10-K: Quantum Computing Inc. 2025 Annual Report: Growth, Acquisitions, Capital

Quantum Computing Inc. reported an 83% increase in total revenue for 2025, driven by product sales and strategic acquisitions, while continuing to incur significant operating losses and addressing internal control weaknesses.

Summary

• Quantum Computing Inc. (QCi) is an American company focused on integrated photonics and non-linear quantum optics to develop machines for quantum computing, machine learning, remote sensing, imaging, and cybersecurity applications.
• QCi's products, including the Entropy Quantum Computer (EQC), are designed to operate at room temperature and low power, differentiating them from cryogenic quantum systems.
• The company substantially completed the buildout of its state-of-the-art Thin Film Lithium Niobate (TFLN) chip research and development, prototyping, and small-batch manufacturing facility in Tempe, AZ, in March 2025.
• QCi acquired Luminar Semiconductor, Inc. (LSI) in February 2026 for $110 million in cash, broadening its photonic chip design and manufacturing capabilities.
• New products launched include the Dirac-3 EQC in Q1 2024 and Neurawave, a photonics-based reservoir computer, in November 2025.
• Total revenue increased 83% to $682 thousand in 2025 from $373 thousand in 2024, primarily driven by successful sales of vibrometer and quantum networking devices.
• The net loss decreased to $18.674 million in 2025 from $68.542 million in 2024.
• QCi raised $1,475.1 million in net proceeds through private placements of equity during 2025.
• The company reported an accumulated deficit of $219.2 million as of December 31, 2025.
• Material weaknesses in internal control over financial reporting were identified as of December 31, 2025, although previously identified weaknesses related to revenue recognition and accounting policies were remediated.
• QCi is involved in ongoing legal proceedings, including a securities class action lawsuit and multiple shareholder derivative actions.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report due to significant revenue growth, a substantial capital raise, and strategic acquisitions that strengthen the company's technological foundation, despite ongoing operating losses and internal control challenges typical for an early-stage, high-growth technology company.

Positives

• Total revenue increased 83% year-over-year to $682 thousand in 2025, up from $373 thousand in 2024.
• Product revenue saw a substantial increase of 1,063% in 2025, driven by successful sales of vibrometer and quantum networking devices.
• Successfully raised $1,475.1 million in net proceeds from equity private placements in 2025, significantly strengthening liquidity and capital resources.
• Strategic acquisition of Luminar Semiconductor, Inc. (LSI) in February 2026 for $110 million, enhancing photonic chip design and manufacturing capabilities and supporting the technology roadmap.
• Completion of the TFLN chip R&D and small-batch manufacturing facility in Tempe, AZ, in March 2025, with plans for a higher volume manufacturing facility (FAB 2).
• Launch of new products: Dirac-3 EQC in Q1 2024 and Neurawave (photonics-based reservoir computer) in November 2025, expanding product offerings.
• Net loss decreased significantly by 73% from $68.542 million in 2024 to $18.674 million in 2025.
• Interest and other income, net, increased by 4,798% to $20.718 million in 2025 from $423 thousand in 2024, reflecting higher cash balances from financing activities.
• Remediation of previously identified material weaknesses in internal controls related to revenue recognition and insufficient written policies and procedures for accounting and financial reporting.

Negatives

• Gross profit decreased by 40% to $67 thousand in 2025, with the gross profit margin falling from 30% in 2024 to 10% in 2025, largely due to higher direct labor expenses for new hardware product assembly and testing.
• Operating expenses increased significantly by 96% to $51.144 million in 2025, driven by higher research and development, sales and marketing, and general and administrative expenses.
• The company has a history of operating losses and an accumulated deficit of $219.2 million as of December 31, 2025, and expects to incur significant expenses and continuing losses for the foreseeable future.
• Identified material weaknesses in internal control over financial reporting as of December 31, 2025, related to the control environment, risk assessment process, and IT general controls.
• Ongoing securities class action lawsuit and multiple shareholder derivative actions alleging violations of the Exchange Act and breaches of fiduciary duties, which could result in substantial costs and divert management attention.
• The business model is unproven, and commercial adoption of quantum computing technology is uncertain and may never occur, posing a fundamental risk to long-term success.
• Reliance on a single supplier for certain materials and concentration of TFLN Optical Chips manufacturers in China and East Asia expose the company to geopolitical tensions, trade restrictions, and supply chain disruptions.
• The quantum computing industry is highly competitive, with larger, well-established technology companies and sovereign nations investing heavily, making it challenging for QCi to compete effectively.
• Future capital requirements are significant for R&D and manufacturing expansion, and additional financing may result in dilution to stockholders or be unavailable on acceptable terms.
• The company's ability to use net operating loss carryforwards and other tax attributes may be limited due to ownership changes, potentially increasing future income tax liability.

Risks

• The company is in its early stages with a limited operating history, making it difficult to forecast future results of operations.
• A history of operating losses and an expectation to incur significant expenses and continuing losses for the foreseeable future, with no certainty of achieving or sustaining profitability.
• The business model is unproven and may never allow the company to cover its costs.
• Inability to scale the business quickly enough to meet customer and market demand, which could adversely affect financial condition and results of operations.
• Commercial adoption of quantum computing technology is uncertain and may never occur, and the company has no experience in producing large quantities of its products.
• Products may contain defects in design and manufacture that may cause them to not perform as expected or require repair and design changes, potentially leading to liability.
• Failure to manage growth effectively could harm the business, results of operations, and financial condition.
• Requires a significant amount of cash for expenditures and may need additional capital sooner than planned, with no assurance that additional financing will be available on acceptable terms.
• Ability to use net operating loss carryforwards and other tax attributes may be limited in connection with ownership changes.
• Significant barriers in developing and manufacturing products, including the need to invent and develop new technology, which may not be overcome in a timely or cost-effective manner.
• Inability to reduce production costs sufficiently, which may prevent competitive pricing of quantum systems.
• Products and services may fail to deliver customer value to a broader range of customers than classical approaches, hindering market acceptance.
• The quantum computing industry is highly competitive, and the company may not be successful in competing or establishing confidence among partners and customers.
• Reliance on access to high-performance third-party classical computing through public clouds, with risks of connectivity issues or changes in relationships with providers.
• Dependence on certain suppliers, with failure to maintain relationships or replace them potentially having a material adverse effect on business.
• Acquisitions or divestitures could result in adverse impacts on operations, including integration challenges, diversion of management attention, and unexpected liabilities.
• TFLN Optical Chips manufacturers, suppliers, and distributors are concentrated primarily in China and other parts of East Asia, exposing the company to geopolitical uncertainty and supply chain disruptions.
• Inability to attract, retain, and motivate key associates, especially those with highly technical skill sets, could adversely affect the business.
• Competitors may achieve technological breakthroughs that render the company's quantum computing systems obsolete or inferior.
• The quantum computing industry is in its early stages and volatile, and if it does not develop or develops slower than anticipated, business growth will be harmed.
• Experience of service disruptions, outages, defects, and other performance and quality problems with quantum computing products and services, or reliance on public cloud infrastructure.
• Future growth and success depend on the ability to sell effectively to government entities and large enterprises, which involve longer sales cycles and specific risks.
• Quantum computing systems may not be compatible with some or all industry-standard software and hardware in the future.
• Cybersecurity risks and the failure to maintain the integrity of data could expose the company to data loss, litigation, and harm to reputation.
• Unfavorable conditions in the industry or global economy could limit business growth and negatively affect results of operations.
• Government actions and regulations, such as tariffs and trade protection measures, especially in China and the United States, may adversely impact the business.
• Potential to become subject to legal proceedings that could have a material adverse impact on financial position and results of operations.
• Material weaknesses in internal control over financial reporting, which may result in material misstatements or failure to meet periodic reporting obligations.
• Stock price has been and may continue to be volatile or may decline regardless of operating performance.
• Future sales of shares of common stock, or the perception that these sales may occur, may depress the stock price.
• Delays in filing financial reports, internal control weaknesses, and restatements could hinder Form S-3 eligibility.
• Shares of currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for shares.
• No current intention to pay dividends on common stock, meaning return on investment depends solely on stock price appreciation.
• Experience dilution of ownership interest due to the future issuance of additional shares of common stock.
• Executive officers and directors possess significant voting power, limiting influence on corporate matters.
• Articles of incorporation grant the Board the power to issue additional shares of common and preferred shares and to designate other classes of preferred shares, all without stockholder approval.

Future Outlook

QCi expects product revenues to continue to increase and anticipates future generations of its reservoir computing machines to introduce greater performance and scalability, enabling participation in large language model (LLM) training and other applications. The company's longer-term product development plan involves migrating current product designs to Thin Film Lithium Niobate (TFLN) optical integrated circuits. QCi expects to incur additional losses and higher operating expenses for the foreseeable future as it continues to invest in research and development, go-to-market programs, and integration/scaling costs associated with the Luminar Semiconductor acquisition. Management believes existing cash, cash equivalents, and investments will be sufficient to meet working capital and capital expenditure needs for at least the next twelve months, but may pursue opportunistic capital raising or refinancing transactions.

Management Comments

• "Our vision is to lead the revolution in photonics and quantum information technology with scalable, accessible, and affordable solutions to bring quantum technology into real-world application to solve real-world problems."
• "We believe that these emerging approaches will create an opportunity for new materials and methods that can meet the growing demand for scalable performance and power efficiency."
• "We anticipate that our EQC may enable us to develop and produce multiple generations of quantum machines with increasing computational power, scalability, and speed."
• "We anticipate that future generations of the RC will introduce greater performance and scalability, which will enable the RC to participate in LLM training and other applications."
• "We believe that our Core Photonics Technology applications offer practical, cost-effective solutions that can materially advance the adoption of quantum machines across several market segments."
• "We believe QCi is well-positioned to benefit from this forecasted increase in demand [for TFLN and PIC markets]."
• "We believe that our existing cash, cash equivalents and investments will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months, although we may choose to take advantage of opportunistic capital raising or refinancing transactions at any time."
• "We are committed to maintaining a strong internal control environment and believe that these remediation efforts will represent significant improvements in our control environment."

Industry Context

StockSavvy.ai notes that Quantum Computing Inc. operates in a nascent but rapidly growing market for quantum computing and photonics, with market size estimates for high-performance computing reaching $53.6 billion by 2027 and enterprise quantum computing projected to hit $18.3 billion by 2030. The company's focus on room-temperature, low-power photonic quantum systems differentiates it from competitors relying on cryogenic technologies (e.g., IBM, Google, Quantinuum). The acquisition of Luminar Semiconductor and the development of TFLN chips align with the forecasted 39% CAGR for the TFLN market and 20.5% for the photonic integrated circuit market, positioning QCi to capitalize on these trends. However, the industry remains highly competitive with significant R&D investments from both large tech giants and sovereign nations, posing challenges for QCi's commercialization efforts and market share capture.

Comparison to Industry Standards

• QCi's Entropy Quantum Computer (EQC) operates at room temperature and low power, contrasting with leading quantum computing approaches like superconducting (e.g., IBM, Google), trapped-ion (e.g., Quantinuum, IonQ), and annealing (e.g., D-Wave Quantum) architectures, which typically require cryogenic temperatures and high power.
• The company's focus on integrated photonics and Thin Film Lithium Niobate (TFLN) chips positions it in a rapidly growing segment, with the TFLN market projected to grow from $190.4 million in 2022 to $1.9 billion by 2029 (39% CAGR), and the photonic integrated circuit (PIC) market from $15.1 billion in 2024 to $38.4 billion in 2029 (20.5% CAGR).
• QCi's reservoir computing machines, Emucore and Neurawave, aim to provide faster processing speeds and lower energy consumption for time-dependent tasks compared to certain traditional software implementations, competing with AI/ML hardware solutions from companies like NVIDIA (GPUs) and specialized AI accelerators.
• The company faces competition from diversified global companies with significantly greater financial, technical, and marketing resources such as IBM, Google, Intel, Microsoft, Quantinuum (formerly Honeywell), and Amazon, as well as specialized quantum computing firms like D-Wave Quantum, Rigetti Computing, IonQ, PsiQuantum, Xanadu, and Infleqtion (formerly ColdQuanta).
• QCi's strategy to offer on-premises EQC installations, compatible with standard server room infrastructure, differentiates it from cloud-only quantum computing services offered by many competitors.

Management Changes

Corporate Governance

Legal Proceedings

• BV Advisory v. QCi Appraisal Action: Resolved on July 17, 2025, through a Confidential Settlement Agreement and Release, where QCi issued 1,900,000 shares of common stock to Barksdale (BV Advisory's managing member) or his designees, and BV Advisory dismissed its claims.
• BV Advisory v. QCi Breach of Contract Lawsuit: Resolved on July 17, 2025, through the same Confidential Settlement Agreement and Release.
• QCi v. BV Advisory Injunction Lawsuit: Resolved on July 17, 2025, through the same Confidential Settlement Agreement and Release, with QCi dismissing its claims against BV Advisory.
• Securities Class Action Lawsuit: Filed February 25, 2025, alleging violations of Section 10(b) and 20(a) of the Exchange Act for false/misleading statements between March 30, 2020, and January 15, 2025. A second amended complaint was filed on February 13, 2026, and QCi intends to file a motion to dismiss by March 13, 2026.
• Shareholder Derivative Action Lawsuits (March, May, June, September 2025): Multiple lawsuits filed against current and past officers and directors for alleged breaches of fiduciary duties, unjust enrichment, abuse of control, waste of corporate assets, gross mismanagement, and common law fraud. All these actions have been stayed pending the resolution of the company's motion to dismiss the Securities Class Action.
• Arbitration over Stock Options: In February 2025, arbitrations began with two former consultants regarding forfeited stock options. On February 23, 2026, an arbitrator ruled in favor of one consultant on 1 of 7 claims; the award is confidential and immaterial to the company's financial condition. The remaining arbitration is deemed immaterial.

Stakeholder Impact

• Shareholders: Experienced significant dilution from the issuance of 86.3 million shares of common stock in 2025 through private placements. Face risks of stock price volatility, further dilution from future capital raises, and concentrated voting power of executive officers and directors.
• Employees: Increased headcount in R&D and sales staff. Benefit from stock option plans and 401(k) retirement savings plan. Risk of inability to attract and retain highly qualified and skilled employees in a competitive market.
• Customers: Benefit from new product launches (Dirac-3 EQC, Neurawave, vibrometer, quantum networking devices) and the availability of foundry services for TFLN Optical Chips. The company is focused on customer education and providing quantum-ready solutions for complex optimization problems.
• Suppliers: The company's dependence on certain suppliers, particularly for TFLN Optical Chips, with manufacturing concentrated in East Asia, exposes it to geopolitical and supply chain risks that could affect product development and production.
• Creditors: The company repaid the Streeterville Convertible Note in 2024 and has no lines of credit or short-term debt obligations outstanding as of December 31, 2025, indicating a strong current liquidity position.

Next Steps

• Continue to invest in ongoing research and development and go-to-market programs.
• Incur additional integration and scaling costs associated with the Luminar Semiconductor acquisition.
• Invest in the Foundry Services offering, including future expansion of the AZ Chips Facility and the construction or acquisition of a high-volume chip manufacturing facility (FAB 2).
• Accelerate the development of key technologies and products by hiring additional scientists, engineers, and technicians.
• Develop and release a series of additional EQC products (e.g., Dirac-4) in the coming years, with planned enhancements in size, capacity, speed, scalability, and performance fidelity.
• Introduce greater performance and scalability in future generations of the reservoir computing machine to enable participation in LLM training and other applications.
• Migrate product designs based on discrete optical components to photonic integrated circuits built on Thin Film Lithium Niobate (TFLN) wafers.
• Implement and monitor measures to remediate identified material weaknesses in internal control over financial reporting, including hiring additional accounting professionals, documenting procedures, and improving IT general controls.
• File a motion to dismiss the second amended complaint in the securities class action lawsuit on or before March 13, 2026.
• File the proxy statement for the 2026 annual meeting of stockholders within 120 days after December 31, 2025.

Key Dates

Recommendation

StockSavvy.ai recommends a "hold" for Quantum Computing Inc. The company demonstrated strong revenue growth in 2025, particularly in product sales, and successfully secured a substantial $1.475 billion in capital, providing a significant financial runway for its ambitious R&D and commercialization efforts. The strategic acquisition of Luminar Semiconductor enhances its vertical integration and technological capabilities in the high-growth photonics market. However, QCi remains an early-stage company with an unproven business model, persistent operating losses, and identified material weaknesses in internal financial controls, which require diligent remediation. The highly competitive quantum computing landscape and ongoing legal challenges introduce considerable uncertainty. While the long-term potential of its photonics-based quantum technology is compelling, the immediate future is marked by both significant opportunities and substantial execution risks, warranting a cautious stance for investors.

Keywords

Quantum Computing, Photonics, Quantum Optics, AI, Machine Learning, Remote Sensing, Cybersecurity, TFLN, Lithium Niobate, Entropy Quantum Computer, Dirac, Neurawave, LiDAR, Quantum Photonic Vibrometer, Quantum Authentication, SEC Filing, 10-K, Financial Report, Technology, Hardware, Software, Semiconductor, Acquisition, Luminar Semiconductor, Corporate Governance, Risk Management