Mr. Ted Carefoot reports

QSE ISSUES CEO LETTER TO SHAREHOLDERS HIGHLIGHTING COMMERCIAL EXECUTION AND GROWTH PRIORITIES

Quantum Secure Encryption Corp. has released a letter to shareholders from chief executive officer Ted Carefoot outlining the company's progress over the past six months and its priorities as Quantum Secure advances from platform development and validation into commercial execution.

The letter highlights the approximately 200-per-cent increase in Quantum Secure's sales pipeline over the period, commercial validation across municipal government and financial services, expanded channel reach in Malaysia and Thailand, additions to the company's leadership team, continued intellectual-property development and the approximately $6-million financing completed in August, in addition outlining the company's near-term priorities.

The full text of the shareholder letter follows.

Letter to shareholders

Dear shareholders,

Over the past six months, Quantum Secure has moved from building and validating its postquantum cybersecurity platform into a new phase: commercial execution. During that period, our sales pipeline increased by approximately 200 per cent, giving our team and partners a larger pool of opportunities to convert into customer commitments and revenue. Our focus remains straightforward: help organizations identify quantum-related cryptographic risk, build a practical migration plan and move from assessment to implementation.

Why the market is moving now

The opportunity is becoming clearer because postquantum readiness is no longer only a future technology discussion. Governments, regulated industries and large enterprises are beginning the multiyear work of identifying where cryptography is used across their systems, determining what is most exposed and planning how to migrate without disrupting critical operations. For organizations that must protect sensitive information for many years, this work needs to begin well before quantum computers become a direct threat to today's encryption. That is the problem Quantum Secure is built to address.

Turning technology into a commercial platform

Our product strategy follows the way customers actually approach this transition. QPrime provides a structured view of an organization's overall quantum-readiness posture. QScope discovers and organizes cryptography across applications, certificates, networks and infrastructure. QSim helps management teams compare migration approaches, costs, timelines and operational impacts before committing capital. From there, Quantum Secure's broader identity and data protection capabilities support the move from planning to implementation.

For shareholders, the commercial logic is important: assessment can be the beginning of a customer relationship, not the end. Organizations cannot fix what they cannot see, and migration decisions are made long before security products are deployed. By engaging early, Quantum Secure can compete for a broader role in a customer's postquantum program and create opportunities for recurring and usage-based revenue as that relationship develops.

Building validation and distribution

We have made meaningful progress validating that model. Earlier this year, we launched our first municipal government postquantum security pilot through MISA. In July, we secured our first major financial-services purchase order for our preparedness platform from the Malaysian operations of a leading global insurance and asset-management group, an important proof point in a highly regulated industry where cybersecurity, compliance and vendor review standards are demanding.

Malaysia is becoming an important commercial foothold for Quantum Secure. Our partnership with Pos DigiCert combines Quantum Secure's readiness and migration technology with established local digital-certificate and public key infrastructure (PKI) capabilities. This matters because Malaysia's Cyber Security Act 2024 and related government directives are beginning to formalize postquantum migration requirements for critical infrastructure, creating a practical need for the inventories, risk analysis and migration planning our platform provides. In Thailand, our agreement with Nextwave provides access to a network of more than 50 cybersecurity-focused channel partners. Rather than build a large direct sales organization in every country, we are using established local partners to accelerate market entry while keeping our operating structure disciplined.

Strengthening the company for the next stage

commercial progress also requires credibility, leadership and defensible technology. We appointed Michael Massing as chief technology officer, adding more than 30 years of experience across cybersecurity, cryptography and enterprise technology, and Joseph Hall as chief intelligence officer to strengthen the connection between threat intelligence, product priorities and customer needs. Quantum Secure also joined the PKI Consortium and was selected for a government of Canada quantum technology delegation to the Netherlands, expanding our participation in the broader digital-trust and postquantum ecosystem. In parallel, we are advancing 11 patent applications and trademark applications covering our branded products and innovations across automated assessment and postquantum protection.

We also strengthened our financial position. A financing initially announced at $3-million was increased twice following investor demand and closed in August at approximately $6-million in gross proceeds. The capital supports continued commercialization, expansion of the Quantum Secure platform and working capital. We view it as capital for execution, not an end in itself.

Our priorities from here

Our priorities remain measurable: convert pipeline into revenue; help our partners win and deliver business; expand customer relationships from assessment into broader migration and protection work; and grow recurring and usage-based revenue across the platform. We are directing sales resources toward markets where regulation and enforcement are creating the clearest near-term urgency, while using channel partners to educate customers and build future opportunities in markets where standards are still developing. We are at a point of significant growth, and our focus is execution. The metrics that matter are customer adoption, commercial conversion, recurring revenue and partner productivity, not simply the number of announcements we make.

Compared with six months ago, Quantum Secure has a larger pipeline, a broader commercial platform, deeper routes to market, stronger enterprise and public-sector validation, additional leadership depth and greater financial flexibility. Our ambition is to become a trusted platform throughout the postquantum transition. Our responsibility now is to translate that stronger foundation into sustained operating performance and long-term shareholder value.

Thank you for your continued support and confidence in Quantum Secure.

Sincerely,

Ted Carefoot

Chief executive officer

Quantum Secure Encryption

About Quantum Secure Encryption Corp.

Quantum Secure is a Canadian technology company specializing in postquantum data security, encryption and secure data infrastructure. Built around quantum-delivered entropy and zero-knowledge architecture, Quantum Secure's solutions help protect sensitive data from current cyber threats and future quantum-enabled attacks. Quantum Secure serves organizations across commercial, enterprise and public-sector environments requiring long-term data confidentiality and resilience.

We seek Safe Harbor.