Quantum Computing Inc. Announces First Quarter 2023 Financial Results

Quantum Computing Inc Announces First Quarter 2023 Financial Results  

Quantum Computing Inc. initiates commercialization of its technology during first quarter of  2023 and commenced multiple product launches to date, including: 

• Dirac series entropy quantum computer. 

• Zero-trust cyber security protection solution. 

• Non-repeatable Quantum Random Number Generator. 

• Reservoir photonics computing (machine learning/predictive) capability to enhance  Artificial Intelligence systems. 

LEESBURG, Virginia – May 11, 2023 – Quantum Computing Inc. (“QCi” or the “Company”)  (NASDAQ: QUBT), a first-to-market full-stack photonic-based quantum computing and solutions  company, today reports its financial results for the first quarter ended March 31, 2023. 

“We have been building toward this quarter. QCi is prioritizing top-line growth as we roll out our  leading-edge quantum computing product line throughout 2023 and beyond. We are establishing ourselves as a leader in photonic quantum information processing, which has proven to be a  distinctly superior methodology featuring greater processing capability, higher-speed, superior  accuracy and security at less cost with lower power requirements than the alternative quantum  approaches,” commented Robert Liscouski, co-Founder, CEO & Chairman of QCi. “The Dirac  series, our photonic-based quantum entropy computing flagship product line, delivers solutions for  both binary (processing at 11,000+ qubits) and integer-based (qudit processing) optimization  problems. To further leverage the Company’s core technology and expanding capabilities, we  recently announced a joint R&D project to develop a quantum AI application using reservoir  computing and launched a unique Quantum Random Number Generator as part of our quantum cybersecurity offering. I am pleased to report that interest is growing quickly.” 

Mr. Liscouski continued, “Our product roll-out schedule for the second half of 2023 is exciting. We  are in the planning stages and eagerly anticipating hybrid computing capability, the world’s first  fully integrated quantum and classical combination. This computer has the potential to be a game changer. It is well understood that there are material deficiencies in standalone classical computing  that are solved through quantum computing and, conversely, the classical computer has an advantage  in data capture and storage. The introduction of a hybrid computer would revolutionize AI and take  it to the next level.” Mr. Liscouski concluded, “We are also actively working on the specification  and design for a dedicated quantum chip fabrication facility to develop and produce lithium niobate  optical chips. The development of a proprietary photonic quantum chip will enable us to take our  products to a next generation level, stay tuned.”  

First Quarter 2023 Financial Highlights 

• Revenue: First quarter revenues totaled approximately $121,000 (53.3% gross margin)  compared to $31,000 (63.0% gross margin) generated in the first quarter 2022. Revenue was  derived from a mix of commercial and government contracts. The Company commenced  technology commercialization during the first quarter.

• Operating Expenses: First quarter operating expense increased 16.7% year-over-year to  $7.9 million due primarily to an increase in salary expense partly offset by a decrease in  consulting and professional services as the Company builds its internal team and shifts  several core responsibilities in-house.  

The Company’s average monthly cash burn during first quarter 2023 was approximately  $1.57 million, an increase of $0.17 million or roughly 12% over the prior year’s monthly  average, primarily due to additional quantum engineering hires as a result of the QPhoton  merger and a focus on marketing to support an increase in product launches. The level of  cash expenditure is expected to hold relatively steady for the foreseeable future. 

• Net Results: The Company reported a net loss of $8.5 million for the first quarter of 2023, which included approximately $985,000 in non-recurring, merger-related operating expenses  and financing costs. This represents an increase of approximately $1.1 million or 19.2%  when compared to the same period of the previous year, 

• Total Assets: During the first quarter total assets increased $227,000 (0.25%) to $89.5  million as compared with year end at on December 31, 2022.  

• Cash increased $1.5 million during first quarter 2023 to approximately $6.8 million.  

• Total Liabilities: For the first three months of 2023, total liabilities decreased $1.8 million  to approximately $12.6 million as the Company began repayment of its debt and associated  interest as well as satisfied final expenses related to the QPhoton merger. 

• Shareholders’ Equity: During the three months of the quarter, shareholder equity increased  $2.0 million (2.7%) to $76.9 million. 

• Capitalization: As of March 31, 2023, QCi had approximately 60.5 million shares of  common stock outstanding, an increase of approximately 4.5 million shares from year-end  2022. This increase is attributed to the sale of shares through an At-The-Market (ATM)  facility and the shares issued as compensation for services related to the QPhoton merger.  As of May 9, 2023, the Company has $93.3 million remaining on its shelf registration that  went effective November 8, 2022. 

QCi’s fully diluted shares total approximately 79.5 million, including 10.2 million stock  options of which approximately 68% have vested (average exercise price $3.33), 1.6 million  warrants (average exercise price $6.93), 5.1 million cashless warrants to pre-merger  shareholders of QPhoton, and 1.5 million shares underlying Series A Preferred stock. In the  event that all options and warrants were to be exercised, the Company would receive an  additional $45.1 million in cash. 

Subsequent Financial Developments: 

o The Company has repaid $750,000 of principal and accrued interest on the  Company’s unsecured Note for a cumulative total repayment of $1 million as of May  9, 2023. 

o The Company issued 853,600 shares of restricted common stock with a two-year  vesting period to thirty-five employees as payment in lieu of cash for 2022  performance bonuses. 

First Quarter 2023 Operational Highlights 

Leadership Appointments: 

o Dr. Carl Weimer, a 30-year veteran of the aerospace industry focused on advanced  technologies, including laser remote sensing and LiDAR, joins QCi Board of  Directors as an independent member. Dr. Weimer currently serves as Chief  Technologist at Ball Aerospace & Technologies Corp within the Ball Civil Business  Unit. Previously, Dr. Weimer was the Principal Investigator for the NASA Earth  Science Technology Office. 

o The Honorable James (Jim) Simon, Jr., a seasoned US intelligence community leader  was appointed to create and lead QCi’s Technical Advisory Board as the Company  commences product sales. A key role of the Technical Advisory Board is to help  maintain QCi’s balance between competitive, technological development and  profitable growth. 

o Dr. Brian LaMacchia, a recently retired Distinguished Engineer and head of the  Security and Cryptography team within Microsoft Research, has joined the Technical  Advisory Board. 

New Subsidiary Announcement: 

o The Company launched a wholly owned subsidiary, QI Solutions, Inc., to deliver  quantum products and services to the US government agencies and defense markets.  Strategically headquartered in Arizona, the new initiative will be headed by Sean  Gabeler, a 30-year US Army and Special Operations officer and highly decorated  multi war combat veteran with a proven applied technology expertise in adapting  commercial technology to government solutions. 

Contract Announcement: 

o The Company received a subcontract award from SSAI to support NASA’s testing  of quantum photonic sensing solutions for monitoring climate change. Under the terms of the subcontract, QCi will test an existing LiDAR system designed to  remotely measure the physical properties of different types of snowpacks, including  the density, particle size and depth. Upon successful completion of this testing, QCi  may proceed with airborne testing with the ultimate goal to position the QCi LiDAR  units on satellites to create a network for monitoring snow levels globally. 

New Product Launch: 

o The Company commenced its cyber security product launch as international patents  were awarded addressing unconditional network security, including a method for  quantum authentication. This breakthrough patent fills a critical security breach  vulnerability by offering a way to effectively protect information in a zero-trust  environment and thereby safeguarding the entire network at all points of slippage. 

o The Company announced its plans to manufacture its own photonic quantum  computing microchips, which it currently produces in contract fab facilities at CUNY  and Columbia in New York City. QCi is working to obtain funding from the recent 

US government’s announcement of the CHIPs and Science Act $52 billion funding  to re-shore and develop new microchip technologies with the objective to increase  and maintain US competitiveness. This program offers QCi the opportunity to apply  for US government funding for its quantum photonic chip development. QCi and QI 

Solutions are aggressively pursuing this opportunity and anticipate funding in 2023  to establish its fabrication facility. 

Paid Proof of Concept and Beta-tests: 

o Virginia Innovation Partnership Corporation (VPIC) selected QCi as its partner for  risk-based flight trajectories. QCi successfully identified the optimal time, speed,  and route for drone aircraft to traverse among destinations, while satisfying airspace  constraints and minimizing risks related to weather, obstacles, and other aircraft  through the use of QCi’s Dirac-1 system. 

o Rabobank engaged QCi to demonstrate the application of QCi’s quantum computing  capabilities to fraud detection in assessing bank transactions. QCi successfully demonstrated four separate applications of our Dirac-1 towards different types of  machine learning classification tasks using Rabobank’s fraud detection data. 

o The Company is engaged in a number of beta-tests to demonstrate the effectiveness  of its computing capabilities, including: 

• Portfolio Optimization to demonstrate the optimization of stock portfolios for  trading. 

• Optimization of windmill placement for energy production. 

• Optimization of nuclear fuel rods for cost efficient replacement of fuel rods  for nuclear power plants. 

• Stock performance predictive modeling. 

Consortium Membership Invitation: 

o QI Solutions joined the University of Arizona’s Center for Quantum Networking  (CQN). In addition to QI Solutions, CQN partners include Harvard University, MIT,  Yale as well as Cisco, Lockheed Martin, L3Harris, and Raytheon. 

o QI Solutions joined the Arizona Defense and Industry Coalition (AZDIC) as a non traditional defense company that offers a suite of quantum services, ranging from  quantum computing to quantum sensing, imaging, and cybersecurity. AZDIC unites  a massive defense community that includes six military installation, four national  guard operations and 1,250 defense contractors collectively generating $10 billion in  economic impact. 

Subsequent Operational Developments and Outlook 

New Product Launch: 

o The Company announced its reprogrammable and non-repeatable Quantum Random Number Generator (QRNG), a patented technology that is crucial to  mitigate security vulnerabilities and provides customers with trustworthy data. The  QRNG is available through a cloud-based subscription on the Company website  followed by an option to purchase the hardware later in 2023.

o The Company announced its reservoir photonics computing capability through an  MOU with artificial intelligence company millionways, Inc. The partnership  represents a significant development for QCi as it enters into the AI market to  demonstrate the value of quantum computing for AI. The partnership will highlight the value of processing millionways’ AI algorithms through QCi’s existing RQC  systems that can uniquely assess audio files to produce an emotional scoring  capability and demonstrate an enhanced capability for AI systems in general. If the  data processing project is successful, the companies will develop a joint marketing  and business development plan to pursue commercial opportunities. 

 Leadership Announcement: 

o Lewis Shepherd, an emerging and disruptive technologies specialist within both  Silicon Valley (VMware, Microsoft) and government service (U.S. Department o  Defense, Federal Communications Commission, Intelligence Committee of AFCEA  International, Defense Intelligence Agency), has joined the QCi Technical Advisory  Board to provide industry advice, market intelligence, and QCi product visibility into  his extensive network. 

 Consortium Membership Invitation: 

o QI Solutions joined the Center for Quantum Technologies (CQT). CQT is a National  Science Foundation sponsored initiative with engineers and scientists from Purdue  University, Indiana University, the University of Notre Dame, and Indiana University  Purdue University Indianapolis (IUPUI). QI Solutions and these four universities are  joined by industry leaders, such as Air Force Research Laboratory, Amazon Web  Services, Eli Lilly, Cummins, Toyota, Northrup Grumman, and IBM Quantum, to  explore novel quantum technologies that address industry and defense challenges. 


o The Company has completed its discovery and research phase of its core technology  and has now transitioned to commercializing applications through its various product  lines. Year-to-date, QCi has released several products in the first four months of  2023 with a number of additional product launches planned during the remainder of  this year. The Company is actively increasing its sales and marketing efforts,  anticipating gradual revenue increase mid year with acceleration to occur in the  second half of 2023. 

For additional information on the company’s suite of solutions, please visit our website or contact  our team directly.  

About Quantum Computing Inc. (QCi) 

Quantum Computing Inc. is a full-stack quantum hardware and software company on a mission to accelerate  the value of quantum computing for real-world business solutions, delivering the future of quantum  computing, today. The company delivers accessible and affordable full-stack solutions with real-world  industrial applications, using photonic-based quantum entropy, which can be used anywhere and with little  to no training, operates at normal room temperatures, low power and is not burdened with unique  environmental requirements. QCi is competitively advantaged delivering its quantum solutions at greater  speed, accuracy, and security at less cost QCi’s core entropy computing capability, the Dirac series, delivers 

solutions for both binary and integer-based optimization problems using over 11,000 qubits for binary  problems and over 1000 (n=64) qudits for integer-based problems, each of which are the highest number of  variables and problem size available in quantum computing today. Using the Company’s core quantum  methodologies, QCi has also developed specific quantum applications for AI, cybersecurity and remote  sensing, including its Reservoir Quantum Computing, reprogrammable and non-repeatable Quantum Random  Number Generator and LiDAR products. For more information about QCi, visit  www.quantumcomputinginc.com. 

About QI Solutions, Inc. (QIS) 

QI Solutions, Inc., a wholly owned subsidiary of Quantum Computing Inc., is a supplier of quantum  technology solutions and services to the government and defense industries. With a team of qualified and  cleared staff, QIS delivers a range of solutions from entropy quantum computing to quantum communications  and sensing, backed by expertise in logistics, manufacturing, R&D and training. The company is exclusively  focused on delivering tailored solutions for partners in various government departments and agencies. For  more information about QIS, visit https://qiwerx.com/. 

Important Cautions Regarding Forward-Looking Statements 

This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as  amended, and Section 21E of the Securities Exchange Act of 1934, as amended. By their nature, forward-looking  statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that  will occur in the near future. Those statements include statements regarding the intent, belief or current expectations of  Quantum Computing Inc. (the “Company”), and members of its management as well as the assumptions on which such  statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees  of future performance and involve risks and uncertainties, and that actual results may differ materially from those  contemplated by such forward-looking statements. 

The Company undertakes no obligation to update or revise forward-looking statements to reflect changed conditions.  Statements in this press release that are not descriptions of historical facts are forward-looking statements relating to  future events, and as such all forward-looking statements are made pursuant to the Securities Litigation Reform Act of  1995. Statements may contain certain forward-looking statements pertaining to future anticipated or projected plans,  performance, and developments, as well as other statements relating to future operations and results. Any statements in  this press release that are not statements of historical fact may be considered to be forward-looking statements. Words  such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “intends,” “goal,” “objective,” “seek,” “attempt,”  “aim to,” or variations of these or similar words, identify forward-looking statements. These risks and uncertainties  include, but are not limited to, those described in Item 1A in the Company’s Annual Report on Form 10-K, which is  expressly incorporated herein by reference, and other factors as may periodically be described in the Company’s filings  with the SEC.