees and expenses in connection with the September Placement.

The September Placement Agency Agreement contains customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties, and termination provisions.

F-28

Lock-Up Agreements

Pursuant to Lock-Up Agreements with the Company, the Company’s directors and executive officers agreed for a period of 60 days after the closing date of the September Placement, subject to certain exceptions, not to directly or indirectly offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any shares of the Company’s common stock or securities convertible, exchangeable or exercisable into common stock, that they beneficially own, hold, or thereafter acquire, or make any demand for or exercise any right or cause to be filed a registration, including any amendments thereto, with respect to the registration of any common stock or common stock equivalents or publicly disclose the intention to do any of the foregoing.

Private Placement Offering

On October 5, 2025, the Company entered into securities purchase agreements (the “October Purchase Agreements”) pursuant to which the Company agreed to issue to the Purchasers (as defined therein), in a private placement (the “October Placement”), an aggregate of 37,183,937 shares (the “October Placement Shares”) of the Company’s common stock. The closing of the October Placement occurred on October 8, 2025. The October Placement resulted in gross proceeds of approximately $750 million before deducting placement agent commissions and other offering expenses.

The Company was required to file a registration statement providing for the resale of the October Placement Shares by October 23, 2025. The Company filed such registration statement on Form S-3ASR on October 10, 2025.

Pursuant to the October Purchase Agreements and the October Placement Agency Agreement (as defined below), the Company has agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents, or file any registration statement or any amendment or supplement thereto, for a period of 75 days after the closing date of the October Placement, subject to certain customary exceptions, without the consent of Titan and the Purchasers.

Placement Agency Agreement

The Company also entered into a Placement Agency Agreement (the “October Placement Agency Agreement”) with Titan dated October 5, 2025, pursuant to which Titan acted as the exclusive placement agent for the Company in connection with the October Placement. The Company agreed to pay Titan a 4% cash fee based on the total size of the October Placement, as set forth in the October Placement Agency Agreement. In addition, the Company agreed to reimburse Titan for up to $100,000 of its fees and expenses in connection with the October Placement.

The October Placement Agency Agreement contains customary representations, warranties, and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties, and termination provisions.

Lock-Up Agreements

Pursuant to Lock-Up Agreements with the Company, the Company’s directors and executive officers agreed for a period of 60 days after the closing date of the October Placement, subject to certain exceptions, not to directly or indirectly offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any shares of the Company’s common stock or securities convertible, exchangeable or exercisable into Common Stock, that they beneficially own, hold, or thereafter acquire, or make any demand for or exercise any right or cause to be filed a registration, including any amendments thereto, with respect to the registration of any common stock or common stock equivalents or publicly disclose the intention to do any of the foregoing.

The total amount of net proceeds raised during the year ended December 31, 2025 was $1,475.1 million, which includes $2.4 million resulting from exercise of warrants.

F-29

Registered Direct Offering

On November 14, 2024, the Company entered into securities purchase agreements (the “November RDO SPAs”) for a registered direct offering (the “November RDO”) to sell an aggregate of 16 million shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $2.50 per share (the “November RDO Shares”), resulting in gross proceeds of $40 million, before deducting placement agent commissions and other offering expenses. On November 18, 2024, the Company completed the sale of the November RDO Shares and announced its intention to use the net proceeds from the November RDO for the repayment of debt, working capital, and general corporate purposes. Specifically, the Company used approximately $9.3 million of the gross proceeds to pay in full the Streeterville Convertible Note.

In conjunction with the November RDO SPAs, the Company also entered into a placement agency agreement with Titan Partners Group LLC (“Titan”), a division of American Capital Partners, LLC (the “November Placement Agent”) dated November 14, 2024, pursuant to which the November Placement Agent will act as the exclusive placement agent for the Company in connection with the November RDO. The Company agreed to pay the November Placement Agent a cash fee of 7.25% of the gross proceeds from the November RDO and to issue to the November Placement Agent (or its designees) 800,000 five-year warrants representing 5% of the securities sold in the November RDO, which will be exercisable beginning on May 13, 2025, and have an initial exercise price per share of the Company’s common stock of $2.875. In addition, the Company agreed to reimburse the November Placement Agent for up to $100,000 of its fees and expenses in connection with the November RDO.

Registered Direct and Private Placement Offerings

On December 10, 2024, the Company entered into securities purchase agreements (the “December RDO SPAs”) for a registered direct offering (the “December RDO”), an aggregate of 1,540,000 shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $5.00 per share. Also on December 10, 2024, the Company entered into securities purchase agreements (the “December Placement SPAs” and together with the December RDO SPAs, the “Purchase Agreements”), pursuant to which the Company agreed to issue in a concurrent private placement (the “December Private Placement” and together with the December RDO, the “December SPAs”), an aggregate of 8,460,000 shares (the “December Placement Shares”) of common stock at a purchase price of $5.00 per share. The December SPAs closed on December 12, 2024. The December RDO resulted in gross proceeds of $7.7 million and the December Private Placement ~~resulted~~ resulted in gross proceeds of $42.3 million, in each case before deducting placement agent commissions and other offering expenses. Furthermore, the Company filed a registration statement ~~registering~~providing for the resale of the December Placement Shares on December 20, 2024, which went ~~effective~~ effective January 6, 2025.

In conjunction with the December SPAs, the Company also entered into a placement agency agreement with Titan (the “December Placement Agent”), dated December 10, 2024, pursuant to which the December Placement Agent will act as the exclusive placement agent for the Company in connection with the December SPAs. The Company agreed to pay the December Placement Agent a cash fee of 7% of the gross proceeds from the December SPAs and to issue to the December Placement Agent (or its designees) 500,000 five-year warrants (representing 5% of the securities sold in the Offerings), which will be exercisable beginning on June 8, 2025, and have an initial exercise price per share of the Company’s common stock of $5.75. In addition, the Company agreed to reimburse the December Placement Agent for up to $100,000 of its fees and expenses in connection with the December SPAs.

The combined amount of net proceeds raised from the ATM and RDOs was $106.8 million and $24.7 million for the years ended December 31, 2024 and 2023, respectively.

F-30

Warrants

The table below summarizes the warrants outstanding at December 31, ~~2024~~2025 (in thousands, except exercise prices):

Issuance Date	Expiration Date	Exercise Price		Issued		Exercised			Forfeited / Canceled			Warrants Outstanding
August 18, 2020	August 18, 2025	$	2.00		171		(~~150~~171	)		-			21-
June 16, 2022	May 9, 2027	$	0.0001		6,325		-(1,187	)		(4,~~121~~338	)		~~2,204~~800
November 18, 2024	November 18, 2029	$	2.875		800		-(304	)		-			~~800~~496
December 12, 2024	December 12, 2029	$	5.75		500		-(100	)		-			~~500~~400
January 9. 2025	January 9, 2030	$	14.0875		327		(65	)		-			262
													1,958

~~F-22~~In connection with a restricted stock units offering in June 2020, the Company issued warrants in August 2020 to purchase 171,000 shares of the Company’s common stock, at an exercise price of $2.00. As of December 31, 2025, all of these warrants were exercised.

InOn ~~connection~~June ~~with~~16, a2022, ~~restricted~~the Company issued 6.3 million QPhoton Warrants to purchase shares of the Company’s common stock ~~units~~at ~~offering~~an exercise price of $0.0001 per share. Those warrants are exercisable when and inif stock options and warrants issued by the Company and outstanding as of June ~~2020~~15, 2022 (the “Underlying Options”) are exercised. As of December 31, 2025, the Company ~~issued~~expects ~~warrants~~758 inthousand ~~August~~(the ~~2020~~“In-the-Money QPhoton Warrants) of the 800 thousand outstanding QPhoton Warrants are likely to ~~purchase~~be ~~171,000~~exercised ~~shares~~as the exercise prices of the Underlying Options associated with the In-the-Money QPhoton Warrants are below the closing of the Company’s ~~common~~bid stock price of $10.26 per share as of December 31, at2025. anThe ~~exercise~~6.3 million issued warrants ~~price~~represent a portion of $2the 7.000 million QPhoton Warrants, having been received by two former QPhoton shareholders. ~~Those~~A third shareholder rejected the Merger Consideration and commenced litigation, and as of December 31, 2025 that litigation was resolved and the associated 702,834 warrants ~~are~~were ~~exercisable~~forfeited, of which 481,949 would have been canceled to date due to forfeitures of Underlying Options. See Part I, Item 3, Legal Proceedings, for ~~five~~additional ~~years~~information ~~from~~on the ~~date~~status of ~~issuance~~the litigation.

InDuring ~~connection with~~ the ~~QPhoton~~year ~~Merger~~ended onDecember ~~June 16~~31, ~~2022~~2025, ~~the~~a ~~Company~~total ~~issued~~of ~~6.3~~469,306 ~~million~~of the Placement Agent warrants towere ~~purchase~~exercised ~~shares~~by principals of ~~the~~Titan ~~Company’s~~Capital ~~common~~Partners, ~~stock~~resulting atin anproceeds ~~exercise~~to ~~price~~the Company of $02.~~0001~~4 million. ~~Those~~The warrants ~~are~~exercised ~~exercisable~~were ~~when~~304,000 ~~and~~at ifan ~~stock~~exercise ~~options~~price ~~and~~of ~~warrants~~$2.875, ~~issued~~100,000 byat ~~the~~an ~~Company~~exercise ~~and~~price ~~outstanding as~~ of ~~June~~$5.75 15and 65,306 ~~2022~~at ~~(the~~an ~~“Underlying~~exercise price ~~Options”)~~of ~~are exercised~~$14.0875. AsIn ~~of December 31~~addition, ~~2024,~~during ~~all of~~ the ~~QPhoton~~year ~~Warrants~~ended ~~linked~~December to31, ~~the~~2025 ~~outstanding~~1.187 ~~Underlying~~million ~~Options~~QPhoton ~~are~~warrants ~~expected to~~were be exercised, asat ~~the~~an exercise ~~prices~~ price of ~~all~~$0.0001, ~~the~~resulting ~~Underlying~~in ~~Options~~proceeds ~~are~~to ~~below~~ the ~~closing~~Company ~~stock price as~~ of ~~December 31, 2024~~$119. ~~The~~Due ~~6.3 million~~to ~~issued~~the ~~warrants~~exercise ~~represent~~of athese ~~portion~~QPhoton ofwarrants, ~~the 7~~$21.0 million ~~warrants~~of ~~included in~~ the ~~Merger Consideration, having been received by~~derivative ~~two~~liability ~~QPhoton~~was ~~shareholders.~~reclassified Ato ~~third~~additional ~~alleged~~paid-in ~~shareholder~~capital ~~rejected~~during the ~~Merger~~year ~~Consideration~~ended ~~and~~December ~~commenced litigation~~31, ~~and~~2025. toTotal ~~date~~shares ~~that~~issued ~~litigation has~~due ~~not~~to ~~been~~exercise of ~~resolved~~all ~~and~~warrants during the ~~associated~~year ~~702,834~~ended ~~warrants~~December ~~have~~31, ~~not~~2025, ~~been~~were ~~issued~~1,677,439 of(including ~~which~~1.656 ~~457,926~~million ~~would~~shares ~~have~~from ~~been~~exercise ~~canceled~~of tothe ~~date due~~Placement toAgent ~~forfeitures~~warrants) ofand ~~Underlying~~proceeds ~~Options.~~to ~~See~~the ~~Part~~Company I,from ~~Item~~all 3,warrant ~~Legal~~exercises ~~Proceedings,~~during ~~for~~the ~~additional~~year ~~information~~ended onDecember ~~the~~31, ~~status~~2025 ofwere ~~the~~$2.411 ~~litigation~~million.

As of December 31, ~~2024~~2025, of the 6.3 million QPhoton Warrants issued, approximately 6569% have been forfeited because the corresponding Underlying Options had expired or been forfeited. Further, as discussed in Note 24, ~~Significant Accounting Policies –~~ Fair Value of Financial Instruments, the QPhoton Warrants ~~issued on June 16, 2022,~~ are considered Level 3 liabilities for fair value measurement on the valuation hierarchy. 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, and then ~~accounts~~accounting for changes period-over-period by realizing a mark-to-market gain or loss for the period. Due to the difference between the exercise price and the market value of the Company'’s common stock as of the consolidated balance sheet dates, and the probability of the underlying options and warrants being exercised are the only significant inputs in the valuation of the warrant liability. The market value of the Company’s stock was $10.26 per share and $16.55 per share as of December 31, 2025 and December 31, 2024, respectively (the “Balance Sheet Date Stock Prices”), and the probability of exercise was determined based on whether the exercise price of the underlying options and warrants ~~being~~was ~~exercised~~above ~~are~~or below the ~~only~~Balance ~~significant inputs~~Sheet Date Stock Prices, resulting in the ~~valuation~~QPhoton ofWarrants being out-of-the-money ~~warrant~~or ~~liability~~in-the-money, respectively. Accordingly, the Company recognized a mark-to-market gain of $11.8 million, a mark-to-market loss of $40.5 million and a mark-to-market gain of $528 thousand during the years ended December 31, 2025, 2024 and 2023, respectively. In Asaddition, ofdue ~~December~~to ~~31,~~the ~~2024,~~exercise ~~the~~of QPhoton ~~Warrants~~warrants, ~~have a carrying value of~~ $4021.50 million asof athe derivative liability onwas ~~the~~reclassified ~~Company’s~~to ~~consolidated~~additional ~~balance~~paid-in capital ~~sheet,~~during anthe ~~increase~~year ofended ~~$40.5~~December ~~million~~31, as2025. ~~compared to~~As ~~the~~of ~~Company’s~~ December 31, ~~2023~~2025 ~~consolidated~~and ~~balance sheet~~2024, ~~where~~ the QPhoton Warrants ~~had~~have noa carrying value of $7.8 million and $40.5 million, respectively, as a liability on the Company’s consolidated balance ~~sheet~~sheets.

~~Note 11 – Stock~~F-~~based Compensation~~31

Note 13 – Stock-based Compensation

Incentive Plans

The Quantum Computing Inc. 2019 Equity and Incentive Plan, as amended in 2021 (the “2019 Plan”) enabled the Company to grant incentive stock options or nonqualified stock options and other equity awards to employees, directors and consultants of the Company up to a total of 3.0 million shares of common stock, all of which have been issued.

On July 5, 2022, the Board of Directors adopted the Quantum Computing Inc. 2022 Equity and Incentive Plan (the “2022 Plan”), ~~which~~and was approved by a majority of the shareholders in September 2022. The 2022 Plan initially provided for the issuance of up to 16.0 million shares of the Company’s common stock ~~and~~ and includes provisions for annual automatic evergreen increases of 1,000,000 shares of common stock. As of December 31, ~~2024~~2025, the total ~~number~~ number of shares of our common stock reserved for issuance under the 2022 Plan is 1819.0 million and a total of 1317.3 million shares, ~~and~~including 7.1 million shares underlying options, were issued and outstanding under the 2022 Plan.

Options

The following table summarizes the Company’s option activity for the year ended December 31, 2025, 2024 and 2023 (in thousands, except exercise price and contractual life data):

	Number Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)
Balance as of January 1, 2023		9,165		$	3.51		4.2
Granted		5,340			1.38		5.0
Forfeited		(662	)		4.41		-
Balance as of December 31, 2023		13,843		$	2.64		3.7
Granted		830			0.92		5.0
Forfeited		(1,690	)		4.14		-
Balance as of December 31, 2024		12,983		$	2.34		2.9
Vested and exercisable as of December 31, 2023		8,803			3.21		3.4
Granted		1,630			11.09		4.7
Exercised		(7,204	)		2.30		-
Forfeited		(346	)		8.11		-
Balance as of December 31, 2025		7,063		$	4.11		2.6
Vested and exercisable as of December 31, 2025		4,563		$	3.68		2.3
Vested and exercisable as of December 31, 2024		9,646		$	2.66		2.7

FThe following table presents the assumptions used in the Black-23Scholes option-pricing model to determine the grant-date fair value of stock options granted during the years ended December 31, 2025 and 2024:

The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the years ended December 31, 2024 and 2023:

	Year Ended
	December 31,
	2025			2024
Exercise price	$	1.00 – 21.78		$	0.46 – 1.12
Risk-free interest rate		3.6 – 4.2	%		4.2 – 5.2	%
Expected volatility		130 – 138	%		90 – 105	%
Expected dividend yield		0	%		0	%
Expected life of options (in years)		5.0			5.0

	Year Ended
	December 31,
	2024			2023
Exercise price	$	0.46 – 1.12		$	0.85 – 1.84
Risk-free interest rate		4.2 – 5.2 %			4.7 – 5.0 %
Expected volatility		90 – 105 %			98 – 137 %
Expected dividend yield		0	%		0	%
Expected life of options (in years)		5.0			5.0

F-32

The following table summarizes the exercise price range as of December 31, ~~2024~~2025 (in thousands):

Exercise Price	Outstanding Options		Exercisable Options
$ 0.00 – 1.00		230		122
$0.00 – 1.00		610		390
$ 1.00 – 2.00		5,803		2,928
$1.00 – 2.00		3,191		1,611
$ 2.00 – 3.00		5,879		5,525
$2.00 – 3.00		1,260		1,260
$ 3.00 – 6.00		38		38
$3.00 – 6.00		158		38
$ 6.00 – 8.00		683		683
$6.00 – 8.00		962		937
$ 8.00 – 12.00		350		350
$8.00 – 12.00		302		227
		12,983		9,646
$12.00 – 22.00		580		100
		7,063		4,563

The weighted average grant-date fair value of stock options granted during the years ended December 31, ~~2024~~2025 and ~~2023~~2024 was $011.9209 per share and $10.3892 per share, respectively. As of December 31, ~~2024~~2025, total unrecognized compensation cost related to common stock options was $38.16 million, which is expected to be recognized over a period of 3.0 years.

Restricted Stock

As of December 31, ~~2024~~2025, there were ~~1.3~~700 ~~million~~thousand shares of the Company’s common stock issued and unvested, ~~that~~which had been awarded as stock-based compensation under the 2022 Plan. The following table summarizes the Company’s activity for restricted stock tied to vesting schedules for the year ended December 31, 2025, 2024 and 2023 (in thousands):

	Number Outstanding			Weighted Average Fair Value
Unvested as of January 1, 2023		50		$	5.70
Granted		2,429			1.36
Vested		(1,046	)		1.48
Forfeited		(24	)		1.28
Unvested as of December 31, 2023		1,409		$	1.42
Granted		904			1.58
Vested		(1,049	)		1.82
Unvested as of December 31, 2024		1,264		$	1.20
Granted		150			10.95
Vested		(698	)		2.14
Forfeited		(16	)		0.67
Unvested as of December 31, 2025		700		$	5.62

F-2433

Stock-based compensation

The Company recognized stock-based compensation expense related to common stock options and restricted shares of common stock in the following expense categories of its consolidated statements of operations (in thousands):

	Year Ended
	Year Ended December 31,
	December 31,
	2025		2024			2023
	2024		2023
Research and development	$	2,701	$	4,024		$	2,080
Research and development	$	4,024	$	2,080
Selling and marketing		214		301			(279	)
Selling and marketing		301		(279	)
General and administrative		5,744		1,457			2,470
General and administrative		1,457		2,470
Total stock-based compensation	$	8,659	$	5,782		$	4,271
Total stock-based compensation	$	5,782	$	4,271

For the years ended December 31, 2025, 2024 and 2023, the ~~consolidated~~ statement of stockholders’ equity was higher by $1.5 million, lower by $1.5 million and lower by $33 thousand, respectively, as compared to the ~~consolidated~~ statement of cash flows for timing differences between award dates and the realization of stock-based compensation expense.

The Company did not issue any shares of common stock as compensation during the year ended December 31, 2025. In terms of new issuances, the Company issued ~~995~~ 150 thousand shares of the Company’s common stock to employees in the year ended December 31, ~~2024~~2025 (the “~~2024~~2025 SBC Awards”), 995 thousand shares asin ~~compared~~the toyear ended December, 2024 (the “2024 SBC Awards) and 2.3 million shares in the year ended December 31, 2023 (the “2023 SBC Awards”).

The ~~2024~~2025 SBC Awards included ~~218~~150 thousand such shares ~~issued~~ to ~~former~~an ~~executives~~employee per their respective employment ~~and~~agreement. ~~separation~~50 ~~agreements (the “Separation Agreement Shares”) and 777~~ thousand ~~such~~ shares ~~issued~~were asimmediately ~~performance~~vested and ~~incentive~~subject ~~awards, which included 727 thousand shares of the Company’s common stock issued~~ to 30a ~~employees as payment in lieu of cash for 2023 performance bonuses (the “2024 Performance Incentive Shares”)~~three-year ~~and~~claw ~~50 thousand shares of common stock as retention bonuses to five employees identified as key technical staff (the “2024 Retention Incentive Shares”)~~back. The ~~2024~~remaining ~~Performance~~100 ~~Incentive~~thousand ~~Shares~~shares are restricted with the following vesting schedule: ~~one-half vested on December 31~~25,000 ~~2024~~shares ~~and~~vested ~~one-half~~annually ~~will~~based ~~vest~~ on the ~~December~~performance ~~31,~~of ~~2025.~~certain ~~The~~milestones ~~2024~~through ~~Retention Incentive Shares are restricted and vested on December 31, 2024~~2029.

The ~~Company~~2024 ~~recognized~~SBC ~~$197~~Awards included 218 thousand such shares to former executives per their respective employment and ~~$815~~separation agreements (the “Separation Agreement Shares”) and 777 thousand, ~~respectively~~such shares as performance and incentive awards, ofwhich ~~stock-based~~included ~~compensation~~727 ~~expense~~thousand ~~during~~shares of the ~~year~~Company’s ~~ended~~common ~~December~~stock issued ~~31,~~to ~~2024~~30 employees as payment in ~~conjunction~~lieu ~~with~~of ~~the~~cash ~~Separation Agreement~~for ~~Shares~~2023 ~~and~~performance bonuses (the “2024 ~~Retention~~Performance Incentive Shares,”) and 50 ~~does~~thousand ~~not~~shares ~~expect~~of ~~future~~common ~~expense~~stock ~~related~~as retention bonuses to ~~these~~five ~~issuances~~employees identified as ~~they~~key ~~are~~technical ~~fully vested.~~staff In(the ~~conjunction~~“2024 ~~with~~Retention Incentive ~~the~~Shares”). The 2024 Performance Incentive Shares, ~~the~~are ~~Company~~restricted ~~recognized~~with ~~$244~~the ~~thousand~~following ofvesting ~~stock~~schedule: one-~~based~~half ~~compensation~~vested ~~expense~~on ~~during the year ended~~ December 31, 2024, and ~~expects~~one-half ~~future~~vested ~~expense~~on ~~related~~December to31, ~~these~~2025. ~~offerings~~The to2024 ~~total~~Retention ~~$244~~Incentive ~~thousand~~Shares inare ~~the~~restricted ~~year~~and ~~ending December~~vested on December 31, ~~2025~~2024.

The ~~2023~~Company ~~SBC~~recognized ~~Awards~~$197 ~~included~~thousand ~~854~~and $815 thousand ~~shares~~ of ~~the Company’s common~~ stock-based ~~issued~~compensation toexpense 35during ~~employees~~the asyear ~~payment~~ended inDecember ~~lieu~~31, of2024 ~~cash~~in ~~for~~conjunction ~~2022~~with ~~performance bonuses (~~the ~~“2023~~Separation ~~Performance~~Agreement ~~Incentive~~ Shares”) and ~~1.5~~2024 ~~million shares of the Company’s common stock as long-term incentive bonuses to five employees identified as key technical staff (the “2023~~ Retention Incentive Shares~~”). The 2023 Performance Incentive Shares are restricted and vested in equal halves on each of December 31~~, ~~2023 and 2024. As of December 31~~respectively, ~~2024, the Company canceled 23,600 of the issued shares that were forfeited by employees no longer with the Company~~ and does not expect future expense related to these offerings as they are fully vested. ~~The 2023~~ Retention Incentive Shares are restricted and vest annually in equal amounts over a five-year period as follows: 20% vested or will vest on each December 31 of 2023, 2024, 2025, 2026 and 2027, subject to the grantee continuing to perform services for the Company in the capacity in which the grant was received on each applicable vesting date. In conjunction with the ~~2023~~2024 Performance Incentive Shares, the Company recognized $~~462~~233 thousand of stock-based compensation expense during the year ended December 31, ~~2024~~2025 ~~and~~compared ~~does not expect future expense related to these offerings as they are fully vested. In conjunction~~ with ~~the 2023 Retention Incentive Shares, the Company recognized~~ $~~533 thousand~~244 ~~and $320~~ thousand, ~~respectively, of stock-based compensation expense~~ during the ~~years~~year ended December 31, 2024 ~~and 2023, and expects future expense related to these offerings to total $1~~.~~3 million over the remaining vesting periods.~~

FThe 2023 SBC Awards included 854 thousand shares of the Company’s common stock issued to 35 employees as payment in lieu of cash for 2022 performance bonuses (the “2023 Performance Incentive Shares”) and 1.5 million shares of the Company’s common stock as long-25term incentive bonuses to five employees identified as key technical staff (the “2023 Retention Incentive Shares”). The 2023 Performance Incentive Shares are restricted and vested in equal halves on the December 31, 2023 and 2024. As of December 31, 2024, the Company canceled 23,600 of the issued shares that were forfeited by employees no longer with the Company and does not expect future expense related to these offerings as they are fully vested. The 2023 Retention Incentive Shares are restricted and vest annually in equal amounts over a five-year period as follows: twenty percent (20%) vested or will vest on each December 31 of 2023, 2024, 2025, 2026 and 2027, subject to the grantee continuing to perform services for the Company in the capacity in which the grant was received on each applicable vesting date. In conjunction with the 2023 Performance Incentive Shares, the Company recognized $462 of stock-based compensation expense during the year ended December 31, 2025 and does not expect future expense related to these offerings as they are fully vested. In conjunction with the 2023 Retention Incentive Shares, the Company recognized $426 thousand, $533 thousand and $320 thousand of stock-based compensation expense during the years ended December 31, 202 December 31, 2024 and 2023, respectively, and expects future expense related to these offerings to total $852 thousand over the remaining vesting periods.

F-34

Stock-based compensation for services

The Company recognized $2318 thousand, $23 thousand and $284 thousand~~, respectively,~~ during the years ended December 31, 2025, 2024 and 2023, respectively, in stock-based compensation for services in lieu of cash payments to certain consultants, including expenses for both shares issued and stock option awards granted. For the years ended December 31, 2025, 2024 and 2023, the statement of stockholders’ equity was ~~higher~~the same, lower by $~~114~~113 thousand and $2.2 million, respectively, as compared to the statement of cash flows for timing differences between award dates and the realization of stock-based compensation for services expense.

In terms of issuances, the Company issued ~~142 thousand~~no shares of the Company’s common stock to ~~various~~ consultants for ~~market and media advisory~~ services in the year ending December 31, ~~2024~~2025, as compared to ~~1.6~~141 ~~million~~thousand shares of the Company’s common stock ~~in the year ending December 31, 2023 (the “2023 Advisor Shares”). The Company~~ issued ~~1.5 million of the 2023 Advisor Shares~~ to aconsultants ~~consultant~~for ~~who~~market ~~served as an advisor on the QPhoton Merger (the “QPhoton Advisor Shares”), comprised of 750 thousand such shares to Draper, Inc.~~ and ~~750~~media ~~thousand~~advisory ~~such shares to Carriage House Capital, Inc, and issued 75 thousand of the 2023 Advisor Shares to FMW Media Works as compensation for~~ services ~~rendered~~ in ~~support of marketing and communications. For~~ the ~~QPhoton~~year ~~Advisor~~ending ~~Shares,~~December ~~the expense was recognized in 2022 at the time of the merger~~31, ~~though~~ ~~the shares were not awarded and issued until 2023~~2024.

Note 1214 – Related Party Transactions

~~There~~Management ~~were~~identified no related -party transactions ~~during~~ for the years ended December 31, 2025, 2024, and 2023.

Note 1315 – Operating Leases:

As of December 31, ~~2024~~2025, the Company has use of space in three different locations, Hoboken, NJ, Tempe, AZ, and ~~Arlington~~Mclean, VA, under lease or membership agreements, which expire at various dates through ~~November~~July 3031, ~~2028~~2030. The Company’s leases do not provide an implicit rate, and the rates implicit in our leases are ~~not~~ not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease ~~assets~~ assets and liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company’s leases all contain options to extend or renew the lease or membership term.

The table below reconciles the undiscounted future minimum lease payments under these operating leases to the total operating lease liabilities recognized on the consolidated balance sheet as of December 31, ~~2024~~2025 (in thousands):

Year	Lease Payments Due
2025	$	437
2026	$	1,001
2026		591
2027		1,028
2027		515
2028		665
2028		212
2029		213
Total minimum payments		1,755
2030		126
Less: imputed interest		(136	)
Total minimum payments		3,033
Present value of operating lease liabilities		1,619
Less: imputed interest		(456	)
Less: current portion included in other current liabilities		(438	)
Present value of operating lease liabilities		2,577
Long-term operating lease liabilities	$	1,181
Less: current portion included in accrued expenses		(769	)
Long-term operating lease liabilities	$	1,808

F-2635

Other information related to operating lease liabilities consists of the following:

	Year Ended December 31,
	2024			2023
	2025			2024			2023
Cash paid for operating lease liabilities	$	~~385~~594		$	~~411~~385		$	411
Weighted average remaining lease term in years		3.314			3.730			3.70
Weighted average discount rate		10.77	%		10.00	%		10.00	%

Note 1416 – License Agreement – Stevens Institute of Technology

Effective December ~~17th~~17, 2020, QPhoton signed a License Agreement with the Stevens Institute. The License Agreement enables the Company to commercially use technology such as licensed patents, licensed patent applications and licensed “Know-How”. QPhoton is also able to issue sublicenses for the technology under the agreement. The agreement is effective until the later of: (i) the 30-year anniversary of the effective date, or (ii) the expiration of the licensed patent or licensed patent application that is last to expire. As part of the merger of the Company and QPhoton, the Stevens License Agreement was assigned to the Company.

During the term of the agreement and prior to any commercialization or sublicensing of the technology by the Company, the Company shall be required to submit annual reports to the Stevens Institute reporting on all research, development, and efforts toward commercialization and/or sublicensing made during the year. Once any commercialization and/or sublicensing has been initiated, the Company shall deliver quarterly reports to the Stevens Institute reporting on the revenue received by the Company, all sublicenses derived from the sale of licensed products, and the net sales price associated with each transaction. The Company will be responsible for reimbursing Stevens for any costs associated with the prosecution and maintenance of the licensed patents and licensed patent applications moving forward.

Consideration for the agreement

As consideration for the license and other rights granted under the agreement, QPhoton agreed to pay the following: (i) $35 thousand within 30 days of execution of the agreement, (ii) $28 thousand within 30 days of each annual anniversary of the effective date, (iii) equity in the Company equivalent to 9.0% of the membership units of the Company within 30 days of the execution of the agreement, and (iv) royalties of 3.5% of the Net Sales Price of each licensed product sold or licensed by the Company during the quarter then-ended, for which it also received payment, concurrent with the delivery of the relevant quarterly report.

As of December 31, ~~2024~~2025, the Company has begun to commercialize some of the licensed technology, though the Company has not recorded any related revenue and hence has not incurred any royalty expenses payable to the Stevens Institute.

Note 1517 – Subsequent Events:

On ~~January~~December 715, 2025, the Company entered into ~~securities~~ ~~purchase~~a ~~agreements~~Stock Purchase Agreement (the “~~January~~Stock ~~SPAs~~Purchase Agreement”) ~~pursuant~~with toLuminar ~~which~~Technologies, Inc., a Delaware corporation (the ~~Company~~“Seller”) and ~~agreed~~Luminar toSemiconductor, ~~issue~~Inc., in a ~~private~~Delaware ~~placement~~corporation (the “~~January Private Placement~~Target”), anpursuant ~~aggregate~~to ~~of 8~~which,~~163,266~~ ~~shares~~subject (to the ~~“January~~terms ~~Placement~~and ~~Shares”)~~conditions set offorth in the Stock Purchase Agreement, the Company’s agreed to acquire all of the issued and outstanding shares of common stock, ~~par~~of ~~value~~the Target ~~$0.0001~~from ~~per~~the ~~share,~~Seller at(the “Transaction”) for a total purchase price of $12110.250 ~~per~~million ~~share.~~in ~~The~~cash ~~January~~(the ~~SPAs~~“Purchase ~~required~~Price”). The ~~the~~ Company todelivered ~~file~~10% aof ~~registration statement~~the ~~registering~~Purchase Price (the ~~resale~~“Escrowed ofAmount”) ~~the~~to ~~January~~an ~~Placement~~escrow ~~Shares~~agent byin ~~January~~December 242025, ~~2025.~~which ~~The~~could be returned to the Company’s ~~Registration~~in ~~Statement~~the onevent ~~Form S-1~~of ~~(File~~specified ~~No.~~trigger ~~333-284416)~~events, toincluding ~~register~~termination ~~resale~~ of the ~~the~~Stock ~~shares~~Purchase ~~sold~~Agreement, insubject ~~this~~to ~~offering~~certain exceptions ~~was~~relating ~~filed~~to ona ~~January~~breach ~~22,~~of ~~2025~~the ~~and~~Stock ~~became~~Purchase ~~effective on~~Agreement ~~February~~by 3,the ~~2025~~Target. ~~The~~Upon ~~January~~closing ~~Private~~the ~~Placement~~Transaction, ~~resulted~~the inEscrowed ~~gross~~Amount ~~proceeds~~remains with ofthe ~~approximately~~escrow ~~$100~~agent ~~million~~to ~~before~~cover ~~deducting~~certain ~~placement agent~~limited ~~commissions~~indemnification ~~and~~obligations ~~other~~of ~~offering~~the ~~expenses.~~Seller ~~The~~pursuant ~~closing~~to of the ~~January~~Stock ~~Private~~Purchase ~~Placement~~Agreement ~~took~~for the ~~place~~twelve onmonths ~~January~~following 9,the ~~2025~~Closing, ~~following~~which ~~the satisfaction~~occurred ofon ~~customary~~February ~~closing~~2, ~~conditions~~2026.

Pursuant to the January SPAs, the Company has agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents, or file any registration statement or any amendment or supplement thereto, for a period of 75 days after the closing date of the January Private Placement, subject to certain customary exceptions, without the consent of the January SPAs purchasers and the January Placement Agent, as defined below.F-36

FThe 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. The Target was not a debtor in such Chapter 11 case and was operating in the ordinary course of business. Upon Bankruptcy Court approval, the Company was designated as the “stalking horse” bidder in connection with a sale of the Target under Section 363 of the Bankruptcy Code. The Transaction was conducted through a Bankruptcy Court-27supervised 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.

The ~~Company~~Stock ~~also~~Purchase ~~entered~~Agreement ~~into~~contains acustomary representations, ~~placement~~warranties ~~agency agreement~~and ~~with~~covenants ~~Titan~~of (the ~~“January~~parties ~~Placement~~for ~~Agent”),~~a ~~dated~~transaction ~~January~~involving 7,the ~~2025,~~acquisition ~~pursuant~~of tostock ~~which~~owned ~~the~~by ~~January~~a ~~Placement~~debtor ~~Agent~~in bankruptcy, ~~will~~and ~~act as~~ the ~~exclusive~~completion ~~placement~~of ~~agent for~~ the ~~Company~~Transaction inis ~~connection~~subject ~~with~~to ~~the~~a ~~January~~number ~~SPAs.~~of ~~The~~customary ~~Company~~conditions, ~~agreed~~which, toamong ~~pay~~others, include the ~~January~~entry ~~Placement Agent a cash fee~~ of 6%an order of the ~~gross~~Bankruptcy ~~proceeds~~Court ~~from~~authorizing ~~the January SPAs~~ and toapproving ~~issue~~the toTransaction, the ~~January~~performance ~~Placement~~by ~~Agent~~each ~~(or~~party of its ~~designees)~~obligations ~~326,531 five-year~~under ~~warrants~~the ~~(representing~~Stock 4%Purchase Agreement ofand the ~~securities~~material ~~sold~~accuracy inof ~~the~~each ~~Placement),~~party’s ~~which~~representations. ~~will~~The beStock ~~exercisable~~Purchase ~~beginning~~Agreement oncontains ~~July~~certain 6,termination ~~2025, and~~rights ~~have~~for anboth ~~initial~~the ~~exercise~~Company ~~price~~and ~~per~~the ~~share~~Seller, ofincluding the ~~Company’s~~right ~~common~~to ~~Stock~~terminate ofthe ~~$14.0875.~~Stock InPurchase ~~addition,~~Agreement if the ~~Company~~Transaction ~~agreed~~is tonot ~~reimburse~~consummated ~~the~~by ~~January~~March ~~Placement Agent for up to $100~~31,~~000~~ of2026 ~~its~~or ~~fees~~the ~~and~~Seller ~~expenses~~enters ininto ~~connection~~a transaction with ~~the~~a ~~January~~competing ~~SPAs~~bidder.

AsThe aforegoing ~~condition~~summary of the ~~January~~Stock ~~SPAs,~~Purchase ~~the Company’s~~Agreement ~~directors~~is ~~and~~not ~~executive~~complete ~~officers~~and ~~entered~~is ~~into~~qualified ~~Lock-Up~~in ~~Agreements~~its ~~with~~entirety ~~the~~by ~~Company~~reference ~~pursuant~~ to ~~which they agreed for a period of 60 days after~~ the ~~closing~~full ~~date~~text of the ~~January~~Stock ~~SPAs,~~Purchase ~~subject to certain exceptions~~Agreement, ~~not to directly or indirectly offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase~~ a ~~put~~copy ~~equivalent position or liquidate or decrease a call equivalent position with respect to, any shares~~ of ~~the~~which ~~Company’s~~was ~~common stock or securities convertible, exchangeable~~filed oras ~~exercisable~~Exhibit ~~into~~2.1 ~~the Company’s common stock, that they beneficially own, hold, or thereafter acquire, or make any demand for or exercise any right or cause~~ to beForm ~~filed~~8k aand ~~registration,~~is ~~including~~incorporated ~~any~~herein ~~amendments~~by ~~thereto, with respect to the registration of any the Company’s common stock or common stock equivalents or publicly disclose the intention to do any of the foregoing~~reference.

OnThe ~~January~~Transaction 28was completed on February 2, ~~2025~~2026. The consideration paid by the Company at closing consisted of approximately $97.5 million in cash, along with the ~~Delaware~~$11.0 ~~Chancery~~million ~~Court~~of funds ~~reassigned~~that ~~the~~were BVplaced ~~Advisory~~with ~~appraisal~~an ~~action~~escrow ~~from~~agent ~~Vice~~in ~~Chancellor~~connection ~~Glasscock~~with ~~(following~~the ~~his~~signing ~~retirement~~of onthe ~~January~~Stock ~~15,~~Purchase ~~2025)~~Agreement. toThe ~~Vice~~escrowed ~~Chancellor~~amount will remain ~~Bonnie~~with ~~David,~~the ~~effective~~escrow asagent to cover certain limited indemnification obligations of ~~that~~the ~~date~~Seller pursuant to the Stock Purchase Agreement until February 2, 2027.

OnThe ~~January~~foregoing ~~31,~~description ~~2025,~~of the ~~Company~~Transaction ~~filed a complaint~~and inthe ~~Delaware~~Stock ~~Chancery~~Purchase ~~Court~~Agreement ~~against~~does BVnot ~~Defendants~~purport ~~(BV~~to ~~Advisory~~be complete and is qualified in its ~~principal~~entirety ~~Keith~~by ~~Barksdale)~~reference ~~asserting~~to ~~claims~~the ~~for~~Stock ~~defamation,~~Purchase ~~breach~~Agreement, ofwhich ~~contract~~the Company filed with the SEC as Exhibit 2.1 in its Current Report on Form 8-K on December 15, ~~conversion~~2025, ~~aiding~~ and ~~abetting~~is ~~conversion~~incorporated herein by reference. The representations, warranties and ~~misappropriation~~covenants ofset ~~trade~~forth ~~secrets~~in ~~based~~the onStock ~~the~~Purchase BVAgreement ~~Defendants’~~have ~~unauthorized~~been made only for purposes ~~possession~~of the Stock Purchase Agreement and ~~dissemination~~solely offor ~~certain~~the benefit of the ~~Company’s~~parties ~~confidential~~thereto, and ~~privileged~~may ~~documents.~~be ~~The~~subject ~~Company~~to ~~seeks,~~limitations ~~among~~agreed ~~other~~upon ~~relief,~~by the ~~injunctive~~contracting ~~relief~~parties, ~~and~~including ~~damages.~~being Onqualified ~~February~~by ~~11,~~confidential ~~2025,~~disclosures made for the ~~Court~~purposes ~~granted~~of allocating contractual risk between the ~~Company’s~~parties ~~motion~~to ~~for~~the ~~temporary~~Stock ~~restraining~~Purchase ~~order~~Agreement ~~and~~instead of establishing these matters as facts. In addition, information regarding the subject ~~instructed~~matter of the ~~parties~~representations toand ~~negotiate~~warranties anmade ~~expedited~~in ~~case~~the ~~schedule.~~Stock OnPurchase ~~February~~Agreement ~~13,~~may ~~2025~~change after the date of the Stock Purchase Agreement. Accordingly, the ~~Court~~Stock ~~entered~~Purchase aAgreement ~~stipulated~~is ~~case~~included ~~schedule~~with ~~that set~~this aCurrent ~~trial~~Report ~~for~~on ~~April~~Form 8-K only to provide investors with information regarding its terms and 9not to provide investors with any other factual information regarding the Company, ~~2025~~its onsubsidiaries, the Target, or the Company’s, ~~claims~~the ~~for~~Target’s ~~conversion,~~or ~~aiding~~their ~~and~~subsidiaries’ ~~abetting~~respective ~~conversion,~~businesses ~~and~~as ~~misappropriation~~of the date of the Stock Purchase Agreement or as of ~~trade~~any ~~secrets~~other date.

In February 2025, the Company entered into arbitrations with two former consultants (two individuals) regarding forfeiture of stock options. The Company had issued stock options to the consultants in 2020 and 2021 and terminated the former consultants’ agreements in March 2024, at which time the Company informed the former consultants that any vested options had to be exercised within three months of the termination date, per the 2019 Plan and the 2022 Plan. 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 these claims are without merit and intends to defend itself vigorously.

There are no other events of a subsequent nature that in management’s opinion are reportable.

F-2837

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