October 24, 2022
Dear Members of the Board and Shareholders:
BV Advisory Partners, LLC (together with its affiliates, “BVP” or “we”)* are stakeholders** of Quantum Computing, Inc. (Nasdaq: QUBT) (the “Company” or “QUBT”).
* BVP was a [financial advisor] to QPhoton, Inc., a Delaware company, (“QPhoton “) who was acquired by QUBT on June 16, 2022 in a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated May 18, 2022 by and among, QUBT, two of its wholly-owned subsidiaries, QPhoton and Yuping Huang, the former Chairman. Chief Executive Officer, President and, together with his wife, Xiao Pan, who also was a QPhoton director, who claims to be the holder of more than 80% of the outstanding QPhoton common stock; and since the Merger closing has been the Chief Quantum Officer, a director and the largest shareholder of QUBT. BVP also was at least a 10% stockholder of QPhoton, introduced and arranged the license by QPhoton of all of its quantum intellectual property from the Stevens Institute, provided the initial $500,000 of funding to QPhoton through the purchase of $500,000 QPhoton convertible notes (the “Notes”), assisted in the building of QPhoton into an operational company, and introduced QPhoton to QUBT. Because BVP did not receive any cash compensation for its 18 months of services to QPhoton and for the risks taken by BVP in providing the $500,000 of initial financing to QPhoton, at a time when QPhoton had no funds, revenues and/or any other prospects or sources of funding, QPhoton agreed in the Notes and the Note Purchase Agreement with BVP dated March 1, 2021 (the “NPA”) that upon the closing of the Merger (a change of control), BVP would receive as payment for its Notes a dollar amount equal to the market value of the number of shares of QUBT common stock BVP would receive as if it converted its Notes into QPhoton common stock, as adjusted based upon an arms-length negotiated formula between QPhoton and BVP including as to the conversion price, immediately prior to the Merger, which payment amount as of the date of Merger closing was $13,182,140 million. Because BVP believes QPhoton and QUBT breached their payment obligations under the Notes and the NPA, on August 15, 2022, BVP sued QPhoton, QUBT and its executive officers Robert Liscouski, CEO and Director, William McGann, COO and CTO and Chris Roberts CFO as well as Greg Osborne, the Director of Business Development of QUBT, Joseph Salvani, who BVP believes based upon, among other factors, correspondences with QUBT and representations by Salvani and others, that Salvani is an undisclosed “founder,” principal and control person of QUBT, and Dan Walsh, identified in QUBT correspondence to BVP as Salvani’s “partner (cap markets).” In prior actions brought by the SEC against Salvani, Osborne, such persons were sanctioned by the SEC for violations of the United States Federal Securities Laws. See https://www.sec.gov/litigation/admin/34-44590.htm (cited as: Joseph M. Salvani, Exchange Act Release No. 44590 (July 26, 2001)) and https://www.sec.gov/litigation/opinions/2019/33-10641.pdf (cited as: Gregory Osborn, Securities
Act Release No. 10641, Exchange Act Release No. 86001, Investment Company Act Release No. 33498, 2019 WL 2324337 (May 31, 2019)). BVP’s Verified Complaint, captioned, BV Advisory Partners, LLC, (Plaintiff) v. Quantum Computing Inc., QPhoton, LLC, Yuping Huang, Xiao Pan, Robert Liscouski, William McGann, Chris Roberts, Joseph Michael Salvani, Gregory Osborn, and Dan Walsh, (Defendants), C.A. No. 2022-0719-SG (Del. Ch. filed on Aug. 15, 2022). A copy of the complaint is attached hereto as Exhibit A.
** Because of BVP’s concerns regarding and the actions of QUBT including its management and the QUBT Board as set forth in this letter and in BVP’s litigation complaint, BV has demanded its appraisal rights with regard to its QPhoton stock.
This letter is an open response to a very concerning recent email that we received on October 19, 2022, from an anonymous member within the QCI group pretending to be Stevens Institute and the law firm Gibbons P.C. Gibbons has publicly confirmed that it did not send the email, and the fake email addresses that were included did not belong to anyone at the firm. Despite us presenting to QCI the New Jersey statute that makes these criminal behaviors illegal, no one from the board of directors, the management team, or the QCI group have denounced or officially denied this illegal activity. We have turned the matter and other evidence collected over to authorities. Therefore, we are writing in light of the fact that our attempts at fruitful engagement with the Board and management over the last several months have effectively been ignored, despite the serious ongoing operational issues at Quantum Computing, Inc.
Upon review of the publicly reported pending lawsuit in Delaware, BV Advisory Partners, LLC and its controlling shareholder, Keith Barksdale, is one of the largest creditors and stakeholders of QCI. BVP is a long-term focused, multigenerational technology investor, not a short-term hedge fund or activist. BVP was the first and only outside investor in QPhoton, Inc which QCI acquired on June 16, 2022. BVP funded and led the acquisition of QCI’s most valuable asset in the Quantum Computing Technologies License from Stevens Institute of Technology. Based on our filed lawsuit, we are owed ~ $13million in cash and ~40% of QCI shares because of its acquisition of QPhoton. We invested considerable time, effort, and capital in the licensed Stevens Institute Quantum Computing Intellectual Property (Stevens IP), because we believed in its substantial long-term potential.
However, we believe this valuable asset is unfortunately being mismanaged.
As we presented to the Board in September 2022, it is our belief that the intrinsic value of QCI portfolio of the Stevens IP patents have been appreciably damaged over the last several months. In November 2021, we signed a term sheet with QCI to participate in the acquisition of QPhoton, and since November 15, 2021, QCI stock price has gone down from $6.59 per share to a close on October 24, 2022 of $1.92 per share, which is well below the closing price of $2.37 per share on June 16, 2022 when QCI announced the closing of the QPhoton acquisition. Since November 2021, QCI has issued 21 press releases in what appears to be a brazen stock manipulation scheme in an attempt to pump up the stock, so that the holders of the Toxic Financing completed in November 2021 can dump their shares. Despite being a relatively small company with only $31,000 in revenue for 2021, QCI management team ran up losses over ~$27 million in 2021. In the first half of 2022, QCI has ran up operating loss of another ~$12.2 million for very little revenue (~$31,000). The current Board and management team has recently taken on another $8.25 million in Toxic debt from a group that has SEC issues, to continue to pay unjustified salaries, stock options, and consulting fees to other players who have been sanctioned by the SEC. The CEO of QCI lives in Virginia, the current COO lives in the Boston area, the CRO lives in San Francisco, while the bulk of the legacy QCI technology team lives in Minneapolis, and while the rest of the most valuable team members associated with the licensed Stevens IP resides in New Jersey, where BVP and its affiliated company Power Analytics Global is based. The vast majority of QCI’s senior management team, along with the majority of the Board, frankly, have no Quantum or software technology experience.
Since the current management team took over in 2018, they have not delivered any real revenue, no net income, and no real institutional investors, despite accumulating over ~$93 million in Stockholders Equity Accumulated Deficit. Even after the installation of a new Board of Directors in 2021, QCI continues to be one of the worst offenders of good corporate governance practices in the country.
In his recent press release on the Toxic Financing, Mr. Liscouski stated that “Our management team and board of directors evaluated several financing alternatives”. Why has the QCI Board thus far refused to engage in good faith discussions about proposals to enhance shareholder value? The substance of the financing alternatives has not been shared with us or any other shareholder not represented on the Board as far as we can tell. However, on October 17, 2022 the Board approved the issuance of an absurd amount of options to all directors and the majority of senior management of over ~4million shares with an outrageous accelerated vesting period. These actions by the Board and the management team of QCI is the poster child for abysmal corporate governance.
Despite the fact that QCI stock price is down ~39% YTD, and down ~60% over the last year, the Board of directors granting themselves bonus options for closing a transaction is the epitome of a conflict of interest.
The bulk of QCI’s core assets are in New Jersey. As has been presented to the QCI Board, BVP and Power Analytics, unlike the majority of QCIs senior management team and Board, live and work in New Jersey running a software company. We have nearly 30 years of experience investing in, managing, developing and generating value for stakeholders with emerging technologies. We currently operate a software company in the AI and ML space with paying customers and a substantial technology portfolio, on behalf of a diverse group of investors. We have spent decades creating value in QCI’s core markets led by talented veteran executives.
As a major stakeholder, we approached the QCI Board over four months ago about working with the Board to help QCI address many of the strategic and operational issues at the company. At that time, we introduced a project opportunity with the VIPC, which at the time Mr. Liscouski informed us he had never heard of them. We shared a detailed plan on how we could work together. In April, we presented to the Mr. Liscouski a detailed study of QCIs’ bloated cost structure and functional issues. Among other things, Power Analytics executives “blind tested” each of QCI’s product offerings and found obvious shortcomings in products and business models. In September, we made a visit to QCI’s Leesburg, VA offices and saw only Mr. Liscouski and Mr. Roberts in a shared conference room office space with no computers. On October 12-14th in New Jersey at the Stevens Institute, we paid to attend the Quantum Coherence Workshop that was exclusively sponsored by QCI, but NO ONE from Senior Management of QCI presented, nor was even in attendance besides Dr. Yuping Huang, who did not present. Despite making a combined total annual compensation of over
~$4million neither the CEO (Mr. Liscouski), COO (Mr. McGann), CRO (Mr. Morris), CFO (Mr.Roberts), nor SVP of Quantum Solutions (Mr. Keymer) were in attendance.
In April, we proposed solutions to address many of QCI’s issues, including a way to almost immediately reduce QCI’s $10 million of annual G&A to close to $2 million annually. Our proposal included strict controls and oversight to ensure proper governance and transparency. Instead of engaging in good faith discussions about our proposal, we received threats and most recently, an anonymous email from someone in your group pretending to be from Stevens Institute and Gibbons law firm. How can a company thrive when it’s Board and management team apparently associates with (and does not denounce) players who will commit such criminal activity of impersonating someone else?
BVP and Power Analytics, as one of the largest QCI stakeholders, has offered its robust operating platform to QCI at cost to drastically (a) reduce G&A expense and (b) upgrade the quality, and depth of QCI’s management capabilities. BVP and Power Analytics are willing to forgo typical management fees to immediately cut QCI’s G&A expenses. Power Analytics has undertaken a zero-base G&A budget and believes it can reduce the $10 million of G&A in 2021-2022 to just under $2 million
immediately. In our proposal to the Board, we made clear that BVP would only get paid for our efforts if we are successful in substantially growing the equity value of the company for all shareholders.
As a major stakeholder with unique experience in QCI’s core markets, we have tried to engage directly and privately with QCI’s Board and management. Unfortunately, to date, our attempts at fruitful good faith engagement have been rebuffed. We must therefore make our concerns and proposals clear to all QCI shareholders so they can understand for themselves why we believe QCI stock has performed so poorly despite seemingly positive announcements, and why our proposed strategies can swiftly change the direction in a positive way.
Power Analytics is prepared to engage directly and seriously in good faith negotiations for a joint venture arrangement whereby Dr. Yuping Huang would retain internal management of the licensed Stevens IP, but Power Analytics would help bring down QCI’s unsustainable operating expenses immediately and reposition QCI’s Qatalyst Software product, so that they can start generating significant revenue and net income for all QCI shareholders. As stated many times to the QCI’s Board, Power Analytics would only receive compensation for such efforts when Power Analytics achieves material shareholder value for all QCI shareholders. Moreover, to the extent that QCI has any concern regarding potential conflicts of interest between BVP, Power Analytics and QCI products, we are prepared to implement robust procedures to address any potential conflict.
As an alternative, Power Analytics is prepared to acquire a majority of the outstanding shares of QCI at a price of $2.37 per share (which is the same strike price as the October 17, 2022, stock option grant to the Board of directors and senior management) subject to due diligence and proper documentation. This price represents a 24% premium to QCI’s last closing price of $1.92, which we believe has been temporarily inflated by the recent flurry of press releases. This price also represents the same as the June 16, 2022, closing price of $2.37, the date the QPhoton acquisition closed. Based upon discussions with financing sources, Power Analytics believes it has access to the financing necessary to consummate this transaction subject to due diligence and proper documentation.
We would have preferred to engage in these discussions privately and directly with the Board but to date the Board has not shown a good faith willingness to discuss alternatives to the unsuccessful plan it has been implementing for the last several years, resulting in equity destruction.
Therefore, we have no choice but to make our proposals public so all QCI stakeholders are aware of more viable alternatives to the current unsustainable path that QCI is on. The Board can choose to help its shareholders achieve an immediate return on their investment and put an end to all the Toxic Financings and value destructive behavior, or the Board can try to engage with a major stakeholder and best-in-class software operator in QCI’s market to finally address the issues weighing on equity value and begin tangible value creation for all QCI stakeholders for the long term.
The status quo is unacceptable. QCI cannot continue to with the highest G&A costs in its peer group and a Board with no operating experience in software or Quantum Technology. The Company is too small and has surrounded itself with bad actors who are in the crosshairs of the SEC to permanently attract and support a competent internal management team. We propose that it partner with, or be acquired by, Power Analytics Group a best-in-class operator with a proven track record of significant value creation for customers and investors alike.
We are hopeful for all QCI stakeholders that by making this proposal public, the QCI Board will choose engagement rather than further intransigence.
BV Advisory Partners, LLC (together with its affiliates, “BVP” or “we”)* are stakeholders** of Quantum Computing, Inc. (Nasdaq: QUBT) (the “Company” or “QUBT”).
* BVP was a [financial advisor] to QPhoton, Inc., a Delaware company, (“QPhoton “) who was acquired by QUBT on June 16, 2022 in a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated May 18, 2022 by and among, QUBT, two of its wholly-owned subsidiaries, QPhoton and Yuping Huang, the former Chairman. Chief Executive Officer, President and, together with his wife, Xiao Pan, who also was a QPhoton director, who claims to be the holder of more than 80% of the outstanding QPhoton common stock; and since the Merger closing has been the Chief Quantum Officer, a director and the largest shareholder of QUBT. BVP also was at least a 10% stockholder of QPhoton, introduced and arranged the license by QPhoton of all of its quantum intellectual property from the Stevens Institute, provided the initial $500,000 of funding to QPhoton through the purchase of $500,000 QPhoton convertible notes (the “Notes”), assisted in the building of QPhoton into an operational company, and introduced QPhoton to QUBT. Because BVP did not receive any cash compensation for its 18 months of services to QPhoton and for the risks taken by BVP in providing the $500,000 of initial financing to QPhoton, at a time when QPhoton had no funds, revenues and/or any other prospects or sources of funding, QPhoton agreed in the Notes and the Note Purchase Agreement with BVP dated March 1, 2021 (the “NPA”) that upon the closing of the Merger (a change of control), BVP would receive as payment for its Notes a dollar amount equal to the market value of the number of shares of QUBT common stock BVP would receive as if it converted its Notes into QPhoton common stock, as adjusted based upon an arms-length negotiated formula between QPhoton and BVP including as to the conversion price, immediately prior to the Merger, which payment amount as of the date of Merger closing was $13,182,140 million. Because BVP believes QPhoton and QUBT breached their payment obligations under the Notes and the NPA, on August 15, 2022, BVP sued QPhoton, QUBT and its executive officers Robert Liscouski, CEO and Director, William McGann, COO and CTO and Chris Roberts CFO as well as Greg Osborne, the Director of Business Development of QUBT, Joseph Salvani, who BVP believes based upon, among other factors, correspondences with QUBT and representations by Salvani and others, that Salvani is an undisclosed “founder,” principal and control person of QUBT, and Dan Walsh, identified in QUBT correspondence to BVP as Salvani’s “partner (cap markets).” In prior actions brought by the SEC against Salvani, Osborne, such persons were sanctioned by the SEC for violations of the United States Federal Securities Laws. See https://www.sec.gov/litigation/admin/34-44590.htm (cited as: Joseph M. Salvani, Exchange Act Release No. 44590 (July 26, 2001)) and https://www.sec.gov/litigation/opinions/2019/33-10641.pdf (cited as: Gregory Osborn, Securities
Act Release No. 10641, Exchange Act Release No. 86001, Investment Company Act Release No. 33498, 2019 WL 2324337 (May 31, 2019)). BVP’s Verified Complaint, captioned, BV Advisory Partners, LLC, (Plaintiff) v. Quantum Computing Inc., QPhoton, LLC, Yuping Huang, Xiao Pan, Robert Liscouski, William McGann, Chris Roberts, Joseph Michael Salvani, Gregory Osborn, and Dan Walsh, (Defendants), C.A. No. 2022-0719-SG (Del. Ch. filed on Aug. 15, 2022). A copy of the complaint is attached hereto as Exhibit A.
** Because of BVP’s concerns regarding and the actions of QUBT including its management and the QUBT Board as set forth in this letter and in BVP’s litigation complaint, BV has demanded its appraisal rights with regard to its QPhoton stock.
This letter is an open response to a very concerning recent email that we received on October 19, 2022, from an anonymous member within the QCI group pretending to be Stevens Institute and the law firm Gibbons P.C. Gibbons has publicly confirmed that it did not send the email, and the fake email addresses that were included did not belong to anyone at the firm. Despite us presenting to QCI the New Jersey statute that makes these criminal behaviors illegal, no one from the board of directors, the management team, or the QCI group have denounced or officially denied this illegal activity. We have turned the matter and other evidence collected over to authorities. Therefore, we are writing in light of the fact that our attempts at fruitful engagement with the Board and management over the last several months have effectively been ignored, despite the serious ongoing operational issues at Quantum Computing, Inc.
Upon review of the publicly reported pending lawsuit in Delaware, BV Advisory Partners, LLC and its controlling shareholder, Keith Barksdale, is one of the largest creditors and stakeholders of QCI. BVP is a long-term focused, multigenerational technology investor, not a short-term hedge fund or activist. BVP was the first and only outside investor in QPhoton, Inc which QCI acquired on June 16, 2022. BVP funded and led the acquisition of QCI’s most valuable asset in the Quantum Computing Technologies License from Stevens Institute of Technology. Based on our filed lawsuit, we are owed ~ $13million in cash and ~40% of QCI shares because of its acquisition of QPhoton. We invested considerable time, effort, and capital in the licensed Stevens Institute Quantum Computing Intellectual Property (Stevens IP), because we believed in its substantial long-term potential.
However, we believe this valuable asset is unfortunately being mismanaged.
As we presented to the Board in September 2022, it is our belief that the intrinsic value of QCI portfolio of the Stevens IP patents have been appreciably damaged over the last several months. In November 2021, we signed a term sheet with QCI to participate in the acquisition of QPhoton, and since November 15, 2021, QCI stock price has gone down from $6.59 per share to a close on October 24, 2022 of $1.92 per share, which is well below the closing price of $2.37 per share on June 16, 2022 when QCI announced the closing of the QPhoton acquisition. Since November 2021, QCI has issued 21 press releases in what appears to be a brazen stock manipulation scheme in an attempt to pump up the stock, so that the holders of the Toxic Financing completed in November 2021 can dump their shares. Despite being a relatively small company with only $31,000 in revenue for 2021, QCI management team ran up losses over ~$27 million in 2021. In the first half of 2022, QCI has ran up operating loss of another ~$12.2 million for very little revenue (~$31,000). The current Board and management team has recently taken on another $8.25 million in Toxic debt from a group that has SEC issues, to continue to pay unjustified salaries, stock options, and consulting fees to other players who have been sanctioned by the SEC. The CEO of QCI lives in Virginia, the current COO lives in the Boston area, the CRO lives in San Francisco, while the bulk of the legacy QCI technology team lives in Minneapolis, and while the rest of the most valuable team members associated with the licensed Stevens IP resides in New Jersey, where BVP and its affiliated company Power Analytics Global is based. The vast majority of QCI’s senior management team, along with the majority of the Board, frankly, have no Quantum or software technology experience.
Since the current management team took over in 2018, they have not delivered any real revenue, no net income, and no real institutional investors, despite accumulating over ~$93 million in Stockholders Equity Accumulated Deficit. Even after the installation of a new Board of Directors in 2021, QCI continues to be one of the worst offenders of good corporate governance practices in the country.
In his recent press release on the Toxic Financing, Mr. Liscouski stated that “Our management team and board of directors evaluated several financing alternatives”. Why has the QCI Board thus far refused to engage in good faith discussions about proposals to enhance shareholder value? The substance of the financing alternatives has not been shared with us or any other shareholder not represented on the Board as far as we can tell. However, on October 17, 2022 the Board approved the issuance of an absurd amount of options to all directors and the majority of senior management of over ~4million shares with an outrageous accelerated vesting period. These actions by the Board and the management team of QCI is the poster child for abysmal corporate governance.
Despite the fact that QCI stock price is down ~39% YTD, and down ~60% over the last year, the Board of directors granting themselves bonus options for closing a transaction is the epitome of a conflict of interest.
The bulk of QCI’s core assets are in New Jersey. As has been presented to the QCI Board, BVP and Power Analytics, unlike the majority of QCIs senior management team and Board, live and work in New Jersey running a software company. We have nearly 30 years of experience investing in, managing, developing and generating value for stakeholders with emerging technologies. We currently operate a software company in the AI and ML space with paying customers and a substantial technology portfolio, on behalf of a diverse group of investors. We have spent decades creating value in QCI’s core markets led by talented veteran executives.
As a major stakeholder, we approached the QCI Board over four months ago about working with the Board to help QCI address many of the strategic and operational issues at the company. At that time, we introduced a project opportunity with the VIPC, which at the time Mr. Liscouski informed us he had never heard of them. We shared a detailed plan on how we could work together. In April, we presented to the Mr. Liscouski a detailed study of QCIs’ bloated cost structure and functional issues. Among other things, Power Analytics executives “blind tested” each of QCI’s product offerings and found obvious shortcomings in products and business models. In September, we made a visit to QCI’s Leesburg, VA offices and saw only Mr. Liscouski and Mr. Roberts in a shared conference room office space with no computers. On October 12-14th in New Jersey at the Stevens Institute, we paid to attend the Quantum Coherence Workshop that was exclusively sponsored by QCI, but NO ONE from Senior Management of QCI presented, nor was even in attendance besides Dr. Yuping Huang, who did not present. Despite making a combined total annual compensation of over
~$4million neither the CEO (Mr. Liscouski), COO (Mr. McGann), CRO (Mr. Morris), CFO (Mr.Roberts), nor SVP of Quantum Solutions (Mr. Keymer) were in attendance.
In April, we proposed solutions to address many of QCI’s issues, including a way to almost immediately reduce QCI’s $10 million of annual G&A to close to $2 million annually. Our proposal included strict controls and oversight to ensure proper governance and transparency. Instead of engaging in good faith discussions about our proposal, we received threats and most recently, an anonymous email from someone in your group pretending to be from Stevens Institute and Gibbons law firm. How can a company thrive when it’s Board and management team apparently associates with (and does not denounce) players who will commit such criminal activity of impersonating someone else?
BVP and Power Analytics, as one of the largest QCI stakeholders, has offered its robust operating platform to QCI at cost to drastically (a) reduce G&A expense and (b) upgrade the quality, and depth of QCI’s management capabilities. BVP and Power Analytics are willing to forgo typical management fees to immediately cut QCI’s G&A expenses. Power Analytics has undertaken a zero-base G&A budget and believes it can reduce the $10 million of G&A in 2021-2022 to just under $2 million
immediately. In our proposal to the Board, we made clear that BVP would only get paid for our efforts if we are successful in substantially growing the equity value of the company for all shareholders.
As a major stakeholder with unique experience in QCI’s core markets, we have tried to engage directly and privately with QCI’s Board and management. Unfortunately, to date, our attempts at fruitful good faith engagement have been rebuffed. We must therefore make our concerns and proposals clear to all QCI shareholders so they can understand for themselves why we believe QCI stock has performed so poorly despite seemingly positive announcements, and why our proposed strategies can swiftly change the direction in a positive way.
Power Analytics is prepared to engage directly and seriously in good faith negotiations for a joint venture arrangement whereby Dr. Yuping Huang would retain internal management of the licensed Stevens IP, but Power Analytics would help bring down QCI’s unsustainable operating expenses immediately and reposition QCI’s Qatalyst Software product, so that they can start generating significant revenue and net income for all QCI shareholders. As stated many times to the QCI’s Board, Power Analytics would only receive compensation for such efforts when Power Analytics achieves material shareholder value for all QCI shareholders. Moreover, to the extent that QCI has any concern regarding potential conflicts of interest between BVP, Power Analytics and QCI products, we are prepared to implement robust procedures to address any potential conflict.
As an alternative, Power Analytics is prepared to acquire a majority of the outstanding shares of QCI at a price of $2.37 per share (which is the same strike price as the October 17, 2022, stock option grant to the Board of directors and senior management) subject to due diligence and proper documentation. This price represents a 24% premium to QCI’s last closing price of $1.92, which we believe has been temporarily inflated by the recent flurry of press releases. This price also represents the same as the June 16, 2022, closing price of $2.37, the date the QPhoton acquisition closed. Based upon discussions with financing sources, Power Analytics believes it has access to the financing necessary to consummate this transaction subject to due diligence and proper documentation.
We would have preferred to engage in these discussions privately and directly with the Board but to date the Board has not shown a good faith willingness to discuss alternatives to the unsuccessful plan it has been implementing for the last several years, resulting in equity destruction.
Therefore, we have no choice but to make our proposals public so all QCI stakeholders are aware of more viable alternatives to the current unsustainable path that QCI is on. The Board can choose to help its shareholders achieve an immediate return on their investment and put an end to all the Toxic Financings and value destructive behavior, or the Board can try to engage with a major stakeholder and best-in-class software operator in QCI’s market to finally address the issues weighing on equity value and begin tangible value creation for all QCI stakeholders for the long term.
The status quo is unacceptable. QCI cannot continue to with the highest G&A costs in its peer group and a Board with no operating experience in software or Quantum Technology. The Company is too small and has surrounded itself with bad actors who are in the crosshairs of the SEC to permanently attract and support a competent internal management team. We propose that it partner with, or be acquired by, Power Analytics Group a best-in-class operator with a proven track record of significant value creation for customers and investors alike.
We are hopeful for all QCI stakeholders that by making this proposal public, the QCI Board will choose engagement rather than further intransigence.
Keith Barksdale
Chairman
Power Analytics Global
Chairman
Power Analytics Global