QCLS

Q/C Technologies, Inc. (QCLS) - 10-Q Summary

Business Context and Reporting Period

This Quarterly Report on Form 10-Q covers the period ended June 30, 2026. Q/C Technologies, Inc. (formerly MyMD Pharmaceuticals and TNF Pharmaceuticals) has pivoted from a clinical-stage pharmaceutical company to a focus on energy-efficient blockchain, cryptocurrency infrastructure, and high-performance computing via quantum-class laser-based computing. The company is currently pre-revenue, generating income solely from investments. On June 26, 2026, the company terminated its exclusive license agreement with LightSolver Ltd., shifting focus to a proprietary silicon photonic computing architecture for AI inference.

Key Financial Metrics

Material Changes vs. Prior Period

• Impairment Charge: A non-cash impairment charge of $3,177,999 was recorded for the Technology License following the termination of the LightSolver agreement. This was the primary driver of the increased operating loss compared to the prior year.
• Stock-Based Compensation: Increased significantly to $2,432,261 (vs. $189,490 in 2025), driven by stock options issued to the Board of Directors and new consulting agreements.
• Research & Development: Decreased to $746,667 (vs. $2,418,985 in 2025) due to the suspension of the Phase 2b study for the legacy pharmaceutical candidate Isomyosamine.
• Derivative Liability Gains: The company recorded a gain of $591,000 from the change in fair value of derivative liabilities (Series H), compared to a gain of $1,303,000 in the prior period.
• Asset Reduction: Total assets decreased by approximately $18.3 million, primarily due to the write-off of the Technology License asset and the reduction in marketable securities.

Guidance, Outlook, and Risks

• Strategic Pivot: Management is fully focused on the Optical Processing Unit (OPU) Initiative for AI inference. Legacy pharmaceutical assets (Isomyosamine and Supera-CBD) are being evaluated for divestiture or licensing.
• Liquidity: Management believes current resources (cash and marketable securities totaling ~$11 million) are sufficient to fund operations for the next twelve months. However, the company has an accumulated deficit of $152.19 million and will require substantial additional funding to commercialize new technologies.
• Risks: The company faces risks related to the successful development and certification of laser-based computing products. Failure to raise additional capital could force delays in development or modification of strategic objectives. The company also carries significant contingent consideration liabilities related to the LPU acquisition, though the termination of the LightSolver license relieved future milestone obligations.
• Executive Changes: Subsequent to the period end, the company appointed Todd Fagan as Chief Financial Officer, replacing the interim CFO.

Investor Verification Checklist

• Capital Adequacy: Verify the runway provided by the $10.7 million in marketable securities against the current burn rate of ~$5.1 million per six months.
• Derivative Liabilities: Review the valuation assumptions (volatility, stock price) for the Series H derivative liabilities, as changes significantly impact reported net loss.
• Preferred Stock Terms: Examine the terms of Series G and Series H Preferred Stock, including dividend rates (10% and 7% respectively) and conversion rights, which dilute common equity.
• Technology Viability: Assess the progress of the proprietary silicon photonic computing architecture, as the company has no product revenue and relies entirely on future commercialization.
• Stock-Based Compensation: Monitor future equity grants, as the recent spike in SBC expenses indicates a heavy reliance on equity for compensation.