Q1 2026 01 Quantum Inc Earnings Call
Speaker #1: First quarter 2026, results and a business update. I'm Brian Stringer. I'm Chief Financial Officer for 01 Quantum. And with me today is Andrew Chung, our Chief Executive Officer.
Speaker #1: The agenda today will be, Andrew will give a presentation of the company, of the results, a business update on how we're progressing, and that'll be wrapped up by, a Q&A.
Speaker #1: I'll moderate the, Q&A at the end. And everybody knows, I think by now, on Zoom calls how to use the Q&A; there's a button at the bottom where our Q&A—just click it.
Speaker #1: send me the, question and we'll, we'll get to it time permitting at the end of the presentation. Now, if you notice we have our disclaimer, which, forms a, integral part of this presentation.
Speaker #1: Take a few seconds to, look it over, please. And with that, I'll now turn it over to Andrew for the presentation.
Speaker #2: Thank you, Brian. How are you doing? I'm Andrew. the president and CEO of 01 Quantum. We specialize in making everything quantum-safe, which is, guarding against hackers who are using quantum computers to do the dirty works.
Speaker #2: So we started doing this about seven years ago, maybe more than seven years ago, invested over $7 million to reach where we are today.
Speaker #2: We are the first one in the post-quantum cybersecurity space that has crossed into revenue generations last year. We are carrying over this advantage into 2026 and beyond, so I'm gonna give you all the details later.
Speaker #2: Our value proposition is very simple. I won't go into the details about how quantum computers work, what they are, you know, quantum and neural link or, whatever.
Speaker #2: all I wanna say is that they're excessive computing power has created an unprecedented cybersecurity threat for the world, or AKA Q-Day, which is the day when the bad guys are using quantum computers to do the dirty works.
Speaker #2: So on and after Q-Day, essentially everything under the sun that is protected by today's cybersecurity—uh, today's crypto-cryptographic technology, such as RSA, Elliptic Curve, will become totally naked in front of a quantum computer.
Speaker #2: Now, Q-Day concerns everyone not only because it is mathematically proven by Shor's algorithm that it can, can—can, crack those, RSA and Elliptic Curve algorithms, but it is also affecting everything from email to financial to, medical, AI, cryptocurrencies, just to name a few.
Speaker #2: So major enterprises like Apple, Google, Microsoft have already started their QPQC conversion, post-quantum, cryptography conversion journey already. So if you don't believe in how business people handle QA, you should at least listen to the government.
Speaker #2: First of all, the US, president's office back in 2022 had already issued an official letter, MSM-10, warning that the agencies to be very mindful of a famous attack called HNDL, HarvestNow Decrypt Later, whereby the hackers are obtaining the encrypted data they hold onto it and wait until they get hold of a quantum computer that is powerful enough.
Speaker #2: Then do the hacking. So the problem is not a problem of tomorrow, but a problem today or even yesterday. So no wonder why Howard Lutnick, the, US Secretary of Commerce on the CNBC interviewed about eight months ago, openly said that the worldwide cybersecurity will be totally broken by quantum computers if we don't act immediately.
Speaker #2: In addition to that, Jensen Huang of NVIDIA also said that we are now in an inflection point while Vitalik Buterin of Ethereum also said that they are 20% chance that Q-Day would arrive by 2029.
Speaker #2: And this is dovetailed by the announcement from IBM that they expect to have a full fault-tolerant quantum computer by 2029. But the most concerning fact to me is that all these writings on the wall are only from the open world.
Speaker #2: There are some closed worlds such as Russia and China whose vendor never published their roadmap. So my biggest worry is, is kinda like a deep-seek, like event in the quantum world that one day a company you never heard of the name suddenly announce a quantum computer that beats everything and if you are not prepared by that day, basically you're toasted.
Speaker #2: So the bottom line is that you have to—you have to act now before it's too late because the difference between, Q-Day ready two years ago, sorry, two years too early versus one day too late is, basically everything.
Speaker #2: So I keep reiterating that unlike most of our competitors, who aim to, to license their, PQC technology for others to do the PQC journey conversion, we are doing it differently.
Speaker #2: instead, you know, we are giving it away, for free, right? As long as our customers are using us to, help them doing the conversion journey.
Speaker #2: So, for example, you know, they can say that, you know, "Yeah, we give you a quantum vulnerable product and all we want is that you guys spit out on the other side a quantum-safe version," right?
Speaker #2: So this kind of business model had proven early success versus our competitors who are still in, in largely in pre-money, stage. And, we have already, you know, the generated revenue and, created, some solutions for our, customers already.
Speaker #2: So, the first, like, of, these type of product we have created was, for Hitachi. head office in Japan. earlier last year, they asked us to kinda like the, the, the, the one I, I, I just mentioned, they asked us to help them converting their remote access, offering to become quantum-safe.
Speaker #2: We spent about six, seven months, going through a very tough software engineering process. Successfully completed the task and a joint press release has been issued about two months ago.
Speaker #2: Now, remote access is very susceptible to HOD and HarvestNow, HND, HNDL, HarvestNow Decrypt Later, attack because your encrypted communication session can be recorded by hackers, which is kinda like a history book of all your corporate activities that would become naked when the hackers eventually get hold of a quantum computers, right?
Speaker #2: that they can do the hacking. So being quantum-safe gives Hitachi a huge edge and they are now actively selling this in Japan. Hitachi is selling a, a, a server version which is starting price about, $6,000 US and a, SaaS software as a service subscription, model for about $15 per month.
Speaker #2: So we typically, we see a, one-time engineering fee plus ongoing revenue sharing. So we don't need to spend. The beauty is that we don't need to spend, a dime doing sales and marketing.
Speaker #2: We just sit back, being the SME subject matter expert and collect, royalties. A risk-free business. The second application that we have created was to help a, crypto foundation.
Speaker #2: We have started working on crypto, POC proof of concept more than, like, three years ago because we believe cryptocurrencies will likely be the, the, the probably the lowest hanging fruit for quantum attack because of the heavy financial incentive as well as the total open nature of cryptocurrencies/blockchain technologies.
Speaker #2: So essentially, crypto is a perfect storm for HNDL attack because hackers can easily obtain the public key of any crypto wallet. And they simply hold onto their, their, the list of public key and then up to their mercy of which wallet they want first when they get hold of a powerful enough quantum computer.
Speaker #2: So, QLabs Foundation, asked us to create for them a truly quantum-safe token. And despite the, the, the bear market, the, they called it the, the token Q1, they went through a successful ICO in February about a month ago.
Speaker #2: And we are currently in the final stage, before commercial launching at the end of April, allowing the token Q1 to be used as a quote-unquote "quantum gas fee" for crypto users to pay to protect their layer one asset like, Hyperliquid, the, the, the hype token, the Ethereum token, Solana token, etc.
Speaker #2: against Q-Day threats, of course. So, this exercise, throughout this exercise, we have, applied three patterns, protection. One was granted and two more in the patent pending stage.
Speaker #2: And, the market size is huge because, the whole $4 trillion digital asset market must be protected against Q-Day threats. And similar to Hitachi, we are, also receiving a one-time, engineering fee plus $22 million, number of these Q1 token as the compensation.
Speaker #2: So a simple math, is that for every dollar worth of, these PQC gas fee that it would eventually, achieve, it would represent $22.5 million, worth, you know, for us.
Speaker #2: So again, we don't need to spend sales and marketing dollar. We just sit back being their subject matter expert and collect royalties. So another risk-free business.
Speaker #2: Now, the third one, is our own product, which is, the world's first, truly quantum-safe end-to-end email, security product, INCAT-X. It complies with the NIST, FIPS 203 and 204 encryptions and digital signature standard.
Speaker #2: So with the quantum-safe digital signature, it basically guarantees the authenticity of the, the sender, hence effectively plugging, the whole of phishing email, which is 91% the source, of ransomware attack.
Speaker #2: Its end-to-end encryption guarantees privacy, which is a big blind spot in my opinion in the usage of email since day one, especially for the highly confidential professional, industries such as financial, legals, accounting, etc.
Speaker #2: And most importantly, we made it operating as a plug-in of, of, Microsoft Office Outlook, which is the de facto standard in corporate emails. In other words, we are mainstream ready, pending proper, marketing budgets.
Speaker #2: The marketing, the, the market size, is huge, like the, the total addressable market is very simple that there are 730 million business email addresses in the world.
Speaker #2: So if only 10% of them are serious, and wanting some, quantum protection and paying $3 a month, that's a potential 2.6 billion annual revenue, offer grab for us.
Speaker #2: So, after that, right, besides all these three, revenue generators that we created, we are also cooking another, I would call it bigger than the combination of all these three, in this year and next year, we have a unique invention that is, kinda like a crossover between, AI and quantum safety.
Speaker #2: If there are if there's one single obstacle that prevents AI from doing its full potential, it's privacy. Because AI operations today are performed in, unencrypted fashion totally, and the privacy applies not only on the user data that breaches business confidentiality, compliance, national securities, etc., but also the AI model itself can be pirated, right?
Speaker #2: So there's a huge market need for privacy preserved AI operations. And we have this solutions. Now, during the most of, 2024 and last year, we have invested heavily in creating in creating a patent pending, technology that we call Quantum AI Wrappers QAW technology.
Speaker #2: And this is basically using, full homomorphic encryption technology to encrypt both the user data and the AI model before performing AI inference. Together with quantum-safe communication, we have essentially protected the privacy of both the user data and the AI model while at the same time operating everything in a quantum-safe fashion.
Speaker #2: So this year and next year would largely be our market building stage for the QAW market as, professional services and managed services. So the total addressable market is huge, growing from 0.9, the billion because basically it's paralyzed, as I mentioned earlier, by privacy, last year to 5.4 billion by 2032.
Speaker #2: And the, the full homomorphic encryption subset alone has a size of 850 million by 2028 already, while the subs the subsegment of financial, of finance, government, and healthcare alone has, a size of 660, 650 million.
Speaker #2: So it's very sizable, addressable market that we are, diving into. So our value proposition is very straightforward, which is to protect the user data and the IP of the AI model.
Speaker #2: And user data protection allows compliance and national securities related users to take a full advantage of public AI without worrying about privacy. And this also opens for dedicated and on-premise, deployed, business.
Speaker #2: And finally, you know, we are also creating an Amazon or eBay alike, AI marketplace where we allow AI model vendors to list their model for users to search and, and use in a total, quantum secure fashion.
Speaker #2: So we simply in this kind of a marketplace, we simp again, similar to, Amazon and eBay, we simply share 15 to 25% of the, the usage revenue, and we will build build for the for the the AI model and deposit for them and taking a a percentage, as our commission.
Speaker #2: And, this value proposition also allows us to open to government funding and procurement opportunities. And, market channels are, very typical, the. PR, public relation, demand generations, partner events, and market, event, etc., which the sales channel will be typical, direct channel, government government procurement channel partners, and etc.
Speaker #2: So, we have, created a a very tight timeline, that the first target is the Q1 2026, which is right now that we already have an optimized, FHC full homomorphic encryption model, which is ready for demo to various potential customers already that we are currently doing that.
Speaker #2: And, we will have a private AI, in the Q2, a few months from now, this year, and followed by a hybrid, FHC in the Q1 of next year.
Speaker #2: Then the AI marketplace, for private AI will be there by Q2 of the, of next year. And then the optimized version will be by by Q3, and then culminated with, an AI marketplace that is, slash between premium and a hybrid FHC by, the end of, 2027, the end of the next year.
Speaker #2: So, so that is a very tight timeline that we we are, achieving as, we speak right now for the, the the crossover between AI and the quantum safety.
Speaker #2: So, all of the above are kind of reflected by our Q1 result, with, 350,000 of, engineering revenue and this is actually up more than 400% from last year.
Speaker #2: And, most importantly, despite ramping up our marketing, investor relation, R&D, you know, etc., we spend less than $300,000 in the quarter and ended with a cash position of about $3.3 million dollar, which is, increased by more than 2.3 million from last year.
Speaker #2: And we expect income starting from, additional area on top of what we already produce, which I think is is likely coming from the AI and other service, providing.
Speaker #2: So, I I like to, to take a a quick pause here, resurfacing sometimes for, Q&A because I I think, you know, you would have a lot of questions that you would you would like to ask me.
Speaker #2: So I like to reserve more time for that. So again, as, mentioned by Brian, I assume that everyone by now is very familiar with how to use the Q&A section with, with Zoom.
Speaker #2: So, please do that. And Brian, again, as usual, will moderate your questions. Back to you, Brian. Okay. Thank you, Andrew. Let me just grab others.
Speaker #2: Several of them here. Okay. the first one, Andrew, has to do with the Q1 token. And, as common as the on the, 22.5 million, Q1s, he says, "How how are you reflecting these on the balance sheet?" And I'll take the first part and then Andrew can elaborate on the valuation.
Speaker #2: But with respect to the balance sheet, remember, these were received subsequent to the end of the quarter. So it's a subsequent event. so no, they're not reflected on the Q1 balance sheet.
Speaker #2: And going forward, it'll be a matter of, we'll disclose in the notes as which follow proper IFRS and GAAP, reporting. And I'll turn it over to Andrew now to answer the second part of the question was, "How do you feel about the value?" Yeah.
Speaker #2: this is a very good question. and it's also that, this is the ink is still wet, you know, about this because as as Brian mentioned, this is happening after the, the quarter ends.
Speaker #2: And, part of the compensation, was to receive, a bunch of, these Q1 token. And we believe, these token has tremendous value because it is not a meme token.
Speaker #2: It is actually the first, quantum safe token, in the world. And also, it is the first, quantum safe utility token. Like, utility token mean meaning that it is not just for a store of value.
Speaker #2: It has usage. Like, what the use what the usage of Q1 token is for other people, that are holding digital asset and worry about, Q day threat to quantum protect their token.
Speaker #2: So, for example, if you're holding some hyperliquid, token and you worry about, Q Q day threat and you can, go to our partner site, the the, the the Q Labs Foundation, site, and click a button, to, link your wallet to the the the the our product.
Speaker #2: And then they can quantum protect. They call quantum locking, you know, doing a quantum lock to protect the the asset against Q day Q day threats.
Speaker #2: And then doing quantum unlock when they want to sell or transfer or something like that. So obviously, you know, doing this kind of a protection, we will require, people to pay some fees, which is very cheap.
Speaker #2: You're you're talking about, like, a penny, two pennies, something. So the so the the the, the the the business model is kind of like you when you are combining so many pennies together, it becomes billion dollars of, revenue.
Speaker #2: That is the kind of things that that, they are going after. And then, and then this would also help pushing the value of Q1 token.
Speaker #2: So today, the value of the the Q1 token is about $10 million dollar, which is very, very good. As I said, in a in a, a bear market like that, and they are still, you know, going out, with a successful ICO.
Speaker #2: And then the real game is by the end of April when we are releasing, the quantum lock and unlocking process while people can can protect the token and paying the, the quantum gas fee using this currency.
Speaker #2: So, yeah, in a in a after a long-winded answer to the question, the short answer is that the, the we are very, I would say, positive, you know, on the the value proposition of this Q1 token.
Speaker #2: Okay. Thanks. this is a follow-on question to it. And I think it's more, technology related. and it came in as you were talking. Can you, outline the current measures being taken by crypto players?
Speaker #2: like BC, so I assume that's, Bitcoin. And, Ethereum. To protect from hacking. And how our solution compares. With timelines. Yeah. I would say that, a few years ago, when we were, preaching about Q day threat, nobody even some people don't even understand, and nobody listened.
Speaker #2: And, now everyone is talking about it, and they started doing something. But they they are where we were about two, three years ago. So the the kind of solution that they are all, presenting, you know, are either a new layer one, chain, which the world doesn't need another layer one chain, right?
Speaker #2: Or they are proposing something that would that would be a a, a quantum signature, changing the signature of the of the the, the the fundamental blockchain technology, which also doesn't work because we went through that before, you know, two, three years ago, that it is too large.
Speaker #2: to fit into the existing data structure. So it it just won't work, right? And, finally, you know, some of the, the proposal by, say, the original layer one chain or, Bitcoin chain, that may work, it also would take a long time because the nature of the the blockchain technology, the nature of the the the cryptocurrency technology, isn't an open community.
Speaker #2: Rather than, having an owner, it is a community-owned technology, which takes a long time for so many, like, thousands of, smart people to come together, having the same consensus in how things works, right?
Speaker #2: So if you are following what, Ethereum has been doing, simply changing from from, proof of work to proof of stake, it took them five years to do it.
Speaker #2: So, to do something like that, it would take another few years to do it. Like, you know, 2029 or 2030 or something is definitely passing the, the Q day, threshold already.
Speaker #2: So, I would summarize saying that, it's, it's about it's too late, you know? While our solution is today, so whether Q Q day came in 2029, 28, or 27, or whatever the technology is here, today, of what we have created for our our partner, which is ready, ready for use beginning April, about a month and a half from now.
Speaker #2: Okay. Thanks. And now, I'll turn it over because I've grouped these next group of questions, because they have to do with AI. Andrew, the first one is in this is in the last, few presentations, you were mentioning the AI marketplace.
Speaker #2: And now you're talking about, small language models, SLMs. Are you switching focus? no. We're not switching focus. It's basically, the the AI marketplace is a marketplace for SLM.
Speaker #2: It's just that we we haven't used the the term SLM, which is small language model. And, the market for SLM, or some people calling them, special purpose AI, is extremely large.
Speaker #2: And, the reason being is, there are all kinds of different technology for for specifically for different sector, the typical example I I always give is, say, credit card fraud detection for the credit card company, right?
Speaker #2: Or, facial recognition, anomaly detection, medical, advice, and all these kind of things are are typical SLM, small language model, market. And, the only difference that we would, the first application we thought, at the beginning was to implement the the AI marketplace, for these small small language SLM, models, to be listed for their users to use.
Speaker #2: But then, after starting our market, generation, activities, we found we found that the market is way larger than that. We have many, inquiring from, the the likes of financial sectors, government sector, or something that they want to have their own model.
Speaker #2: For their own use, which is also very, privacy-oriented. So, yeah, the market has been, just expanded, you know, rather than, the the switching focus.
Speaker #2: So so it is, still the same thing, only that becoming bigger. Okay. the next one, it's it's still on AI. And I grouped several of these together because they're all asking pretty much the same.
Speaker #2: And it's, what is your plan for sales, revenue, in AI? And one person, noticed that we talked about a use case for banks in our press release.
Speaker #2: And, governments and healthcare are obvious ones as well, he says. this represents a huge opportunity. Can you elaborate on 01 Quantum's go-to-market strategy for AI?
Speaker #2: Yeah. in in general, I think I I kind of, alluded a little bit in, in my, early, presentation here. That we we are going after the market in several different, cylinders, right?
Speaker #2: The first one was, the government. And then the second one, going after, enterprises. And, we are also running some, seminar, or webinars in the educating, the market.
Speaker #2: So, we have, two, executives, focusing on, two different things. One focused on the the government procurement and government, funding sec, sector. And the other executive are, focusing on the the financial, sectors.
Speaker #2: But they are both, you know, addressing the same, SLM, small language model, requirement by, the the either the government sector, defense sector, or the, the the financial sector.
Speaker #2: And then there's also a third, front that we are working with partners. And, we have some really big, the partners that are currently in in discussing, discussion with us and doing, demonstration to their large enterprise, customer in the areas of AI.
Speaker #2: So, yeah, it's a it's a multi, multi-direction, attacking, you know, for the sales and marketing channel for this market. Okay. And then, I think we got time for one more, Andrew.
Speaker #2: How are companies, protecting their AI-generating data, generated data now? And, it seems to be confused. How is our proposed solution going? yeah, I think I understand your your question is likely, that how how people today are protecting their data.
Speaker #2: And how we are addressing that problem. I I think, you know, the answer is very simple. Today, people are not protecting their data. Simple, you know.
Speaker #2: So there's no protection. Everything that is, happening in the AI sectors, the AI inference, or you call it AI queries, are totally unencrypted. So, everything that you ask, ChatGPT, for example, or you ask your SLM, are 100% unencrypted.
Speaker #2: That the someone the operator of the the model would understand what you have asked, right? And they can analyze your question. They know what you have asked.
Speaker #2: And, and those they also know the answer to that. So what we have, created, and it's patent pending today, is, encrypting the user query or the prompt, right?
Speaker #2: And encrypting the AI model. So that they are encrypted before the AI inference. And then the answer is also encrypted, back only the the the person who asked having the private key can decrypt the answer.
Speaker #2: So the the the AI model vendor would have no idea what exact although they can provide the answer, but they don't know what the user has asked, right?
Speaker #2: So that's how we protect the privacy, the complete privacy of the user and also the AI model itself. Okay. Thank you, Andrew. I'm cognizant of time.
Speaker #2: There are a few open questions. And, for those if you wish, please, you can contact either myself or Andrew Chung. You can call us or email.
Speaker #2: Email us anytime, for any further questions or updates. And again, thank you for attending. And I'll turn it back to Andrew for closing comments.
Speaker #2: Yeah. Thank you, Brian. in closing, I I would say timing is everything. The, the the quantum market is like AI three years ago. And, it has a huge total addressable market.
Speaker #2: So my goal is to have, 01 come out at, the unicorn, you know, in the PQC market. And we are very well positioned to achieve that goal.
Speaker #2: So, thank you again. And, I hope to see you again in our AGM, happening, the I think someday in in in April that we will announce the date.