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
o 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.
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.
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.
Investor Relations Contact:
CMA Investor Relations
*** Financial Statements Follow ***
Quantum Computing Inc. Consolidated Balance Sheet (Unaudited) – Read below.