DEF 14A of Quantum Computing Inc., Nov 1, 2024

DEF 14A of Quantum Computing Inc.

Filed Nov 1, 2024 · FY20230001213900-24-093562

Open on EDGAR

  1. INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE

    INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE

  2. Executive Officers and Board of Directors

    Executive Officers and Board of Directors Set forth below are the names of and certain biographical information about each executive officer and member of the Board. The information presented includes each officer and director’s principal occupation and business experience for the past five years and the names of other public companies of which he has served as a director during the past five years. The Board, upon the recommendation of its Nominating and Corporate Governance Committee, has nominated Dr. Yuping Huang, Dr. Carl Weimer, Dr. Javad Shabani, Robert Fagenson and Michael Turmelle for election as directors, each to hold office until the next annual meeting of stockholders of the Company and until their successors are elected and qualified or until their earlier resignation or removal.

  3. Executive Officers and Board of Directors

    | Name | Current Age | Position | | William J. McGann | 66 | Chief Executive Officer and President | | Chris Boehmler | 45 | Chief Financial Officer | | Robert Liscouski | 70 | Chairman of the Board of Directors | | Dr. Yuping Huang | 45 | Chief Quantum Officer and Director | | Dr. Carl Weimer | 62 | Director | | Dr. Javad Shabani | 43 | Director | | Robert Fagenson | 75 | Director | | Michael Turmelle | 65 | Director |

  4. Executive Officers and Board of Directors

    William McGann has served as the Company’s Chief Executive Officer and President since February 1, 2024. Prior to that, he had served as the Company’s Chief Technology Officer and Chief Operations Officer since January 2022 and as a Director of the Company from September 2021 to December 2021. Prior to joining Quantum Computing, Dr. McGann was the Chief Technology Officer for the Security, Detection and Automation business at Leidos Holdings, Inc., a provider of technical services, primarily to the U.S. government, from May 2019 to January 2022. Dr. McGann has a strong, directed passion for transforming credible science into practical technology solutions in solving some of the world’s greatest challenges. Prior to joining Leidos, Dr. McGann held numerous business and technology leadership positions and roles including (a) Founder of the first explosives trace detection company, Ion Track Instruments, (b) Chief Technology Officer for GE Security, (c) VP of Engineering for United Technologies Fire and Security business, (d) CEO and board member of Implant Sciences Corp., and (e) Chief Technology Officer at L3Harris Aviation Security and Detection business. Dr. McGann holds a Ph.D. in Chemical Physics from the University of Connecticut and undergraduate degrees in Chemistry and Biology. Chris Boehmler has served as the Company’s Chief Financial Officer since July 1, 2023. Mr. Boehmler joined Quantum Computing Inc. as Controller in March 2022. He worked as an independent consultant from June 2018 until March 2022, serving both private and non-profit organizations. Previous to June 2018, his corporate finance experience totals 12 years in senior management positions for private and public technology-driven and financial institutions, primarily at Bridgewater Associates, LP and Intelsat. During this time, he also led the finance functions for two start-ups where he was instrumental in raising private equity and performing due diligence on acquisition targets. His financial expertise spans capital markets, planning & analysis, accounting operations, management and regulatory reporting, financial systems integrations, and Sarbanes Oxley Act financial risks & controls. He started his career working in the investment banking division of Credit Suisse First Boston, followed by strategic management consulting for Booz Allen Hamilton. Mr. Boehmler has an undergraduate degree in Economics with a minor in Germanic Studies from the University of Chicago. Robert Liscouski is the Chairman of the Board; he has served in this position since February 2018. From March 2018 through January 2024 Mr. Liscouski served as the Company’s Chief Executive Officer and President. Prior to that Mr. Liscouski served as Chairman and Founder of Convergent Risk Group LLC, an enterprise security risk management firm specializing in the convergence of physical and cyber risk, from January 2011 through May 2019 and as President of Implant Sciences Corp., a public company that became a leader in the explosive trace detection industry culminating in the sale of the technology to L3 Communications in January 2017. Mr. Liscouski is a proven security professional, thought leader and successful entrepreneur with over 35 years of senior level security operational and company leadership experience in government and public and private companies. Mr. Liscouski is a recognized security industry leader in assessing, mitigating and managing physical and cybersecurity risk in private sector enterprises and state and federal government agencies. Mr. Liscouski has extensive experience in leading innovative start up and turnaround companies as well as building programs for large government organizations and is recognized as a leader in identifying emerging security technologies. He serves as a “Trusted Advisor” to senior officials within government and private sector, providing guidance in areas such as physical and cyber security, crisis management, organizational development and strategic planning. Mr. Liscouski’s career has spanned local law enforcement, senior government and private sector positions from operations to senior leadership and Boards of Directors. He served as a senior advisor to the intelligence community and was appointed by President George W. Bush as the first Assistant Secretary for Infrastructure Protection at the Department of Homeland Security. Mr. Liscouski is a founder and Chairman of the Board of the National Child Protection Task Force, a 501(c)(3) charitable organization, and served on the Board of Clean Coal Technologies Inc. (CCTC) from 2019 until December 2020. He received his Bachelor of Science degree in Criminal Justice from John Jay College and his MPA in Public Administration from the Kennedy School of Government, Harvard University. Yuping Huang has served as the Company’s Chief Quantum Officer and a Director since June 14, 2022. Dr. Huang has over 20 years of experience in commercial and academic settings, with pioneering research in a wide spectrum of quantum physics, optics, and technology. Prior to joining the Company, Dr. Yuping founded QPhoton, Inc., where he served as Chief Executive Officer from 2020 until its acquisition by the Company in 2022. QPhoton was a development stage company commercializing quantum photonic technology and devices to provide innovative and practical quantum solutions for critical challenges facing big data, cyber, remote sensing, and healthcare industries. Dr. Huang worked as a postdoctoral fellow, a research faculty member, and principal investigator at Northwestern University from 2009-2014. Dr. Huang has been a Professor of Physics at the Stevens Institute of Technology, a private research technological university in Hoboken, New Jersey, since 2014 (from 2014 to 2019 as assistant professor, from 2019-2023 as associate professor and as a full professor since 2023). Dr. Huang is the founding director of the Center for Quantum Science and Engineering and Gallagher Associate Professor of Physics at the Stevens Institute of Technology. He received a Bachelor of Science in modern physics from the University of Science and Technology of China in 2004 and a PhD in quantum AMO physics in 2009 from Michigan State University. Dr. Huang’s expertise in quantum physics and optics and leadership experience in quantum research qualifies him to serve as a member of the Board. Dr. Carl Weimer has served as a director of the Company since January 14, 2023. Dr. Weimer has over 25 years of experience in the aerospace industry. He has previously been involved in two companies in the aerospace industry, holding positions including Team Leader, Principal Investigator and Chief Technologist. From 1994 through 2000, Dr. Weimer was a Team Leader for Ophir Corporation, an aerospace optics company. From 2000 to 2018 he was a Team Leader for Ball Aerospace & Technologies Corp., a spacecraft company, and in 2008 he was awarded a NASA Distinguished Public Service Medal. In addition, Dr. Weimer has been the Principal Investigator for the NASA Earth Science Technology Office since 2008, and he holds seven U.S. patents in optical systems. Dr. Weimer received a Bachelor of Science degree from Harvey Mudd College (1984) and a Master of Science (1987) and a PhD (1992) from Colorado State University, all in experimental Physics. Dr. Weimer’s expertise in advanced optics and leadership experience in the aerospace industry qualifies him to serve as a member of the Board.

  5. Executive Officers and Board of Directors

    Dr. Javad Shabani has served as a director of the Company since April 19, 2024. Dr. Shabani has over 13 years of experience in advanced physics and quantum information physics. Dr. Shabani has been an associate professor in the New York University Physics Department and director of the NYU Center for Quantum Information Physics since 2022. From 2017 to 2022, he was an Assistant Professor at the NYU Physics Department. From 2015 to 2017, Dr. Shabani was an Assistant Professor at the City College of New York Physics Department. From 2014 to 2015, he was a Project Scientist in the California Nanosystems Institute at the University of California Santa Barbara. From 2011 to 2014, he was a Postdoctoral Fellow at the Harvard University Physics Department (2011 – 2012) and the California Nanosystems Institute at the University of California Santa Barbara (2012 – 2014). He was awarded the IBM Q Scholar Award in 2021, and the US Air Force Young Investigator Program Award and the US Army Young Investigator Award in 2016. Dr. Shabani holds four patents in quantum physics applications and has published over 85 papers. Dr. Shabani received Bachelor of Science degrees in physics and electrical engineering from Sharif University of Technology (2004) a Master of Science in Electrical Engineering from the University of California, Santa Cruz (2005), a Master of Arts in Electrical Engineering from Princeton University (2007) and a PhD in Electrical Engineering from Princeton University (2011). Dr. Shabani’s scholarship and experience in physics and electrical engineering qualifies him to serve on the Board to help lead the Company towards continued growth and success. Robert Fagenson has served as a Director of the Company since March 2021. Mr. Fagenson has served as a member of the board of directors of National Holdings Corporation (“NHC”), a broker-dealer, since March 2012. He has served as vice chairman of the board of directors of NHC since September 2016. Mr. Fagenson previously served as co-chief executive officer of NHC from January 3, 2017 to January 31, 2017, as chief executive officer and chairman of the board of directors of NHC from December 2014 to September 2016, and as executive vice-chairman of the board of directors of NHC from July 2012 to December 2014. NHC was acquired by B. Riley Financial in February 2024. Mr. Fagenson has been a branch owner at National Securities Corp, an operating company of NHC, since 2012, and president of Fagenson & Co., Inc., a family investment company, since 1982. Mr. Fagenson spent the majority of his career at the New York Stock Exchange (“NYSE”), where he was managing partner of one of the exchange’s largest specialist firms. While at the NYSE, Mr. Fagenson served as a governor on the trading floor and was elected to the NYSE board of directors in 1993, where he served for six years, eventually becoming vice chairman of the NYSE board of directors from 1998 to 1999 and 2003 to 2004. Mr. Fagenson has served as director of the New York City Police Museum since 2005 and as director of the Federal Law Enforcement Officers Association Foundation since 2009. He has also served on the board of directors of Sigma Alpha Mu Foundation since 2011 and on the board of directors of New York Edge since 2015. In addition, Mr. Fagenson served as the non-executive chairman of Document Security Systems, Inc. from 2012 to 2018 (NYSEMKT: DSS). He is currently a member of the alumni boards of the Whitman School of Business at Syracuse University. Mr. Fagenson received his B.S. in Transportation Sciences & Finance from Syracuse University in 1970. Mr. Fagenson’s experience in the financial services industry and in senior leadership positions qualifies him to serve as a member of the board and as chairman of the audit committee. Michael Turmelle has served as a Director of the Company since January 2022. Mr. Turmelle has served on the board of directors of Ideal Power Inc. since December 2017 and as chairman of the Ideal Power board since 2021. From January 2018 through January 2024, Mr. Turmelle served as the Managing Director of Hayward Tyler, a United Kingdom private equity-backed manufacturer and service provider of pumps and motors, which he joined in February 2015. Mr. Turmelle also served on the boards of Hayward Tyler and Energy Steel (a Hayward Tyler subsidiary) from 2017 until January 2024. Hayward Tyler designs, manufactures, and services performance-critical electric motors and pumps to meet the most demanding of applications for the global energy industry, as both an original equipment manufacturer supplier and trusted partner. Previously, Mr. Turmelle ran his own consulting company, working with start-ups and turn-arounds in the areas of renewable energy, medical, and other advanced technologies. Mr. Turmelle has served on numerous Boards of Directors including the Board of Directors of Implant Sciences Corp., an explosive and narcotic trace detection company, where he served as Chairman of the Board from 2015 to 2017. Mr. Turmelle was Chief Financial Officer and Chief Operating Officer and a member of the Board of Directors of SatCon Technology Corporation, a maker of energy management systems, from 1992 to 2005. Mr. Turmelle was also on the Board of Directors of Beacon Power, a SatCon spin-off company dealing in flywheel energy storage, from 1996 to 2000. Mr. Turmelle has a BA in Economics from Amherst College and is a graduate of General Electric’s Financial Management Program. Mr. Turmelle’s experience as a public company director and executive as well as extensive experience in finance, business operations and technology, qualifies him to serve as a member of the Board and as chairman of the compensation committee.

  6. Summary Compensation Table

    Summary Compensation Table The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the Company’s executive officers whose total compensation for the year ended December 31, 2023, did not exceed $100,000 (the “named executive officers” or “NEOs”) by us during the years ended December 31, 2023 and 2022.

  7. 2023 EXECUTIVE OFFICER COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | Chris Boehmler(2) | 2023 | 260,246 | 5,000 | 69,738 | 276,000 | 0 | 610,984 | | Chief Financial Officer (PFO) | 2022 | 168,547 | 250 | 0 | 254,338 | 0 | 423,134 | | William J. McGann(1) | 2023 | 403,074 | 0 | 191,278 | 0 | 0 | 594,352 | | Chief Executive Officer and President (PEO) | 2022 | 403,768 | 250 | 0 | 3,654,000 | 0 | 4,058,018 | | Robert Liscouski(3) | 2023 | 403,130 | 0 | 0 | 138,000 | 0 | 541,130 | | Chairman | 2022 | 402,839 | 180,000 | 0 | 4,510,500 | 0 | 5,093,339 |

  8. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table sets forth information regarding equity awards held by our named executive officers as of December 31, 2023:

  9. Outstanding Equity Awards at Fiscal Year End

    | | Option Awards | | | | Stock Awards | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | | Chris Boehmler(1) | 30,417 | 60,833 | 2.56 | March 28, 2027 | 29,550 | 26,891 | | Chris Boehmler | 2,917 | 5,833 | 2.37 | October 12, 2027 | | | | Chris Boehmler | 100,000 | 200,000 | 1.18 | December 27, 2028 | | | | William J. McGann(2) | 356,666 | 178,334 | 2.40 | January 24, 2027 | 81,050 | 73,756 | | William J. McGann | 1,000,000 | 0 | 2.37 | October 17, 2027 | | | | Robert Liscouski(3) | 75,000 | 0 | 1.00 | May 22 2025 | 0 | 0 | | Robert Liscouski | 250,000 | 0 | 6.85 | April 26, 2026 | | | | Robert Liscouski | 166,676 | 83,334 | 2.40 | January 24, 2027 | | | | Robert Liscouski | 1,605,560 | 44,440 | 2.37 | October 17, 2027 | | | | Robert Liscouski | 72,244 | 77,776 | 1.44 | December 27, 2028 | | |

  10. Outstanding Equity Awards at Fiscal Year End

    ____________ (1) Mr. Boehmler’s stock options expiring March 28, 2027 and October 12, 2027 vest as follows: (i) 33,334 options vested on March 28, 2023; (ii) 33,334 options vested on March 28, 2024; and (iii) 33,332 options vest on March 28, 2025. Mr. Boehmler’s stock options expiring on December 27, 2028 vest as follows: (i) 100,000 options vested on July 1, 2023; (ii) 100,000 options vested on July 1, 2024; and (iii) 100,000 options vest on July 1, 2025. Mr. Boehmler’s 29,550 shares of stock vest on December 31, 2024. (2) Dr. McGann’s stock options expiring January 24, 2027ed vest as follows: (i) 178,333 options vested on January 24, 2022; (ii) 178,333 options vested on January 24, 2023; and (iii) 178,334 options vested on January 24, 2024. Dr. McGann’s stock options expiring on October 17, 2022 vested as follows: (i) 750,000 options vested on October 17, 2022; and (ii) 250,000 options vested on December 31, 2022. Dr. McGann’s 81,050 shares of stock vest on December 31, 2024. (3) Mr. Liscouski’s stock options expiring May 22, 2025 vested as follows: (i) 25,000 options vested on April 8, 2021; (ii) 25,000 options vested on April 8, 2022; and (iii) 25,000 options vested on April 8, 2023. Mr. Liscouski’s stock options expiring April 26, 2026 vested on April 26, 2021. Mr. Liscouski’s stock options expiring January 27, 2022 vested as follows: (i) 83,333 options vested on July 15, 2022; (ii) 83,333 options vested on July 15, 2023; and (iii) 83,334 options vested on July 15, 2024. Mr. Liscouski’s stock options expiring October 17, 2027 vest as follows: (i) 1,053,890 options vested on October 17, 2022; (ii) 508,334 options vested in equal monthly increments in 2023; and (iii) the remainder vest in equal monthly increments of 2,778 shares through April 1, 2025, with the final month vesting 2,770 shares. Mr. Liscouski’s stock options expiring December 27, 2028 vest as follows: (i) 72,224 vested as of December 31, 2023; and (ii) the remainder vest in equal monthly increments of 2,778 shares through April 1, 2026, with the final month vesting 2,770 shares. Pursuant to Mr. Liscouski’s Separation Agreement all unvested options vested effective March 15, 2024.

  11. Director Compensation

    Director Compensation The Company’s independent directors each received compensation of $9,000 per quarter for their services as directors, plus an additional $4,000 per quarter if they also served as a committee Chair, in fiscal year 2023. The following table presents the total compensation earned and paid to non-employee members of the Board for the fiscal year ended December 31, 2023. In addition to the compensation outlined below, we reimburse non-employee Directors for reasonable travel expenses and out-of-pocket costs incurred in attending meetings of the Board or events that they attend on behalf of the Company.

  12. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Stock Options ($) | Total ($) | | Bertrand Velge(1) | 46,207 | 0 | 130,812 | 177,019 | | Michael Turmelle | 52,000 | 0 | 130,812 | 182,812 | | Carl Weimer | 36,000 | 0 | 130,812 | 166,812 | | Robert Fagenson | 52,000 | 0 | 130,812 | 182,812 |

  13. Director Compensation

    ____________ (1) Mr. Velge resigned from the Company’s Board on November 20, 2023.

  14. Pay versus Performance Table

    Pay versus Performance Table The following table shows the total compensation for the named executive officers as set forth in the Summary Compensation Table, the compensation “actually paid” (“CAP”) to the NEOs, the Company’s total shareholder return (“TSR”), and our net income for the years ended December 31, 2023 and 2022. The tables below reflect the changes to stock-based compensation expense resulting from the Company’s restatement of its audited consolidated financial statements for the periods ended December 31, 2023 and 2022. 2023 Pay vs. Performance Table

  15. Pay versus Performance Table

    | Fiscal Year | Summary compensation table total for PEO(1) | Compensation actually paid to PEO(1)(3) | Average summary compensation table total for non-PEO NEOs(2) | Average compensation actually paid to non-PEO NEOs(2)(3) | Value of initial fixed $100 investment based on total shareholder return | Net income (loss) ($000) | | 2023 | $478,393 | $557,261 | $479,799 | $472,501 | $6 | (29,731) | | 2022 | $3,546,501 | $4,072,923 | $1,353,972 | $1,345,901 | $11 | $(38,594) | | 2021 | $1,962,822 | $(3,111,112) | $2,080,745 | $(1,868,218) | $24 | $(27,899) |

  16. Pay versus Performance Table

    ____________ (1) In the table above, our PEO is Robert Liscouski. (2) The non-PEO NEOs for each applicable year are as follows: – 2023: Christopher Boehmler, Christopher Roberts, Yuping Huang, William McGann, and David Morris – 2022: Christopher Roberts, Yuping Huang, William McGann, and David Morris – 2021: Christopher Roberts and David Morris (3) The SEC rules require that certain adjustments be made to the Summary Compensation Table (“SCT”) totals to determine CAP, as reported in the Pay versus Performance table above. The following table details the applicable adjustments that were made to determine CAP:

  17. Pay versus Performance Table

    | Year | Executives | SCT total ($) | Deduct grant date fair value of stock awards & option awards ($) | Add year-end fair value of unvested equity granted in the year ($) | Add year-over- year change in fair value of outstanding and unvested equity granted in prior years ($) | Add fair value as of vesting date of equity awards granted and vested in the year ($) | Add year- over-year change in fair value of equity awards granted in prior years that vested in the year ($) | Deduct fair value at the end of the prior year of equity awards that failed to meet vesting conditions in the year ($) | | 2023 | PEO | 478,393 | (75,263) | 71,017 | (76,268) | 229,022 | (69,640) | — | | | Non-PEO NEOs (average) | 479,799 | (130,079) | 64,319 | (69,041) | 194,357 | (66,853) | — | | 2022 | PEO | 3,546,501 | (2,963,662) | 369,109 | — | 3,548,475 | (427,500) | — | | | Non-PEO NEOs (average) | 1,353,972 | (988,096) | 266,767 | (157,542) | 1,036,258 | (165,458) | — | | 2021 | PEO | 1,962,822 | (1,410,922) | — | (2,407,500) | 1,865,250 | (3,120,762) | — | | | Non-PEO NEOs (average) | 2,080,745 | (1,841,687) | 767,250 | (1,230,500) | 576,225 | (2,220,250) | — |

  18. Relationship Between Compensation Actually Paid and Performance Measures

    Relationship Between Compensation Actually Paid and Performance Measures The Pay versus Performance table above and the charts below illustrate the following: CAP to our PEO and non-PEO NEOs has not consistently moved in line with our TSR, that is, declines in our TSR over 2021 and 2022 were not accompanied by declining compensation outcomes during those years, however, in 2023 our TSR and CAP both declined. The CAP definition of pay reflects changes in the value of unvested and vested equity, so declines in the value of our stock price were similarly reflected in the value of equity (both unvested and vested) as compared to grant-date SCT values of pay. The declines in the value of our stock price were, however, reflected in the difference between compensation is reflected in the SCT and CAP for the PEO and non-PEO NEOs in each year. In 2023, 2022 and 2021, the value of outstanding equity held by our PEO and non-PEO NEOs declined and resulted in a negative impact on CAP for both our PEO and the non-PEO NEOs. Total CAP for our PEO and non-PEO NEOs decreased in 2023 compared with 2022 but did increase in 2022 compared to 2021, due to equity grants related to the QPhoton merger that closed in 2022. We expect that as the market value of the Common Stock increases, CAP values would also increase given both the equity tie to stock price and the potential impact of positive financial results on incentive payouts. CAP does not move in line with our net income, as the measure can be volatile year-over-year due to accounting requirements, such as the inclusion of estimated values of equity grants, changes in the value of inventories, acquisitions, and intangible asset amortization, and related metrics. As such, we use other key measures of financial performance for a growing company, such as revenue, bookings, and EBITDA margin, in our incentive programs.

  19. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    PROPOSAL NO. 1: ELECTION OF DIRECTORS The Board is currently comprised of six directors. A total of five directors will be elected at the Annual Meeting to serve until the next annual meeting of stockholders to be held in 2024 and until their successors are duly elected and qualified. The terms of all of the Board members currently in office expire at the Annual Meeting, and they have each been nominated by the Board for re-election at the Annual Meeting and are all standing for re-election. The person named as “proxy” will vote the shares represented by all validly submitted proxies in accordance with the specifications of the stockholders submitting such proxies. If no choice has been specified by a stockholder, the shares will be voted FOR the election of each of the Board’s nominees. If at the time of the Annual Meeting any of the nominees named below should be unable or unwilling to serve, which event is not expected to occur, the discretionary authority provided in the proxy will be exercised to vote for such substitute nominee or nominees, if any, as shall be designated by the Board. If a quorum is present, the nominees for directors receiving the highest number of FOR votes will be elected.

  20. NOMINEES FOR ELECTION AS DIRECTOR

    NOMINEES FOR ELECTION AS DIRECTOR