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Corporate History

Quantum Computing Inc. (“QCi,” the “Company” or “us”) was originally incorporated in the State of Nevada on July 25, 2001, under a predecessor name. On February 22, 2018, the Company redomiciled to Delaware and changed its name to Quantum Computing Inc. in connection with its transition to a quantum computing technology business. The Company’s common stock, par value $0.0001, has traded on the Nasdaq Capital Market under the symbol "QUBT" since July 15, 2021. On June 16, 2022, the Company merged with QPhoton, Inc. (“QPhoton”) (the “QPhoton Merger”), 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.

In February 2026, the Company completed its acquisition of Luminar Semiconductor, Inc. (“LSI”), a manufacturer and supplier of photonic components that are important building blocks on QCi’s technology roadmap. The LSI acquisition brings QCi a portfolio of core photonic technologies, patents, and a highly experienced team of engineers and scientists that are expected to accelerate QCi’s roadmap while continuing to support and grow LSI’s established customer base.

In March 2026, the Company acquired NuCrypt, LLC (“NuCrypt”), a quantum communications technology company. NuCrypt contributes expertise in generating, distributing, and measuring entangled photons over fiber optic links, which is expected to enhance QCi’s development of quantum security products. The NuCrypt acquisition helps establish quantum communications as an important commercialization vertical within QCi’s broader quantum technology strategy. By integrating NuCrypt’s quantum communications systems and products, QCi is expanding its portfolio of quantum secure communications and quantum photonics solutions while advancing its broader quantum technology roadmap.

In June 2026, the Company acquired NHanced Semiconductors, Inc. ("NHanced"), a U.S. based packaging foundry with expertise in hybrid bonding, chiplet architectures, silicon interposers, photonic device integration, advanced semiconductor packaging and manufacturing. The NHanced acquisition launched QCi’s Fab 2 initiative ahead of schedule and significantly expanded the Company’s advanced packaging and semiconductor manufacturing capabilities. NHanced strengthens QCi’s production infrastructure for nanophotonics and thin-film lithium niobate (“TFLN”) technologies while increasing production capacity, operational flexibility and U.S.-based manufacturing capabilities. The NHanced acquisition also expands QCi’s ability to support commercial and government customers across photonics, semiconductor manufacturing, artificial intelligence, defense, aerospace, telecommunications and quantum technologies.

Nature of Business

QCi is an American company utilizing integrated photonics, non-linear quantum optics, and advanced manufacturing to develop and deliver machines for quantum computing, reservoir computing, 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. We believe that our core 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. Through our LSI and NHanced subsidiaries, QCi also offers a range of photonic components and products, as well as engineering, manufacturing and advanced semiconductor packaging services.

Our leading quantum products today are our Entropy Quantum Computer (“EQC”), reservoir computer, photonic vibrometer, and quantum secured communication systems. Our longer-term product development plan is to migrate our current designs, as well as other product designs based on discrete components, to a set of thin film lithium niobate ("TFLN") optical integrated circuits built on TFLN wafers. We believe that the acquisitions of LSI, NuCrypt and NHanced will accelerate our technology roadmap by enhancing our capabilities in integrated photonics and quantum security, which will broaden our quantum secured network product line and support the Company’s initiatives to further integrate and miniaturize certain products for commercial and government customers. In addition, QCi offers LSI’s portfolio of photonic semiconductor products, including lasers, photo detectors and avalanche diodes, as well as NHanced's engineering and advanced packaging services.

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Liquidity

Basis of Presentation and Principles of Consolidation:

The Company prepares its condensed 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 Accounting Standards Codification (“ASC”) 810, Consolidation. The accompanying unaudited condensed 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.

Furthermore, the accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements have been included. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future period. The unaudited condensed consolidated balance sheet as of December 31, 2025 has been derived from audited consolidated financial statements at that date, but does not include all disclosures required by U.S. GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Reclassifications

Certain reclassifications have been made to the fiscal 2025 condensed consolidated financial statements to conform with the fiscal 2026 presentation. The reclassifications had no impact on net loss, total assets, total liabilities, or stockholders’ equity.

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 condensed 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.

Use of Estimates

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.

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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, certificates of deposits and deposit and money market accounts with high quality financial institutions which, at times, may exceed federally insured limits. As of June 30, 2026 and December 31, 2025, the Company had $189.2 million and $737.9 million, respectively, in cash equivalents invested in mutual funds, certificates of deposit and deposits. The Company has not experienced any losses on these deposits and believes it is not exposed to significant credit risk on cash and cash equivalents.

Operating Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in operating lease right-of-use assets on the condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the other current liabilities and operating lease liabilities, respectively, on the condensed 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, and 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 leases are comprised of operating leases for our facilities, and as of June 30, 2026 and December 31, 2025, the Company was not party to any finance leases.

Valuation of Goodwill

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 tax-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 performs its annual impairment test during the fourth quarter of each fiscal year. As of June 30, 2026, 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.

Intangible Assets

The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of the acquired business to the respective net tangible and intangible assets. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits are consumed.

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 repair costs are expensed as incurred.

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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 the three and six months ended June 30, 2026 and 2025, the Company did not record any impairment related to long-lived assets.

Fair Value of Financial Instruments

The carrying amount of certain financial instruments held by the Company, such as accounts receivable, short- and long-term investments, 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 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 1Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2Inputs 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 3Unobservable 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 June 30, 2026 and December 31, 2025, the Company’s cash and cash equivalents included $189.2 million and $737.9 million, respectively, of Level 1 assets, comprised of U.S. Government mutual funds. As of June 30, 2026 and December 31, 2025, the Company’s available-for sale securities of $1.1 billion and $782.5 million, respectively, were in Level 2 assets, comprised of U.S. Treasuries, U.S. agency securities, corporate debt securities, asset-backed securities and certificates of deposits. The Company had $6.3 million and $7.8 million as of June 30, 2026 and December 31, 2025, respectively, in Level 3 liabilities, which are comprised of derivative liabilities. See Note 11, Capital Stock – Warrants, for a full discussion of the warrant liability.

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.

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,

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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 includes the potential dilutive effect 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. Because the impact of these items is generally anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses.

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

						Three Months Ended June 30,									Six Months Ended June 30,
Basic net loss per common share:						2026						2025			2026						2025
Numerator:
Net loss						$	(11,753)					$	(36,482)		$	(15,803)					$	(19,500)
Denominator:
Weighted average outstanding shares of common share – basic*						224,727						141,401			224,355						138,326
Loss per common share - basic						$	(0.05)					$	(0.26)		$	(0.07)					$	(0.14)
Diluted net loss per common share:
Numerator:
Net loss						$	(11,753)					$	(36,482)		$	(15,803)					$	(19,500)
Denominator:
Weighted average common shares outstanding - basic						224,727						141,401			224,355						138,326
Effect of dilutive securities						-						-			-						—
Weighted average common shares outstanding - diluted						224,727						141,401			224,355						138,326
Loss per common share - diluted						$	(0.05)					$	(0.26)		$	(0.07)					$	(0.14)

*The total shares outstanding as of December 31, 2025 was 224.2 million, however the weighted average share calculation does not include 700 thousand shares of unvested common stock.

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 three and six months ended June 30, 2026 and 2025, 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

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equivalents for the securities outstanding during the period that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Warrants			1,738						10,277						1,552						11,179
Options			3,624						3,071						3,983						3,329
Unvested restricted common stock			946						1,198						843						1,220
Total potentially dilutive shares			6,308						14,546						6,378						15,728

Recently Issued Accounting Pronouncements

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 condensed consolidated financial position or results of operations upon adoption.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to provide disaggregated disclosures of certain expense captions presented on the face of the income statement into specific categories within the notes to the consolidated financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its condensed consolidated financial statements and related disclosures.

On July 30, 2025, the FASB issued ASU 2025-05, 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 adopted the guidance as of January 1, 2026 and adoption did not have a material impact on our consolidated financial statements and related disclosures.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC) and the SEC did not or are not expected to have a material effect on our condensed consolidated financial statements.

LSI Acquisition

On December 15, 2025, the Company entered into a Stock Purchase Agreement with Luminar Technologies, Inc., a Delaware corporation (the “Seller”) and Luminar Semiconductor, Inc. a Delaware corporation (“LSI”), pursuant to which, the Company agreed to acquire all of the issued and outstanding shares of common stock of LSI from the Seller (the “Transaction”). The Transaction was completed on February 2, 2026 (the “LSI Closing Date”). LSI is engaged primarily in the design, development, manufacturing, packaging, and development services of photonic components and sub-systems (including semiconductor lasers and photodetectors), application-specific integrated circuits, and pixel-based sensors. LSI’s revenue is derived from customers located in the United States and international markets.

The purchase price was $110.0 million in cash, subject to a dollar-for-dollar adjustment to the extent that the working capital at closing was greater or less than the target working capital of $8.1 million. The consideration paid by the Company at closing consisted of approximately $97.5 million in cash, along with $11.0 million placed with an escrow agent at signing. The escrow will remain in place for twelve months following the LSI Closing Date to cover certain limited indemnification obligations of the Seller.

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The fair value of consideration transferred is below (in thousands):

Initial purchase price			$	110,000
Less adjustments per purchase agreement for working capital and indebtedness			(1,501)
Preliminary purchase price			108,499
Amount paid prior to closing date			(11,000)
Cash consideration on closing date			$	97,499

The acquisition is accounted for in accordance with FASB ASC Topic 805, Business Combinations (“ASC 805”). This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The table below represents the preliminary purchase price allocation for LSI based on estimates, assumptions, valuations and other analyses as of the Closing Date, that have not been finalized in order to make a definitive allocation. Accordingly, the adjustments to allocate the purchase price will remain preliminary until management finalizes the fair values of assets acquired and liabilities assumed. The fair value of intangible assets was based upon an independent appraiser utilizing the cost, income or market approach. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The final amounts allocated to assets acquired and liabilities assumed, and therefore, calculation of goodwill, are dependent upon certain valuation and other studies that have not yet been completed and could differ materially from the amounts presented in the condensed consolidated financial statements. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.

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The preliminary purchase price is allocated to the tangible and intangible assets and liabilities of LSI based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):

			Acquisition Date Fair Values Assigned
Assets acquired:
Cash and cash equivalents			$	-
Accounts receivable			3,624
Inventory			3,070
Prepaid expenses and other current assets			1,146
Property and equipment			3,246
Operating lease right-of-use assets			3,181
Intangible assets			24,144
			38,411
Liabilities assumed:
Accounts payable			721
Accrued expenses			604
Deferred revenue and contract liabilities			1,267
Other current liabilities			913
Operating lease liabilities, net of current portion			2,268
			5,773
Total identifiable net assets acquired			32,638
Goodwill			75,861
Preliminary purchase price			$	108,499

During the three-months ended June 30, 2026, there was a $10.6 million change to the purchase price allocation related to intangibles assets. The measurement period adjustment did not have a material impact on the condensed consolidated statement of operations.

Acquired intangibles include the following:

			Fair Value (in thousands)						Useful Life in Years
Developed technology			$	21,238					7
Tradename			2,906						5
Total			$	24,144

From the acquisition date through June 30, 2026, LSI contributed revenue of $8.1 million and operating loss of $5.7 million.

NuCrypt Acquisition

The Company completed its acquisition of NuCrypt, LLC (“NuCrypt”), a quantum communications technology company, on March 4, 2026. The acquisition helps establish quantum communications as an important commercialization vertical within QCi’s broader quantum technology strategy. By integrating NuCrypt’s suite of quantum communications systems and products, QCi expects to advance its technology roadmap while extending its portfolio of quantum communications and quantum photonics solutions.

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The purchase price was $2.5 million in cash, subject to a working capital adjustment at closing, and 250,000 shares of QCi’s common stock. The equity consideration is valued at the fair value as of the acquisition date and will be issued equally in shares of common stock on the first, second and third anniversaries of the acquisition. The shares are reserved out of the Company’s authorized but unissued shares.

The fair value of consideration transferred is below (in thousands):

Initial cash purchase price			$	2,500
Plus adjustments per purchase agreement for working capital			(9)
Equity consideration at fair value			2,038
Preliminary Purchase Price			4,529
Less: Cash Retained by Company			(58)
Fair value of consideration transferred			$	4,471

The acquisition is accounted for in accordance with ASC 805. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates. The table below represents the preliminary purchase price allocation for NuCrypt based on estimates, assumptions, valuations and other analyses as of the Closing Date, that have not been finalized in order to make a definitive allocation. Accordingly, the adjustments to allocate the purchase price will remain preliminary until management finalizes the fair values of assets acquired and liabilities assumed. The fair value of intangible assets was based upon an independent appraiser utilizing the cost, income or market approach. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The fair value of the customer relationships was determined using the multi-period excess earnings income approach or cost approach. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The final amounts allocated to assets acquired and liabilities assumed, and therefore, calculation of goodwill, are dependent upon certain valuation and other studies that have not yet been completed and could differ materially from the amounts presented in the condensed consolidated financial statements. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.

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The preliminary purchase price is allocated to the tangible and intangible assets and liabilities of NuCrypt based on their estimated fair values, with any excess purchase consideration allocated to goodwill as follows (in thousands):

			Acquisition Date Fair Values Assigned
Assets acquired:
Cash and cash equivalents			$	58
Accounts receivable			59
Prepaid expenses and other current assets			11
Operating lease right-of-use assets			22
Property and equipment			18
Intangible assets			1,018
			1,186
Liabilities assumed:
Accounts payable			33
Other current liabilities			43
			76
Total identifiable net assets acquired			1,110
Goodwill			3,419
Preliminary purchase price			$	4,529

Acquired intangibles include the following:

			Fair Value (in thousands)						Useful Life in Years
Developed technology			$	586					8
Customer Relationships			289						16
Tradename			143						7
Total			$	1,018

From the acquisition date through June 30, 2026, NuCrypt contributed revenue of $0.4 million and operating loss of $0.2 million.

NHanced Acquisition

The Company completed its acquisition of NHanced Semiconductors, Inc. (“NHanced”) on June 22, 2026. The acquisition marks an important step in QCi’s transition from research-driven innovation and prototyping to scalable commercial production. By adding semiconductor and nanophotonics fabrication capabilities, advanced packaging expertise and specialized engineering talent, QCi is strengthening its operational capabilities and manufacturing readiness.

The purchase price was $48.1 million in cash, subject to a working capital adjustment at closing, $20.0 million placed in escrow and $5.0 million in shares of QCi’s common stock. The escrow amounts are to be paid to the sellers, with interest, upon NHanced achieving certain revenue targets as of December 31, 2027 and 2028. The equity consideration consists of 447,000 shares valued using the stock price as of the acquisition date. In addition, the acquisition agreement includes contingent consideration of up to $72.0 million based on the achievement of certain post-acquisition performance targets based on revenue as of December 31, 2027 and revenue and EBITDA as of December 31, 2028. As of June 30, 2026, the Company is continuing to evaluate the fair value of the contingent consideration as part of its preliminary purchase price allocation. Based on information available at this time, no amount has been preliminarily assigned to the contingent consideration liability; however, the valuation remains subject to change upon completion of the Company's valuation analyses and other purchase accounting procedures.

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The fair value of consideration transferred is below (in thousands):

Initial cash purchase price			$	48,100
Plus contingent consideration paid to escrow			20,000
Plus adjustments per purchase agreement for working capital			684
Total cash payments at close			68,784
Equity consideration at fair value			5,000
Preliminary Purchase Price			$	73,784

The acquisition is accounted for in accordance with ASC 805. This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company has not completed its valuation of acquired identifiable assets, including intangibles, as of the filing date of this Form 10-Q. Accordingly, the preliminary purchase price allocation reflects provisional amounts based on information currently available. Significant adjustments may be recorded upon completion of management's valuation analysis and third-party valuation studies. Such adjustments are expected to impact intangible assets, property and equipment, inventory and goodwill. As the allocation to identifiable intangible assets, which are expected to include developed technology, customer relationships, and tradename is not currently available due to the timing between the acquisition date and the filing of the Form 10-Q, we have classified amounts that would be allocated to such assets as goodwill as of June 30, 2026. The table below represents the preliminary purchase price allocation for NHanced based on management's best estimates as of the Closing Date. Operating lease asset and operating lease liability were valued based upon the present value of lease payments over the remaining lease term. The estimated fair value of all other assets and liabilities approximated the carrying values at acquisition date. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill recorded from this acquisition represents business

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benefits the Company anticipates from the acquired workforce and expectations for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.

			Acquisition Date Fair Values Assigned
Assets acquired:
Cash and cash equivalents			$	-
Accounts receivable			2,592
Inventory			7,720
Prepaid expenses and other current assets			185
Property and equipment			24,746
Operating lease right-of-use assets			12,812
Other non-current assets			320
Intangible assets (subject to completion of valuation)
			48,375
Liabilities assumed:
Accounts payable			1,567
Accrued expenses			2,305
Deferred revenue and contract liabilities			1,492
Other current liabilities			2,231
Other non-current liabilities			1,184
Operating lease liabilities, net of current portion			12,414
			21,193
Total identifiable net assets acquired			27,182
Goodwill			46,602
Preliminary purchase price			$	73,784

From the acquisition date through June 30, 2026, NHanced contributed revenue of $0.1 million and an operating loss of $0.4 million.

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Unaudited Proforma Condensed Consolidated Results

The table below presents the unaudited pro forma condensed consolidated results assuming the acquisition of LSI, NuCrypt and NHanced had occurred on January 1, 2025 (in thousands):

			Three Months Ended June 30, 2026
			QCi as Reported						LSI Pre-Acquisition						NuCrypt Pre-Acquisition						NHanced Pre-Acquisition						Total
Total revenue			$	5,551					$	—					$	—					$	3,525					$	9,076
Net loss			$	(11,753)					$	—					$	—					$	(3,229)					$	(14,982)
			Three Months Ended June 30, 2025
			QCi as Reported						LSI Pre-Acquisition						NuCrypt Pre-Acquisition						NHanced Pre-Acquisition						Total
Total revenue			$	61					$	5,146					$	149					$	10,399					$	15,755
Net (loss) income			$	(36,482)					$	(3,578)					$	(167)					$	2,398					$	(37,829)
			Six Months Ended June 30, 2026
			QCi as Reported						LSI Pre-Acquisition						NuCrypt Pre-Acquisition						NHanced Pre-Acquisition						Total
Total revenue			$	9,242					$	1,742					$	346					$	7,549					$	18,879
Net loss			$	(15,803)					$	(640)					$	(158)					$	(4,277)					$	(20,878)
			Six Months Ended June 30, 2025
			QCi as Reported						LSI Pre-Acquisition						NuCrypt Pre-Acquisition						NHanced Pre-Acquisition						Total
Total revenue			$	100					$	13,619					$	340					$	16,445					$	30,504
Net (loss) income			$	(19,500)					$	(9,603)					$	(204)					$	290					$	(29,017)

The proforma information above reflects the combination of the Company’s results of operations as disclosed in the accompanying condensed consolidated statements of operations together with the unaudited results of LSI, NuCrypt and NHanced for the same periods.

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 condensed consolidated net (loss) income 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.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Revenue			$	5,551					$	61					$	9,242					$	100
Less:
Salaries and employee related costs			9,359						3,994						18,169						7,239
Stock-based compensation			1,759						1,777						3,005						3,182
Rent and facilities			1,617						425						2,448						658
Professional services and legal fees			6,319						985						13,812						2,517
Technology & IT costs			1,771						807						2,871						1,259
Direct and indirect materials			1,281						-						1,938						-
Other sales and marketing costs			1,553						471						2,485						736
Depreciation and amortization expense			3,154						888						5,126						1,862
Other operational expense			1,751						885						2,951						1,104
Operating loss			(23,013)						(10,171)						(43,563)						(18,457)
Other income (loss)
Interest and other income			12,954						1,843						26,449						3,539
Interest expense			(12)						(58)						(183)						(116)
Change in fair value of derivative and warrant liabilities			(1,682)						(28,096)						1,494						(4,466)
Segment net loss			(11,753)						(36,482)						(15,803)						(19,500)
Other comprehensive loss			(945)						-						(4,767)						-
Total comprehensive loss			$	(12,698)					$	(36,482)					$	(20,570)					$	(19,500)

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. As of June 30, 2026, the Company has a valuation allowance against all of its net deferred tax assets.

The total effective tax rate was 0% for each of the three and six months ended June 30, 2026 and 2025.

For each of the three and six months ended June 30, 2026 and 2025, the Company’s effective tax rate differed from the federal statutory rate of 21%, primarily due to the valuation allowance placed against its net deferred tax assets.

The Company did not pay any material state income tax during the three and six months ended June 30, 2026 and 2025.

Loss carryovers are generally subject to modification by tax authorities until three years after they have been utilized; as such, the Company is subject to examination for the fiscal years ended 2018 through present.

Uncertain Tax Positions

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The following table summarizes available-for sale debt securities held by the Company as of June 30, 2026:

			Remaining Maturity Contractual						Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
U.S. Treasuries			< 1 year						$	355,438					$	-					$	(496)					$	354,942
			1 - 3 years						191,155						-						(1,687)						189,468
			3 - 5 years						-						-						-						-
Corporate debt securities			< 1 year						406,919						133						(718)						406,334
			1 - 3 years						170,896						1						(1,035)						169,862
			3 - 5 years						-						-						-						-
Certificates of Deposits			< 1 year						3,748						-						(4)						3,744
			1 - 3 years						499						-						-						499
			3 - 5 years						-						-						-						-
Asset-Backed Securities			< 1 year						-						-						-						-
			1 - 3 years						7,496						-						(43)						7,453
			3 - 5 years						2,015						-						(13)						2,002
Total available-for-sale debt securities									$	1,138,166					$	134					$	(3,996)					$	1,134,304

The Company may from time to time sell its available-for-sale debt securities. There were $112 thousand and $128 thousand in realized gains on sales of available-for-sale debt securities for the three and six months ended June 30, 2026, respectively. The realized gains on available-for-sale debt securities related to investments purchased during the three and six months ended June 30, 2026. Therefore, there were no amounts reclassified out of accumulated other comprehensive loss, net of tax during the three and six months ended June 30, 2026. The Company’s investment portfolio includes callable securities that may be called prior to maturity.

The aggregated net unrealized loss on available-for-sale debt securities in the amount of $3.9 million has been recorded in accumulated other comprehensive loss in the Company’s condensed consolidated balance sheet as of June 30, 2026.

The changes in goodwill during the six months ended June 30, 2026 are as follows (in thousands):

Balance at December 31, 2025			$	55,573
LSI acquisition			75,861
NuCrypt acquisition			3,419
NHanced acquisition			46,602
Balance at June 30, 2026			$	181,455

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The composition of intangible assets, net, is as follows (in thousands):

			June 30, 2026																		December 31, 2025
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Website domain name and trademark			$	1,152					$	(831)					$	321					$	1,009					$	(724)					$	285
Technology and licensed patents			13,317						(7,453)						5,864						12,731						(6,516)						6,215
Customer relationships			289						(6)						283						-						-						-
Developed technology			21,238						(1,263)						19,975
Tradename			2,906						(242)						2,664						-						-						-
Total			$	38,902					$	(9,795)					$	29,107					$	13,740					$	(7,240)					$	6,500

The Company recorded amortization expense of the Company’s intangible assets of $1.4 million and $2.6 million during the three and six months ended June 30, 2026, respectively, and $0.7 million and $1.5 million for the three and six months ended June 30, 2025, respectively. The Company expects future amortization expense to be the following (in thousands):

			Amortization
2026 (remaining six months)			$	2,874
2027			5,630
2028			5,546
2029			4,485
2030			3,727
Thereafter			6,845
Total			$	29,107

The Company’s property and equipment, net, consist of (in thousands):

			June 30, 2026						December 31, 2025
Computer and lab equipment			$	34,472					$	13,070
Network equipment			45						35
Furniture and fixtures			355						99
Software			1,187						374
Leasehold improvements			6,589						2,303
Construction in progress			5,731						-
Total cost of property and equipment			48,379						15,881
Accumulated depreciation			(5,481)						(2,910)
Property and equipment, net			$	42,898					$	12,971

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The Company recorded depreciation expense of $1.5 million and $2.6 million during the three and six months ended June 30, 2026, respectively, and $0.2 million and $0.4 million during the three and six months ended June 30, 2025, respectively. Useful lives of the Company’s long-lived assets are as follows:

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

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 three and six months ended June 30, 2026 or 2025.

The Company leases its facilities under operating leases which expire at various dates through 2038. Most of the Company’s leases include one or more options to renew. The Company’s leases do not provide an implicit rate, and the rates implicit in our leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease 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 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 June 30, 2026 (in thousands):

Year
2026 (remaining six months)						$	2,323
2027						4,706
2028						4,282
2029						3,683
2030						3,128
Thereafter						19,774
Total minimum payments						37,896
Less: imputed interest						(14,507)
Present value of operating lease liabilities						23,389
Less: current portion included in other current liabilities						(2,287)
Long-term operating lease liabilities						$	21,102

The payments above include approximately $3.6 million related to options to extend operating leases that are reasonably certain of being exercised.

In conjunction with the acquisition of NHanced, the Company assumed two leases where the prior owner, and now a current employee of the Company, is the lessor. Monthly rent under these leases is $48.7 thousand with three percent annual increases. Of the total minimum payments presented in the table above, $6.7 million relates to these assumed leases.

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Other information related to operating lease liabilities consists of the following (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Operating lease cost			$	689					$	162					$	1,134					$	305
Short term lease cost			26						10						42						20
Total lease cost			$	715					$	172					$	1,176					$	325
Cash payments for operating leases			$	621					$	162					$	1,070					$	305
Lease assets obtained in exchange for new operating lease liabilities			$	5,579					$	776					$	5,579					$	776

			June 30, 2026						December 31, 2025
Weighted average remaining lease term in years			9.16						3.30
Weighted average discount rate			10.75		%				10.00		%

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 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 a 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 condensed consolidated financial position or results of operations and are adequately covered by our liability insurance. However, it is possible that condensed consolidated cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies or because of the diversion of management’s attention and the incurrence of significant expenses.

See Part II, Item 1, Legal Proceedings, in this Form 10-Q for additional details on the status of motions in the following 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 Exchange Act. The complaint alleges that the Company made false and/or misleading statements and/or failed to disclose material

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information about the Company’s customers, contracts and business operations in its public statements and SEC filings. The plaintiff seeks unspecified monetary damages plus attorney’s fees and costs. In June 2025, the New Jersey District Court designated a lead plaintiff who filed an amended operative complaint on or 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 filed a motion to dismiss the second amended complaint on March 13, 2026, and the lead plaintiff filed its opposition to the company’s motion to dismiss on April 22, 2026. On May 22, 2026, the Company filed a reply memorandum of law in support of the motion to dismiss. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims asserted. Given the early stage of the litigation, the Company is unable to estimate a range of potential loss at this time. However, an unfavorable outcome could have a material adverse effect on the Company's financial condition, results of operations, and cash flows.

Shareholder Derivative Action Lawsuit

On March 30, 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.

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.

Authorized Classes of Stock

As of June 30, 2026, the Company is authorized to issue common stock, par value $0.0001 per share, and two classes of preferred stock, par value $0.0001 per share, including 1,550,000 shares designated as Series A and 3,079,864 shares designated as Series B. No shares of Series A or Series B preferred stock were outstanding as of June 30, 2026 and December 31, 2025.

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At-the-market facility

The Company did not sell any shares through its at-the-market facility during the three and six months ended June 30, 2026 and 2025.

Equity Activity

Net proceeds during the three and six months ended June 30, 2026 were $0.8 million and $4.3 million, respectively, from stock option exercises.

Warrants

The table below summarizes the warrants outstanding at June 30, 2026 (in thousands, except exercise price data):

Issuance Date						Expiration Date						Exercise Price						Issued						Exercised						Forfeited / Canceled						Warrants Outstanding
June 16, 2022						May 9, 2027						$	0.0001					6,325						(1,187)						(4,491)						647
November 18, 2024						November 18, 2029						$	2.875					800						(304)						-						496
December 12, 2024						December 12, 2029						$	5.75					500						(100)						-						400
January 9, 2025						January 9, 2030						$	14.0875					327						(65)						-						262
																																				1,805

On June 16, 2022, the Company issued 6.3 million QPhoton warrants to purchase common stock at an exercise price of $0.0001 per share, exercisable upon exercise of certain underlying Company options and warrants outstanding as of June 15, 2022. As of June 30, 2026, approximately 71% of the QPhoton warrants have been forfeited because the corresponding underlying instruments expired or were forfeited. The QPhoton warrants are classified as liabilities and measured at fair value, with changes recognized in earnings. The liability was $6.3 million as of June 30, 2026. See Note 2 - Significant Accounting Policies – Fair Value of Financial Instruments - for valuation methodology and inputs. During the three and six months ended June 30, 2026, the Company recognized mark-to-market losses of $1.7 million and mark-to-market gains of $1.5 million, respectively. During the three and six months ended June 30, 2025, the Company recognized mark-to-market losses of $28.1 million and $4.5 million, respectively. During the year ended December 31, 2025, $20.4 million was reclassified from warrant liability to additional paid-in capital upon exercise of QPhoton warrants.

Incentive Plans

The Quantum Computing Inc. 2019 Equity and Incentive Plan, as amended in 2021 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 was approved by a majority of the shareholders in September 2022. The 2022 Plan initially provided for the issuance of up to 16 million shares of the Company’s common stock and includes provisions for annual automatic evergreen increases of 1,000,000 shares of common stock. As of June 30, 2026, the total number of shares of our common stock reserved for issuance under the 2022 Plan is 30 million and of that amount a total of 17.9 million shares, including 5.9 million shares underlying options, were issued and outstanding under the 2022 Plan.

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Options

The following table summarizes the Company’s option activity for the six months ended June 30, 2026 (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, 2026			7,063						$	4.11					2.6
Granted			196						9.82						9.7
Exercised			(1,206)						3.52						0.0
Forfeited			(188)						8.95						0.0
Balance as of June 30, 2026			5,865						4.26						2.6
Vested and exercisable as of June 30, 2026			3,460						$	3.34					2.2

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 three and six months ended June 30, 2026 and 2025:

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Exercise price			$7.06 - 12.24						$7.06 - 12.24						$7.06 - 12.24						$1.00 - 14.34
Risk-free interest rate			3.8 - 4.3%						3.4 - 4.3%						3.4 - 4.3%						4.0 - 4.2%
Expected volatility			125.7 - 130.1%						130 - 138%						125.7 - 136.2%						130.0 - 138.0%
Expected dividend yield			0		%				0		%				0		%				0		%
Expected life of options (in years)			10						5						10						5

The following table summarizes the exercise price range as of June 30, 2026 (in thousands, except exercise price data):

Exercise Price						Outstanding Options						Exercisable Options
$0.00 - 1.00						554						419
$1.00 - 2.00						2,660						1,221
$2.00 - 3.00						1,098						1,098
$3.00 - 6.00						110						30
$6.00 - 8.00						537						505
$8.00 - 12.00						268						77
$12.00 - 22.00						638						110
						5,865						3,460

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2026 and 2025 was $9.82 and $7.63 per share, respectively. As of June 30, 2026, total unrecognized compensation cost related to common stock options was $8.1 million, which is expected to be recognized over a period of 2.9 years.

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Restricted Stock

As of June 30, 2026, there were 1.1 million shares of the Company’s common stock issued and unvested that 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 three and six months ended June 30, 2026 (in thousands):

			Number Outstanding						Weighted Average Fair Value
Unvested as of December 31, 2025			700						$	5.6
Granted			438						10.1
Vested			(55)						6.8
Forfeited			(6)						7.0
Unvested as of June 30, 2026			1,077						$	5.3

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 condensed consolidated statements of operations (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Research and development			$	840					$	467					$	1,596					$	964
Sales and marketing			82						31						144						91
General and administrative			837						1,279						1,265						2,109
Total stock-based compensation			$	1,759					$	1,777					$	3,005					$	3,164

For the six months ended June 30, 2025, stock-based compensation on the condensed consolidated statements of stockholders’ equity was $1.5 million higher than expense recorded in the condensed consolidated statement of operations, due to timing differences between award dates and the realization of stock-based compensation expense.

The Company issued 55 thousand and 428 thousand shares of common stock during the three and six months ended June 30, 2026. The Company did not issue any shares of common stock as compensation during the three and six months ended June 30, 2025. During the six months ended June 30, 2025, the Company issued 25 thousand shares of common stock to former executives per their separation agreements.

The Company leases two facilities from an employee as a result of the NHanced acquisition. See Note 9 for further discussion. There were no other related party transactions during the three and six months ended June 30, 2026 and 2025.

Effective December 17, 2020, QPhoton signed a License Agreement with the Stevens Institute (the “Stevens License Agreement”). The Stevens License Agreement enables the Company to commercially use technology such as licensed patents, licensed patent applications and licensed “Know-How” and 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 QPhoton Merger, the Stevens License Agreement was assigned to the Company.

During the term of the Stevens License Agreement and prior to any commercialization or sublicensing of the technology by the Company, the Company is 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

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and/or sublicensing has been initiated, the Company will 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% of the outstanding equity of the Company within 30 days of the execution of the agreement, and (iv) royalties of 30 days of the execution of the agreement, and (iv) royalties of 4% 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 June 30, 2026, the Company is working towards commercializing some of the licensed technology, though has not recognized any related revenue and hence has not incurred any royalty expenses payable to the Stevens Institute.

There are no subsequent events that in management’s opinion are reportable.

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