2024 Q4 Form 10-Q Financial Statement

#000121390024084727 Filed on October 02, 2024

View on sec.gov

Income Statement

Concept 2024 Q4 2024 Q2 2023 Q4
Revenue $183.0K $74.89K
YoY Change 63.12% 5750.78%
Cost Of Revenue $125.0K $64.52K
YoY Change 144.35% 235.34%
Gross Profit $58.00K $10.37K
YoY Change -4.97% -157.74%
Gross Profit Margin 31.69% 13.85%
Selling, General & Admin $2.802M $6.288M
YoY Change -961.19% -62.55%
% of Gross Profit 4831.03% 60631.92%
Research & Development $2.094M $1.630M
YoY Change 32.14% 14.77%
% of Gross Profit 3610.34% 15718.42%
Depreciation & Amortization $71.00K $1.778M
YoY Change 17.71% 16.2%
% of Gross Profit 122.41% 17143.39%
Operating Expenses $5.325M $7.918M
YoY Change 35.84% -56.52%
Operating Profit -$5.267M -$7.907M
YoY Change 36.48% -56.62%
Interest Expense $73.00K -$183.9K
YoY Change -112.85% -45.64%
% of Operating Profit
Other Income/Expense, Net -$215.1K
YoY Change -2.15%
Pretax Income -$5.194M -$8.306M
YoY Change 11.88% -55.79%
Income Tax $0.00
% Of Pretax Income
Net Earnings -$5.194M -$8.306M
YoY Change 11.88% -55.79%
Net Earnings / Revenue -2838.25% -11091.16%
Basic Earnings Per Share -$0.06
Diluted Earnings Per Share -$0.06 -$0.10
COMMON SHARES
Basic Shares Outstanding 91.35M shares 93.55M shares 75.10M shares
Diluted Shares Outstanding 93.55M shares

Balance Sheet

Concept 2024 Q4 2024 Q2 2023 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $2.526M $2.059M
YoY Change -64.9% -61.21%
Cash & Equivalents $2.500M $2.059M
Short-Term Investments
Other Short-Term Assets $272.0K $427.6K
YoY Change 2251.52% 915.51%
Inventory $266.0K $72.65K
Prepaid Expenses $138.5K
Receivables $56.00K $622.2K
Other Receivables $0.00 $0.00
Total Short-Term Assets $3.415M $3.182M
YoY Change -57.51% -43.06%
LONG-TERM ASSETS
Property, Plant & Equipment $5.387M $3.670M
YoY Change 271.17% 276.3%
Goodwill $55.60M $60.36M
YoY Change -14.6% 2.09%
Intangibles $11.39M
YoY Change -48.76%
Long-Term Investments
YoY Change
Other Assets $133.0K $129.1K
YoY Change -99.83% -99.84%
Total Long-Term Assets $72.54M $75.55M
YoY Change -10.01% -9.75%
TOTAL ASSETS
Total Short-Term Assets $3.415M $3.182M
Total Long-Term Assets $72.54M $75.55M
Total Assets $75.96M $78.73M
YoY Change -14.32% -11.84%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.672M $1.462M
YoY Change 78.76% 67.63%
Accrued Expenses $327.0K $195.9K
YoY Change -88.44% -94.5%
Deferred Revenue $104.0K
YoY Change
Short-Term Debt $0.00 $2.496M
YoY Change -100.0% 366.04%
Long-Term Debt Due $2.496M
YoY Change 366.04%
Total Short-Term Liabilities $2.893M $4.620M
YoY Change -75.35% -29.42%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change -100.0%
Other Long-Term Liabilities $708.0K $840.1K
YoY Change 272.91%
Total Long-Term Liabilities $708.0K $840.1K
YoY Change -89.31%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.893M $4.620M
Total Long-Term Liabilities $708.0K $840.1K
Total Liabilities $3.601M $5.460M
YoY Change -69.31% -62.09%
SHAREHOLDERS EQUITY
Retained Earnings -$143.6M -$149.7M
YoY Change 7.86% 24.78%
Common Stock $9.000K $7.745K
YoY Change 33.85% 38.4%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $65.53M $73.27M
YoY Change
Total Liabilities & Shareholders Equity $75.96M $78.73M
YoY Change -14.32% -11.84%

Cashflow Statement

Concept 2024 Q4 2024 Q2 2023 Q4
OPERATING ACTIVITIES
Net Income -$5.194M -$8.306M
YoY Change 11.88% -55.79%
Depreciation, Depletion And Amortization $71.00K $1.778M
YoY Change 17.71% 16.2%
Cash From Operating Activities -$4.014M -$5.301M
YoY Change -20.87% -11.54%
INVESTING ACTIVITIES
Capital Expenditures $1.077M -$42.01K
YoY Change 431.64% -99.93%
Acquisitions
YoY Change
Other Investing Activities $70.00K
YoY Change -99.73%
Cash From Investing Activities -$1.077M $112.0K
YoY Change 51.43% -99.87%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 1.516M -130.7K
YoY Change -75.61% -99.84%
NET CHANGE
Cash From Operating Activities -4.014M -5.301M
Cash From Investing Activities -1.077M 112.0K
Cash From Financing Activities 1.516M -130.7K
Net Change In Cash -3.575M -5.319M
YoY Change -927.72% 4.85%
FREE CASH FLOW
Cash From Operating Activities -$4.014M -$5.301M
Capital Expenditures $1.077M -$42.01K
Free Cash Flow -$5.091M -$5.259M
YoY Change -3.49% -110.01%

Facts In Submission

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us-gaap Nature Of Operations
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note 1. Nature of the Organization and Business </b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Corporate History</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Quantum Computing Inc. (“QCi” or the “Company”) was formed in the State of Nevada on July 25, 2001, under its prior name, Ticketcart, Inc. 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 with QPhoton, Inc. (“QPhoton”), a developer of quantum photonic systems and related technologies and applications.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Nature of Business</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">QCi is an American company utilizing integrated photonics and non-linear quantum optics to deliver quantum and ancillary products for high-performance computing applications based on patented and proprietary photonics technology. QCi’s products are designed to operate at room temperature and at very low power levels beyond the capabilities of other systems in the market. Our core photonics technology enables the execution of a go-to-market strategy which emphasizes accessibility and affordability. Our quantum machines enable subject matter experts (SMEs) and end users to deliver critical business solutions today in working with highly complex optimization problems.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company initially focused on providing software tools and applications for several commercially available quantum computers. However, following the June 2022 merger with QPhoton and its associated intellectual property and engineering team, the Company now offers integrated high-performance quantum systems, ancillary products and services.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The core of our quantum offerings today is our Entropy Quantum Computing (“EQC”) technology. We have built room-temperature, photonic quantum information processing systems underpinned by a series of patented and patent pending technologies. Our technology, supported by professional services through our “Quantum Solutions” offering, enables our clients to solve complex optimization problems. In addition, our engineering teams are using our leading-edge photonics technology to continue to enhance and further develop quantum LIDAR sensing and imaging systems, quantum-secured network solutions, and photonic chips.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Going Concern</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets, and the satisfaction of liabilities in the normal course of business. Cash and cash equivalents on hand were $2.5 million as of June 30, 2024. The Company has historically incurred losses and negative cash flows from operations. As of June 30, 2024, the Company also had an accumulated deficit of $143.6  million and working capital of $522 thousand. Furthermore, we have not achieved a level of sales adequate to support the Company’s cost structure and may need to raise additional funds in the next twelve months by selling additional equity or incurring debt. It is management’s opinion that these conditions raise substantial doubt about our ability to continue as a going concern.</p>
dei Entity Incorporation Date Of Incorporation
EntityIncorporationDateOfIncorporation
2001-07-25
CY2024Q2 us-gaap Cash And Cash Equivalents At Carrying Value
CashAndCashEquivalentsAtCarryingValue
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CY2024Q2 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
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qubt Working Capital Deficit
WorkingCapitalDeficit
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us-gaap Prior Period Reclassification Adjustment Description
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Reclassifications</i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain reclassifications have been made to the fiscal year 2023 audited consolidated financial statements to conform to the presentation in the three and six months ended June 30, 2024. The reclassifications had no impact on consolidated net loss, total consolidated assets, total consolidated liabilities, or consolidated stockholders’ equity.</span></p>
us-gaap Use Of Estimates
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Use of Estimates:</i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include the valuation of goodwill and intangible assets, deferred tax assets, equity-based transactions and liquidity assessment. Actual results may differ from these estimates.</p>
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WeightedAverageNumberOfSharesOutstandingBasic
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us-gaap Earnings Per Share Basic
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note 10. Contingencies </b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Indemnification Arrangements</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Legal Proceedings</i></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 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.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See Part II, Item 1, Legal Proceedings, in this Form 10-Q for additional details on the status of motions on the following proceedings.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">BV Advisory v. QCi Breach Lawsuit</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As part of our business combination with QPhoton in June 2022, we acquired a payable to BV Advisory based on a Note Purchase Agreement that QPhoton had entered into with BV Advisory on March 1, 2021. The Company has recorded an estimated payable (the “BV Advisory Payable”), recognized as other current liabilities on the unaudited condensed consolidated financial statements, based on best available information in the amount of $536 thousand as of June 30, 2024 and December 31, 2023.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On August 16, 2022, BV Advisory filed a complaint in the Court of Chancery of the State of Delaware (the “DE Chancery Court”) naming the Company and certain of its directors and officers (among others) as defendants seeking, among other relief, monetary damages. The Company believes that BV Advisory’s claims have no merit and intends to defend itself vigorously. BV Advisory’s claims are not covered by the Company’s liability insurance, nor does the Company believe it is necessary to accrue an amount in addition to the BV Advisory Payable at this time.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">BV Advisory v. QCi Appraisal Action</span></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">BV Advisory Partners, LLC (“BV Advisory”) was purportedly a shareholder of QPhoton, Inc., the predecessor in interest to QPhoton, LLC, a wholly owned subsidiary of the Company (both referred to as “QPhoton” in this Legal Proceedings discussion). BV Advisory, rejected the Merger Consideration and on October 13, 2022, commenced litigation by filing a petition in the DE Chancery Court seeking appraisal rights on the shares of QPhoton it allegedly owned (which shares represented 10% of the shares of QPhoton outstanding immediately prior to the Company’s acquisition of QPhoton). The Company included BV Advisory’s purported ownership of QPhoton in the purchase price accounting for the QPhoton Merger.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. 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 Transaction).</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accordingly, as of June 30, 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 June 30, 2024 and 2023, and the Unissued QPhoton Warrants have no carrying value as a liability on the Company’s consolidated balance sheet as of June 30, 2024.</span></p>
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us-gaap Share Based Compensation
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us-gaap Other Expenses
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qubt Consideration Agreement Description
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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 nine percent of the outstanding equity of the Company within 30 days of the execution of the agreement, and (iv) royalties of 3.5% of the net sales price of each licensed product sold or licensed by the company during the quarter then-ended, for which it also received payment, concurrent with the delivery of the relevant quarterly report.
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