2025 Q1 Form 10-K Financial Statement

#000121390025025561 Filed on March 20, 2025

View on sec.gov

Income Statement

Concept 2025 Q1 2024 Q4 2024
Revenue $373.0K
YoY Change 4.18%
Cost Of Revenue $261.0K
YoY Change 33.41%
Gross Profit $112.0K
YoY Change -31.04%
Gross Profit Margin 30.03%
Selling, General & Admin $14.73M
YoY Change -29.64%
% of Gross Profit 13152.68%
Research & Development $11.32M
YoY Change 75.54%
% of Gross Profit 10105.36%
Depreciation & Amortization $694.0K
YoY Change -64.55%
% of Gross Profit 619.64%
Operating Expenses $26.05M
YoY Change -4.87%
Operating Profit -$25.94M
YoY Change -4.72%
Interest Expense
YoY Change
% of Operating Profit
Other Income/Expense, Net
YoY Change
Pretax Income -$68.54M
YoY Change 130.54%
Income Tax
% Of Pretax Income
Net Earnings -$68.54M
YoY Change 130.54%
Net Earnings / Revenue -18375.87%
Basic Earnings Per Share -$0.73
Diluted Earnings Per Share -$0.73
COMMON SHARES
Basic Shares Outstanding 137.2M shares 91.35M shares 93.88M shares
Diluted Shares Outstanding 93.88M shares

Balance Sheet

Concept 2025 Q1 2024 Q4 2024
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $78.90M
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory $18.00K
Prepaid Expenses
Receivables $27.00K
Other Receivables
Total Short-Term Assets $79.15M
YoY Change 2387.66%
LONG-TERM ASSETS
Property, Plant & Equipment $8.212M
YoY Change 123.78%
Goodwill $55.57M
YoY Change -7.93%
Intangibles $8.972M
YoY Change -21.22%
Long-Term Investments
YoY Change
Other Assets $129.0K
YoY Change -0.04%
Total Long-Term Assets $74.41M
YoY Change -1.51%
TOTAL ASSETS
Total Short-Term Assets $79.15M
Total Long-Term Assets $74.41M
Total Assets $153.6M
YoY Change 95.05%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $1.372M
YoY Change -6.13%
Accrued Expenses $2.134M
YoY Change 989.22%
Deferred Revenue $79.00K
YoY Change
Short-Term Debt
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $4.559M
YoY Change -1.31%
LONG-TERM LIABILITIES
Long-Term Debt
YoY Change
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities $4.559M
Total Long-Term Liabilities
Total Liabilities $46.27M
YoY Change 747.52%
SHAREHOLDERS EQUITY
Retained Earnings -$200.5M
YoY Change 33.92%
Common Stock $13.00K
YoY Change 67.85%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $107.3M
YoY Change
Total Liabilities & Shareholders Equity $153.6M
YoY Change 95.05%

Cashflow Statement

Concept 2025 Q1 2024 Q4 2024
OPERATING ACTIVITIES
Net Income -$68.54M
YoY Change 130.54%
Depreciation, Depletion And Amortization $694.0K
YoY Change -64.55%
Cash From Operating Activities -$16.21M
YoY Change -18.69%
INVESTING ACTIVITIES
Capital Expenditures $6.036M
YoY Change 184.99%
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities -$6.036M
YoY Change 130.56%
FINANCING ACTIVITIES
Cash Dividend Paid $215.0K
YoY Change -75.14%
Common Stock Issuance & Retirement, Net $106.8M
YoY Change 318.88%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $99.14M
YoY Change 413.4%
NET CHANGE
Cash From Operating Activities -$16.21M
Cash From Investing Activities -$6.036M
Cash From Financing Activities $99.14M
Net Change In Cash $76.89M
YoY Change -2466.32%
FREE CASH FLOW
Cash From Operating Activities -$16.21M
Capital Expenditures $6.036M
Free Cash Flow -$22.25M
YoY Change 0.86%

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 1 – Nature of the Organization and Business</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Corporate History</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Nature of Business</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The leading application of our quantum offerings today is our Entropy Quantum Computing. 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 optical integrated circuits (TFLN Optical Chips) built on TFLN wafers.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Liquidity</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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. The Company has historically incurred losses and negative cash flows from operations. During the year ended December 31, 2024, the Company issued 49,679 shares of common stock for net proceeds of $106.8 million. Cash and cash equivalents on hand were $78.9 million as of December 31, 2024. As of December 31, 2024, the Company also had an accumulated deficit of $200.5 million and working capital of $74.6 million. In January 2025, the Company issued 8,163,266 shares of common stock for net proceeds of $93.3 million. As a result, the Company has adequate cash and cash equivalents on hand to meet its obligations over the next 12 months.</p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 8 – Contingencies </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Indemnification Arrangements</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Legal Proceedings</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">See Part I, Item 3, <i>Legal Proceedings</i>, in this Form 10-K for additional details on the status of the following proceedings.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">BV Advisory v. QCi Breach Lawsuit</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At the time of the QPhoton Merger in June 2022, QPhoton had an outstanding balance of principal and interest due to 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 recorded an estimated payable (the “BV Advisory Payable”), recognized as other current liabilities on the consolidated financial statements, based on best available information in the amount of $536 thousand as of December 31, 2024 and 2023.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 16, 2022, BV Advisory filed a complaint Delaware Chancery Court naming the Company and certain of its 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 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">BV Advisory v. QCi Appraisal Action</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 (as defined below) and on October 13, 2022 filed a petition in the Delaware Chancery Court seeking appraisal of 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 Appraisal Petition is currently pending in Delaware Chancery Court. The Company included BV Advisory’s purported ownership of QPhoton in the purchase price accounting for the QPhoton Merger.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 <span style="-sec-ix-hidden: hidden-fact-96">no</span> carrying value as a liability on the Company’s consolidated balance sheet as of December 31, 2023.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>QCi v. BV Advisory Injunction Lawsuit</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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, 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 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. The Company does not believe it is necessary to accrue a litigation reserve at this time.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Securities Class Action Lawsuit</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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. To date, the New Jersey District Court has not certified a class or designated a lead plaintiff. The Company disputes the allegations in the complaint, intends to vigorously defend against the claims asserted, and does not believe it is necessary to accrue a litigation reserve at this time.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Arbitration over Stock Options</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2025, the Company entered into arbitrations with 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 Company’s Equity and Incentive Plans. The Former Consultants did not exercise their vested options, and the options were duly forfeited. In December 2024, the Former Consultants claim that they still retain 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.</p>
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