SEC Filing | Rigetti & Co, LLC

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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-266938

PROSPECTUS SUPPLEMENT NO. 5

(To Prospectus dated April 14, 2023)

23,648,889 SHARES OF COMMON STOCK

This prospectus supplement updates and supplements the prospectus, dated April 14, 2023 (as supplemented to date, the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-266938). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the Securities and Exchange Commission on November 9, 2023 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relate to the offer and resale of up to 23,648,889 shares of our common stock, $0.0001 per share (the “common stock”), by B. Riley Principal Capital II, LLC (“B. Riley” or the “selling stockholder”). The shares included in the Prospectus consist of shares of common stock that we have issued or that we may, in our discretion, elect to issue and sell to B. Riley, from time to time after the date of the Prospectus, pursuant to a Common Stock Purchase Agreement we entered into with B. Riley on August 11, 2022 (the “Purchase Agreement”), in which B. Riley has committed to purchase from us, at our direction, up to $75,000,000 of our common stock, subject to terms and conditions specified in the Purchase Agreement. Concurrently with our execution of the Purchase Agreement on August 11, 2022, we issued 171,008 shares of common stock to B. Riley as consideration for its irrevocable commitment to purchase shares of our common stock at our election in our sole discretion, from time to time after the date of the Prospectus, upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement. See the section of the Prospectus titled “Committed Equity Financing” for a description of the Purchase Agreement and the section titled “Selling Stockholder” for additional information regarding the selling stockholder.

We are not selling any shares of common stock being offered by the Prospectus and will not receive any of the proceeds from the sale of such shares by B. Riley. However, we may receive up to $75,000,000 in aggregate gross proceeds from sales of our common stock to B. Riley that we may, in our discretion, elect to make, from time to time after the date of the Prospectus, pursuant to the Purchase Agreement.

B. Riley may sell or otherwise dispose of the shares of common stock included in the Prospectus in a number of different ways and at varying prices. See the section of the Prospectus titled “Plan of Distribution (Conflict of Interest)” for more information about how B. Riley may sell or otherwise dispose of the common stock being offered in the Prospectus. B. Riley is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement is qualified by reference to the Prospectus, including any amendments or supplements thereto, except to the extent that the information in this prospectus supplement updates and supersedes the information contained therein.

The common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “RGTI.” On November 8, 2023, the last reported sales price of the common stock as reported on Nasdaq was $1.05 per share.

We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. The Prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

Investing in our securities involves a high degree of risks. You should review carefully the risks and uncertainties described in the section titled “Risk Factors” beginning on page 20 of the Prospectus, and under similar headings in any amendments or supplements to the Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of the Prospectus or this prospectus supplement. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is November 9, 2023.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT

For the transition period from to

Commission File Number (001-40140)

RIGETTI COMPUTING, INC.

(Exact name of registrant as specified in its charter)


Delaware	88-0950636
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

775 Heinz Avenue
Berkeley California	94710
(Address of principal executive offices)	(Zip Code)

(510) 210-5550

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, $0.0001 par value per share	RGTI	The Nasdaq Capital Market
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	RGTIW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☑	Smaller Reporting Company	☑
		Emerging Growth Company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

As of November 7, 2023, there were 140,581,377 shares of the registrant’s Common Stock, no par value, issued and outstanding.

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		Page
Cautionary Note Regarding Forward-looking Statements		2

PART I — FINANCIAL INFORMATION		7

Item 1.	Financial Statements (Unaudited)	7
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	7
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2023 and 2022	8
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2023 and 2022	9
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2023 and 2022	10
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	53
Item 4.	Controls and Procedures	53

PART II — OTHER INFORMATION		56

Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
	Signatures	59

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Cautionary Note Regarding Forward-looking Statements

Unless the context requires otherwise, references in this report to “Rigetti”, the “Company”, “we”, “us”, and “our” refer to Rigetti Computing, Inc. and its consolidated subsidiaries.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. We have based these forward-looking statements on our current expectations and projections about future events. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “goal,” “objective,” “design,” “goal,” “seek,” “target,” “should,” “could,” “will,” “would” or the negative of such terms or other similar expressions.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward- looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:

●

the sufficiency of our cash resources, our expectation that we will need to raise additional capital by early 2025, including any additional sales of common stock through our Common Stock Purchase Agreement with B.Riley or from other sources, and our ability to raise additional capital when needed and on attractive terms,

●

our ability to achieve milestones, and/or technological advancements, including with respect to executing on our technology roadmap and developing practical applications,

●

the potential of quantum computing and estimated market size and market growth including with respect to our long-term business strategy for quantum computing as a service (“Quantum Computing as a Service,” or “QCaaS”),

●

the success of our partnerships and collaborations,

●

our ability to accelerate our development of multiple generations of quantum processors,

●

customer concentration and the risk that a significant portion of our revenue currently depends on contracts with the public sector,

●

the outcome of any legal proceedings that may be instituted against us or others with respect to the Business Combination (as defined herein) or other matters,

●

our ability to execute on our business strategy, including monetization of our products,

●

our financial performance, growth rate and market opportunity,

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our ability to maintain compliance with standards relating to the listing of our common stock, par value $0.0001 per share (the “common stock”) and Public Warrants (as defined herein) on the Nasdaq Capital Market (“Nasdaq”), and the potential liquidity and trading of such securities,

●

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, our ability to grow and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees,

●

costs related to operating as a public company,

●

our ability to remediate the material weaknesses in, and establish and maintain, effective internal controls over financial reporting,

●

changes in applicable laws or regulations,

●

the possibility that we may be adversely affected by other economic, business, or competitive factors,

●

the evolution of the markets in which we compete,

●

our ability to implement our strategic initiatives, expansion plans and continue to innovate our existing services,

●

unfavorable conditions in our industry, the global economy or global supply chain (including any supply chain impacts from the ongoing military conflicts involving Russia and Ukraine and sanctions related thereto and the state of war between Israel and Hamas and the potential larger regional conflict), including inflation and financial and credit market fluctuations,

●

changes in applicable laws or regulations,

●

our success in retaining or recruiting, or changes required in, our officers, key employees or directors,

●

our estimates regarding expenses, profitability, future revenue, capital requirements and needs for additional financing,

●

our ability or decisions to expand or maintain our existing customer base; and

●

Macroeconomic conditions, including worsening global economic conditions, disruptions to and volatility and uncertainty in the credit and financial markets, increases in inflation and interest rates, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, on the foregoing.

These statements reflect our current views with respect to future events, are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These known and unknown risks, uncertainties and other factors include, without limitation:

●

Based on our estimates and current business plan, we expect that we will need to raise additional capital by early 2025, including any additional sales of common stock through our Common Stock Purchase Agreement with B. Riley or from other sources, in order to continue our research and development efforts and achieve our business objectives. We cannot be sure that additional financing will be available. If we are unable to raise additional funding when needed and on attractive terms, we may be required to delay, limit or substantially reduce our quantum computing development efforts.

●

We are in our early stages and have a limited operating history, which makes it difficult to forecast our future results of operations.

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●

We have a history of operating losses and expect to incur significant expenses and continuing losses for the foreseeable future.

●

Even if the market in which we compete achieves its anticipated growth levels, our business could fail to grow at similar rates, if at all.

●

Our ability to use net operating loss carryforwards and other tax attributes may be limited.

●

We have not produced quantum computers with high qubit counts and we face significant barriers in our attempts to produce quantum computers, including the need to invent and develop new technology. If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail.

●

Any future generations of hardware, including any future generations developed to demonstrate narrow quantum advantage and broad quantum advantage and the anticipated wider external release of an 84 qubit system, and anticipated release of a 336 qubit system, each of which is an important anticipated milestone for our technology roadmap and commercialization, may not occur on our anticipated timeline or at all.

●

If our computers fail to achieve quantum advantage, our business, financial condition and future prospects may be harmed. Moreover, the standards by which we measure our progress may be based on assumptions and expectations that are not accurate or that may change as quantum computing evolves.

●

The quantum computing industry is competitive on a global scale and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers.

●

We depend on a limited number of customers for a significant percentage of our revenue and the loss or temporary loss of a major customer for any reason could harm our financial condition.

●

A significant portion of our revenue depends on contracts with the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business.

●

Our business is currently dependent upon our relationship with our cloud providers. There are no assurances that we will be able to commercialize quantum computers from our relationships with cloud providers.

●

We rely on access to high performance third party classical computing through public clouds, high performance computing centers and on-premises computing infrastructure to deliver performant quantum solutions to customers. We may not be able to maintain high quality business relationships and connectivity with these resources which could make it harder for us to reach customers or deliver solutions in a cost-effective manner.

●

We depend on certain suppliers to source products. Failure to maintain our relationship with any of these suppliers, or a failure to replace any of these suppliers, could have a material adverse effect on our business, financial position, results of operations and cash flows.

●

Our system depends on the use of certain development tools, supplies, equipment and production methods. If we are unable to procure the necessary tools, supplies and equipment to build our quantum systems, or are unable to do so on a timely and cost-effective basis, and in sufficient quantities, we may incur significant costs or delays which could negatively affect our operations and business.

●

Even if we are successful in developing quantum computing systems and executing our strategy, competitors in the industry may achieve technological breakthroughs which render our quantum computing systems obsolete or inferior to other products.

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●

We may be unable to reduce the cost of developing our quantum computers, which may prevent us from pricing our quantum systems competitively.

●

The quantum computing industry is in its early stages and volatile, and if it does not develop, if it develops more slowly than we expect, if it develops in a manner that does not require use of our quantum computing solutions, if it encounters negative publicity or if our solution does not drive commercial engagement, the growth of our business will be harmed.

●

We could suffer disruptions, outages, defects and other performance and quality problems with our quantum computing systems, our production technology partners or with the public cloud, data centers and internet infrastructure on which we rely.

●

If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences, which may adversely affect our business.

●

We have identified material weaknesses in our internal control over financial reporting related to the lack of effective review controls over the accounting for complex financial instruments and to the design and operation of our overall closing and financial reporting processes, and we may identify additional material weaknesses in the future. The material weakness over accounting for complex financial instruments has resulted in errors in financial statements for prior periods. If we fail to remediate such material weaknesses, if we identify additional material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, it may adversely affect our ability to accurately and timely report our financial results in the future, and may adversely affect investor confidence, our reputation, our ability to raise additional capital and our business operations and financial condition.

●

Our failure to obtain, maintain and protect our intellectual property rights could impair our ability to protect and commercialize our proprietary products and technology and cause us to lose our competitive advantage.

●

We have in the past been out of compliance with the continued listing standards of Nasdaq and we may be unable to maintain compliance with such standards. If we fail to maintain compliance with the listing requirements of the Nasdaq Capital Market or fail to cure any future deficiencies, we may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

●

Sales of our securities, or perceptions of sales, by us or holders of our securities in the public markets or otherwise could cause the market price for our securities to decline and even in such case certain holders of our securities may still have an incentive to sell our securities.

●

Delaware law and our Certificate of Incorporation and Bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

●

Unstable market and economic conditions, including recent bank failures, have had and may continue to have serious adverse consequences on our business, financial condition and share price.

●

Our warrants, including our Public warrants, each entitling the holder to purchase one share of our common stock at an exercise price of $11.50 per share, that trade on the Nasdaq Capital Market under the ticker symbol “RGTIW” (“Public Warrants”), private placement warrants, each entitling the holder to purchase one share of our common stock at an exercise price of $11.50 per share (“Private Warrants”), and other warrants we have issued, are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.

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●

Our warrants are exercisable for Common Stock, the exercise of which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

●

The warrants may never be in the money, and they may expire worthless.

Additional discussion of the risks, uncertainties and other factors described above, as well as other risks material to our business, can be found under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. In addition, our goals and objectives are aspirational and are not guarantees or promises that such goals and objectives will be met. Should one or more of the risks or uncertainties described in this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2022 materialize, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Also, these forward-looking statements represent our plans, objectives, estimates, expectations, assumptions, and intentions only as of the date of this filing.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, levels of activity and performance as well as other events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RIGETTI COMPUTING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares and par value)

(unaudited)


	September 30,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	41,757	$	57,888
Available-for-sale investments		68,470		84,923
Accounts receivable, net		2,996		6,235
Prepaid expenses and other current assets		3,473		2,450
Forward contract—assets		—		2,229
Deferred offering costs		—		742
Total current assets		116,696		154,467
Property and equipment, net		40,348		39,530
Operating lease right-of-use assets		8,028		9,316
Other assets		132		129
Total assets	$	165,204	$	203,442

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,447	$	1,938
Accrued expenses and other current liabilities		7,389		8,205
Current portion of deferred revenue		472		961
Current portion of debt		11,522		8,303
Current portion of operating lease liabilities		2,212		2,345
Total current liabilities		23,042		21,752
Debt - net of current portion		13,111		20,635
Operating lease liabilities, less current portion		6,705		7,858
Derivative warrant liabilities		6,087		1,767
Earn-out liabilities		3,568		1,206
Total liabilities	$	52,513	$	53,218
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, none outstanding		—		—
Common stock, par value $0.0001 per share, 1,000,000,000 shares authorized, 140,181,421 shares issued and outstanding at September 30, 2023 and 125,257,233 shares issued and outstanding at December 31, 2022		14		12
Additional paid-in capital		453,790		429,025
Accumulated other comprehensive gain (loss)		74		(161)
Accumulated deficit		(341,187)		(278,652)
Total stockholders’ equity		112,691		150,224
Total liabilities and stockholders’ equity	$	165,204	$	203,442

See accompanying notes to condensed consolidated financial statements.

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RIGETTI COMPUTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	3,105	$	2,804	$	8,632	$	7,042
Cost of revenue		834		776		1,940		2,063
Total gross profit		2,271		2,028		6,692		4,979
Operating expenses:
Research and development		13,056		17,365		39,981		44,040
Selling, general and administrative		6,047		15,987		20,808		43,293
Restructuring		—		—		991		—
Total operating expenses		19,103		33,352		61,780		87,333
Loss from operations		(16,832)		(31,324)		(55,088)		(82,354)
Other income (expense), net
Interest expense		(1,473)		(1,436)		(4,511)		(3,811)
Interest income		1,263		1,042		3,746		1,172
Change in fair value of derivative warrant liabilities		(3,442)		8,103		(4,320)		19,853
Change in fair value of earn-out liabilities		(1,731)		4,860		(2,362)		17,418
Transaction costs		—		—		—		(927)
Total other income (expense), net		(5,383)		12,569		(7,447)		33,705
Net loss before provision for income taxes		(22,215)		(18,755)		(62,535)		(48,649)
Provision for income taxes		—		—		—		—
Net loss	$	(22,215)	$	(18,755)	$	(62,535)	$	(48,649)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.17)	$	(0.16)	$	(0.48)	$	(0.51)
Weighted average shares used in computing net loss per share attributable to common stockholders – basic and diluted		133,866		118,571		129,173		95,691

See accompanying notes to condensed consolidated financial statements.

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RIGETTI COMPUTING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(22,215)	$	(18,755)	$	(62,535)	$	(48,649)
Other comprehensive income (loss):
Foreign currency translation adjustments		41		(270)		(38)		(223)
Unrealized gains (losses) on available-for-sale debt securities		32		(356)		273		(356)
Total other comprehensive income (loss) before income taxes		73		(626)		235		(579)
Income taxes		—		—		—		—
Total other comprehensive income (loss) after income taxes		73		(626)		235		(579)
Total comprehensive loss	$	(22,142)	$	(19,381)	$	(62,300)	$	(49,228)

See accompanying notes to condensed consolidated financial statements.

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RIGETTI COMPUTING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(62,535)	$	(48,649)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,381		4,801
Stock-based compensation		8,727		37,643
Change in fair value of earn-out liabilities		2,362		(17,418)
Change in fair value of derivative warrant liabilities		4,320		(19,853)
Change in fair value of forward contract		2,229		(5,465)
Impairment of deferred offering costs		836		—
Accretion of available-for-sale securities		(2,310)		(356)
Amortization of debt issuance costs, commitment fees and accretion of debt end-of-term liabilities		1,100		1,072
Non-cash lease expense		1,288		—
Changes in operating assets and liabilities:
Accounts receivable		3,239		(753)
Prepaid expenses, other current assets and other assets		(1,027)		(2,247)
Deferred revenue		(489)		(174)
Accounts payable		(212)		(694)
Accrued expenses and other current liabilities		(2,067)		3,469
Other liabilities		—		142
Net cash used in operating activities	$	(38,158)	$	(48,482)
Cash flows from investing activities:
Purchases of property and equipment		(7,511)		(19,294)
Purchases of available-for-sale securities		(79,047)		(87,186)
Maturities of available-for-sale securities		98,082		—
Net cash provided by (used in) investing activities	$	11,524	$	(106,480)
Cash flows from financing activities:
Proceeds from Business Combination, net of transaction costs paid		—		225,604
Transaction costs paid directly by Rigetti		—		(18,420)
Proceeds from issuance of notes payable		—		5,000
Payment on principal of notes payable		(5,405)		—
Payments on debt issuance costs		—		(85)
Payment on loan and security agreement exit fees		—		(1,000)
Payments on deferred offering costs		(107)		—
Proceeds from sale of common stock through Common Stock Purchase Agreement		15,051		—
Proceeds from issuance of common stock upon exercise of stock options and warrants		1,002		5,990
Net cash provided by financing activities	$	10,541	$	217,089
Effects of exchange rate changes on cash and cash equivalents		(38)		(219)
Net (decrease) increase in cash and cash equivalents		(16,131)		61,908
Cash and cash equivalents – beginning of period		57,888		12,046
Cash and cash equivalents – end of period	$	41,757	$	73,954
Supplemental disclosures of other cash flow information:
Cash paid for interest	$	3,299	$	2,739
Non-cash investing and financing activities:
Initial fair value of earn-out liability acquired in merger		—		20,413
Initial fair value of private placement and public warrant liability acquired in merger		—		22,932
Reclassification of loan and security agreement warrants to equity		—		6,370
Settlement of the first tranche of forward contract		—		3,305
Capitalization of deferred costs to equity upon share issuance		13		1,098
Purchases of property and equipment recorded in accounts payable		394		449
Purchases of property and equipment recorded in accrued expenses		605		—
Unrealized gain (loss) Short Term Investments		273		(356)

See accompanying notes to condensed consolidated financial statements.

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RIGETTI COMPUTING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)

Description of Business

Rigetti Computing, Inc. and its subsidiaries (collectively, the “Company” or “Rigetti”) builds quantum computers and the superconducting quantum processors that power them. Through the Company’s Quantum Computing as a Service (“QCaaS”) platform, the Company’s machines can be integrated into any public, private or hybrid cloud. The Company offers product types of Platform, Research and Software Tools usage in application areas of benchmarking, chemical simulation, education/entertainment, machine learning, and optimization.

The Company is located and headquartered in Berkeley, California. The Company also operates in Fremont, California; London, United Kingdom; Adelaide, Australia and British Columbia, Canada. The Company’s revenue is derived primarily from operations in the United States and the United Kingdom.

(2) Summary of Significant Accounting Policies

Basis of Presentation

On March 2, 2022 (the “Closing Date”), a merger transaction between Rigetti Holdings, Inc. (“Legacy Rigetti”) and Supernova Partners Acquisition Company II, Ltd. (“SNII”) was completed (the “Business Combination”, see Note 3). In connection with the closing of the Business Combination, the Company changed its name to Rigetti Computing, Inc. and all SNII Class A ordinary shares and SNII Class B ordinary shares automatically converted into shares of common stock, par value $0.0001, of the Company (the “Common Stock”) on a one-for-one basis. The SNII Public Warrants and the Private Warrants held by SNII became warrants for Common Stock. The Company’s Common Stock and Public Warrants trade on the Nasdaq Capital Market under the ticker symbols “RGTI” and “RGTIW,” respectively. For more information on this transaction, see Note 3.

The Company determined that Legacy Rigetti was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (ASC) 805, Business Combination.

The determination was primarily based on the following facts:

●

Former Legacy Rigetti stockholders have a controlling voting interest in the Company;

●

The Company’s board of directors as of immediately after the closing was comprised of eight board members, six seats occupied by previous Legacy Rigetti board members and one seat being occupied by a previous SNII representative. The final eighth seat was filled by an individual who did not have ties to either Legacy Rigetti or SNII pre-Business Combination; and

●

Legacy Rigetti management held executive management roles for the post-combination company and was responsible for day-to-day operations.

Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Rigetti issuing stock for the net assets of SNII, accompanied by a recapitalization. The primary asset acquired from SNII was related to the cash amounts that was assumed at historical costs. Separately, the Company also assumed warrants that were deemed to be derivatives and meet liability classification subject to fair value adjustment measurements upon closing of the Business Combination (the “Closing”). No goodwill or other intangible assets were recorded as a result of the Business Combination.

While SNII was the legal acquirer in the Business Combination, because Legacy Rigetti was deemed the accounting acquirer, the historical financial statements of Legacy Rigetti became the historical financial statements of the combined company, upon the consummation of the Business Combination.

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As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Rigetti prior to the Business Combination; (ii) the combined results of SNII and Legacy Rigetti following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Rigetti at their historical cost; and (iv) the Company’s equity structure for all periods presented.

The equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s Common Stock, $0.0001 par value per share, issued to Legacy Rigetti shareholders and Legacy Rigetti convertible preferred shareholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Rigetti redeemable convertible preferred stock and Legacy Rigetti Common Stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S” and such accounting principles, “GAAP”) for complete financial statements due to the permitted exclusion of certain disclosures for interim reporting. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary under GAAP for a fair statement of results for the interim periods presented have been included. As a result of displaying amounts in thousands, rounding differences may exist in the condensed consolidated financial statements and footnote tables. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for other interim periods or future years.

The condensed consolidated balance sheet as of December 31, 2022, included herein, is derived from the audited consolidated financial statements as of that date, however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed within the SEC on March 27, 2023.

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions have been eliminated upon consolidation.

Significant Accounting Policies

There were no significant changes to our significant accounting policies disclosed in “Note 2 – Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 27, 2023.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates include, but are not limited to, the fair value of share-based awards, fair value of level 2 investments, fair value of the Forward Warrant Agreement (as defined below), the fair value of derivative warrant liabilities, the fair value of earnouts issued in connection with the Business Combination (See Note 3), accrued liabilities and contingencies, depreciation and amortization periods, revenue recognition and accounting for income taxes. Actual results could differ from those estimates.

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Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements; therefore, actual results could differ from those estimates.

Risks and Uncertainties

The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology.

Based on the Company’s forecasts, the Company believes that its existing cash and cash equivalents and available-for-sale investments should be sufficient to meet its anticipated operating cash needs for at least the next 12 months from the issuance of these financial statements based on the Company’s current business plan and expectations and assumptions considering current macroeconomic conditions.

Macroeconomic Conditions

Economic conditions in some parts of the world have been worsening, with disruptions to, and volatility and uncertainty in, the credit and financial markets in the U.S. and worldwide resulting from the effects of inflation and interest rates. These conditions have been further exacerbated by recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, the ongoing military conflict involving Russia and Ukraine and sanctions related thereto, the state of war between Israel and Hamas and the related risk of a larger regional conflict. It is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted. If these conditions persist and deepen, the Company could experience an inability to access additional capital, or its liquidity could otherwise be impacted. If the Company is unable to raise capital when needed and on attractive terms, it would be forced to delay, reduce or eliminate its research and development programs and other efforts.

Prior Period Reclassifications

Sales and marketing expenses became less significant following the reduction in workforce and strategic realignment the Company announced in February 2023. For this reason, sales and marketing and general administrative expenses have been combined and are now reported as selling, general and administrative beginning in the period ended June 30, 2023. Related amounts for all prior periods have been reclassified to conform with this presentation. These reclassifications did not result in a restatement of prior period condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases and related subsequently issued ASUs (collectively, “Topic 842”), which supersedes Topic 840. From a lessee perspective, the core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term. The Company adopted Topic 842 on December 31, 2022, effective as of January 1, 2022, using the modified retrospective transition option of applying the new standard at the adoption date for all leases with an original term greater than 12 months. Adoption of the standard resulted in the recognition of operating lease ROU assets and operating lease liabilities of $6.3 million and $6.6 million, respectively, and a $0.3 million adjustment to deferred rent, with no impact to accumulated deficit as of January 1, 2022. Adoption of the standard did not have an impact on the Company’s consolidated statement of operations or cash flows. The Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2022 continue to be presented in accordance with the presentation requirements of Topic 840.

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In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU No. 2019-04 was issued as part of the FASB’s ongoing project to improve upon its Accounting Standards Codification (ASC), and to clarify and improve areas of guidance related to recently issued standards on credit losses, hedging, and recognition and measurement. For entities that have not yet adopted the guidance in Update 2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition requirements in Update 2016-13.

The amendments related to ASC 326 were effective for the Company as of January 1, 2023. The adoption of the ASU did not have a material impact on the consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB issued this update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The ASU is effective for the Company after December 15, 2024, and interim periods within those fiscal years, with early adoption permitted. The Company is still evaluating the impact of this pronouncement on the consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—(Topic 815) (“ASU No. 2020-06”), which simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. The amendments in ASU No. 2020-06 are effective for public companies, other than smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is still evaluating the impact of this pronouncement on the consolidated financial statements.

(3) Business Combination

As discussed in Note 1, on March 2, 2022, the Business Combination was completed. Pursuant to the Company’s certificate of incorporation, as amended on March 2, 2022, the Company is authorized to issue 1,000,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par value $0.0001, of the Company (the “Preferred Stock”). The holders of shares of Common Stock are entitled to one vote for each share of Common Stock held. The Preferred Stock is non-voting. No shares of Preferred Stock were issued and outstanding as of September 30, 2023 or December 31, 2022.

On March 1, 2022, prior to the Closing, as contemplated by that certain Agreement and Plan of Merger dated as of October 6, 2021, as amended on December 23, 2021 and January 10, 2022 (as amended, the “Merger Agreement”), by and among SNII, Supernova Merger Sub, Inc., Supernova Romeo Merger Sub, LLC and Legacy Rigetti and following approval by SNII’s shareholders at an extraordinary general meeting of shareholders held on February 28, 2022 (the “Extraordinary General Meeting”), SNII filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”) and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SNII was domesticated and continues as a Delaware corporation, changing its name to “Rigetti Computing, Inc.”

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As a result of and upon the effective time of the Domestication (which occurred on March 1, 2022), among other things (1) each then issued and outstanding Class A ordinary share, par value $0.0001 per share, of SNII (“SNII Class A ordinary share”) converted automatically, on a one-for-one basis, into a share of Common Stock; (2) each then issued and outstanding Class B ordinary share, par value $0.0001 per share, of SNII (“SNII Class B ordinary share”) converted automatically, on a one-for-one basis, into a share of Common Stock; (3) each then issued and outstanding whole warrant of SNII to purchase one SNII Class A ordinary share converted automatically into a Public Warrant to acquire one share of Common Stock at an exercise price of $11.50 per share pursuant to the Warrant Agreement, dated March 1, 2021, between SNII and American Stock Transfer & Trust Company, as warrant agent; and (4) each then issued and outstanding unit of SNII (the “SNII Units”) was separated and converted automatically into one share of Common Stock and one-fourth of one Warrant.

Immediately prior to the effective time of the Business Combination, each share of Legacy Rigetti’s Series C preferred stock and Series C-1 preferred stock (collectively, the “Legacy Rigetti Preferred Stock”) with Par Value of $0.000001 converted into shares of Common Stock of Legacy Rigetti (“Legacy Rigetti Common Stock”) in accordance with the Amended and Restated Certificate of Incorporation of Legacy Rigetti (such conversion, the “Legacy Rigetti Preferred Conversion”).

As a result of the Business Combination, among other things (1) all outstanding shares of Legacy Rigetti Common Stock as of immediately prior to the Closing (including Legacy Rigetti Common Stock resulting from the Legacy Rigetti Preferred Stock Conversion), were exchanged at an exchange ratio of 0.7870 (the “Exchange Ratio”) for an aggregate of 78,959,579 shares of Common Stock; (2) each warrant to purchase Legacy Rigetti Common Stock converted into a warrant to purchase shares of Common Stock (“Assumed Warrant”), with each Assumed Warrant subject to the same terms and conditions as were applicable to the original Legacy Rigetti warrant and having an exercise price and number of shares of Common Stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement; (3) each option to purchase Legacy Rigetti Common Stock converted into an option to purchase shares of Common Stock (“Assumed Option”), with each Assumed Option subject to the same terms and conditions as were applicable to the original Legacy Rigetti option and with an exercise price and number of shares of Common Stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement, and; (4) each Legacy Rigetti restricted stock unit award converted into a restricted stock unit award to receive shares of Common Stock (“Assumed RSU Award”), with each Assumed RSU Award subject to the same terms and conditions as were applicable to the Legacy Rigetti restricted stock unit award, and with the number of shares of Common Stock to which the Assumed RSU Award converted based on the Exchange Ratio and other terms contained in the Merger Agreement.

In connection with the execution of the Merger Agreement, SNII entered into a sponsor support agreement (the “Sponsor Support Agreement”) with Supernova Partners II, LLC (the “Sponsor”), Legacy Rigetti and SNII’s directors and officers. Pursuant to the Sponsor Support Agreement, the Sponsor and SNII’s directors and officers (“Sponsor Holders”), among other things, agreed to vote all of their shares of SNII capital stock in favor of the approval of the Business Combination. In addition, pursuant to the Sponsor Support Agreement, (i) 2,479,000 shares of Common Stock held by the Sponsor Holders became unvested and subject to forfeiture as of the Closing and will only vest if, during the five year period following the Closing, the volume weighted average price of Common Stock equals or exceeds $12.50 for any twenty trading days within a period of thirty consecutive trading days (such shares, the “Promote Sponsor Vesting Shares”), and (ii) 580,273 shares of Common Stock held by the Sponsor Holders became unvested and subject to forfeiture as of the Closing and will only vest if, during the five year period following the Closing, the volume weighted average price of Common Stock equals or exceeds $15.00 for any twenty trading days within a period of thirty consecutive trading days (such shares, the “Sponsor Redemption-Based Vesting Shares,” and, collectively with the Promote Sponsor Vesting Shares, the “Sponsor Vesting Shares”). Any such shares held by the Sponsor Holders that remain unvested after the fifth anniversary of the Closing will be forfeited (Refer to Note 4 for related significant accounting policy for the Earn-Out Liability related to the Sponsor Vesting Shares).

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Concurrently with the execution of the Merger Agreement, SNII entered into Subscription Agreements (the “Initial Subscription Agreements”) with certain investors (together, the “Initial PIPE Investors”), pursuant to which the Initial PIPE Investors agreed to subscribe for and purchase, and SNII agreed to issue and sell to the Initial PIPE Investors, an aggregate of 10,251,000 shares of Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $102.5 Million (the “Initial PIPE Financing”). On December 23, 2021, SNII entered into Subscription Agreements (the “Subsequent Subscription Agreements”, and together with the Initial Subscription Agreements, the “Subscription Agreements”) with two “accredited investors” (as such term is defined in Rule 501 of Regulation D) (the “Subsequent PIPE Investors”, and together with the Initial PIPE Investors, the “PIPE Investors”) pursuant to which the Subsequent PIPE Investors agreed to subscribe for and purchase, and SNII agreed to issue and sell to the Subsequent PIPE Investors, an aggregate of 4,390,244 shares of Common Stock at a price of $10.25 per share, for aggregate gross proceeds of $45.0 Million (the “Subsequent PIPE Financing”, and together with the Initial PIPE Financing, the “PIPE Financing”). Pursuant to the Subscription Agreements, Rigetti agreed to provide PIPE Investors with certain registration rights with respect to the shares purchased as part of the PIPE Financing. The PIPE Financing was consummated immediately prior to the Business Combination. The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, SNII was treated as the “acquired” company for financial reporting purposes.

In accounting for the Business Combination and after redemptions, net proceeds received by the Company totaled $225.6 million. The table below shows the net proceeds from business combination and PIPE financing (in thousands):



Cash - SNII trust and cash (net of redemption)	$	77,769
Cash - PIPE		147,510
Cash - SNII operating account		325
Net proceeds from Business Combination and PIPE	$	225,604

Transaction costs consist of direct legal, accounting and other fees relating to the consummation of the Business Combination. Legacy Rigetti transaction costs specific and directly attributable to the business combination totaled $20.65 million. These costs were initially capitalized as incurred in deferred offering assets on the consolidated balance sheets. Upon the Closing, transaction costs related to the issuance of shares were recognized in stockholders’ equity (deficit) while costs associated with the Public Warrants, Private Warrants and the earnout related to the Sponsor Vesting Shares were expensed in the condensed consolidated statements of operations. Of the total transaction costs of $20.65 million, $19.75 million was recorded to additional paid-in capital as a reduction of proceeds and the remaining $0.9 million was expensed during the nine months ended September 30, 2022. Cash transaction costs paid during the nine months ended September 30, 2022 totaled $16.7 million. Bonuses paid to certain employees related to the business combination during the nine months ended September 30, 2022 totaled $2.1 million.

The amount recorded to additional paid-in-capital was $159.55 million, comprised of $225.6 million net proceeds less $19.75 million of transaction costs, $16.3 million recognized for the Public Warrant liabilities, $9.6 million recognized for the Private Warrant liabilities, and $20.4 million recognized for the earnout liability related to the Sponsor Vesting Shares.

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The number of shares of Common Stock issued immediately following the consummation of the Business Combination was as follows:


Common Stock—SNII Class A, outstanding prior to Business Combination		34,500,000
Less: redemption of SNII Class A ordinary shares		(22,915,538)
Common Stock—SNII Class A ordinary shares		11,584,462
Common Stock—SNII Class B ordinary shares*		8,625,000
Shares issued in PIPE		14,641,244
Business Combination and PIPE shares		34,850,706
Common Stock—Legacy Rigetti**		18,221,069
Common Stock—exercise of Legacy Rigetti stock options immediately prior to the closing**		1,123,539
Common Stock—exercise of Legacy Rigetti warrants immediately prior to the closing**		2,234,408
Common Stock—upon conversion of Legacy Rigetti Series C preferred stock**		54,478,261
Common Stock—upon conversion of Legacy Rigetti Series C‑1 preferred stock**		2,902,302
Total shares of Common Stock immediately after Business Combination		113,810,285

*	Includes (i) 2,479,000 shares of “Promote Sponsor Vesting Shares” and (ii) 580,273 shares of “Sponsor Redemption-Based Vesting Shares”.

All outstanding shares of Legacy Rigetti Common Stock as of immediately prior to the Closing (including Legacy Rigetti Common Stock resulting from the Legacy Rigetti Preferred Stock Conversion), were exchanged at an exchange ratio of 0.7870 (the “Exchange Ratio”). The conversion ratio to Legacy Rigetti Common Stock for the Legacy Series C Preferred Stock was one-for-one and for Legacy Series C-1 Preferred Stock was eight-for-one.

(4) Earn-out Liabilities

At the closing of the Business Combination, the Sponsor subjected the Sponsor Vesting Shares to forfeiture as of the Closing Date for a five-year period following the Closing, with vesting occurring only if thresholds related to the weighted average price of Common Stock are met as described above in Note 3. Business Combination (the “Earn-Out Triggering Events”). Any such shares held by the Sponsor that have not vested by the fifth anniversary of the Closing will be forfeited.

The Sponsor Vesting Shares are accounted for as liability classified instruments because the Earn-Out Triggering Events that determine the number of Sponsor Vesting Shares to be earned back by the Sponsor include outcomes that are not solely indexed to the Common Stock of the Company. The aggregate fair value of the Sponsor Vesting Shares on the Closing Date was estimated using a Monte Carlo simulation model and was determined to be $20.4 million at the Closing Date. The Earn-out liability is adjusted to fair value each reporting period using the Monte Carlo simulation model until such time as the Earn-Out Triggering Events are achieved or the Sponsor Vesting Shares are forfeited.

The calculated fair value of the Earn-out liabilities with respect to the Sponsor Vesting Shares at September 30, 2023 and December 31, 2022 was $3.6 million and $1.2 million, respectively. The change in the fair value of the Earn-out liabilities included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 was a loss of $1.7 million and $2.4 million, respectively. The change in the fair value of the Earn-out liabilities included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 was a gain of $4.9 million and $17.4 million, respectively.

Significant inputs into the Monte Carlo simulation models as of September 30, 2023, December 31, 2022 and March 2, 2022 (the date of initial recognition) are as follows:


Valuation Assumptions	September 30, 2023		December 31, 2022		March 2, 2022
Stock price	$	1.33	$	0.73	$	9.43
Simulated trading days		862		1,050		1,198
Annual volatility (%)		168.90%		109.30%		30.50%
Risk-free rate (%)		4.70%		4.04%		1.74%
Estimated time to expiration (in years)		3.42		4.17		5.00

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(5)

Changes in Stockholders’ Equity (Deficit)

Three and Nine Months Ended September 30, 2023 (in thousands):


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Gain (Loss)		Deficit		Equity (Deficit)
Balance, June 30, 2023	132,401	$	13	$	437,320	$	1	$	(318,972)	$	118,362
Issuance of common stock upon exercise of stock options	164		—		94		—		—		94
Issuance of common stock upon exercise of common stock warrants	334		—		5		—		—		5
Issuance of common stock upon release of restricted stock units	946		—		—		—		—		—
Proceeds from sale of common stock through Purchase Agreement	6,336		1		12,702		—		—		12,703
Stock-based compensation	—		—		3,669		—		—		3,669
Foreign currency translation gain	—		—		—		41		—		41
Change in unrealized loss on available-for-sale securities	—		—		—		32		—		32
Net loss	—		—		—		—		(22,215)		(22,215)
Balance, September 30, 2023	140,181	$	14	$	453,790	$	74	$	(341,187)	$	112,691


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Gain (Loss)		Deficit		Equity (Deficit)
Balance, December 31, 2022	125,257	$	12	$	429,025	$	(161)	$	(278,652)	$	150,224
Issuance of common stock upon exercise of stock options	3,588		—		996		—		—		996
Issuance of common stock upon exercise of common stock warrants	477		—		6		—		—		6
Issuance of common stock upon release of restricted stock units	2,654		—		—		—		—		—
Proceeds from sale of common stock through Purchase Agreement	8,205		2		15,049		—		—		15,051
Capitalization of deferred costs to equity upon share issuance	—		—		(13)		—		—		(13)
Stock-based compensation	—		—		8,727		—		—		8,727
Foreign currency translation loss	—		—		—		(38)		—		(38)
Change in unrealized loss on available-for-sale securities	—		—		—		273		—		273
Net loss	—		—		—		—		(62,535)		(62,535)
Balance, September 30, 2023	140,181	$	14	$	453,790	$	74	$	(341,187)	$	112,691

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Three and Nine Months Ended September 30, 2022 (in thousands):


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Gain (Loss)		Deficit		Equity (Deficit)
Balance, June 30, 2022	117,103	$	11	$	407,015	$	99	$	(237,025)	$	170,100
Issuance of common stock upon exercise of stock options	1,126		1		305		—		—		306
Issuance of common stock upon exercise of common stock warrants	860		—		9		—		—		9
Issuance of common stock upon release of RSUs	3,480		—		—		—		—		—
Issuance of common stock pursuant to the Common Stock Purchase Agreement - B.Riley	171				—
Stock-based compensation	—		—		15,121		—		—		15,121
Capitalization of deferred costs to equity upon share issuance	—		—		(250)		—		—		(250)
Foreign currency translation loss	—		—		—		(270)		—		(270)
Change in unrealized loss on available-for-sale securities	—		—		—		(356)		—		(356)
Net loss	—		—		—		—		(18,755)		(18,755)
Balance, September 30, 2022	122,740	$	12	$	422,200	$	(527)	$	(255,780)	$	165,905

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									Accumulated
	Redeemable Convertible						Additional		Other				Total
	Preferred Stock*			Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Gain (Loss)		Deficit		Equity (Deficit)
Balance, December 31, 2021	77,697	$	81,523	18,221	$	2	$	135,549	$	52	$	(207,131)	$	(71,528)
Issuance of common stock upon conversion of Legacy Series C and C-1 preferred stock in connection with the Business Combination (Note3)	(77,697)		(81,523)	57,380		6		81,517		—		—		81,523
Issuance of common stock through Business Combination and PIPE Financing, net of transaction costs and derivative liabilities (Note 3)	—		—	34,851		3		159,535		—		—		159,538
Issuance of common stock upon exercise of stock options	—		—	2,479		1		941		—		—		942
Issuance of common stock upon exercise of common stock warrants	—		—	4,797		—		5,048		—		—		5,048
Issuance of common stock upon release of RSUs	—		—	4,841		—		—		—		—		—
Issuance of common stock pursuant to the Common Stock Purchase Agreement - B. Riley	—		—	171		—		—		—		—		—
Reclassification of loan and security agreement warrants to equity	—		—	—		—		6,370		—		—		6,370
Settlement of the first tranche of forward contract	—		—	—		—		(3,305)		—		—		(3,305)
Stock-based compensation	—		—	—		—		37,643		—		—		37,643
Capitalization of deferred costs to equity upon share issuance	—		—	—		—		(1,098)		—		—		(1,098)
Foreign currency translation loss	—		—	—		—		—		(223)		—		(223)
Change in unrealized loss on available-for-sale securities	—		—	—		—		—		(356)		—		(356)
Net loss	—		—	—		—		—		—		(48,649)		(48,649)
Balance, September 30, 2022	—	$	—	122,740	$	12	$	422,200	$	(527)	$	(255,780)	$	165,905

*	Shares of legacy Redeemable Convertible Series C Preferred Stock, Redeemable Convertible Series C-1 Preferred Stock, legacy Class A Common Stock, and legacy Class B Common Stock have been retroactively restated to give effect to the Business Combination

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Revenue Recognition

The following tables depict the disaggregation of revenue according to the type of good or service and timing of transfer of goods or services for the three and nine months ended September 30, 2023 and 2022, respectively (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Collaborative research, other professional services and related materials	$	2,266	$	1,990	$	6,560	$	4,982
Access to quantum computing systems		839		814		2,072		2,060
	$	3,105	$	2,804	$	8,632	$	7,042


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue recognized at a point in time	$	412	$	—	$	748	$	—
Revenue recognized over time		2,693		2,804		7,884		7,042
	$	3,105	$	2,804	$	8,632	$	7,042

Selected condensed consolidated balance sheet line items that reflect accounts receivable, contract assets and liabilities as of September 30, 2023, December 31, 2022 and December 31, 2021 were as follows (in thousands):


	September 30, 2023		December 31, 2022		December 31, 2021
Trade receivables	$	2,640	$	6,143	$	962
Unbilled receivables	$	356	$	92	$	581
Deferred revenue	$	(472)	$	(961)	$	(985)

Changes in deferred revenue from contracts with customers were as follows:


	Nine Months Ended September 30,
	2023		2022
Balance at beginning of period	$	(961)	$	(985)
Deferral of revenue		(1,829)		(384)
Recognition of deferred revenue		2,318		558
Total deferred revenue at end of period	$	(472)	$	(811)

Amounts recognized as revenue from beginning contract liabilities during the three and nine months ended September 30, 2023 totaled $0.6 million and $0.8 million, respectively. Amounts recognized as revenue from beginning contract liabilities during the three and nine months ended September 30, 2022 totaled $0.7 million and $0.6 million, respectively. Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of September 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $6.0 million. The Company expects to recognize estimated revenues related to performance obligations that are unsatisfied (or partially satisfied) during the next twelve months.

The Company has not identified any costs that are incremental to the acquisition of customer contracts that would be capitalized as deferred costs on the balance sheet in accordance with ASC 340-40. Incremental costs incurred to fulfill the Company’s contracts that meet the capitalization criteria in ASC 340-40 have historically been immaterial. Accordingly, the Company has not capitalized any contract fulfillment costs as of September 30, 2023 and December 31, 2022.

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Investments

Money market funds and U.S. treasury securities with remaining maturities at the date of purchase of three months or less are classified as cash equivalents. All other investments in fixed income securities are classified as available-for-sale in the consolidated balance sheets. Fixed income securities are recorded at their estimated fair value. The amortized cost, gross unrealized holding gains and losses included in other comprehensive income (loss) and the fair value of the fixed income securities at September 30, 2023 and December 31, 2022 are presented in the tables below (in thousands):


	September 30, 2023
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash equivalents:
Money market funds	$	15,614	$	—	$	—	$	15,614
U.S. treasury securities		11,896		2		—		11,898
Available-for-sale investments:
U.S. treasury securities		14,686		1		—		14,687
U.S. government agency bonds		35,602		2		(15)		35,589
Corporate bonds		18,224		—		(30)		18,194
Available-for-sale investments – short-term	$	68,512	$	3	$	(45)	$	68,470


	December 31, 2022
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash equivalents:
Money market funds	$	36,346	$	—	$	—	$	36,346
Available-for-sale investments:
U.S. treasury securities		58,514		—		(304)		58,210
Corporate bonds		3,581		—		(10)		3,571
Commercial paper		23,142		—		—		23,142
Available-for-sale investments – short-term	$	85,237	$	—	$	(314)	$	84,923

The Company invests in highly rated investment grade debt securities. All of the Company’s available-for-sale securities have final maturities of one year or less. The Company reviews the individual securities that have unrealized losses on a regular basis. The Company evaluates whether it has the intention to sell any of these investments and whether it is more likely than not that it will be required to sell any of them before recovery of the amortized cost basis. Neither of these criteria were met as of September 30, 2023 or December 31, 2022. The Company additionally evaluates whether the decline in fair value of the securities below their amortized cost basis is related to credit losses or other factors. Based on this evaluation, the Company determined that the unrealized losses for its available-for-sale securities were primarily attributable to changes in interest rates and non-credit-related factors. Accordingly, the Company determined that none of the unrealized losses were other-than-temporary, and that recognition of an impairment charge was not required as of September 30, 2023, and December 31, 2022. As of September 30, 2023, there were 12 securities that were in an unrealized loss position with a market value of $44.8 million, with the largest loss for any single security being inconsequential. None of the Company’s available-for-sale securities have been in an unrealized loss position for more than one year. No available-for-sale security was sold during the three and nine months ended September 30, 2023 and 2022, respectively.

See Note 8 for additional information regarding the fair value of the Company’s investments.

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Fair Value Measurements

The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3—Inputs are unobservable inputs for the asset or liability.

The following tables present the fair value hierarchy used to measure the Company’s financial assets and liabilities as of September 30, 2023 and December 31, 2022, respectively (in thousands):


	September 30, 2023
	Level 1		Level 2		Level 3
Assets:
Cash equivalents:
Money market funds	$	15,614	$	—	$	—
U.S. treasury securities		11,898		—		—
Short-term investments:
U.S. treasury securities		14,687		—		—
U.S. government agency bonds		—		35,589		—
Corporate bonds		—		18,194		—
Total Assets	$	42,199	$	53,783	$	—
Liabilities