Ladies and gentlemen, greetings, and welcome to the Quantum Computing, Inc. Third Quarter 2025 Shareholder Update Call. At this time, all participants are placed on a listen-only mode. Following management's remarks, the call line will be open for questions. It is now my pleasure to introduce your host, Rosalyn Christian with IMS Investor Relations. Thank you.

And I want to welcome everyone to the Quantum Computing, Inc. Third Quarter 2025 Shareholder Update Call. Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements based on our current expectations and projections regarding future events and are subject to change based on various important factors. In light of these risks, uncertainties, and assumptions, you should not place undue reliance on these forward-looking statements, which speak only as of the date of this call. For more details on factors that could affect these expectations, please see our filings with the Securities and Exchange Commission. On the call today, we have Dr. Yuping Huang, interim CEO and chairman, and Chris Roberts, CFO. The team will provide an update on the business, followed by a question and answer session. With that, I would like to turn the call over to management. Please go ahead, Yuping. Thank you, everyone, for joining us today to hear about QSET's progress in 2025. The past few months have been pivotal for our company. We ended the quarter with a strengthened balance sheet, a growing portfolio of commercial relationships, and a clear disciplined strategy for scaling our technology. To date, in 2025, we have reached over $1.5 billion in capital, and we now have the resources to execute thoughtfully on our long-term vision of putting quantum technology into the hands of people. In the third quarter, we raised $500 million and subsequent to the quarter, raised another $750 million. This raises put us in a very strong position to drive our roadmap forward and make strategic investments in engineering, manufacturing, and sales. As many of you know, QSI's mission has always been centered around building quantum systems that are practical, scalable, and accessible. We're not just developing quantum technologies for laboratories. We are working to make quantum usable for a broader community of innovators, with the ultimate goal of having our technology ingrained in society as cell phones. This is what sets QSI apart. While many quantum players remain focused on theoretical advances or systems that require complex cryogenic environments, our integrated photonic approach enables room temperature operation, compact form factors, and energy-efficient performance. These advantages not only reduce the cost and complexity of deployment but also make it possible to scale quantum solutions to a wide range of real-world settings, from aerospace and defense to telecommunications, finance, and data security. As the technology matures, we believe the key differentiator will not be who can build the most powerful quantum prototype in isolation, but who can scale quantum reliably and affordably. The challenge ahead is one of engineering and manufacturing execution, and that's where QSI's focus lies today. Our long-term goal is to move from prototype and small batch manufacturing towards volume production, and we see that transition taking shape by the end of this decade. To get there, our current three-year roadmap is focused on refining our processes, scaling small batch production, and expanding our team and facility to position QSI for industrial scale output. In other words, the technology is there. Our quantum machines and chips have been validated across multiple use cases. The next step is to scale the engineering and manufacturing behind them, and we now have the team, resources, facility, and a plan to make that happen. Let me take a moment to highlight some of the key updates from the third quarter. First, on the commercial front, we continue to see growing adoption of our quantum and photonic solutions across research, enterprise, and government sectors. During the quarter, we recorded revenue from our ongoing NASA LIDAR initiative, which uses our Direct3 quantum optimization machine to remove solar noise from space-based LiDAR data. This project represents a significant technical achievement and underscores the real-world value of QSI's quantum computing technology for scientific and environmental applications, as well as our initiatives to drive strong relationships within government programs. We also saw meaningful momentum in our commercial engagements. Following the sale of our ImmuCore reservoir computing device earlier this year to a global automotive manufacturer, in the third quarter, we completed a transaction with a major US financial institute, marking another important milestone in validating our quantum AI and security platforms in real-world settings. Our foundry operations in Tempe, Arizona, also continue to progress. As we have shared previously, this facility, also known as Step 1, is a small-scale manufacturing site designed to qualify processes and to support early customer programs in thin film lithium niobate photonic chips. This is an important first step in our broader manufacturing strategy. Since launch, our team has been refining the production line, expanding our operations staff, and building relationships with early customers across research, government, and commercial sectors. This engagement helps us fine-tune both process quality and device yield. Importantly, we are already in the early stage of planning for Fab 2, which we expect to begin developing over the next three years. Fab 2 will be designed to support higher volume manufacturing and serve as a cornerstone for scaling production to meet growing demand in telecommunications, sensing, and quantum information systems. As we advance this manufacturing strategy, our hiring efforts are ramping accordingly. Over the past quarter, we have added key technical and operations staff to strengthen our execution capabilities, and we expect that trend to continue as we prepare for higher production volumes. We have also continued to broaden awareness of QSI's capabilities within the quantum and photonic communities. Over the past several months, we have been active participants at multiple industry events and conferences, presenting our work and engaging both public and private sector partners. Those events include the IEEE International Conference on Quantum Computing and Engineering, the NYC Quantum Computing Meetup, Quantum World Congress, the Dutch Photonics event, the 51st European Conference on Optical Communication, Quantum Tech Europe, and the Quantum Innovation and Readiness Forum. We also recently joined the Quantum Economic Development Consortium and the Consumer Technology Association, aligning QSI with an expanding network of technology leaders and innovators. These memberships enhance our visibility and influence in shaping the future of quantum computing, cyber photonics, and AI-driven solutions across the consumer technology landscape. In September, we deepened our thought leadership presence in the photonics and AI community through a webinar hosted by Optical titled "Photonic Machine Learning for Time Series Program." The session highlighted how our ImmuCore reservoir computing platform and next-generation photonic architecture address memory and power consumption bottlenecks in modern AI workloads and underscored our thin film lithium niobate foundry capability for high-performance photonic systems. This engagement further expands our credibility in both academic and industrial circles and underscores QSI's increasing visibility as a practical quantum and photonic innovator. We have also been pleased with the increasing level of inbound interest from prospective customers and collaborators in academia and industry. The conversations we are having today reflect the momentum building behind integrated photonics and quantum-ready devices, where QSI has a clear first-mover advantage. QSI's approach positions us uniquely for the next phase of industrial evolution. While the broader quantum computing sector continues to grapple with scalability and stability challenges, our integrated photonics platform operates at room temperature with significantly lower size, weight, power, and cost requirements—the so-called SWAP-C advantages. These advantages become increasingly relevant as global energy constraints and the computational demands of artificial intelligence push existing infrastructure to its limit. We believe that energy-efficient, room-temperature quantum devices represent a critical piece for the next generation of computing, and QSI is positioned to deliver such solutions at scale. Over the next three years, our roadmap priority is small-scale, high-value manufacturing as we refine processes, demonstrate performance across customer applications, and establish supply chain and design partnerships. In parallel, we will be developing the foundation for Fab 2, which will enable volume manufacturing and allow us to bring quantum-enabled devices into wider use across multiple sectors. The quantum era is unfolding faster than most predicted, and QSI is determined to ensure we remain at the center of this transformation, delivering technologies that make quantum practical, scalable, and accessible to the world. With that, I will now turn the call over to our Chief Financial Officer, Chris Roberts.

Thank you, Yuping. And now let's review the financial results from the quarter. Revenue during our third quarter totaled approximately $384,000 compared to $101,000 in the same period last year. The increase in revenue was primarily due to increases in the number, size, and level of effort on research and development services contracts and custom hardware contracts. We also started to recognize some revenue for cloud-based access to the Dirac 3 quantum optimization system during the third quarter. Looking ahead, the company continues to build a healthy pipeline of sales and partnership opportunities, which we expect will support future growth as customer adoption of our products and technologies continues to increase. Our gross margin for the third quarter increased to 33% compared to 9% in 2024. However, it's important to keep in mind that with a small number of active contracts, some of which involve custom design work, gross margin is likely to be variable from one period to the next. As Yuping mentioned earlier, we have been active in the capital markets and substantially strengthened our balance sheet during the third quarter, closing on a $500 million equity financing in September 2025. As a result, we ended the third quarter with cash and cash equivalents of $352 million and investments of $460 million on our balance sheet at the end of the quarter. After the end of the third quarter, we also closed on an additional $750 million financing in October. As a result of the recent financings, we now have substantial resources to implement our TFLN fabrication and quantum machine development initiatives. In addition to organic growth plans, a key element of our long-term strategy is to evaluate opportunities that could help us accelerate our vision of putting quantum technology in the hands of people. Operating expenses for the third quarter totaled $10.5 million compared to $5.4 million in the same quarter last year. The increase in operating expenses is the result of substantial growth in personnel for research and development, engineering, manufacturing, sales and marketing, and administration as we position the company for long-term growth. We are scaling our organization across the board to support this expansion plan, including all functional areas of the company. As a result, SG&A expense is expected to grow in the near term as we invest in the necessary resources to advance our technology and execution capabilities. The company reported net income of $2.4 million for the third quarter or approximately $0.01 per share compared to a net loss of $5.7 million in 2024. The increase in net income this quarter was primarily due to a gain of $9.2 million from the mark-to-market of a derivative liability plus interest income of $3.5 million. For the nine months ended September 30, 2025, the company reported a net loss of $17.1 million or $0.12 per share, compared to a net loss of $17.3 million or $0.19 per share in the first nine months of 2024. As of September 30, 2025, total assets stood at $898 million, up from $154 million at year-end 2024. Since the end of 2024, cash and cash equivalents have increased by $273 million to $352 million, and total investments have increased by $460 million. Total liabilities at the end of the third quarter were $20 million, which is a decrease of approximately $26 million compared to year-end 2024. This decrease in liability is driven primarily by a $25.8 million decrease in the derivative liability related to the Q Photon merger warrants. Stockholders' equity rose to $878 million at the end of the third quarter, which also shows our strengthened financial position. Now it's my pleasure to turn the meeting back over to Yuping.

Thank you, Chris. As we move into the final month of 2025, I wanted to take a moment to thank our employees, partners, and shareholders for their continued support. The technological and strategic progress we have made this year positions QSI for what I believe will be a defining period ahead. Our technology is maturing rapidly, and our focus remains on scaling our engineering and manufacturing capabilities, advancing customer programs, and continuing to strengthen our relationships across government, industry, and academia. With a solid balance sheet, a growing team, and a clear roadmap, we are well-positioned to drive this next phase of growth. Thank you for joining us today and for your continued confidence in our mission. With that, we will now open the call for questions. Operator, please go ahead.

Certainly. Everyone, at this time, we will be conducting a question and answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Max Michaels from Lake Street Capital. Your line is live.

Hey, guys. Thanks for taking my questions. A few here kind of scattered around a couple of different topics. The first one is going to be I noticed that press release about POET Technologies. Was wondering if you could give maybe a little bit more detail on outside of just what was said in the press release and maybe think about sort of the long-term opportunities with them and then maybe some other partnerships you have in the pipeline similar to that POET Technologies.

Okay. Sure. Thanks, Max. So on that front, we have actually been very actively talking with multiple parties on using our thin film lithium niobate technology for the next generation high-speed transceiver technology. So as you probably know, the industry is recognizing thin film lithium niobate as the next generation platform for much higher speed Internet. So this collaboration with POET is one of the agreements that we have discussed and has come to fruition. And we look forward to working with them and also with others to explore thin film lithium niobate for telecom and other applications.

Okay. And my next one is just sort of around that top five US bank you guys secured or purchase order you guys secured in the quarter around Quantum Security Solutions. Can you give some other sort of use cases you guys are having discussions with with other large opportunities, I guess, or other large firms outside of just security solutions?

Yes. In fact, we have been talking with other firms, including the potential of putting our technology on photonic integrated chips so that we can really shrink the size of our current quantum communication systems, our quantum path chips, and our quantum random number generators to an inch square chip. So there are many sectors, including the wireless or Internet providers, so they can easily adopt. We have been in discussion also with some potential partners to see if we can apply our quantum communication technology to the aerospace platform so that it can solve the issue of the long-term quantum Internet challenge.

Then, Chris, I think you mentioned inorganic opportunities around M&A. And sort of how evaluations and multiples trended in that space as well as maybe adding on sort of the end markets or technologies you guys plan on going after when it comes to M&A?

Well, the M&A market continues to be volatile, and the valuations depend in good part on how the stock market's going. And right now, it's very unsettled. We are looking actively for acquisition candidates and evaluating them as they come up. Nothing formal we can announce at this time, but we are working very hard in that direction. As I mentioned before, we're looking at M&A as a way of doing two things. One is to acquire customers and revenue and product lines that can be moved forward and migrated forward with our technologies. And we're also looking to fill in some key aspects of our own technology roadmap so we can accelerate our commercialization. Does that help to answer your question, or do you have a different point in mind?

Nope. Nope. That's great. Thanks for taking my question, guys.

Sure thing, Max. One thing is let me just add to what Yuping said about the POET project. It's a perfect example of why we built Fab 1. Because we have the only fabrication facility in the US that can work with thin film lithium niobate. And this gives us the ability to do this type of advanced prototyping of product concepts that we can then, if we're successful, move forward into Fab 2 and produce in collaboration with a firm like POET for a larger market. This is a real validation of the idea behind the investment in Fab 1.

Okay. No. Perfect. Thanks, guys.

Oh, you're welcome. Thanks for joining the call.

Thank you. Your next question is coming from Troy Jensen from Cantor Fitzgerald. Your line is live.

Hey, gentlemen. Congrats on all the progress here. Maybe a couple of quick ones for Chris first. Can you tell us what is the remaining CapEx for Fab 1?

Roughly? Fab 1 is a good question. Yeah. Fab 1 is pretty much built out or it is built out, but I'm always looking at new equipment, but Yuping might be a better one to answer on that. I don't have anything I know of that's lined up near term.

Yep. So right now, Troy, Fab 1 is fully operational, and we actually are making chips to deliver the 10 plus foundry service orders that we have so far. But we do have a plan to install a very high-speed measurement equipment in the foundry so that we can quickly test the property of high-speed electro-optical modulations on the chip. So there, we are looking at an additional CapEx of about $2 million to add this very high-speed testing equipment.

Alright. That seems pretty modest. With respect to Fab 2, building that out, would you guys obviously, hopefully, be producing your own picks, but is the idea to outsource capacity to other people that need thin film lithium niobate capabilities?

Yes. Yes. So we are scoping Fab 2 to both support our own quantum machine manufacturing as well as to serve the increase in demand for thin film lithium niobate chips. As the industry is becoming more and more interested due to the many nice properties of this interesting material for different applications beyond quantum. So, Troy, our goal there is that we hope that we can quickly establish a Fab 2 that can make hundreds to hundreds of millions of chips per year. So that will both support our own needs for our quantum machines and also substantially serve demand from others on the thin film lithium niobate manufacturing.

Great. Okay. How about a quick one for Chris? Could you let us know what the share count will be exiting 2026?

Well, at the moment, we have 224 million shares outstanding and 250 million shares authorized. We're not expecting to do another financing, so it'll probably end up with another couple of million shares potentially if options are exercised. But it would not be a large number.

Is that what you guys are offering? That just happened.

I mean, if you include the offering that happened here in Q4, any other I mean, yes. Including the $750 million offer that was included in October. We have 224 million shares outstanding. There are several million outstanding warrants and stock options, which I have no way of predicting when they may be exercised. But that gives you a sense of the range of possible outcomes at the end of '26.

Great. So for a share count that we should be modeling, it should be that 224 number for Q4?

224 for Q4. Yes. That's probably the best number I can provide. At the end of '26, that's a little harder because it really depends on market conditions and

No. That's good. How about if I could toss in one more? For Yuping here? I guess I'd love to hear stats on your QPU with respect to Q account or Fidelity or maybe it's, you know, too early to talk about that now and, you know, maybe correct me if I'm wrong, but is the near-term opportunity more in sensing and other applications that you guys are targeting right now versus kind of the QPU type sales?

Sure. I can talk about both. So on the QPU front, in fact, we have been upgrading our current Dirac 3 system. Some of our external users actually start to find some real nice advantages over classical computers. So we have some pretty exciting results there. And in the meanwhile, we are actually making great progress in building the next version of that, which is based on the same architecture and built for optimization. But we increased the speed by orders of magnitude. So we are making pretty good progress here for our quantum optimization machine. And in the meanwhile, as I reported last time, we do have the roadmap of going to gate-based machines. And we have done a lot of theoretical work and proof of concept in the lab. But we just got started on the hardware development because the gate machine requires very high-quality thin film lithium niobate chips. And as you know, we just finished the construction of Fab 1 in March and over the summer. So we gave out the recipe and set up the processes, and so the fun has just started, and with that, we will quickly get to the hardware of the gate-based machine. So on the quantum sensor part, yes. And as we reported, we did sell one of our quantum photonic wire vibrometers, and people are using it for different applications. And we also sold a quantum communication system to a US bank as we reported. And we have also made some sales on the AI front, and we continue to engage the community on thin film lithium niobate, and we have recorded more sales on foundry services.

Gotcha. Alright, guys. Well, keep up the good work.

Thanks. Well, I appreciate your calling.

Thank you. Your next question is coming from John McPeak from Rosenblatt Securities. Your line is live.

Hey, guys. Congratulations, Dr. Yuping and Chris on the momentum in the business and the bank deal.

Thank you, John.

Recently, there's been some new implementations of Shor's algorithm that suggest that pretty soon we're gonna be able to crack RSA 2048. I guess when I say soon, we're talking about years, at least kind of over the career of a CSO at a large company, so they can't just ignore it. And I'm just wondering if that might be increasing the pipeline of potential security deals, particularly in the financial sector.

Yes. Definitely. So, John, one thing that we all have to keep in mind is that if somebody somewhere has a very powerful quantum computer to crack our passwords, they will not make a public announcement on that. Right? So we have to really deal with the cyber threat. We really have to think ahead and act fast and plan ahead. So far, as I know, the only truly secure cyber solution against the attack of the quantum computer would be using quantum itself to secure our Internet. So at QSI, our engineers are leveraging over ten years of R&D work in quantum communication, quantum encryption, quantum authentication, and now we are pushing our engineering effort to put our technology in a practical footprint. In fact, we have designed our technology so that it is fully compatible with existing fiber-based telecom infrastructure. So in order to use our technology, you can just buy some end units from us and hook them onto the fiber portal in your garage, and you will be able to enjoy quantum-secured Internet. And so you don't need to worry about if somebody has already a powerful quantum computer or not. So, yes, John. To answer your question, I think it is time. It is really, really time for us to start to adopt quantum Internet solutions.

Thank you. So on the other side of the business, the optimization, you know, I guess the Dirac 3 is just starting to have revenues recognized this past quarter. How is that market trending right now? Is there more awareness of these solutions for optimization?

Yes. Yes. And I would like to put it this way. Quantum computing is a pretty disruptive technology. And just like how other disruptive technologies are commercialized, we must address three hurdles before we can see wide adoption and very meaningful revenue. The first is that the customers really need to know and understand the technology itself. The second is that we need to see a clear path to be able to integrate and adopt the technology with their existing systems and solutions. The third is that we, as the technology providers, must lower the entry level so that people can quickly get to the technology. So that includes making the device very compatible, having a very easy user interface, and ensuring the price tag is reasonable. For the first one, we are ramping up our marketing communication, including pushing out more educational material on our website, publishing open access journals so that people can find the material to know and understand our technology. For the second, we are actually building and expanding our applications team to explore and help with potential customers to adopt our technology. Now for the third, we are actually in the phase of transitioning ourselves from a technology innovation company to volume production so that we can reduce the unit cost of our quantum computing products. So those are the three measures that we are taking that we are on now in order to quickly get our technology into the hands of people.

Thank you. That's helpful.

Thank you, John.

Thank you. And once again, everyone, if you have any questions or comments, please press star then 1 on your phone. Your next question is coming from Ed Woo from Ascendiant. Your line is live.

Yes. Congratulations on all the progress. I was just curious about international opportunities. It seems like most of your focus now is in the US. Do you have plans to focus on international opportunities?

Yes. Yes. In fact, quantum is also very hot outside the US, and we have been very active in talking to and looking for opportunities, either partnering or providing our products and services to international institutes. For example, we actually sold our ImmuCore system, which is an AI device at Edge, and we sold our vibrometer to Europe, and we are working with a distributor in South Korea to explore the market there. And then our Dirac 3 actually has users from Singapore.

Great. Thanks for answering my questions, and I wish you guys good luck.

Thank you.

Thanks, Ed.

Thank you. That concludes our Q&A session. I'll now hand the conference back to management for closing remarks. Please go ahead.

Thank you, everyone, for joining and participating in today's call. I encourage you to follow us on our social media channels, including LinkedIn.