The following discussion and analysis of results of operations and financial condition for the years ended December 31, 2020 and 2019 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements which appear elsewhere in this annual report. Our discussion includes forward-looking statements based on current expectations that involve risks and uncertainties, such as our plans, goals, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements due to a number of factors. See “Forward-Looking Statements”.

The Management’s Discussion and Analysis of Results of Operations and Financial Condition (“MD&A”) is a supplement to the accompanying summary financial statements and provides additional information on Quantum Computing Inc.
(“Quantum” or the “Company”), current developments, financial condition, cash flow and results of operations.

When we say “we”, “us”, “our”, “Company” or “Quantum”, we mean Quantum Computing Inc.


At present, we are a development stage company with limited operations. The Company plans to enter the market for high-performance computers and software applications, focusing specifically on so-called “quantum computers”. The Company has assembled a team of experts in quantum computing software technology and quantum mathematics, which will focus on the design and development of several quantum software applications targeting solutions to non-deterministic polynomial applications. The Company’s development team initially focused on solving computational problems in financial services, supply chain, and logistics management; pharmaceutical design, heavy manufacturing and computer (cyber) security market segments. The company’s development team includes mathematicians, physicists and software developers.


Results of Operations

Twelve month period ended December 31, 2020 vs. December 31, 2019


                           For the                         For the
                     Twelve Months Ended             Twelve Months Ended
                      December 31, 2020               December 31, 2019
(In thousands)   Amount             Mix          Amount             Mix          Change
Products               0                   0 %         0                   0 %         0 %

Services               0                   0 %         0                   0 %         0 %
Total            $     0               100.0 %   $     0               100.0 %         0 %

Turnover for the twelve months ended December 31, 2020 were $0 compared to
$0 for the comparable period of the previous financial year, a variation of $0, or 0%. The lack of revenue is because quantum computing is a new idea for most potential customers, so the company has focused on raising customer awareness rather than pushing for immediate sales. We have developed and launched two products and are currently in the marketing and commercialization process. We expect to generate revenue in 2021.

Cost of Revenues

Revenue Cost for the Ended Twelve Months December 31, 2020 has been $0 compared to $0 for the comparable period of the previous financial year, a variation of $0 or 0%. No revenue cost has been recorded as the Company has not yet commenced marketing and selling any products or services.

Gross Margin

Gross Margin for the Twelve Months Ended December 31, 2020 has been $0 compared to $0 for the comparable period of the previous year. There was no gross margin as the Company has not yet started to market and sell any products or services.

Operating Expenses

Operating expenses for the Twelve Months ended December 31, 2020 were
$17,343,007 compared to $2,547,652 for the comparable period of the previous year, an increase of $14,795,355 or 581%. The increase in operating expenses is explained by a
$10,962,226 increase in stock-based compensation expense, a $1,322,310 increase in consulting expenses, a $648,391 increase in R&D expenditure, an increase of
$195,062 legal fees, an increase in $140,698 in related party marketing expenses, and a $147,533 increase in payroll costs compared to the comparable period of the previous year. Additionally, there was an increase in $1,574,197
in other SG&A expenses compared to the comparable period of the previous year.

Net Loss

Our net loss for the twelve months ended December 31, 2020 has been $24,734,280 compared to a net loss of $8,381,088 for the comparable period of the previous year, an increase of $16,353,193 or 195%. The increase in net loss is mainly explained by the increase in operating expenses recorded during the current period compared to the comparable period of the prior year, as indicated above, and by the increase of $5,681,612
interest expense, primarily related to financing costs incurred in connection with several of the Company’s common stock offerings, which were partially offset by a $1,961,460 decrease in interest charges linked to the mark to market of derivatives and $1,100,777 decrease in warrant expenses in the current period.

Cash and capital resources

Since the start of operations as quantum computing in February 2018the company raised $17,226,000 by private placement of equity and $5,158,550
through private placements of convertible promissory notes for a total of
$22,384,550 in new investments. The Company has an outstanding bank loan under the Small Business Administration Paycheck Protection Program (“PPP”) in the amount of $218,371, no line of credit and no outstanding long-term debt. From March 17, 2021the Company had cash and cash equivalents of
$14,296,102 at hand.


Critical accounting policies

Basis of Presentation:

The balance sheet attached to December 31, 2020which has been derived from the audited financial statements, and the unaudited interim financial statements of the Company have been prepared in accordance with we GAAP for Interim Financial Information, Form 10-Q Instructions and Regulation SX Section 10. In the opinion of management, the accompanying audited financial statements contain all the adjustments necessary to present fairly the financial position of the Company as at December 31, 2020, together with cash flows and results of operations for the twelve months then ended. These adjustments only related to normal recurring items. Operating results for the twelve months ended the 31st of December are not necessarily indicative of the results of subsequent periods. The accounting policies followed by the Company are set out in Note 1 to the Company’s consolidated financial statements contained herein, and it is suggested that such financial statements be read in conjunction with these statements.

Accounting Changes

Quantum has consistently applied accounting policies to all periods presented in these unaudited financial statements.

Use of Estimates:

These financial statements have been prepared in accordance with generally accepted accounting principles in The United States of America. Since an accurate determination of assets and liabilities, and therefore of income and expenditure, depends on future events, the preparation of financial statements for any period necessarily involves the use of estimates and assumptions , for example stock option valuation assumptions. Actual amounts may differ from these estimates. These financial statements have, in the opinion of management, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below. Certain of our accounting policies require the application of significant judgment by our management, and these judgments are reflected in the amounts reported in our condensed consolidated financial statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to use in determining the estimates. These estimates are based on our historical experience, the terms of existing contracts and agreements, our observation of market trends, information provided by our strategic partners and information available from other external sources, as appropriate. Actual results may differ materially from the estimates contained in our condensed consolidated financial statements

Cash and Cash Equivalents

It is the Company’s policy to report bank balances in cash and cash equivalents, which at times may exceed federally insured limits. The Company has not incurred any losses in these accounts.

Property and Equipment

Tangible fixed assets are recorded at cost or at contribution value. Furniture, software and equipment are amortized on a straight-line basis over their estimated useful lives, and leasehold improvements are amortized on a straight-line basis over the shorter of their lives. estimated utility or lease term. The cost and related accumulated amortization of equipment retired or sold is removed from the accounts and any difference between the unamortized amount and the sale proceeds is recorded as a gain or loss on sale of equipment.

Net Loss Per Share:

Net loss per share is based on the weighted average number of common shares and common share equivalents outstanding during the period.

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