Let's get started. Good morning, everyone, and welcome to our 2026 third quarter results and business update.

I'm Brian Stringer. I'm the Chief Financial Officer for 01 Quantum, and with me on the call today is our CEO and founder, Andrew Cheung.

Now the agenda today will be I will pass it over shortly to Andrew, who will take us through an operational highlight and discussion on the results, followed by which there will be time for Q&A. I will moderate the questions, and I think by now everybody is familiar as how to use Zoom.

At the bottom, there's a raise hand. Feel free, please, to type your questions, and we'll get to them at the end.

Now before I pass it over to Andrew, is our disclaimer, which forms an integral part of our presentation. Please take a few seconds to look it over.

Thank you. Now I'll turn it over to Andrew for his presentation.

Over to you, Andrew.

Thank you, Brian. Hello, everyone.

I'm Andrew Cheung, CEO of 01 Quantum. Welcome to our Q3 corporate update.

Now this quarter marks a very important new chapter for the company. With the new capital received last year, we have advanced our technologies and go-to-market to a whole new level.

I'm very optimistic about the business for the next 2-3 years, but my expectation is not coming from the revenue today as we have already collected the one-time engineering fees during our previous quarters. Instead, it is coming from our outlook, especially on the AI side.

Before I tell you why I'm so optimistic, let me reiterate the market we are in. Quantum computing is advancing quickly and has the potential to drive major breakthrough in the areas such as AI, drugs discovery, material science, and other computationally intensive fields.

Many knowledgeable tech executive expect quantum computing to be as widely used in a few years as AI today. That same computing power has also created an unprecedented cybersecurity threat, or a.k.a.

Q-Day, because the encryption that protects today's digital economy will be totally naked in front of a quantum computer. Our job is to make sure our customers are safe beyond Q-Day.

While there's no definitive answer to when Q-Day would arrive, major tech companies and governments are already preparing for it. Quantum computing vendors like IBM, Microsoft, Google, et cetera, are predicting 2029, and this is echoed by Trump's recent executive order in June mandating the agencies to be quantum-safe by 2030.

The biggest point here is that you don't need Q-Day to arrive for quantum threat. While 2029 is only 2.5 years away, the advancement of AI, especially Claude Mythos recently, has accelerated the practical Q-Day to now because it allow hackers to easily obtain your encrypted data today, and then the hackers simply hold on to the encrypted data and wait until Q-Day and get them decrypted, such as your password, your crypto key, et cetera.

This is the infamous HNDL attack, harvest now, decrypt later. This is why government, enterprises, and technology providers are already beginning their quantum-safe migration journey, because the only way to protect their data in the future is to protect them now.

Now one of the differentiator is that we focus on deploying products, not simply post-quantum research or cryptographic algorithms. The end customers typically do not want to buy an encryption engine.

What they want is the application that they are currently using to become quantum-safe. Therefore, we have built our technologies around practical commercial applications, and today, our core area of focus are in the areas of quantum-safe AI, remote access, digital assets, and email securities.

Some of these solutions are already commercially deployed by our customers, while others are moving through their timelines. This differentiator allow us to sign up a lot of world-class partners such as Hitachi, CGI, Thales, PwC, and others.

We have another big one to announce very soon. I kind of keeping you suspense a little bit here.

Our role is to act as their post-quantum subject matter expert, or SME, and our partners have established customer base and relationship and distribution, while we provide the technology and expertise required to help making their customers quantum-safe. This partner-led approach is important because it allow us to access large customers and markets without having to build a global direct sales organization ourselves.

I would boldly say that our largest single opportunity moving forward here is the crossover between AI, quantum safety, and user data privacies. We have a patent-protected technology called quantum AI wrappers, QAW, that we have been building since 2024.

Recently, it has been publicly announced and demonstrated at the TMLS Conference, Toronto Machine Learning Summit. QAW essentially unlock the single largest obstacle that is hindering the maximum adoption of AI, which is user data privacy, because all AI operations today are operating unencrypted.

QAW uses fully homomorphic encryption, FHE, optimized to encrypt both the user data and the AI model before performing AI inference. In other words, the question asked by the users and the round-trip answer back to the users are 100% end-to-end encrypted.

In other words, the AI model operator has no way seeing the end user's confidential data as well as the answer. This is even more important now as recent debates by Palantir and others have come to a view that AI model operators can eventually create competing product and services when enterprises are using their model asking questions or even performing codings.

To get around, the most straightforward approach is to encrypt the user data with our technology. Our objective is to protect both the user data and the IP of the model owner, and needless to say, the whole end-to-end communication session is quantum-safe while using our technologies.

Our value proposition is very straightforward. In simple terms, we allow AI inference without exposing the underlying data and the AI model as they are both encrypted.

This allows compliance and national security-related usages. This also opens for both dedicated on-premises deployment businesses as well as managed services.

Our go-to-market strategy is to go through our channel partners like CGI, Hitachi, Thales, et cetera, which is very cost-effective as we are riding with them without heavy sales and marketing investment on our jeans. For example, co-marketing campaigns are being crafted with CGI as we speak.

We also will soon announce a marketing campaign related to the Canadian government whereby we will demonstrate a neural network AI with the ability to distinguish drone, cats, birds, plane, et cetera, in an encrypted fashion. In simple terms, it means feeding an encrypted gibberish picture to the AI model, but yet the AI can tell whether it's a military drone or a bird and et cetera.

This is extremely crucial for the military. Now here's the roadmap.

We have already achieved milestone number 2, as I mentioned earlier, at the TMLS event, Toronto Machine Learning Summit, where we demonstrated to the public an optimized privacy-preserved AI operation. By Q1 of next year, we expect to deliver a hybrid mechanism that would allow large language model, LLM, to achieve privacy also.

On top of that, we are also expecting to announce some co-marketing project with one or more of our partners aiming to build privacy-preserved AI marketplace with various stages of a commercial deliverable next year. Essentially, our AI marketplace operates similar to Hugging Face, except that we allow AI model vendors to list their model for others to use in a completely quantum-safe and privacy-preserved fashion.

Now it was mention and pointing out that actually last week NVIDIA spent $14 billion to acquire Hugging Face even though they have been breached by AI model actually from OpenAI 2 months ago. In our AI marketplace, both the user data, as I mentioned, and the AI models are protected even the platform has been compromised.

While our quantum-safe privacy AI is currently our unfolding story for the next few years, we are also very very proud of the PQC projects already delivered to our partners that they are now being marketed as we speak. Let me just quickly reiterate these achievement that we have.

Now earlier last year, we helped Hitachi from Japan converted their remote access offering to become quantum-safe. This project has been successfully delivered earlier this year, and Hitachi is now actively marketing the product in Japan while we sit back to support them and collect royalty.

Recurring revenue started to accumulate, of course, slowly, but surely. Recently in June, we have also delivered a quantum-safe crypto vault to another partner called Q-Labs Foundation.

What we have created for them is a special token called Q1 as the gas fee currency for quantum locking and unlocking digital assets against Q-Day threats. This is a very large market as the whole $4 trillion digital asset market must be protected against Q-Day threats before Q-Day arrival.

We have received cash development fee plus 22.5 million of the Q1 token as the compensation. We believe there's a huge upside value for the Q1 token as the world move closer to Q-Day.

Our partner is now conducting a Mythos Challenge within September. There are more details to be announced.

We have also created an email product called IronCAP X-mail allowing existing Office Outlook users to send and receive quantum-safe encrypted email as well as digital signature that guarantees the authenticity of the sender. To bring into perspective the market size, there are approximately 730 million business email addresses in the world.

If only 10% are serious and wanting some kind of the quantum safety for the email and paying $3 a month for the quantum safety, it is a $2.6 billion annual recurring revenue potential. Since this is not a partner product, it require our own sales and marketing efforts, we are ready to enter into this $2.6 billion untapped market once marketing resources are available.

Last but not least, I'd like to also reemphasize that our enviable partner list packed with big names like Hitachi, CGI, Thales, PwC, and then another one, as I mentioned, to be announced very soon, has accredited us a global reach to embrace our whole PQC market. Now let's take a look at our Q3.

Although again without those one-time engineering fee as in previous quarters, recurring revenue from partner has started, again, slowly, but surely. Thanks to our prudent cash management, even while R&D and marketing have been ramped up significantly, cash usage was only $450,000 in this quarter.

Therefore, we still have a very clean balance sheet with about $2.5 million of cash and zero debt. We expect recurring revenue to continue building, but most importantly, we expect the PQC revenue, especially the AI side-related business, starting to grow exponentially as the world scramble for quantum safety before the end of 2029.

I would like to take a quick pause here, reserving more time for question and answer. I'm sure that there will be a lot, although I haven't seen them.

Brian will be managing, obviously. Please use the Q&A feature mentioned earlier by Brian to enter your question, and as usual, Brian will moderate.

Brian, over to you.

There were a couple that came in, Andrew, as you were speaking, and I'm sure there'll be more to come. The first one has to do with the Carleton University press release we made.

The question is, "Can you expand upon the independent evaluation of the QAW, or Quantum Wrapper, from Carleton University, and did it touch on the market opportunity?"

Thank you, Brian. Okay.

I don't understand why, but always the first question always is a good question. This is good because just like anything in the technology world, right, new technology has to be vetted, has to be using accounting terms is audited, right?

This is no different. Our QAW technology, although it has been vetted by the patent office that it is unique, right, but how effective it is, we still need some third-party, arm's-length companies to kind of evaluate.

This is the process. What Carleton University has done for us was evaluating the efficiency of the QAW technology, because fully homomorphic encryption is nothing really new.

It's new, but it's not like something invented by us like 2 days ago. It has been that encryption concept for AI has been in discussion for many years.

The major concern is about the efficiency, that it would be significantly slowed down. Mainly what we have done in the last 2 years was optimizing the technology so that it would do the AI inference in the encrypted way while retaining reasonable and acceptable efficiency.

That is being vetted and proven by the project conducted by Carleton University. I think this is a very, very important endorsement for the QAW technology.

Okay.

The next one, Andrew. In your presentation, you mentioned CGI is a partner.

The question is, were they the Canadian global system integrator that you mentioned in an earlier press release? Then as a second part to this question, can you elaborate on any progress you've made with respect to, I think they're referring to the partner on joint promotions you were talking about the presentation?

Okay. Short answer to your question, I think your question has two parts.

Are they the party we mentioned in the press release about 2 months ago, the Canadian global system integrator? Short answer is yes.

They are a huge global system integrator. They don't want their name, especially from the PR department, doesn't want the name appear in press release that looks like maybe promotional or whatsoever.

Yes, short answer is it is CGI. I think earlier in my presentation, I already kind of hinted that we are undergoing some co-marketing activities, and yeah, a lot of things are happening between us, and they are very committed in the upcoming, not just post-quantum, but the crossover between quantum and AI.

Yeah.

Okay. I've had a couple of questions on the same subject, try to paraphrase them here.

It's with respect to revenue. Can you elaborate on the customer-funded development projects and the timing with respect to revenue going forward?

I think this one kind of covered in my presentation that the customer-funded development project there were two of them in the last about 1 year. One was with Hitachi, and the other one was with Q-Labs Foundation.

They paid us one-time engineering fee, and that's why the revenue goes up in the last few quarters. Then thereafter, they will be marketing the product.

We don't need to spend the sales and marketing is their product. We just have strike a royalty percentage moving forward, all we have to do is being the SME, support them, and collect the royalty fee.

Moving forward from these project would be royalty dollars, and which we have already booked some of them this quarter. It's always, as I said, it's slowly, but surely, it is accumulating.

As if we get more of these kind of one-time engineering fee moving forward, there will be also some spike in engineering fee, one-time engineering fee. I think the most important thing for engineering fee is not really the amount of revenue.

It's because even though it's a million dollars so, it's not a lot of money we're talking about, but it is the commitment that is the most important thing. The partner will not commit to a million dollar if they are not serious about the project.

For them to commit those kind of dollars into the project meaning that they are seriously moving forward to market it, and this is the significant part that we should focus on, right? I think that's kind of like a long-winded elaboration of what we have already mentioned during the call.

Okay. The next one, Andrew.

Is the opportunity with Hitachi for Do-Mobile limited to Japan or is it global in nature? Straightforward one.

This is for Japan for Hitachi product. It is strictly for Japan.

It is their product. The product name is called Do-Mobile, and if you search about Do-Mobile Hitachi, you'll find that product in Japan.

Strictly for Japan. Globally, we also have our own remote access product that we can market as the PQC post-quantum remote access, but that's our own product, not related to Do-Mobile.

The next one has to do with our cryptocurrency and Q-Labs. How rapidly is the market for Q-Day protection for digital assets, cryptocurrencies, advancing?

I think I would like to draw attention to what I also cover earlier in the presentation that the infamous HNDL attack, harvest now, decrypt later, it's particularly apply to the crypto world, because of the design of the cryptocurrencies that the public key is published on the chain publicly. Anyone with Grade 9 or better education can go to the blockchain and obtain the public key, right?

Yes, the public key cannot be reversed to the private key until Q-Day, but they are collecting. I think that the hacker is already collecting the public key.

Then they just need to wait until Q-Day and then they decrypt and empty your wallet, simple as that. The urgency is probably more so than any other industry, and that is one of the main reason why Q-Labs Foundation spend a lot of money for our engineering to create the Q-Vault and the Q1 token for them so that today, not talking about tomorrow, they can help their customer protecting the digital assets already.

I think that is the essential point. I think I also mentioned that I want to elaborate too that they are as we speak now, they are preparing for in the cybersecurity world called the hackathon, right?

In their terms, they are calling this a Mythos Challenge. In other words, what they are conducting is that they're going to load some significant amount of Q1 tokens, something like around $100,000 or dollar worth or more into the Q-Vault, and then intentionally publish the private key, meaning that it is pretending to be Q-Day already, right?

They publish the private key and then leaving the only protection being our technology, right? Then giving the world of crypto hackers 30 days.

There will be a website countdown: 30, 29, 28, 27 the way and the amount still left in the Q-Vault and challenging them. It's an all-in move.

I think we have very confidence in successfully challenging the world of the Mythos, and they expect to be surviving all 30 days. They will get a lot of attention.

I think this is a very exciting things going to happen.

I'm cognizant of time here. This is the last question, Andrew.

It has to do with AI and security. Question's more of a statement here he has.

"AI security is in the news every day. I see you have a SaaS-type product being developed in AI, that's the marketplace, and can you comment a bit more on when it will be available and exactly how you tend to bring it to market?"

Another part to the question, "Also, in the interim, is there any potential for development fee plus royalty agreements like we've had in the past?"

I would say the short answer is that all of the above. We expect all of these things to happen.

In terms of timeline, I think I showed the timeline earlier in the presentation. We expect the AI marketplace to be available around Q2 of 2027, and there will be some announcement of a codevelopment with some of the big partners that we have.

This is a very important product that is almost defining the future of 01 Quantum. Yes, don't get me wrong, the project with Hitachi is big, and the cryptocurrencies is big, but the crossover between AI and user data privacy and quantum safety is way larger than the combination of the last two that I mentioned.

Typically, because again, one single obstacle that is preventing AI from the full adoption is user data privacy. We have lifted that obstacle, and we have demonstrated the abilities already, and we are putting that into that AI marketplace whereby, as I mentioned, it is operating like Hugging Face, where user AI model can list and store their models there for other people to use.

The single difference is that we are having a platform that is not only quantum-safe, but all the operation, the AI inference, are performing encrypted. The example I used during my presentation was that we're going to announce a government-related demonstration very soon that we're going to demonstrate how we can have an AI model, like a neural network AI model, that can distinguish the gibberish picture, for example, you have an encrypted gibberish picture that is a military drone, you feed that into the neural network AI that we created, encrypted, and we can still distinguish that it is a drone.

It's not a plane, it's not a bird, it's not a cat or whatsoever. This is very, very important moving forward for not just the military, but for the whole AI industry.

Okay. Thank you, Andrew, and thank you, everybody.

The AI is really exciting and it's in the news every day. Now I'll turn it over to Andrew for some closing comments.

Again, thank you all for attending.

Okay. Thanks again, Brian.

I would say that in closing, timing is everything, okay? The quantum market is like AI 3 years ago, with an extremely large total addressable market, and we are way ahead of our competitors, with hands-on experience building multi-segment, commercially ready, quantum-safe product, and also backed by a strong IP portfolio plus a list of global Fortune 500 customers.

I believe we are very well positioned to come out as a unicorn in the PQC market. Again, thank you for attending, and see you again in our next meeting.