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What changed in Rigetti Computing, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Rigetti Computing, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+546 added−594 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-14)

Top changes in Rigetti Computing, Inc.'s 2024 10-K

546 paragraphs added · 594 removed · 382 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

88 edited+46 added−29 removed124 unchanged
Biggest changeAs of March 1, 2024, we employ 134 people globally, the majority of whom are employed in areas of quantum physics, chip and hardware engineering and software development. Most of our employees are based in the United States with the remainder based in the United Kingdom, Australia and Canada.
Biggest changeSee also “Risk Factors—Risks Related to Litigation and Government Regulation.” Employees Our deep and talented workforce is the key to our success. As of March 1, 2025, we employ 140 people globally, of which 137 were full-time employees. The majority of our employees are employed in the areas of quantum physics, chip and hardware engineering and software development.
We expect this patented and patent pending, modular chip architecture to be the building block for new generations of quantum processors that we expect to achieve a clear advantage over classical computers. We are a vertically integrated company. We own and operate Fab-1, a unique wafer fabrication facility dedicated to prototyping and producing our quantum processors.
We expect this patented and patent pending, modular chip architecture to be the building block for new generations of quantum processors that we expect to achieve a clear advantage over classical computers. We are a vertically integrated company. We own and operate Fab-1, a wafer fabrication facility dedicated to prototyping and producing our quantum processors.
We have also sold our QPUs to U.S. national labs who wish to have their own quantum computer on-site and have launched Novera, our first commercially available QPU, which features a 9-qubit chip, tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.
We have also sold our QPUs to U.S. national labs and others who wish to have their own quantum computer on-site and have launched Novera, our first commercially available QPU, which features a 9-qubit chip, tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.
We also launched the Novera™ QPU in December 2023, our first commercially available QPU, which includes a 9-qubit chip that features tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations. The Novera QPU is based on our fourth generation Ankaa™-class architecture.
In December 2023, we launched the Novera™ QPU, our first commercially available QPU, which includes a 9-qubit chip that features tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations. The Novera QPU is based on our fourth generation Ankaa™-class architecture.
The goal of the DARPA Benchmarking Program is to create key quantum computing metrics for fault tolerant quantum computing, make those metrics testable, and estimate the required quantum and classical resources needed to reach critical performance thresholds. Rigetti was awarded Phase 1 in March 2022.
The goal of the DARPA Benchmarking Program was to create key quantum computing metrics for fault tolerant quantum computing, make those metrics testable, and estimate the required quantum and classical resources needed to reach critical performance thresholds. Rigetti was awarded Phase 1 in March 2022.
In the nQA phase, we expect that large enterprises and government organizations would increase their investment in quantum computing as the superior computational capabilities of the technology will have progressed from projected to verifiably advantaged for certain applications.
In the nQA phase, we expect that large enterprises and government organizations will increase their investment in quantum computing as the superior computational capabilities of the technology will have progressed from projected to verifiably advantaged for certain applications.
We have developed, own and operate the distinctive manufacturing capabilities needed to produce quantum processors in our proprietary scalable architecture. In 2017, we became the first company to build a dedicated and integrated Fab for producing quantum processors.
Fab-1 We have developed, own and operate the distinctive manufacturing capabilities needed to produce quantum processors in our proprietary scalable architecture. In 2017, we became the first company to build a dedicated and integrated Fab for producing quantum processors.
Reprogrammability . Reprogrammable quantum computers are general purpose machines that should be able to run any quantum algorithm, provided the machine has the scale, fidelity, and other attributes needed to support the particular problem instance.
Reprogrammable quantum computers are general purpose machines that should be able to run any quantum algorithm, provided the machine has the scale, fidelity, and other attributes needed to support the particular problem instance.
To date, we have focused on developing a range of client relationships and research partnerships with: ● Enterprise-sized organizations working on quantum-assisted breakthroughs in applications areas like drug discovery, network optimization, financial modeling, weather forecasting and fusion energy like NASA, Nasdaq, Standard Chartered Bank, HSBC, AFRL, the U.S. DOE and certain military branches within the U.S.
To date, we have focused on developing a range of client relationships and research partnerships with: ● Enterprise-sized organizations working on quantum-assisted breakthroughs in applications areas like drug discovery, network optimization, financial modeling, weather forecasting and fusion energy like NASA, Moody’s, Standard Chartered Bank, HSBC, AFRL, the U.S. DOE and certain military branches within the U.S.
Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. The information found on our website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. ​ 26 Table of Contents
Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. The information found on our website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. ​ 21 Table of Contents
The following are examples of our work related to machine learning: ​ I n November 2023 we were awarded an Innovate UK grant as part of the Feasibility Studies in Quantum Computing Applications competition. Joining us in this work are Amazon Web Services (AWS), Imperial College London, and Standard Chartered.
The following are examples of our work related to machine learning: In November 2023, we were awarded an Innovate UK grant as part of the Feasibility Studies in Quantum Computing Applications competition. Joining us in this work are Amazon Web Services (AWS), Imperial College London, and Standard Chartered.
Currently, our quantum computers are of sufficient scale and capability to be useful in applied research for quantum algorithm development, the exploration of potential applications of quantum computing, and for understanding the skill gaps an organization must resolve in order to be prepared to take advantage of quantum computing capabilities. 7 Table of Contents We consider the eQA phase to have begun four years ago, and during this time we have worked with business and government researchers, commercial software developers and academic institutions who access our quantum computers via cloud-based services.
Currently, our quantum computers are of sufficient scale and capability to be useful in applied research for quantum algorithm development, the exploration of potential applications of quantum computing, and for understanding the skill gaps an organization must resolve in order to be prepared to take advantage of quantum computing capabilities. 6 Table of Contents We consider the eQA phase to have begun five years ago, and during this time we have worked with business and government researchers, commercial software developers and academic institutions who access our quantum computers via cloud-based services.
Many important systems, such as molecular structures, cannot be accurately modeled due to the level of complexity associated with representing the properties and behaviors of the key elemental components. We believe that quantum computers possess inherent advantages that will allow them to accurately model systems with large numbers of variables that are far outside the reach of classical computers today.
Many important systems, such as molecular structures, cannot be accurately modeled due to the level of complexity associated with representing the properties and behaviors of the key elemental components. 12 Table of Contents We believe that quantum computers possess inherent advantages that will allow them to accurately model systems with large numbers of variables that are far outside the reach of classical computers today.
We believe that quantum computers could allow highly accurate optimization models to be continuously refreshed to reflect the impact of changing conditions on available solutions, ultimately leading to better and more responsive plans and decision-making. 13 Table of Contents Many of the world’s largest and most valuable industries could potentially benefit from enhanced optimization enabled by quantum computing.
We believe that quantum computers could allow highly accurate optimization models to be continuously refreshed to reflect the impact of changing conditions on available solutions, ultimately leading to better and more responsive plans and decision-making. Many of the world’s largest and most valuable industries could potentially benefit from enhanced optimization enabled by quantum computing.
They are also improving along these key metrics faster than approaches based on other qubit modalities, such as ion traps, photonics and neutral atoms. As an example, in June 2011, the largest algorithms demonstrated on programmable, gate model quantum computers across these modalities were in the range of a few qubits.
They are also improving along these key metrics faster than approaches based on other qubit modalities, such as ion traps, photonics and neutral atoms. 14 Table of Contents As an example, in June 2011, the largest algorithms demonstrated on programmable, gate model quantum computers across these modalities were in the range of a few qubits.
Cooling power requirements and associated electricity costs will scale approximately linearly with qubit count, while expected computational utility increases exponentially. 20 Table of Contents As a result, we expect the electricity costs to run the cooling systems of our quantum computers to make up an ever-decreasing fraction of the overall revenue generated from each machine.
Cooling power requirements and associated electricity costs will scale approximately linearly with qubit count, while expected computational utility increases exponentially. As a result, we expect the electricity costs to run the cooling systems of our quantum computers to make up an ever-decreasing fraction of the overall revenue generated from each machine.
It is currently believed in the quantum computing industry that this likely requires systems with 10,000 to 1,000,000 physical qubits. We believe our scalable multi-chip architecture paves the way to scale up to these large systems. We anticipate the beginning of the large-scale fault tolerant phase to be likely at least a decade away.
It is currently believed in the quantum computing industry that this likely requires systems with 10,000 to 1,000,000 physical qubits. We believe our scalable multi-chip architecture paves the way to scale up to these large systems. We anticipate the beginning of the large-scale fault tolerant phase to be roughly a decade away.
For example, re-setting registers of qubits conditional on the outcomes of previous measurements, can increase overall quantum circuit throughput by 5x relative to non-dynamic implementations of the same workload. The QPU control system includes hardware for networking, classical microprocessors, FPGAs for control and readout pulse sequencing, and analog signal processing.
For example, re-setting registers of qubits conditional on the outcomes of previous measurements, can increase overall quantum circuit throughput by 5x relative to non-dynamic implementations of the same workload. 17 Table of Contents The QPU control system includes hardware for networking, classical microprocessors, FPGAs for control and readout pulse sequencing, and analog signal processing.
Phase 2 is expected to be heavily focused on researching fault-tolerant quantum applications. Of particular interest are dynamical chemistry simulations and modeling the dynamics of quantum systems. ​ 14 Table of Contents Machine Learning Machine learning is a well-established field, with broad application, that today is already having a transformative impact on a myriad of markets.
Phase 2 is expected to be heavily focused on researching fault-tolerant quantum applications. Of particular interest are dynamical chemistry simulations and modeling the dynamics of quantum systems. Machine Learning Machine learning is a well-established field, with broad application, that today is already having a transformative impact on a myriad of markets.
We sold our first QPU in 2023 and recently launched Novera™ our first commercially available QPU, which features a 9-qubit chip with tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.
We sold our first QPU in 2023 and in December 2023 launched Novera ™, our first commercially available QPU, which features a 9-qubit chip with tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.
Recently, in February 2024, Rigetti UK Limited, a wholly owned subsidiary of our Company, announced that it was awarded a Small Business Research Initiative grant funded by Innovate UK to develop and deliver a 24-qubit quantum computer to the National Quantum Computing Centre. ​ The Company is enabled by a deep technical team that includes global experts in quantum chip design and manufacturing, quantum computing systems architecture, quantum software, and quantum algorithms and applications.
In February 2024, Rigetti UK Limited, a wholly owned subsidiary of our Company, announced that it was awarded a Small Business Research Initiative grant funded by Innovate UK to develop and deliver a 24-qubit quantum computer to the National Quantum Computing Centre. 5 Table of Contents The Company is enabled by a deep technical team that includes global experts in quantum chip design and manufacturing, quantum computing systems architecture, quantum software, and quantum algorithms and applications.
With the introduction of new innovations and the potential entry of new competitors into the market, we expect competition to increase in the future, which could harm our business, results of operations, or financial condition. Our current and prospective competitors include companies engaged in the research, development, and operation of quantum computing capabilities.
With the introduction of new innovations and the potential entry of new competitors into the market, we expect competition to increase in the future, which could harm our business, results of operations, or financial condition. 19 Table of Contents Our current and prospective competitors include companies engaged in the research, development, and operation of quantum computing capabilities.
Today, cloud computing and HPC have been the predominant sources of the computational capabilities required to create effective machine learning algorithms, models and data analysis applications. But the efficiency of HPC-powered machine learning algorithms is limited when faced with richer and larger data sets.
Today, cloud computing and HPC have been the predominant sources of the computational capabilities required to create effective machine learning algorithms, models and data analysis applications. 11 Table of Contents But the efficiency of HPC-powered machine learning algorithms is limited when faced with richer and larger data sets.
The operating system software includes a rich set of quantum application and software development tools designed to unlock the capabilities of the quantum computing ecosystem by: ● Enabling customers to access Rigetti QPUs through a broad range of quantum application software, development frameworks and algorithm libraries; ● Providing software and algorithm developers with the performance and fine-grained control required to expedite a new era of computational breakthroughs; and 10 Table of Contents ● Facilitating the implementation of high performance public and private clouds with ultra-low latency connectivity between classical hardware and Rigetti QPUs.
The operating system software includes a rich set of quantum application and software development tools designed to unlock the capabilities of the quantum computing ecosystem by: ● Enabling customers to access our QPUs through a broad range of quantum application software, development frameworks and algorithm libraries; ● Providing software and algorithm developers with the performance and fine-grained control required to expedite a new era of computational breakthroughs; and ● Facilitating the implementation of high performance public and private clouds with ultra-low latency connectivity between classical hardware and our QPUs.
Major companies now developing both quantum hardware and software include IBM, Google, Microsoft, IonQ, D-Wave, Quantinuum, PsiQuantum, Xanadu and ColdQuanta. In addition, because of the importance of quantum computing, most large public cloud providers and traditional chip makers are researching and investing in quantum computing initiatives, in some cases seeking to build quantum computers.
Major companies now developing both quantum hardware and software include IBM, Google, Microsoft, IonQ, D-Wave, Quantinuum and PsiQuantum, among others. In addition, because of the importance of quantum computing, most large public cloud providers and traditional chip makers are researching and investing in quantum computing initiatives, in some cases seeking to build quantum computers.
Therefore, faster quantum processing speeds can result in a larger number of addressable problems and larger market opportunity, as well as a more direct path to outperforming classical alternatives and a higher intrinsic revenue potential per unit time. Co-processing .
Therefore, faster quantum processing speeds can result in a larger number of addressable problems and larger market opportunity, as well as a more direct path to outperforming classical alternatives and a higher intrinsic revenue potential. Co-processing .
This was underscored by our announcement of the industry’s first multi-chip quantum processor for scalable quantum computers, a capability realized through many innovations from Fab-1. ● Provide broad access to our quantum computers.
This was underscored by our announcement of the industry’s first multi-chip quantum processor for scalable quantum computers, a capability realized through many innovations from Fab-1. 7 Table of Contents ● Provide broad access to our quantum computers.
They represent a cross section of industries, government agencies and partners in the quantum computing ecosystem. 11 Table of Contents Indirect QCaaS Distribution There are a large and growing number of providers of classical computing services over the cloud.
They represent a cross section of industries, government agencies and partners in the quantum computing ecosystem. Indirect QCaaS Distribution There are a large and growing number of providers of classical computing services over the cloud.
We are pursuing similar arrangements with customers in other important vertical market segments, like finance, where we are developing specific expertise in several application areas and are collaborating with Nasdaq, HSBC and Standard Chartered Bank. We also have distribution relationships with customers like Amazon Web Services, Microsoft, ORNL and Strangeworks.
We are pursuing similar arrangements with customers in other important vertical market segments, like finance, where we are developing specific expertise in several application areas and are collaborating with Moody’s, HSBC and Standard Chartered Bank. We also have distribution relationships with customers like Amazon Web Services, Microsoft Azure and Strangeworks.
Achieving quantum advantage imposes requirements on the quantum computer itself, the most important of which relate to the above performance factors of scale , fidelity , speed , co-processing , and re-programmability . 17 Table of Contents Scale .
Achieving quantum advantage imposes requirements on the quantum computer itself, the most important of which relate to the above performance factors of scale , fidelity , speed , co-processing , and re-programmability . Scale .
The integrated system is designed and built to meet the requirements for co-processing and reprogrammability over the cloud. 22 Table of Contents This capability enables high-speed data flow within the quantum processor, and between the quantum processor and auxiliary classical compute and networking infrastructure.
The integrated system is designed and built to meet the requirements for co-processing and reprogrammability over the cloud. This capability enables high-speed data flow within the quantum processor, and between the quantum processor and auxiliary classical compute and networking infrastructure.
We anticipate that this phase will come to a close when there are repeated demonstrations solving practical problems, of substantial commercial or customer value, with a level of performance that is competitive with the best available classical computing performance.
We anticipate that this phase will end when there are repeated demonstrations solving practical problems, of substantial commercial or customer value, with a level of performance that is competitive with the best available classical computing performance.
In the ensuing eleven-year period from 2012 to 2023, superconducting systems have successfully scaled up to the range of 80 or more qubits, including demonstrations of quantum supremacy. This rate of scaling has easily outpaced other approaches. We believe this leadership results in part from an intrinsic advantage: superconducting qubits have many inherent similarities to traditional silicon-based chips.
In the ensuing twelve-year period from 2012 to 2024, superconducting systems have successfully scaled up to the range of 100 or more qubits, including demonstrations of quantum supremacy. This rate of scaling has easily outpaced other approaches. We believe this leadership results in part from an intrinsic advantage: superconducting qubits have many inherent similarities to traditional silicon-based chips.
In October 2023, we were awarded an Innovate UK grant as part of the Feasibility Studies in Quantum Computing Applications competition. Joining us in this work is HSBC, the Quantum Software Lab (QSL) based at the University of Edinburgh, and the National Quantum Computing Centre (NQCC).
In October 2023, we were awarded a separate Innovate UK grant as part of the Feasibility Studies in Quantum Computing Applications competition. Joining us in this work are HSBC, the Quantum Software Lab (QSL) based at the University of Edinburgh, and the National Quantum Computing Centre (NQCC).
Department of Defense; ● Materials science researchers and quantum algorithm developers at renowned laboratories like Fermilab, Lawrence Livermore National Laboratory, MIT Lincoln Laboratory, NASA Quantum Artificial Intelligence Laboratory and ORNL; 24 Table of Contents ● Quantum-focused software and algorithm companies like 1Qbit, Phasecraft, Riverlane, Q-CTRL and Zapata; ● Cloud service providers like Amazon Web Services and Microsoft Azure; and ● We also enter into multi-year technology development partnerships with organizations that possess specialized technical expertise and strong interests in advancing the development of quantum computing (as referenced in Business - Key Technology Development Partnerships ).
Department of Defense; ● Materials science researchers and quantum algorithm developers at renowned laboratories like Fermilab, NASA Quantum Artificial Intelligence Laboratory and ORNL; ● Quantum-focused software and algorithm companies like Phasecraft, Riverlane and Q-CTRL; ● Cloud service providers like Amazon Web Services and Microsoft Azure; and ● We also enter into multi-year technology development partnerships with organizations that possess specialized technical expertise and strong interests in advancing the development of quantum computing (as referenced in Business - Key Technology Development Partnerships ).
We have been providing cloud access to our quantum computers since 2017 and have since expanded the availability of our machines through distribution agreements with other solution providers including Amazon Bracket and Oak Ridge National Laboratory (“ORNL”), among others.
We have been providing cloud access to our quantum computers since 2017 and have since expanded the availability of our machines through distribution agreements with other solution providers, including Amazon Bracket among others.
These include the scale , or number of qubits available in the quantum processor to encode the problem and algorithm, with more qubits enabling exponentially more complex and challenging problems to be represented; the fidelity of the quantum logic gates from which circuits are composed, which determines how often errors occur when the circuit is executed; the gate speed , which shapes the time taken to execute a given circuit; the co-processing technology and integration, which determines the rate at which classical data representing the problem and algorithm can be loaded into the quantum computer, and the rate at which it flows back out upon completion of the circuit execution; and re-programmability , or the speed with which the specific quantum circuit being executed may be updated to move on to the next step in a computational process.
These include the scale , or number of qubits available in the quantum processor to encode the problem and algorithm, with more qubits enabling exponentially more complex and challenging problems to be represented; the fidelity of the quantum logic gates from which circuits are composed, which determines how often errors occur when the circuit is executed; the gate speed , which shapes the time taken to execute a given circuit; the co-processing technology and integration, which determines the rate at which classical data representing the problem and algorithm can be loaded into the quantum computer, and the rate at which it flows back out upon completion of the circuit execution; and re-programmability , or the speed with which the specific quantum circuit being executed may be updated to move on to the next step in a computational process. 13 Table of Contents Several candidate physical systems, or modalities, have been proposed or are being pursued, to form the basic physical qubits in quantum computers.
We believe the Company’s full-stack product development approach, and strategy of forging collaborative customer partnerships, positions the Company to be a highly valued and long-term provider of quantum computing services to these organizations. To date, these direct customer relationships have been with customers using QCS for general quantum computing research, algorithm development, algorithm benchmarking and software development activities.
We believe our full-stack product development approach, and strategy of forging collaborative customer partnerships positions us to be a highly valued and long-term provider of quantum computing services to these organizations. 9 Table of Contents To date, these direct customer relationships have been with customers using QCS for general quantum computing research, algorithm development, algorithm benchmarking and software development activities.
Our sales and marketing efforts are focused on technology development and distribution partnerships with the leading organizations in these markets. In the U.S. government, for example, the Department of Defense, the DOE, AFRL and the Intelligence Community have each been making significant investments in quantum computing, and we have technology development partnerships with leading agencies and national laboratories.
Our sales and marketing efforts are focused on technology development and distribution partnerships with the leading organizations in these markets. In the U.S. government, for example, the Departments of Defense and Energy have each been making significant investments in quantum computing, and we have technology development partnerships with leading agencies and national laboratories.
The indirect distribution model is enabled by the same QCS platform used in the direct distribution model, providing us with powerful business leverage in addressing the needs of customers in different market segments. In this instance, we can capitalize on our full-stack product development capabilities to meet the unique requirements of cloud-service providers.
The indirect distribution model is enabled by the same QCS platform used in the direct distribution model, allowing us to address the needs of customers in different market segments. In this instance, we can capitalize on our full-stack product development capabilities to meet the unique requirements of cloud-service providers.
We have also developed numerous proprietary technologies required to create quantum computing chips, quantum computer systems, software and cloud-based services and we rigorously protect our unique intellectual property through a portfolio of 84 patents issued and 106 patents pending.
We have also developed numerous proprietary technologies required to create quantum computing chips, quantum computer systems, software and cloud-based services and we rigorously protect our unique intellectual property through a portfolio of 104 patents issued and 133 patents pending as of December 31, 2024.
Powered by the production of our scalable multi-chip quantum processors in Fab-1 and our full-stack product development approach, we are working to develop quantum computing systems that demonstrate clear performance advantages over classical computing alternatives for multiple high-impact application areas. Potential Market Opportunity Demand for computing power capable of solving computationally complex problems is increasing.
Powered by the production of our scalable multi-chip quantum processors in Fab-1 and our full-stack product development approach, we are working to develop quantum computing systems that demonstrate clear performance advantages over classical computing alternatives for multiple high-impact application areas.
Superconducting qubits are silicon-based electronic devices that encode information in quantum states associated with currents and voltages. Superconducting qubits benefit from the fact that their basic properties can be engineered through well-established semiconductor industry design and manufacturing techniques. This enables chip design and architecture tradeoffs to be made to overcome various practical constraints in building commercial quantum computing systems.
Superconducting qubits benefit from the fact that their basic properties can be engineered through well-established semiconductor industry design and manufacturing techniques. This enables chip design and architecture tradeoffs to be made to overcome various practical constraints in building commercial quantum computing systems.
We believe a 2.5x increase in error performance against our previous QPUs, increasing our fidelities by 3%, coupled with our scaling approach, shows that we have a promising strategy for building increasingly higher performing QPUs to help our customers solve their most pressing problems.
We believe a 2.0x improvement in error performance compared to our previous QPUs coupled with our scaling approach, shows that we have a promising strategy for building increasingly higher performing QPUs to help our customers solve their most pressing problems.
Uniquely, our modular processor technology enables improvements to fidelity to be achieved separately from efforts to increase scale; fidelity advancements can be developed on the individual core processor chips, and these improvements can be rapidly integrated into scaled processors through our multi-chip integration technology.
Uniquely, our modular processor technology enables improvements to fidelity to be achieved separately from efforts to increase scale; fidelity advancements can be developed on the individual core processor chips, and these improvements can be rapidly integrated into scaled processors through our multi-chip integration technology. As described above, a quantum logic gate is how computation is expressed on a quantum computer.
We believe quantum computing represents one of the most transformative emerging capabilities in the world today. By leveraging quantum mechanics, our quantum computers process information in fundamentally new, more powerful ways compared to classical computing. When scaled, we believe these systems are poised to solve problems of staggering computational complexity at unprecedented speed.
By leveraging quantum mechanics, our quantum computers process information in fundamentally new, more powerful ways compared to classical computing with meaningful power efficiency. When scaled, we believe these systems are poised to solve problems of staggering computational complexity at unprecedented speed.
The availability of scalable quantum computers is expected to enable scientists and engineers to address problems in areas like climate change, fusion energy, quantitative finance, drug development and discovery, materials science, and artificial intelligence.
The availability of scalable quantum computers is expected to enable scientists and engineers to address problems in areas like climate change, fusion energy, quantitative finance, drug development and discovery, materials science, and artificial intelligence. To unlock this opportunity, we have developed the world’s first multi-chip quantum processor for scalable quantum computing systems.
These innovations have resulted from our investment in more than five years of technology development to establishing the essential capabilities to produce quantum processors meeting the requirements for broad commercial utility.
These innovations have resulted from our investment in more than five years of technological development to establishing the essential capabilities to produce quantum processors meeting the requirements for broad commercial utility. We believe our approach to scaling quantum computers will accelerate us toward quantum advantage systems.
Our patent portfolio seeks to protect our current developments and the intellectual property space for the company’s technology roadmap and anticipated areas of development.
Intellectual Property Our intellectual property portfolio plays a strategic role in advancing our innovation and leadership in quantum computing. Our patent portfolio seeks to protect our current developments and the intellectual property space for the company’s technology roadmap and anticipated areas of development.
Rigetti’s quantum computing facility in Berkeley, California includes both research and development and production quantum processing units, which are each housed in a cryogenic refrigerator. Direct QCaaS Distribution We provide access on a commercial basis to our quantum computers over QCS, directly engaging with enterprises and government organizations making significant investments in quantum computing research, development and readiness.
Direct QCaaS Distribution We provide access on a commercial basis to our quantum computers over QCS, directly engaging with enterprises and government organizations making significant investments in quantum computing research, development and readiness.
Among these, we believe the superconducting qubit is the only such modality that has, to date, demonstrated viability across all these requisite metrics. 18 Table of Contents Our Superconducting Quantum Processors Introduction to Superconducting Qubits We build and operate quantum computers based on superconducting qubits.
Among these, we believe the superconducting qubit is the only such modality that has, to date, demonstrated viability across all these requisite metrics. Our Superconducting Quantum Processors Introduction to Superconducting Qubits We build and operate quantum computers based on superconducting qubits. Superconducting qubits are silicon-based electronic devices that encode information in quantum states associated with currents and voltages.
Combining quantum computing with classical machine learning methodology could offer more powerful resources for processing these data streams, given the potential for quantum computers to process some types of information more efficiently than with classical resources alone. 15 Table of Contents The aim of the consortium is to address the following research objectives: (1) further develop quantum signature kernels and quantum-enhanced feature maps, (2) benchmark the results against classical machine learning methods for streamed data, and (3) build and study quantum algorithms for computing signatures and signature kernels for long and high-dimensional data streams efficiently.
The aim of the consortium is to address the following research objectives: (1) further develop quantum signature kernels and quantum-enhanced feature maps, (2) benchmark the results against classical machine learning methods for streamed data, and (3) build and study quantum algorithms for computing signatures and signature kernels for long and high-dimensional data streams efficiently.
Our processor architecture, software tools, and cloud services platform are designed to enable users and partners to directly construct, test and deploy error correction and error mitigation protocols, and to tailor such codes to specific computational tasks through software.
Our processor architecture, software tools, and cloud services platform are designed to enable users and partners to directly construct, test and deploy error correction and error mitigation protocols, and to tailor such codes to specific computational tasks through software. This capability is enabled by the re-programmability, co-processing integration, and system design we have established.
Key Technology Development Partnerships We enter into multi-year development partnerships with organizations that have specialized technical expertise and a strong interest in advancing their understanding and application of quantum computing technology.
We have signed a distribution agreement with Amazon’s Braket service and Microsoft’s Azure Quantum Service, providing access to our quantum computing systems to AWS and Azure customers. Key Technology Development Partnerships We enter into multi-year development partnerships with organizations that have specialized technical expertise and a strong interest in advancing their understanding and application of quantum computing technology.
Over the last several years, algorithms have been developed on processors with average two-qubit gate fidelities of 95-98%. As processors scale to broad quantum advantage, fidelity will need to improve, likely to 99% and beyond. We are focused on delivering advances to fidelity through a systematic engineering approach centered on our design-fab-test flywheel powered by our in-house design and manufacturing.
As processors scale to broad quantum advantage, fidelity will need to continue to improve, likely to 99.9% and beyond. We are focused on delivering advances to fidelity through a systematic engineering approach centered on our design-fab-test flywheel powered by our in-house design and manufacturing.
Business Model & Services Currently, we generate the majority of our revenues from technology development contracts with various partners. We believe our longer term business model will be more weighted towards QPU sales and recurring revenues generated from quantum computing systems made accessible via the cloud in the form of QCaaS products. Rigetti Quantum Processing Units .
We believe our longer term business model will be more weighted towards QPU sales and recurring revenues generated from quantum computing systems made accessible via the cloud in the form of QCaaS and QCS services. Rigetti Quantum Processing Units . Our QPUs contain fabricated silicon-based chips featuring superconducting qubits.
This in-house fab capability has enabled us to accumulate the hands-on experience and intellectual property, including know-how, patents, and trade secrets, to produce quantum computer chips within our scalable, proprietary architecture. Furthermore, we believe Fab-1 has enough wafer capacity to supply all of our chip needs for at least the next three years. Cooling .
This in-house fab capability has enabled us to accumulate the hands-on experience and intellectual property, including know-how, patents, and trade secrets, to produce quantum computer chips within our scalable, proprietary architecture.
Value of $5 billion to $10 billion could start accruing to users and providers as soon as the next few years. 8 Table of Contents Business Strategy Our approach to developing and sustaining what we believe is strong competitive advantage relies on a four-pronged strategy: ● Create high performance quantum computing systems through full-stack product development.
Business Strategy Our approach to developing and sustaining what we believe is a strong competitive advantage relies on a four-pronged strategy: ● Create high performance quantum computing systems through full-stack product development.
We rely upon a combination of protections afforded to owners of patents, copyrights, trade secrets, and trademarks, along with confidentiality and proprietary rights agreements with employees, consultants, contractors, vendors and business partners to establish and protect our intellectual property rights.
We rely upon a combination of protections afforded to owners of patents, copyrights, trade secrets, and trademarks, along with confidentiality and proprietary rights agreements with employees, consultants, contractors, vendors and business partners to establish and protect our intellectual property rights. 18 Table of Contents As of December 31, 2024, we have 104 patents issued and 133 patents pending that are designed to protect our full-stack technology across hardware, software, and services.
This approach enables us to serve a wide range of customers without the complexity and cost associated with shipping, operating and servicing complex and cryogenic computing equipment on customer premises. Rigetti Quantum Cloud Services Rigetti Quantum Cloud Services (QCS) is a proprietary platform to deliver high-performance quantum computing over the cloud.
Quantum Computing as a Service (QCaaS) We sell access to our quantum computers through cloud-based services, commonly referred to as QCaaS. This approach enables us to serve a wide range of customers without the complexity and cost associated with shipping, operating and servicing complex and cryogenic computing equipment on customer premises.
Our engineers can augment a client’s internal capabilities with expertise in algorithm development, benchmarking, quantum application programming and software development. These fee-based services can enhance our customer’s readiness for quantum, accelerate our customer’s timelines for meaningful discoveries, and increase our depth of knowledge about key application domains and customer requirements for quantum computing in different industries.
These fee-based services can enhance our customer’s readiness for quantum, accelerate our customer’s timelines for meaningful discoveries, and increase our depth of knowledge about key application domains and customer requirements for quantum computing in different industries. Key Applications Quantum computing is expected to drive value across many different applications and industries.
DOE agencies for simulation applications in the areas of nuclear fusion and high energy physics. 16 Table of Contents Our Technology Introduction to Quantum Computing Quantum computers encode and process data using a new kind of information storing electrical circuit called a quantum bit, or qubit.
Other high potential impact areas for quantum mechanical simulations include the design of chemical catalysts, computational fluid dynamics in aerospace engineering, and nuclear fusion for clean energy. Our Technology Introduction to Quantum Computing Quantum computers encode and process data using a new kind of information storing electrical circuit called a quantum bit, or qubit.
Optimization The computational properties of a quantum computer inherently support the problem-solving requirements of extremely complex optimization calculations because quantum computers possess the ability to simultaneously evaluate very large numbers of variables, and each additional qubit in a quantum computer exponentially scales our information processing capacity.
We believe that many of the principal benefits in these areas will spring from four different types of computational problems that are particularly well suited to quantum computing: optimization, machine learning, simulation and quantum mechanical system simulation. 10 Table of Contents Optimization The computational properties of a quantum computer inherently support the problem-solving requirements of extremely complex optimization calculations because quantum computers possess the ability to simultaneously evaluate very large numbers of variables, and each additional qubit in a quantum computer exponentially scales our information processing capacity.
There is a varying degree of promise, potential and risk in building machines capable of meeting the above requirements for broad commercial utility. As outlined below, it is widely believed that superconducting qubit technology is the most mature, the most advanced, and most likely to ultimately lead to broad commercial success.
As outlined below, it is widely believed that superconducting qubit technology is the most mature, the most advanced, and most likely to ultimately lead to broad commercial success.
This includes requiring compliance with eligibility and responsibility requirements, contractor qualifications, financial and reporting requirements, as well as subjecting the company to audits and to other government reviews covering issues such as cost, performance, internal controls and accounting practices. 25 Table of Contents Employees & Core Values Our deep and talented workforce is the key to our success.
This includes requiring compliance with eligibility and responsibility requirements, contractor qualifications, financial and reporting requirements, as well as subjecting the company to audits and to other government reviews covering issues such as cost, performance, internal controls and accounting practices. Our products and technologies are subject to U.S. export control and import laws and regulations, including the U.S.
Effective implementation of co-processing hinges on both the intrinsic technological features of the specific qubit technology, as well as product innovations and system architectures aimed to prioritize this capability. For example, just as in classical computing architecture, fast gate speeds, coupled with a network architecture that achieves low network latency for data flow, are some requirements for high performance co-processing.
For example, just as in classical computing architecture, fast gate speeds, coupled with a network architecture that achieves low network latency for data flow, are some of the requirements for high performance co-processing. Reprogrammability .
We have developed strong customer relationships and collaborative partnerships to accelerate the development of key technologies for high-value use cases to potentially unlock strategic market opportunities. 6 Table of Contents Our partners and customers include commercial enterprises such as Amazon Web Services (“AWS”), Nasdaq, Standard Chartered Bank and HSBC, along with U.S. government organizations such as Defense Advanced Research Projects Agency (“DARPA”), Department of Energy (“DOE"), and Air Force Research Laboratory(“AFRL”) and international government entities.
Our partners and customers include commercial enterprises such as Amazon Web Services (“AWS”) Standard Chartered Bank and Moody’s, along with U.S. government organizations such as Defense Advanced Research Projects Agency (“DARPA”), Department of Energy (“DOE"), and Air Force Research Laboratory (“AFRL”) and international government entities.
Like all high-performance computing systems, Rigetti quantum computers require an advanced cooling system. In this case, commercially available dilution refrigerators maintain chip temperatures at around 0.02 Kelvin.
Furthermore, we believe Fab-1 has enough wafer capacity to supply all of our chip needs for at least the next three years. 15 Table of Contents Cooling Like all high-performance computing systems, Rigetti quantum computers require an advanced cooling system. In this case, commercially available dilution refrigerators maintain chip temperatures at around 0.02 Kelvin.
None of our employees are subject to a collective bargaining agreement or are represented by labor unions at this time. Corporate Information Rigetti Computing, Inc., formerly known as Supernova Partners Acquisition Company II, Ltd. (“Supernova”), was incorporated on December 22, 2020 as a Cayman Islands exempted company and a special purpose acquisition company.
To date, we have not experienced any work stoppages and maintain good working relationships with our employees. None of our employees are subject to a collective bargaining agreement or are represented by labor unions at this time. 20 Table of Contents Corporate Information Rigetti Computing, Inc., formerly known as Supernova Partners Acquisition Company II, Ltd.
We believe a densely connected square lattice with tunable couplers that allows us to control qubit interactions is the foundation for driving qubit performance.
We have already designed and deployed a modular architecture, tiling multiple chips together demonstrating what we believe is the way forward towards building larger systems. We believe a densely connected square lattice with tunable couplers that allows us to control qubit interactions is the foundation for driving qubit performance.
In addition, we work closely with refrigerator vendors and anticipate the commercial availability of dilution refrigerator systems with the capabilities to support our product roadmap. Fidelity Improvements to the coherence times of superconducting qubits, combined with methods for ever-faster and more precise quantum logic gates, have kept superconducting qubits on a pace of continuous fidelity improvement for approximately two decades.
Fidelity Improvements to the coherence times of superconducting qubits, combined with methods for ever faster and more precise quantum logic gates, have kept superconducting qubits on a pace of continuous fidelity improvement for approximately two decades. In recent years, algorithms have been developed on processors with average two-qubit gate fidelities of 98-99%.
In addition, we also engage a small number of consultants and contractors to enhance our research and development and selling general and administrative areas of our business. To date, we have not experienced any work stoppages and maintain good working relationships with our employees.
Most of our employees are based in the United States with the remainder based in the United Kingdom, Australia and Canada. In addition, we also engage a small number of consultants and contractors to enhance our research and development and selling general and administrative areas of our business.
The speed of gate operations in superconducting qubits are determined by the intentional design of circuit elements on-chip and their optimized parameters, rather than relying on atomic properties. Our slowest class of gate operations, two-qubit entangling gates, have a median duration of less than 200 nanoseconds.
Speed One of the strengths of superconducting qubit technology, and our technology in particular, is that gate operations on superconducting processors are faster than other commercially available modalities today. The speed of gate operations in superconducting qubits are determined by the intentional design of circuit elements on-chip and their optimized parameters, rather than relying on atomic properties.
ITEM 1. BUSINESS Overview OUR MISSION IS TO BUILD THE WORLD’S MOST POWERFUL COMPUTERS TO HELP SOLVE HUMANITY’S MOST IMPORTANT AND PRESSING PROBLEMS. Today, many of the world’s most important computational challenges remain intractable, lying beyond the capabilities of traditional supercomputers and cloud infrastructure. We build and operate quantum computers.
Today, many of the world’s most important computational challenges remain intractable, lying beyond the capabilities of traditional supercomputers and cloud infrastructure. We build and operate quantum computers. We believe quantum computing represents one of the most transformative emerging capabilities in the world today.
We expect to add new development partnerships as the capabilities of our quantum computer systems grow and the market’s readiness and interest in quantum computing continues to mature. Rigetti Foundry Services Rigetti Foundry Services leverages the company’s US-based in-house fabrication facility (“Fab-1”) to deliver superconducting quantum chips to advance and accelerate quantum information science and technology research and development efforts.
We expect to add new development partnerships as the capabilities of our quantum computer systems grow and the market’s readiness and interest in quantum computing continues to mature.
Many of these types of problems are approached through the use of High Performance Computing (“HPC”), which relies primarily on large classical computers located either in the cloud or on-premises. Company management estimates the global market for HPC to be approximately $55 billion by 2028.
The closing of the private placement transaction is subject to regulatory clearance. Potential Market Opportunity Demand for computing power capable of solving computationally complex problems is increasing. Many of these types of problems are approached through the use of High Performance Computing (“HPC”), which relies primarily on large classical computers located either in the cloud or on-premises.
Our QPUs contain fabricated silicon-based chips featuring superconducting qubits. These high-performance chips provide fast gate times, low latency conditional logic, and fast program execution times.
These high-performance chips provide fast gate times, low latency conditional logic, and fast program execution times. Our QPUs are designed and fabricated at Fab-1, leveraging novel manufacturing methods to create state-of-the art superconducting qubits.
The product is designed to meet the needs of a diverse set of customers that all benefit from the high-performance nature of its core computational capabilities. Central to QCS are two very powerful sets of technologies developed by us, our quantum processing units (“QPUs”), described above, and our quantum operating system, as described below: Quantum Operating System Software .
Central to QCS are two very powerful sets of technologies developed by us, our quantum processing units (“QPUs”), described above, and our quantum operating system, as described below: Quantum Operating System Software QCS’s computing environment is powered by a distributed quantum operating system that natively supports both public and private cloud architectures.
QCS features a hybrid quantum-classical computing environment that incorporates Rigetti quantum computers operating in tandem with cloud infrastructure. It provides support for a broad range of programming capabilities, the ability to integrate over public or private clouds, and high-speed connectivity to auxiliary classical computing resources.
It provides support for a broad range of programming capabilities, the ability to integrate over public or private clouds, and high-speed connectivity to auxiliary classical computing resources. The product is designed to meet the needs of a diverse set of customers that all benefit from the high-performance nature of its core computational capabilities.
Our QPUs are designed and fabricated at Fab-1, leveraging novel manufacturing methods to create state-of-the art superconducting qubits. ​ Novera™ , our first commercially available QPU, includes a 9-qubit chip that features tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.
We will continue to pursue sales of Novera™ , our first commercially available QPU, which features a 9-qubit chip, tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, we may redeem your Warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Warrants prior to redemption for a number of shares of Common Stock determined based on the redemption date and the fair market value of our Common Stock.
Biggest changeWhen the price per share of our Common Stock equals or exceeds $10.00, we may redeem the outstanding warrants in whole and not in part, at a price of $0.10 per warrant as follows: ● upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption as described below; and ● if, and only if, the closing price of our Common Stock equals or exceeds $10.00 per share on the trading day prior to the date on which we send the notice of redemption to the warrant holders. 55 Table of Contents Beginning on the date the notice of redemption is given until the warrants are redeemed or exercised, holders may elect to exercise their warrants on a cashless basis and could potentially receive up to a maximum of 0.361 shares of Common Stock per warrant or a minimum of 0.034 shares of Common Stock per warrant.
If we cannot attract, train and retain qualified personnel in this competitive environment, we may experience delays in the development of our quantum computing technologies and be otherwise unable to develop and grow our business as projected, or even at all. Our future growth and success depends on our ability to sell effectively to government entities and large enterprises.
If we cannot attract, train and retain qualified personnel in this competitive environment, we may experience delays in the development of our quantum computing technologies and otherwise be unable to develop and grow our business as projected, or even at all. Our future growth and success depends on our ability to sell effectively to government entities and large enterprises.
In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time.
In addition, the lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time.
In addition, perceptions of the Company among customers, suppliers, lenders, investors, securities analysts and others could also be adversely affected. Our facilities or operations could be damaged or adversely affected as a result of prolonged power outages, natural disasters and other catastrophic events.
In addition, the perceptions of the Company among customers, suppliers, lenders, investors, securities analysts and others could also be adversely affected. Our facilities or operations could be damaged or adversely affected as a result of prolonged power outages, natural disasters and other catastrophic events.
The market price of our Common Stock could decline if holders of our shares sell them, including pursuant to the resale registration statements, or are perceived by the market as intending to sell them. As such, sales of a substantial number of shares of our Common Stock in the public market could occur at any time.
The market price of our Common Stock could decline if holders of our shares sell them, including pursuant to resale registration statements, or are perceived by the market as intending to sell them. As such, sales of a substantial number of shares of our Common Stock in the public market could occur at any time.
Among other things, the Certificate of Incorporation and Bylaws include provisions regarding: ● providing for a classified board of directors with staggered, three-year terms; ● the ability of the Board to issue up to 10,000,000 shares of preferred stock, including “blank check” preferred stock, with any rights, preferences and privileges as they may designate, including the right to approve an acquisition or other change of control; ● provide that the authorized number of directors may be changed only by resolution of the Board; ● provide that, subject to the rights of the holders of any series of preferred stock, any individual director or directors may be removed only with cause by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class; ● provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; ● require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent or electronic transmission; ● provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice; ● provide that special meetings of our stockholders may be called by the chairperson of the Board, the chief executive officer or by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors; and ● not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose.
Among other things, the Certificate of Incorporation and Bylaws include provisions regarding: ● providing for a classified board of directors with staggered, three-year terms; ● the ability of the Board to issue up to 10,000,000 shares of preferred stock, including “blank check” preferred stock, with any rights, preferences and privileges as they may designate, including the right to approve an acquisition or other change of control; ● provide that the authorized number of directors may be changed only by the resolution of the Board; ● provide that, subject to the rights of the holders of any series of preferred stock, any individual director or directors may be removed only with cause by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class; ● provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; ● require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent or electronic transmission; ● provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice; ● provide that special meetings of our stockholders may be called by the chairperson of the Board, the chief executive officer or by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors; and ● not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose.
See “ The warrants may never be in the money, and they may expire worthless and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment .” The Warrants may never be in the money, and they may expire worthless and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment.
See “ The warrants may never be in the money, and they may expire worthless and the terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment .” The terms of the Public Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment.
The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or correct any mistake, but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.
The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or correct any mistake but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of the Public Warrants.
None of the Private Warrants will be redeemable by us, subject to certain circumstances, so long as they are held by Supernova Partners II LLC (“Supernova Sponsor”) or its permitted transferees.
None of the Private Warrants will be redeemable by us, subject to certain circumstances, so long as they are held by the Supernova Partners II LLC (“Supernova Sponsor”) or its permitted transferees.
These risks include, among other things: ● unexpected costs and errors in the localization of our platform and solutions, including translation into foreign languages and adaptation for local culture, practices and regulatory requirements; ● lack of familiarity and burdens of complying with foreign laws, legal standards, privacy and cybersecurity standards, regulatory requirements, foreign export control rules, tariffs and other barriers, and the risk of penalties to our customers and individual members of management or employees if our practices are deemed to not be in compliance; ● practical difficulties of enforcing intellectual property rights in countries with varying laws and standards and reduced or varied protection for intellectual property rights in some countries; 50 Table of Contents ● an evolving legal framework and additional legal or regulatory requirements for data privacy and cybersecurity, which may necessitate the establishment of systems to maintain data in local markets, requiring us to invest in additional data centers and network infrastructure, and the implementation of additional employee data privacy documentation (including locally-compliant data privacy notice and policies), all of which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business; ● unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; ● difficulties in managing systems integrators and technology partners; ● differing technology standards; ● different pricing environments, longer sales cycles, longer accounts receivable payment cycles and difficulties in collecting accounts receivable; ● increased financial accounting and reporting burdens and complexities; ● difficulties in managing and staffing international operations including the proper classification of independent contractors and other contingent workers, differing employer/employee relationships and local employment laws; ● increased costs involved with recruiting and retaining an expanded employee population outside the United States through cash and equity-based incentive programs and unexpected legal costs and regulatory restrictions in issuing our shares to employees outside the United States; ● global political and regulatory changes that may lead to restrictions on immigration and travel for our employees; ● fluctuations in exchange rates that may decrease the value of foreign-based revenue; ● potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems, restrictions on the repatriation of earnings, and transfer pricing requirements; and ● permanent establishment risks and complexities in connection with international payroll, tax and social security requirements for international employees.
These risks include, among other things: ● unexpected costs and errors in the localization of our platform and solutions, including translation into foreign languages and adaptation for local culture, practices and regulatory requirements; ● lack of familiarity and burdens of complying with foreign laws, legal standards, privacy and cybersecurity standards, regulatory requirements, foreign export control rules, tariffs and other barriers, and the risk of penalties to our customers and individual members of management or employees if our practices are deemed to not be in compliance; 38 Table of Contents ● practical difficulties of enforcing intellectual property rights in countries with varying laws and standards and reduced or varied protection for intellectual property rights in some countries; ● an evolving legal framework and additional legal or regulatory requirements for data privacy and cybersecurity, which may necessitate the establishment of systems to maintain data in local markets, requiring us to invest in additional data centers and network infrastructure, and the implementation of additional employee data privacy documentation (including locally-compliant data privacy notice and policies), all of which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business; ● unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; ● difficulties in managing systems integrators and technology partners; ● differing technology standards; ● different pricing environments, longer sales cycles, longer accounts receivable payment cycles and difficulties in collecting accounts receivable; ● increased financial accounting and reporting burdens and complexities; ● difficulties in managing and staffing international operations including the proper classification of independent contractors and other contingent workers, differing employer/employee relationships and local employment laws; ● increased costs involved with recruiting and retaining an expanded employee population outside the United States through cash and equity-based incentive programs and unexpected legal costs and regulatory restrictions in issuing our shares to employees outside the United States; ● global political and regulatory changes that may lead to restrictions on immigration and travel for our employees; ● fluctuations in exchange rates that may decrease the value of foreign-based revenue; ● potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems, restrictions on the repatriation of earnings, and transfer pricing requirements; and ● permanent establishment risks and complexities in connection with international payroll, tax and social security requirements for international employees.
See “- If our cost and time estimates for fixed fee arrangements do not accurately anticipate the cost of servicing those arrangements, we could experience losses on these arrangements or our profitability could be reduced. ” In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues generated by such arrangement.
See “- If our cost and time estimates for fixed fee arrangements do not accurately anticipate the cost of servicing those arrangements, we could experience losses on these arrangements or our profitability could be reduced. ” In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues generated by such arrangements.
Any such of the foregoing events or activities, among others, could cause governments and governmental agencies to delay or refrain from entering into contracts with us and/or purchasing our computers in the future, reduce the size or timing of payments with respect to our services to, or purchases from, existing or new government customers, or otherwise have an adverse effect on our business, results of operations, financial condition, and growth prospects.
Any of the foregoing events or activities, among others, could cause governments and governmental agencies to delay or refrain from entering into contracts with us and/or purchasing our computers in the future, reduce the size or timing of payments with respect to our services to, or purchases from, existing or new government customers, or otherwise have an adverse effect on our business, results of operations, financial condition, and growth prospects.
We take steps designed to detect, mitigate, and remediate vulnerabilities, in our information systems (such as our hardware and/or software, including that of third parties upon which we rely), but we may not be able to detect and remediate all vulnerabilities on a timely basis because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature.
Although we take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely), but we may not be able to detect and remediate all vulnerabilities on a timely basis because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature.
Redemption of the outstanding Warrants could force you to: (i) exercise your Warrants and pay the exercise price therefore at a time when it may be disadvantageous for you to do so; (ii) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants; or (iii) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants.
Redemption of the outstanding Public Warrants could force you to: (i) exercise your Public Warrants and pay the exercise price therefore at a time when it may be disadvantageous for you to do so; (ii) sell your Public Warrants at the then-current market price when you might otherwise wish to hold your warrants; or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
If the equity and credit markets further deteriorate, including as a result of political unrest or war, it may make any necessary financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive, and we could be forced to delay, reduce or eliminate our research and development programs and other efforts.
If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive, and we could be forced to delay, reduce or eliminate our research and development programs and other efforts.
Effective succession planning is also important to our long-term success and may cause disruption to our business due to, among other things, diverting management’s attention away from the operations of the business or causing a deterioration to morale. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.
Effective succession planning is also important to our long-term success and may cause disruption to our business due to, among other things, diverting management’s attention away from the operations of the business or causing a deterioration in morale. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.
We have several contracts with various government entities, including contracts with NASA, the Defense Advanced Research Project Agency, and the Department of Energy, among others, and we may enter into additional contracts with U.S. government entities in the future, which subjects our business to statutes and regulations applicable to companies doing business with the government, including the Federal Acquisition Regulation.
We have several contracts with various government entities, including contracts with the Defense Advanced Research Project Agency and the Department of Energy, among others, and we may enter into additional contracts with U.S. government entities in the future, which subjects our business to statutes and regulations applicable to companies doing business with the government, including the Federal Acquisition Regulation.
If we fail to retain talented, highly qualified senior management, engineers and other key employees or attract them when needed, such failure could negatively impact our business. Our future success is highly dependent on our ability to attract and retain our executive officers, key employees and other qualified personnel.
If we fail to retain talented, highly qualified senior management, engineers and other key employees or attract them when needed, such a failure could negatively impact our business. Our future success is highly dependent on our ability to attract and retain our executive officers, key employees and other qualified personnel.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a cybersecurity incident or other interruption, we could experience adverse consequences.
As a result of disclosure of information in this Annual Report on Form 10-K and in filings required of a public company, our business and financial condition are more visible, which may result in threatened or actual litigation, including by competitors.
As a result of the disclosure of information in this Annual Report on Form 10-K and in filings required of a public company, our business and financial condition are more visible, which may result in threatened or actual litigation, including by competitors.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline. If analysts cease coverage of us, the market price and volume for our securities could be adversely affected.
If one or more of these analysts fails to publish reports on us regularly, our share price or trading volume could decline. If analysts cease coverage of us, the market price and volume for our securities could be adversely affected.
If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management. 68 Table of Contents The Certificate of Incorporation designates the Court of Chancery of the State of Delaware or the United States federal district courts as the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, stockholders, employees or agents.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management. 52 Table of Contents The Certificate of Incorporation designates the Court of Chancery of the State of Delaware or the United States federal district courts as the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, stockholders, employees or agents.
If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues.
If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt the manufacturing of our products and result in delays in shipments and revenues.
We have experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with our systems. We have also experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with the public cloud and internet infrastructure on which our systems rely.
We have experienced and may in the future experience, disruptions, outages, defects and other performance and quality problems with our systems. We have also experienced and may in the future experience, disruptions, outages, defects and other performance and quality problems with the public cloud and internet infrastructure on which our systems rely.
The effective operation of our supply chain, including the acquisition of critical components and materials, the development of our quantum computing technologies, the commercialization of our quantum computing technologies and the effective operation of our managerial and operating systems all depend upon our ability to attract, train and retain qualified personnel in the aforementioned specialties. 42 Table of Contents Additionally, changes in immigration and work permit laws and regulations or the administration or interpretation of such laws or regulations could impair our ability to attract and retain highly qualified employees.
The effective operation of our supply chain, including the acquisition of critical components and materials, the development and commercialization of our quantum computing technologies and the effective operation of our managerial and operating systems all depend upon our ability to attract, train and retain qualified personnel in the aforementioned specialties. 33 Table of Contents Additionally, changes in immigration and work permit laws and regulations or the administration or interpretation of such laws or regulations could impair our ability to attract and retain highly qualified employees.
Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, pandemics, political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could cause a decrease in business investments, including the progress on development of quantum technologies, and negatively affect the growth of our business.
Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, inflation, financial and credit market fluctuations, international trade relations and tariffs, pandemics, political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could cause a decrease in business investments, including the progress on development of quantum technologies, and negatively affect the growth of our business.
The value received upon exercise of the Warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the Warrants, including because the number of shares of Common Stock received is capped at 0.361 per share of Common Stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
The value received upon exercise of the Warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying shares price is higher and (2) may not compensate the holders for the value of the Warrants, including because the number of shares of Common Stock received is capped at 0.361 per share of Common Stock per warrant (subject to adjustment) irrespective of the remining life of the warrants.
Our quarterly operating results have and may fluctuate significantly because of several factors, including: ● labor availability and costs for hourly and management personnel; ● profitability of our products, especially in new markets and due to seasonal fluctuations; ● changes in interest rates; ● impairment of long-lived assets; ● macroeconomic conditions, both nationally and locally; ● negative publicity relating to products we serve; ● changes in consumer preferences and competitive conditions; and ● expansion to new markets.
Our quarterly operating results have and may fluctuate significantly because of several factors, including: ● labor availability and costs for hourly and management personnel; ● profitability of our products, especially in new markets and due to seasonal fluctuations; ● changes in interest rates; ● impairment of long-lived assets; ● macroeconomic conditions, both nationally and locally; ● negative publicity relating to our products; ● changes in consumer preferences and competitive conditions; and ● expansion to new markets.
If we are unable to enhance our quantum computing system to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, with better functionality, more conveniently, or more securely than our platform, our business, financial condition and results of operations could be adversely affected.
If we are unable to enhance our quantum computing systems to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, with better functionality, more conveniently, or more securely than our platform, our business, financial condition and results of operations could be adversely affected.
We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making such Warrants worthless.
We may redeem your unexpired Public Warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making such Public Warrants worthless.
Any material change in our contractual and other business relationships with AWS or other cloud provider, could result in reduced use of our systems, increased expenses, including service credit obligations, and harm our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
Any material change in our contractual and other business relationships with AWS or other cloud providers, could result in reduced use of our systems, increased expenses, including service credit obligations, and harm our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
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.
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.
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 .
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.
Accordingly, our business, financial condition, results of operations, and growth prospects may be adversely affected by certain events or activities, including, but not limited to: ● Changes in government fiscal or procurement policies, or decreases in government funding available for procurement of goods and services generally, or for our federal government contracts specifically; ● Changes in government programs or applicable requirements; ● Restrictions in the grant of personnel security clearances to our employees; ● Ability to maintain facility clearances required to perform on classified contracts for U.S. federal government and foreign government agencies; 36 Table of Contents ● Changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding; ● Changes in the government’s attitude towards the capabilities that we offer; ● Changes in the government’s attitude towards us as a company or our platforms; ● Appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government; ● The adoption of new laws or regulations or changes to existing laws or regulations; ● Budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies; ● Influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers; ● Changes in political or social attitudes with respect to security or data privacy issues; ● Potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the coronavirus pandemic; and ● Increased or unexpected costs or unanticipated delays caused by other factors outside of our control.
Accordingly, our business, financial condition, results of operations, and growth prospects may be adversely affected by certain events or activities, including, but not limited to: ● Changes in government fiscal or procurement policies, or decreases in government funding available for procurement of goods and services generally, or for our federal government contracts specifically; ● Government entities exercising termination for convenience rights on our existing government contracts with such government entities; ● Changes in government programs or applicable requirements; ● Restrictions in the grant of personnel security clearances to our employees; ● Ability to maintain facility clearances required to perform on classified contracts for U.S. federal government and foreign government agencies; ● Changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding; ● Changes in the government’s attitude towards the capabilities that we offer; ● Changes in the government’s attitude towards us as a company or our platforms; ● Appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government; ● The adoption of new laws or regulations or changes to existing laws or regulations; ● Budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies; ● Influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers; ● Changes in political or social attitudes with respect to security or data privacy issues; ● Potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the coronavirus pandemic; and ● Increased or unexpected costs or unanticipated delays caused by other factors outside of our control.
There are inherent uncertainties in management’s estimates, judgments and assumptions used in assessing recoverability of goodwill, intangible, and other long-lived assets.
There are inherent uncertainties in management’s estimates, judgments and assumptions used in assessing recoverability of intangible, and other long-lived assets.
Any such restatement of our financial results could, among other potential adverse effects: ● result in us incurring substantial costs; ● affect our ability to timely file our periodic reports until the restatement is completed; ● divert the attention of our management and employees from managing our business; ● result in material changes to our historical and future financial results; ● result in investors losing confidence in our operating results; 70 Table of Contents ● subject us to securities class action litigation; and ● cause our stock price to decline.
Any such restatement of our financial results could, among other potential adverse effects: ● result in us incurring substantial costs; ● affect our ability to timely file our periodic reports until the restatement is completed; ● divert the attention of our management and employees from managing our business; ● result in material changes to our historical and future financial results; ● result in investors losing confidence in our operating results; ● subject us to securities class action litigation; and ● cause our stock price to decline.
This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our securities. We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our securities. We cannot anticipate all of the ways in which the economic climate and financial market and geopolitical conditions could adversely impact our business.
Due to macroeconomic headwinds, we have experienced and may continue to experience increased costs, including with respect to labor and products.
Due to macroeconomic headwinds, including inflation, we have experienced and may continue to experience increased costs, including with respect to labor and products.
Delays in future generations of our quantum computers or technical failures at other quantum computing companies could limit acceptance of our solution. Negative publicity concerning our solution or the quantum computing industry as a whole could limit acceptance of our solution. We believe quantum computing will solve many large-scale problems.
Delays in future generations of our quantum computers or technical failures at other quantum computing companies could limit acceptance of our solutions. Negative publicity concerning our solutions or the quantum computing industry as a whole could limit acceptance of our solutions. We believe quantum computing will solve many large-scale problems.
If our cost and time estimates for fixed fee arrangements do not accurately anticipate the cost of servicing those arrangements, we could experience losses on these arrangements and our profitability could be reduced. Our development contracts are typically fixed fee arrangements invoiced on a milestone basis.
If our cost and time estimates for fixed fee arrangements do not accurately anticipate the cost of servicing those arrangements, we could experience losses on these arrangements and our profitability could be reduced. Our development contracts are often fixed fee arrangements invoiced on a milestone basis.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. 45 Table of Contents We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program. We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts.
See Note 19 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding our federal net operating loss carryforwards, federal research and development tax credit carryforwards and other tax attributes.
See Note 17 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding our federal net operating loss carryforwards, federal research and development tax credit carryforwards and other tax attributes.
As a result, included in our balance sheets as of December 31, 2023 and December 31, 2022 contained in this Annual Report on Form 10-K are derivative liabilities related to embedded features contained within our Warrants.
As a result, included in our balance sheets as of December 31, 2024 and December 31, 2023 contained in this Annual Report on Form 10-K are derivative liabilities related to embedded features contained within our Warrants.
Shortages or supply interruptions in any of these components will have an adverse impact on our ability to deliver revenues. If large-scale development of our quantum computers commences, our computers may contain defects in design and manufacture that may cause them to not perform as expected or that may require repair and design changes.
Shortages or supply interruptions in any of these components will have an adverse impact on our ability to deliver revenues. 24 Table of Contents If large-scale development of our quantum computers commences, our computers may contain defects in design and manufacture that may cause them to not perform as expected or that may require repair and design changes.
Our current competitors include: ● large, well-established tech companies that generally compete across our products, including Quantinuum, Google, Microsoft, Amazon, Intel and IBM; ● large research organizations funded by sovereign nations such as China, Russia, Canada, Australia and the United Kingdom, and those in the European Union as of the date of this Annual Report on Form 10-K and we believe additional countries in the future; ● less-established public and private companies with competing technology, including companies located outside the United States; and ● new or emerging entrants seeking to develop competing technologies.
Our current competitors include: ● large, well-established tech companies that generally compete across our products, including Google, Microsoft, Amazon and IBM; 27 Table of Contents ● large research organizations funded by sovereign nations such as China, Russia, Canada, Australia and the United Kingdom, and those in the European Union as of the date of this Annual Report on Form 10-K and we believe additional countries in the future; ● less-established public and private companies with competing technology, including companies located outside the United States; and ● new or emerging entrants seeking to develop competing technologies.
Furthermore, investors cannot waive compliance with the federal securities laws and rules and regulations thereunder. 69 Table of Contents Our warrants, including our Public Warrants, Private Warrants and other warrants we have issued, and our Sponsor Vesting Shares are accounted for as liabilities and the changes in value of our Warrants and Sponsor Vesting Shares could have a material effect on our financial results.
Furthermore, investors cannot waive compliance with the federal securities laws and rules and regulations thereunder. Our warrants, including our Public Warrants, Private Warrants and other warrants we have issued, and our Sponsor Vesting Shares are accounted for as liabilities and the changes in value of our Warrants and Sponsor Vesting Shares could have a material effect on our financial results.
To the extent such Warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to the holders of Common Stock and increase the number of shares eligible for resale in the public market.
To the extent the aforementioned warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to the holders of Common Stock and increase the number of shares eligible for resale in the public market.
See “ We are in our early stages and have a limited operating history, which makes it difficult to forecast our future results of operations .” If our computers fail to achieve quantum advantage, our business, financial condition and future prospects may be harmed.
See “ We are in our early stages and have a limited operating history, which makes it difficult to forecast our future results of operations .” 26 Table of Contents If our computers fail to achieve quantum advantage, our business, financial condition and future prospects may be harmed.
There is no certainty these research and development milestones will be achieved as quickly as hoped, or even at all. 28 Table of Contents We have a history of operating losses and expect to incur significant expenses and continuing losses for the foreseeable future.
There is no certainty these research and development milestones will be achieved as quickly as hoped, or even at all. We have a history of operating losses and expect to incur significant expenses and continuing losses for the foreseeable future.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors which are outside of our control.
As a result of the recurring fair value measurements, our financial statements and results of operations may fluctuate quarterly, based on factors which are outside of our control.
In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants, and through non-disclosure agreements with business partners and other third parties. However, we may not be able to prevent unauthorized use of our intellectual property.
In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants, and through non-disclosure agreements with business partners and other third parties. 44 Table of Contents However, we may not be able to prevent unauthorized use of our intellectual property.
U.S. law enforcement agencies have indicated to us that quantum computing technology is of particular interest to certain malicious cyber threat actors. In addition, our cybersecurity risk could be increased as a result of the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia.
U.S. law enforcement agencies have indicated to us that quantum computing technology is of particular interest to certain malicious cyber threat actors, including nation-state-supported actors. In addition, our cybersecurity risk could be increased as a result of the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia.
We may not be able to cost effectively manage production at a scale or quality consistent with customer demand in a timely or economical manner.
We may not be able to cost effectively manage production at a scale or quality consistent with customer demand in a timely or economic manner.
In January 2023 we received a letter from the Listing Qualifications Department of the Nasdaq Stock Market, LLC, indicating that, based on the closing bid price for the previous 30 days, the listing of our Common Stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) to maintain a minimum bid price of $1.00 per share.
In September 2024, we received a letter from the Listing Qualifications Department of the Nasdaq Stock Market, LLC, indicating that, based on the closing bid price for the previous 30 days, the listing of our Common Stock was not in compliance with Nasdaq Listing Rule 5550(a)(2) to maintain a minimum bid price of $1.00 per share.
Further, there could be public announcements of the intellectual property litigation, and if securities analysts, investors or others perceive the potential impact to be negative or risks to be substantial, it could have an adverse effect on the price of our Common Stock. ● Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, regardless of the merit of the claim or our defenses, may require us to do one or more of the following: ● cease selling or using solutions or services that incorporate the intellectual property rights that allegedly infringe, misappropriate or violate the intellectual property of a third party; ● make substantial payments for legal fees, settlement payments or other costs or damages; ● obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; ● redesign the allegedly infringing solutions to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible; or ● indemnify third parties using our products or services. 59 Table of Contents The occurrence of infringement claims may grow as the market for our products, services and technologies grows.
Further, there could be public announcements of the intellectual property litigation, and if securities analysts, investors or others perceive the potential impact to be negative or risks to be substantial, it could have an adverse effect on the price of our Common Stock. ● Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, regardless of the merit of the claim or our defenses, may require us to do one or more of the following: ● cease selling or using solutions or services that incorporate the intellectual property rights that allegedly infringe, misappropriate or violate the intellectual property of a third party; ● make substantial payments for legal fees, settlement payments or other costs or damages; ● obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; ● redesign the allegedly infringing solutions to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible; or ● indemnify third parties using our products or services.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell securities in the future at a time and at a price that it deems appropriate. Resales of our securities may cause the market price of our securities to drop significantly, even if our business is doing well.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell securities in the future at a time and price which we deem appropriate. Resales of our securities may cause the market price of our securities to drop significantly, even if our business is doing well.
While we regained compliance in July 2023, there can be no assurance that we will be able to maintain compliance with the Nasdaq Capital Market continued listing requirements in the future or regain compliance with respect to any future deficiencies. This could impair the liquidity and market price of our common stock.
While we regained compliance in November 2024, there can be no assurance that we will be able to maintain compliance with the Nasdaq Capital Market continued listing requirements in the future or regain compliance with respect to any future deficiencies. This could impair the liquidity and market price of our common stock.
Evolving and scaling our business and operations places increased demands on our management as well as our financial and operational resources to: ● attract new customers and grow our customer base; 29 Table of Contents ● maintain and increase the rates at which existing customers use our platform, sell additional products and services to our existing customers, and reduce customer churn; ● invest in our platform and product offerings; ● effectively manage organizational change; ● accelerate and/or refocus research and development activities; ● expand manufacturing and supply chain capacity; ● increase sales and marketing efforts; ● broaden customer-support and services capabilities; ● maintain or increase operational efficiencies; ● implement appropriate operational and financial systems; and ● establish and maintain effective financial disclosure controls and procedures and remediate material weaknesses thereof.
Evolving and scaling our business and operations places increased demands on our management as well as our financial and operational resources to: ● attract new customers and grow our customer base; ● maintain and increase the rates at which existing customers use our platform, sell additional products and services to our existing customers, and reduce customer churn; ● invest in our platform and product offerings; ● effectively manage organizational change; ● accelerate and/or refocus research and development activities; ● expand manufacturing and supply chain capacity; ● increase sales and marketing efforts; ● broaden customer support and services capabilities; ● maintain or increase operational efficiencies; ● implement appropriate operational and financial systems; and ● establish and maintain effective financial disclosure controls and procedures.
There can be no assurance that we will be able to detect and fix any defects in our quantum computers in a timely manner that does not disrupt our services to our customers.
There can be no assurance that we will be able to detect and fix any defects in our quantum computers in a timely manner that does not disrupt our sales of products and services to our customers.
Our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including: ● our ability to meet our technological milestones, including any delays; ● changes in the industries in which we and our customers operate; ● variations in our operating performance and the performance of our competitors in general; ● material and adverse impact of the ongoing military conflict between Russia and Ukraine and sanctions related thereto and the state of war between Israel and Hamas and the potential for larger regional conflict and the broader global economy; ● actual or anticipated fluctuations in our quarterly or annual operating results; ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving the Company; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; 61 Table of Contents ● the volume of shares of our Common Stock available for public sale, including the significant percentage of shares of our Common Stock that may be offered for resale; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance, including with respect to our technology roadmap; ● the development and sustainability of an active trading market for our stock; ● actions by institutional or activist stockholders; ● changes in accounting standards, policies, guidelines, interpretations or principles; and ● other events or factors, including recessions, increases in inflation and interest rates, disruptions to banking systems, foreign currency fluctuations, international tariffs, social, political and economic risks, natural disasters, acts of war (including the conflict involving Russia and Ukraine), terrorism or responses to such events.
Our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including: ● our ability to meet our technological milestones, including any delays; ● changes in the industries in which we and our customers operate; ● variations in our operating performance and the performance of our competitors in general; ● material and adverse impact of military conflicts and wars around the world; ● actual or anticipated fluctuations in our quarterly or annual operating results; ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; 47 Table of Contents ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving the Company; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of shares of our Common Stock available for public sale, including the significant percentage of shares of our Common Stock that may be offered for resale; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance, including with respect to our technology roadmap; ● the development and sustainability of an active trading market for our stock; ● actions by institutional or activist stockholders; ● changes in accounting standards, policies, guidelines, interpretations or principles; and ● other events or factors, including recessions, increases in inflation and interest rates, disruptions to banking systems, foreign currency fluctuations, international tariffs, social, political and economic risks, natural disasters, acts of war (including the conflict involving Russia and Ukraine), terrorism or responses to such events.
During times of war and other major conflicts, we, the third parties upon which we rely, may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
During times of war and other major conflicts, we, the third parties upon which we rely, may be vulnerable to a heightened risk of cybersecurity incidents, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, our third-party information systems, supply chain, and ability to produce, sell and distribute our goods and services.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or losses could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of our securities.
Due to the recurring fair value measurements, we expect that we will recognize non-cash gains or losses on our Warrants and Sponsor Vesting Shares each reporting period and that the amount of such gains or losses could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of our securities.
Any of the following factors (and others) could have an adverse impact on the availability of these components: ● our inability to enter into agreements with suppliers on commercially reasonable terms, or at all; ● difficulties of suppliers ramping up their supply of materials to meet our requirements; ● a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers; ● any reductions or interruption in supply, including disruptions on our global supply chain as a result of the ongoing military conflict between Russia and Ukraine and sanctions related thereto and the state of war between Israel and Hamas and the potential larger regional conflict) (including as a result of disruptions in global shipping, the transport of products, energy supply, cybersecurity incidents and banking systems as well as our ability to control input costs) or otherwise; 39 Table of Contents ● financial problems of either manufacturers or component suppliers; ● significantly increased freight charges, raw material costs, rising electrical power costs and other expenses associated with our business; ● other factors beyond our control or which we do not presently anticipate, could also affect our suppliers’ ability to deliver components to us on a timely basis; ● a failure to develop our supply chain management capabilities and recruit and retain qualified professionals; ● a failure to adequately authorize procurement of inventory by our contract manufacturers; or ● a failure to appropriately cancel, reschedule or adjust our requirements based on our business needs.
Any of the following factors (and others) could have an adverse impact on the availability of these components: ● our inability to enter into agreements with suppliers on commercially reasonable terms, or at all; ● difficulties of suppliers ramping up their supply of materials to meet our requirements; ● a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers; 31 Table of Contents ● any reductions or interruption in supply, including disruptions to our global supply chain as a result of the ongoing military conflicts and wars around the world and sanctions related thereto (including as a result of disruptions in global shipping, the transport of products, energy supply, cybersecurity incidents and banking systems as well as our ability to control input costs) or otherwise; ● financial problems of either manufacturers or component suppliers; ● significantly increased freight charges, raw material costs, rising electrical power costs and other expenses associated with our business; ● other factors beyond our control or which we do not presently anticipate, could also affect our suppliers’ ability to deliver components to us on a timely basis; ● a failure to develop our supply chain management capabilities and recruit and retain qualified professionals; ● a failure to adequately authorize procurement of inventory by our contract manufacturers; or ● a failure to appropriately cancel, reschedule or adjust our requirements based on our business needs.
If we fail to detect or remediate a security breach in a timely manner, or a breach otherwise affects our customers, or if we suffer a cyber-attack that impacts our ability to operate our platform, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; material damage to our reputation; monetary fund diversions; diversions of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we fail to detect or remediate a cybersecurity incident in a timely manner, or it otherwise affects our customers or impacts our ability to operate our platform, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; material damage to our reputation; monetary fund diversions; diversions of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Our platform is built to be accessed through third-party public cloud providers such as AWS. These providers may also experience breaches and attacks to their products which may impact our systems. Data security breaches may also result from non-technical means, such as actions by an employee with access to our systems.
Our platform is built to be accessed through third-party public cloud providers such as AWS. These providers may also experience cybersecurity incidents and attacks to their products which may impact our systems. Cybersecurity incidents may also result from non-technical means, such as actions by an employee with access to our systems.
We believe that we will continue to incur operating and net losses each quarter until at least the time we begin generating significant revenue from our narrow or broad quantum advantage quantum computers, which may never occur. Even with significant production, our services may never become profitable.
We believe that we will continue to incur operating and net losses each quarter until at least the time we begin generating significant revenue from our narrow quantum advantage or broad quantum advantage quantum computers, which may never occur. Even if our computers achieve narrow quantum advantage or broad quantum advantage, we may never become profitable.
If any of the aforementioned factors were to materialize, it could cause us to halt production of our quantum computing solutions and/or entail higher manufacturing costs, any of which could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships.
If any of the aforementioned factors were to materialize, it could negatively impact our research and development efforts or cause us to halt production of our quantum computing solutions and/or entail higher manufacturing costs, any of which could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships.
Further, in future periods, our growth could slow or decline for a number of reasons, including but not limited to slowing demand for our QCS, increased competition, changes to technology, inability to scale up or improve performance of our technology, a decrease in the growth of the market, or our failure, for any reason, to continue to take advantage of growth opportunities.
Further, in future periods, our growth could slow or decline for a number of reasons, including but not limited to slowing demand for sales of our on-premise quantum computers, QCaaS or QCS, increased competition, changes to technology, inability to scale up or improve performance of our technology, a decrease in the growth of the market, or our failure, for any reason, to continue to take advantage of growth opportunities.
However, while we remain an emerging growth company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. 62 Table of Contents To achieve compliance with Sarbanes-Oxley Act Section 404, we have engaged in a process to enhance our documentation and evaluate our internal control over financial reporting, which was both costly and challenging.
However, while we remain an emerging growth company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Sarbanes-Oxley Act Section 404, we engaged in a process to enhance our internal control over financial reporting, which was both costly and challenging.
Any volatility and disruptions may have adverse consequences on us or the third parties on whom we rely. If general economic conditions were to deteriorate or remain uncertain for an extended period, our liquidity and ability to repay our outstanding debt may be harmed and the trading price of our Common Stock could decline.
Any volatility or disruptions in market and economic conditions may have adverse consequences on us or the third parties on whom we rely. If general economic conditions were to deteriorate or remain uncertain for an extended period, our liquidity may be harmed and the trading price of our Common Stock could decline.
Any person or entity purchasing or otherwise acquiring any interest in any of the Public Warrants or Private Warrants will be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. 72 Table of Contents If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of the Public Warrants or Private Warrants, such holder will be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of the Public Warrants or Private Warrants, such holder will be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
However, such problems may never be solvable by quantum computing technology. If our clients and partners do not perceive the benefits of our solution, or if our solution does not drive member engagement, then demand for our products may not develop at all, or it may develop slower than we expect.
However, such problems may never be solvable by quantum computing technology. 32 Table of Contents If our clients and partners do not perceive the benefits of our solutions, or if our solutions do not drive member engagement, then demand for our products may not develop at all, or it may develop slower than we expect.
Any failure to maintain our relationship with any of our top ten largest suppliers, or a failure to replace any such supplier that is lost, could have a material adverse effect on our business, financial position, results of operations and cash flows. 38 Table of Contents We may be required to replace a supplier if their products do not meet our quality or safety standards.
Any failure to maintain our relationship with any of our key suppliers, or a failure to replace any such supplier that is lost, could have a material adverse effect on our business, financial position, results of operations and cash flows. We may be required to replace a supplier if their products do not meet our quality or safety standards.
Such changes in the future could impact valuation assumptions relating to the recoverability of assets and may result in impairment charges to our long-lived assets, other assets or investments, which would negatively impact our operating results and harm our business.
Such changes in the future could impact valuation assumptions relating to the recoverability of assets and may result in impairment charges to our long-lived assets, other assets or investments, which would have a negative impact on our operating results and harm our business.
Commercial traction of quantum computing technology may never occur. As noted above, there are significant technological challenges associated with developing, producing, marketing and selling services in the advanced technology industry, including our services, and we may not be able to resolve all of the difficulties that may arise in a timely or cost-effective manner, or at all.
As noted above, there are significant technological challenges associated with developing, producing, marketing and selling products and services in the advanced technology industry, including our products and services, and we may not be able to resolve all of the difficulties that may arise in a timely or cost-effective manner, or at all.
Our successful execution of our technology roadmap is based on the development of multiple generations of quantum computing systems, including hardware that demonstrates narrow quantum advantage and broad quantum advantage, and the potential release of a 336 qubit system, and the achievement of our targeted fidelities, each of which is an important anticipated milestone for our technology roadmap and commercialization.
Our successful execution of our technology roadmap is based on the development of multiple generations of quantum computing systems and the achievement of our targeted qubit counts and fidelities, including hardware that demonstrates narrow quantum advantage and broad quantum advantage, each of which is an important anticipated milestone for our technology roadmap and commercialization.
These requirements include, for example: ● specialized disclosure and accounting requirements unique to government contracts; ● financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; ● public disclosures of certain contract and company information; and ● mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.
These requirements include, for example: ● specialized disclosure and accounting requirements unique to government contracts; ● cybersecurity safeguards and assessments beyond what are typically required by commercial equivalents; ● financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; ● public disclosures of certain contract and company information; and ● mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.
Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable due to it. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to manufacture our products.
Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to execute our research and development plans or manufacture our products .
Cyber-attacks, malicious internet-based activity, online and offline fraud, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, and social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks) and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties upon which we rely.
Cybersecurity incidents such as malicious internet-based activity, online and offline fraud, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, and social engineering (including through deep fakes or other attacks using artificial intelligence which may be increasingly more difficult to identify as fake, and phishing attacks) as well as natural disasters and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties upon which we rely.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The board of directors’ audit committee, and specifically the subcommittee for cybersecurity, is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Biggest changeThe board of directors’ audit committee, and specifically the subcommittee for cybersecurity, is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by our legal team along with third-party service providers in coordination with the CTO.
This team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment and the Company’s risk profile using various methods including, for example: manual and automated tools; subscribing to and analyzing reports and services that identify cybersecurity threats; conducting scans of our threat environment; evaluating threats reported to us; conducting vulnerability assessments to identify vulnerabilities; and external threat intelligence feeds.
This team identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment and the Company’s risk profile using various methods including, for example: manual and automated tools; subscribing to and analyzing reports and services that identify cybersecurity threats; conducting scans of our threat environment; evaluating threats reported to us; conducting vulnerability assessments to identify vulnerabilities; and analyzing external threat intelligence feeds.
Risk Factors in this Annual Report on Form 10-K, including 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 .
Risk Factors in this Annual Report on Form 10-K, including 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; loss of intellectual property or other confidential business information; and other adverse consequences, which may adversely affect our business .
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program and identified in the Company’s risk register; (2) our information security team works with management, including our Chief Technology Officer (“CTO”), to prioritize our risk management processes and mitigate cybersecurity threats that could more likely lead to a material impact to our business; (3) our senior management/committee evaluates material risks from cybersecurity threats against our overall business objectives and reports to the cybersecurity subcommittee of the audit committee of the board of directors, with the cybersecurity subcommittee reporting to the audit committee of the board of directors which evaluates and oversees our cybersecurity risk as part of our overall enterprise risk.
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program and identified in the Company’s risk register; (2) our information security function works with management, including our Chief Technology Officer (“CTO”), to prioritize our risk management processes and mitigate cybersecurity threats that could more likely lead to a material impact to our business; (3) our senior management/committee evaluates material risks from cybersecurity threats against our overall business objectives and on a quarterly basis reports to the cybersecurity subcommittee of the audit committee of the board of directors, with the cybersecurity subcommittee reporting to the audit committee of the board of directors, which oversees our cybersecurity risk as part of our overall enterprise risk.
Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents and vulnerabilities to members of management depending on the circumstances, including the CTO, CFO, CEO, and others.
Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents and vulnerabilities to members of management depending on the circumstances in accordance with the incident response policy, including the CTO, CFO, CEO, and others.
Our information security function is led by our Senior Director for Information Technology (IT) and supported by members of our legal team and a third party service provider, which helps identify, assess and manage the Company’s cybersecurity threats and risks, including through the use of the Company’s risk register.
Our information security function is supported by members of our legal team and a third party service provider, which helps identify, assess and manage the Company’s cybersecurity threats and risks, including through the use of the Company’s risk register.
Depending on the environment, product, or system, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: an incident response policy, vulnerability management processes, implementing certain security certificates for certain functions of our business; encrypting certain data, using network security controls; segregating data; maintaining access and physical security controls; managing, tracking, and disposing of assets; monitoring our systems; and maintaining cybersecurity insurance. 73 Table of Contents Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
Depending on the environment, product, or system, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: performing risk analyses, establishing an incident response policy, having vulnerability management processes, and implementing certain security certificates for certain functions of our business; encrypting certain data, using network security controls; segregating data; maintaining access and physical security controls; managing, tracking, and disposing of assets; and monitoring our systems.
Our information security function, together with our CTO, works with the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s incident response and vulnerability management processes include reporting to the cybersecurity subcommittee of the board of directors’ audit committee for certain cybersecurity incidents.
Our information security function, together with our CTO, works with the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified.
The Senior Director for IT is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. Our CTO is responsible for approving budgets, helping prepare for potential cybersecurity incidents, approving technical cybersecurity processes, and reviewing security assessments and other security-related reports.
The CTO is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel.
The cybersecurity subcommittee receives periodic reports from the Senior Director for IT or the CTO concerning the Company’s risk profile, including significant cybersecurity threats and risk and the processes the Company has implemented to address them.
The cybersecurity subcommittee receives periodic reports from the CTO, which reflect input from the third-party service provider, concerning the Company’s risk profile, including significant cybersecurity threats and risk and the processes the Company has implemented to address them. The cybersecurity subcommittee also has access to various reports, summaries and presentations related to cybersecurity threats, risk and mitigation.
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Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our Senior Director for IT, who has 25 years of leadership experience in information security, and various IT and security certifications, including certified information systems security professional (CISSP).
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In addition, we may refer to and perform assessments against the Center for Internet Security’s Critical Security Controls to help inform our cybersecurity program, as well as perform assessments such as penetration tests. Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
Removed
The cybersecurity subcommittee of the audit committee also receives/has access to various reports, summaries and presentations related to cybersecurity threats, risk and mitigation. ​ 74 Table of Contents
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This can extend to contingent workers as well, who are required to complete background investigations and agree to adhere to policies, including for privacy and cybersecurity. Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
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Our CTO is responsible for approving budgets, helping prepare for potential cybersecurity incidents, approving technical cybersecurity processes, and reviewing security assessments and other security-related reports. 57 Table of Contents Our CTO has over 20 years of experience in engineering and information technology management at various organizations.
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Our CTO collaborates regularly with our third-party service provider who provides a fractional Chief Information Security Officer, who has extensive experience in cybersecurity and a certification as a CISSP.
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In addition, the Company’s incident response and vulnerability management processes include reporting to the cybersecurity subcommittee of the board of directors’ audit committee for certain cybersecurity incidents in accordance with the incident response plan.
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Cybersecurity Threats As of December 31, 2024, we have not experienced any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents or threats, that have materially affected the business strategy, results of operations or financial condition of the Company or are reasonably likely to have such a material effect.
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However, we have in the past and also anticipate in the future we will be subject to cybersecurity incidents. We have in place insurance coverage designed to provide coverage in connection with cybersecurity incidents, provided, however, that such insurance coverage may be insufficient to cover all insured losses or all types of claims that may arise.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal office is located in Berkeley, California, where we lease approximately 15,625 square feet pursuant to a lease that expires October 31, 2025. Our Fab-1 facility is located in Fremont, California, where the company leases approximately 53,800 square feet pursuant to a lease that expires September 30, 2029.
Biggest changeITEM 2. PROPERTIES Our principal office is located in Berkeley, California, where we lease approximately 15,625 square feet pursuant to a lease that expires October 31, 2028. Our Fab-1 facility is located in Fremont, California, where the company leases approximately 53,800 square feet pursuant to a lease that expires September 30, 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAFETY DISCLOSURES Not Applicable. ​ 75 Table of Contents PART II
Biggest changeMINE SAFETY DISCLOSURES Not Applicable. ​ 58 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 75 ​ ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 76 Item 6. [Reserved] 76 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 77 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 92 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 58 ​ ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 59 Item 6. [Reserved] 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStockholders As of March 1, 2024, there were approximately 168 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Biggest changeThe actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividend Policy We have never declared or paid any cash dividends on our capital stock.
Dividend Policy We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future.
We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business. We do not intend to pay cash dividends on our common stock for the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock On March 2, 2022, our common stock and public warrants began trading on The Nasdaq Capital Market under the symbols “RGTI” and “RGTIW,” respectively.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock and public warrants trade on The Nasdaq Capital Market under the symbols “RGTI” and “RGTIW,” respectively. Stockholders As of March 5, 2025, there were approximately 106 holders of record of our common stock.
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Equity Compensation Plan Information Information required by Item 5 of Form 10-K regarding our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.
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Recent Sales of Unregistered Securities Other than as previously disclosed in our Current Reports on Form 8-K or Quarterly Reports on Form 10-Q filed with the SEC, we did not issue any unregistered equity securities during the 12 months ended December 31, 2024. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe have recorded a full valuation allowance against our deferred tax assets. 81 Table of Contents Results of Operations Comparison of the years ended December 31, 2023 and 2022 The following tables set forth our results of operations for the years indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 vs. 2022 ​ ​ ​ 2023 ​ 2022 ​ $ Change ​ % Change ​ Revenue $ 12,008 $ 13,102 $ (1,094) (8) % Cost of revenue ​ 2,800 ​ 2,873 ​ (73) (3) % Total gross profit ​ 9,208 ​ 10,229 ​ (1,021) (10) % Operating expenses: ​ ​ ​ ​ Research and development ​ 52,768 ​ 59,952 ​ (7,184) (12) % Selling, general and administrative ​ 27,744 ​ 53,980 ​ (26,236) (49) % Goodwill impairment ​ ​ — ​ ​ 5,377 ​ ​ (5,377) (100) % Restructuring ​ ​ 991 ​ ​ — ​ ​ 991 ​ NM ​ Total operating expenses ​ 81,503 ​ 119,309 ​ (37,806) (32) % Loss from operations ​ (72,295) ​ (109,080) ​ 36,785 (34) % Other income (expense), net ​ ​ ​ ​ Interest expense ​ ​ (5,779) ​ ​ (5,286) ​ ​ (493) 9 % Interest income ​ ​ 5,076 ​ 2,433 ​ 2,643 109 % Change in fair value of derivative warrant liabilities ​ ​ (1,160) ​ 22,132 ​ (23,292) (105) % Change in fair value of earn-out liabilities ​ ​ (949) ​ 19,207 ​ (20,156) (105) % Transaction costs ​ — ​ (927) ​ 927 (100) % Total other (expense) income, net ​ (2,812) ​ 37,559 ​ (40,371) (107) % Net loss before provision for income taxes ​ (75,107) ​ (71,521) ​ (3,586) 5 % Provision for income taxes ​ — ​ — ​ — ​ Net loss ​ $ (75,107) ​ $ (71,521) ​ $ (3,586) ​ *NM - Not Meaningful Revenue Revenue decreased by $1.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Biggest changeWe have recorded a full valuation allowance against our deferred tax assets. 62 Table of Contents Results of Operations Comparison of the years ended December 31, 2024 and 2023 The following tables set forth our results of operations for the years indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 vs. 2023 ​ ​ ​ ​ 2024 ​ 2023 ​ $ Change ​ % Change ​ ​ Revenue $ 10,790 $ 12,008 $ (1,218) (10) % ​ Cost of revenue ​ 5,093 ​ 2,800 ​ 2,293 82 % ​ Total gross profit ​ 5,697 ​ 9,208 ​ (3,511) (38) % ​ Operating expenses: ​ ​ ​ ​ ​ Research and development ​ 49,750 ​ 52,768 ​ (3,018) (6) % ​ Selling, general and administrative ​ 24,457 ​ 27,744 ​ (3,287) (12) % ​ Restructuring ​ ​ — ​ ​ 991 ​ ​ (991) ​ NM ​ ​ Total operating expenses ​ 74,207 ​ 81,503 ​ (7,296) (9) % ​ Loss from operations ​ (68,510) ​ (72,295) ​ 3,785 (5) % ​ Other income (expense), net ​ ​ ​ ​ ​ Interest expense ​ ​ (3,255) ​ ​ (5,779) ​ ​ 2,524 (44) % ​ Interest income ​ ​ 5,113 ​ 5,076 ​ 37 1 % ​ Change in fair value of derivative warrant liabilities ​ ​ (90,168) ​ (1,160) ​ (89,008) NM ​ ​ Change in fair value of earn-out liabilities ​ ​ (43,742) ​ (949) ​ (42,793) NM ​ ​ Loss on extinguishment of debt ​ ​ (426) ​ ​ — ​ ​ (426) ​ NM ​ ​ Total other expense, net ​ (132,478) ​ (2,812) ​ (129,666) 4,611 % ​ Net loss before provision for income taxes ​ (200,988) ​ (75,107) ​ (125,881) 168 % ​ Provision for income taxes ​ — ​ — ​ — ​ ​ Net loss ​ $ (200,988) ​ $ (75,107) ​ $ (125,881) ​ ​ *NM - Not Meaningful Revenue Revenue decreased by $1.2 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023.
The amount of variable consideration included in the transaction price is constrained and is included only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Our contracts with customers may include renewal or other options at fixed prices.
The amount of variable consideration included in the transaction price is constrained and is included only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Our contracts with customers may include renewal, upgrade rights or other options at fixed prices.
Provision for Income Taxes We did not record income tax expense during the years ended December 31, 2023 or December 31, 2022 due to the Company’s loss position and full valuation allowance. Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since inception.
Provision for Income Taxes We did not record income tax expense during the years ended December 31, 2024 or December 31, 2023 due to the Company’s loss position and full valuation allowance. Liquidity and Capital Resources We have incurred net losses and negative cash flows from operations since inception.
While our significant accounting policies are described in the Notes to our consolidated financial statements for the year ended December 31, 2023, included elsewhere in this Annual Report on Form 10-K, we believe the following critical accounting policies and estimates are most important to understanding and evaluating our reported financial results.
While our significant accounting policies are described in the Notes to our consolidated financial statements for the year ended December 31, 2024, included elsewhere in this Annual Report on Form 10-K, we believe the following critical accounting estimates are most important to understanding and evaluating our reported financial results.
In accordance, with ASC No. 250, Accounting Changes and Error Corrections, any changes in estimates are reflected in our consolidated statements of operations in the period in which the circumstances that give rise to the revision become known to management.
In accordance with ASC No. 250, Accounting 68 Table of Contents Changes and Error Corrections, any changes in estimates are reflected in our consolidated statements of operations in the period in which the circumstances that give rise to the revision become known to management.
Cost of revenue also includes an allocation of facility costs, depreciation and amortization directly related to the development contracts and QCaaS offerings and other services. 80 Table of Contents Operating Expenses Our operating expenses primarily consist of research and development, and selling, general and administrative expenses.
Cost of revenue also includes an allocation of facility costs, depreciation and amortization directly related to the development contracts and QCaaS offerings and other services. Operating Expenses Our operating expenses primarily consist of research and development, and selling, general and administrative expenses.
In addition, we received net proceeds of $20.5 million in 2023 and $12.8 million in 2024 from the sale of 23,648,889 shares of our common stock (inclusive of 171,008 shares issued to B. Riley in 2022 as consideration for the Purchase Agreement) pursuant to our prior Purchase Agreement with B. Riley.
We received net proceeds of $12.8 million in 2024 and $20.5 million in 2023 from the sale of the maximum 23,648,889 shares of our common stock (inclusive of 171,008 shares issued to B. Riley in 2022 as consideration for the Purchase Agreement) pursuant to the Purchase Agreement.
The increase in loss for the year ended December 31, 2023 was primarily due to the change in our stock price and related share price volatility. 84 Table of Contents Change in Fair Value of Earn-Out Liabilities A discussion of the change in the fair value of the earn-out liabilities is included in Note 12 to our consolidated financial statements for the year ended December 31, 2023, included elsewhere in this Annual Report on Form 10-K.
The increase in loss for the year ended December 31, 2024 was primarily due to the change in our stock price and related share price volatility. 64 Table of Contents Change in Fair Value of Earn-Out Liabilities A discussion of the change in the fair value of the earn-out liabilities is included in Note 10 to our consolidated financial statements for the year ended December 31, 2024, included elsewhere in this Annual Report on Form 10-K.
Cash Flows Provided by (Used in) Investing Activities Cash provided by investing activities during the year ended December 31 2023 totaled $0.8 million, resulting from $119.1 million of maturities of available-for -sale securities, partially offset by $9.1 million of purchases of property and equipment and $109.3 million of purchases of available-for-sale securities.
Cash provided by investing activities during the year ended December 31 2023 totaled $0.8 million, resulting from $119.1 million of maturities of available-for-sale securities, offset in part by $9.1 million of purchases of property and equipment and $109.3 million of purchases of available-for-sale securities.
We have been generating revenue since 2018 through partnerships with government agencies and commercial organizations; however, we have not yet generated profits. We have incurred significant operating losses since inception. Our net losses were $75.1 million and $71.5 million for the years ended December 31, 2023 and December 31, 2022, respectively.
We have been generating revenue since 2018 through partnerships with government agencies and commercial organizations; however, we have not yet generated profits. We have incurred significant operating losses since inception. Our net losses were $201.0 million and $75.1 million for the years ended December 31, 2024 and December 31, 2023, respectively.
Research and development costs are expensed as incurred. ​ Selling, General and Administrative ​ Selling, general and administrative expenses include compensation, employee benefits, stock-based compensation, insurance, facility costs, professional service fees, and other general overhead costs other than those associated with sales of QPUs and providing development contracts, QCaaS offerings and other services.
Selling, General and Administrative Selling, general and administrative expenses include compensation, employee benefits, stock-based compensation, insurance, facility costs, professional service fees, and other general overhead costs other than those associated with sales of QPUs and providing development contracts, QCaaS offerings and other services.
The fair value of the Private Warrants 88 Table of Contents was measured using the Black-Scholes option-pricing model at each measurement date.
The fair value of the Private Warrants was measured using the Black-Scholes option-pricing model at each measurement date.
Additionally, we are working to further develop a revenue stream and forging important customer relationships by entering into technology development contracts with various partners. We are a vertically integrated company. We own and operate Fab-1, a dedicated and integrated laboratory and manufacturing facility, through which we own the means of producing our breakthrough multi-chip quantum processor technology.
Additionally, we are working to further develop a revenue stream and forging important customer relationships by entering into technology development contracts with various partners. We are a vertically integrated company. We operate Fab-1, a wafer fabrication facility dedicated to prototyping and producing our quantum processors. Through Fab-1, we own the means of production of our breakthrough multi-chip quantum processor technology.
Our development contracts are typically fixed price milestone or cost share-based contracts and the timing and amounts of revenue recognized in any given period will vary significantly based on the delivery of the associated milestones and/or the work performed. The timing and delivery of QPU sales will also vary and impact revenue in any given quarterly or annual period.
Our development contracts are typically fixed price milestone or cost share-based contracts and the timing and amounts of revenue recognized in any given period will vary significantly based on the delivery of the associated milestones and/or the work performed.
Subsequent to the separate listing and trading of the Public Warrants, the fair value of the Public Warrants has been measured based on the observable listed prices for such warrants and the fair value of the Private Warrants are measured using a Monte Carlo Pricing Model.
Subsequent to the separate listing and trading of the Public Warrants, the fair value of the Public Warrants has been measured based on the observable listed prices for such warrants and the fair value of the Private Warrants are measured using the Black-Scholes option-pricing model.
The change in fair value of warrant liabilities for the year ended December 31, 2023, was a loss of $1.2 million, compared to a gain of $22.1 million for the year ended December 31, 2022.
The change in fair value of warrant liabilities for the year ended December 31, 2024 was a loss of $90.2 million, compared to a loss of $1.2 million for the year ended December 31, 2023.
Revenue for partially completed milestones deemed probable of being met is recognized using an input measure based on actual labor hours incurred to date relative to total estimated labor hours needed to complete the milestone.
Revenue for partially completed milestones deemed probable of being met is recognized using an input measure based on actual labor hours incurred to date relative to total estimated labor hours needed to complete the milestone. Revenue related to cost share contracts is recognized as the reimbursable costs are incurred.
No goodwill impairment charges were recorded for the year ended December 31, 2023. 91 Table of Contents Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 of our consolidated financial statements for the year ended December 31, 2023 included elsewhere in this Annual Report on Form 10-K.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 of our consolidated financial statements for the year ended December 31, 2024 included elsewhere in this Annual Report on Form 10-K.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Provision for Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Our cash requirements include employee-related costs such as salaries and benefits; materials and components for research and development; working capital requirements; capital expenditures for our quantum chip fabrication facility; quantum computing refrigerators and other requirements; planned development of multiple generations of quantum processors; anticipated investments to scale our operations in the future; and strategic collaborative arrangements and investments.
Our cash requirements include employee-related costs such as salaries and benefits; materials and components for research and development; working capital requirements; capital expenditures for our quantum chip fabrication facility; quantum computing refrigerators and other requirements; planned development of multiple generations of quantum processors; anticipated investments to scale our operations in the future; and strategic collaborative arrangements and investments. 65 Table of Contents We will require a significant amount of cash for expenditure as we invest in ongoing research and development and business operations.
The change in fair value of our earn-out liabilities for the year ended December 31, 2023 was a loss of $0.9 million, compared a gain of $19.2 million for the year ended December 31, 2022.
The change in fair value of our earn-out liabilities for the year ended December 31, 2024 was a loss of $43.7 million, compared a loss of $0.9 million for the year ended December 31, 2023.
Changes in operating assets and liabilities had a minimal impact on the change in cash used in operating activities during the year ended December 31, 2023, compared to the year ended December 31, 2022.
Changes in operating assets and liabilities had a $2.6 million unfavorable impact on the change in cash used in operating activities during the year ended December 31, 2024, compared to the year ended December 31, 2023.
We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2026, the last day of our first fiscal year following the fifth anniversary of the completion of SNII’s initial public offering, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.24 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2026, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the date on which we are deemed to be a “large accelerated filer” under the rules of the SEC or (d) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
Affected employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance. We began implementing activities with respect to our revised business plan, updated technology roadmap and reduction in workforce in February 2023, resulting in a $1.0 million restructuring charge for the year ended December 31, 2023. No further restructuring charges related to this action are expected.
We began implementing activities with respect to our revised business plan, updated technology roadmap and reduction in workforce in February 2023, resulting in a $1.0 million restructuring charge for the year ended December 31, 2023. No further restructuring charges related to this action are expected.
In connection with this updated strategy, we implemented a workforce reduction in order to focus the organization and its resources on nearer-term strategic priorities. The reduction in the workforce impacted approximately 50 employees or approximately 28% of our then workforce.
In connection with this updated strategy, we implemented a workforce reduction beginning in February 2023 to focus the organization and our resources on nearer-term strategic priorities and our efforts to achieve narrow quantum advantage. The reduction in the workforce impacted approximately 50 employees or 28% of our then workforce.
We believe that our existing balances of cash, cash equivalents and available-for-sale investments should be sufficient to meet our anticipated operating cash needs into early in the third quarter of 2025, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions.
We believe that our existing balances of cash, cash equivalents and available-for-sale investments should be sufficient to meet our anticipated operating cash needs for at least the next three years based on our current business plan, and expectations and assumptions considering current macroeconomic conditions.
For the next few years, we expect much of our revenue to be generated from development contracts and sales of QPUs. Cost of Revenue Cost of revenue decreased by $0.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
For the next few years, we expect much of our revenue to be generated from development contracts and anticipated sales of on-premises QPUs. Cost of Revenue Cost of revenue increased by $2.3 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023.
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, we could experience an inability to access additional capital, or our liquidity could otherwise be impacted.
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.
Non-cash charges impacting our net loss increased by $13.8 million to $25.0 million during the year ended December 31, 2023, from $11.2 million during the year ended December 31, 2022.
Non-cash charges impacting our net loss increased by $128.4 million to $153.4 million during the year ended December 31, 2024, from $25.0 million during the year ended December 31, 2023.
Specifically, the Private Warrants contain provisions that cause the settlement amounts to be dependent upon the characteristics of the holder of the warrant which is not an input into the pricing of a fixed-for-fixed option on equity shares. Therefore, the Private Warrants are not considered indexed to our stock and should be classified as a liability.
The Private Warrants do not meet the derivative scope exception and are accounted for as derivative liabilities. Specifically, the Private Warrants contain provisions that cause the settlement amounts to be dependent upon the characteristics of the holder of the warrant which is not an input into the pricing of a fixed-for-fixed option on equity shares.
We expect to continue to incur additional losses for the foreseeable future as we invest in research and development and infrastructure in line with our long-term business strategy.
We expect to continue to incur additional losses for the foreseeable future as we invest in research and development and infrastructure in line with our long-term business strategy. As of December 31, 2024, we had an accumulated deficit of $554.7 million.
The decrease in cost of revenue during the year ended December 31, 2023 is primarily due to lower revenue levels, changes in the composition of our revenue and variability in the pricing and terms of our development contracts. 82 Table of Contents We expect that cost of revenue and total gross profit as a percentage of revenue will vary in future quarterly and annual periods due to changes in the composition of our revenue and variability in the pricing and terms of our development contracts.
We expect that cost of revenue and total gross profit as a percentage of revenue will vary in future quarterly and annual periods due to changes in the composition of our revenue and variability in the pricing and terms of our development contracts.
Since the Private Warrants meet the definition of a derivative, we recorded the Private Warrants as liabilities in the consolidated balance sheet at fair value upon the closing of the Business Combination, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date.
Since the Private Warrants meet the definition of a derivative, we recorded the Private Warrants as liabilities in the consolidated balance sheet at fair value upon the closing of the Business Combination (described in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K), with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date.
Revenue related to subscription-based access to Rigetti quantum computing systems (i.e., quantum computing subscriptions) is recognized on a ratable basis over the subscription term, which can range from six months to two years.
Access to Rigetti quantum computing systems can be purchased as a quantum computing subscription, or on a usage basis for a specified quantity of hours. Revenue related to subscription-based access to Rigetti quantum computing systems (i.e., quantum computing subscriptions) is recognized on a ratable basis over the subscription term, which can range from monthly to two years.
We anticipate that R&D expenditures will grow in the future as we continue to focus on our technology roadmap and long-term goal of achieving broad quantum advantage. Selling, General and Administrative Selling, general and administrative expenses decreased by $26.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
All other research and development costs decreased by a cumulative $0.1 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023. We anticipate that R&D expenditures will grow in the future as we continue to focus on our technology roadmap and long-term goal of achieving broad quantum advantage.
Earn-Out Liabilities At Business Combination Closing, Supernova Sponsor subjected certain shares (“Sponsor Vesting Shares”) of Common Stock held by Supernova Sponsor and its permitted transferees (the “Sponsor Holders”) to forfeiture and vesting as of the Closing if thresholds related to the weighted average price of Common Stock are not met for the duration of various specified consecutive day trading periods during the five-year period following the Closing (the “Earn-out Triggering Events”).
Upon the closing of the Business Combination, SNII, Supernova Partners II, LLC and SNII’s directors and officers (collectively the “Sponsor Holders”) subjected certain shares of our Common Stock that they own ( the “Sponsor Vesting Shares”) to forfeiture and vesting as of the Closing if thresholds related to the weighted average price of our Common Stock are not met for the duration of various specified consecutive day trading periods during the five-year period following the Closing (the “Earn-out Triggering Events”).
We do not currently capitalize any research and development expenditures.
We do not currently capitalize any research and development expenditures. Research and development costs are expensed as incurred.
Prior to the Business Combination, we financed our operations primarily through the issuance of preferred stock, warrants, convertible notes, venture backed debt and revenues. During the years ended December 31, 2023 and December 31, 2022, we incurred net losses of $75.1 million and $71.5 million, respectively.
Historically, we financed our operations primarily through the sale and issuance of common stock preferred stock, warrants, convertible notes, debt and revenues. During the years ended December 31, 2024 and December 31, 2023, we incurred net losses of $201.0 million and $75.1 million, respectively.
As of December 31, 2023, the fair value of the Private Warrants decreased to $1.6 million, with the change in fair value of the derivative warrant liabilities recorded in the consolidated statements of operations each reporting period.
As of December 31, 2024 and December 31, 2023 the fair value of the derivative liability for the Public Warrants was $70.3 million and $1.3 million, respectively, with the change in the fair value of the derivative warrant liabilities recorded in the consolidated statements of operations each reporting period.
Net cash used in operating activities during the year ended December 31, 2022 was $62.7 million, primarily resulting from our net loss of $71.5 million, partially offset by non-cash expenses totaling $11.2 million. Changes in operating assets and liabilities had a minimal impact on net cash used in operating activities during the year ended December 31, 2022.
Net cash used in operating activities during the year ended December 31, 2024 was $50.6 million, primarily resulting from our net loss of $201.0 million, partially offset by non-cash expenses totaling $153.4 million. Changes in operating assets and liabilities had a $3.1 million unfavorable impact on net cash used in operating activities for the year ended December 31, 2024.
Restructuring In February 2023, we announced an updated business strategy, including revisions to our technology roadmap. In connection with this updated strategy, we implemented a workforce reduction in order to focus the organization and our resources on nearer-term strategic priorities. The reduction in workforce impacted approximately 50 employees or approximately 28% of our then workforce.
In connection with this updated strategy, we implemented a workforce reduction in order to focus the organization and our resources on nearer-term strategic priorities. The reduction in the workforce impacted approximately 50 employees or approximately 28% of our then workforce. Affected employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance.
Other Income (Expense), net Interest Expense Our outstanding debt carries a variable rate of interest. Interest expenses increased by $0.5 million for the year ended December 31, 2023 when compared to the year ended December 31, 2022.
Other Income (Expense), net Interest Expense Our outstanding debt with Trinity Capital, Inc., which we repaid in full in December 2024, carried a variable rate of interest. Interest expenses decreased by $2.5 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023.
We expect to continue to finance our cash needs primarily through cash, cash equivalents and available-for-sale investments, potential securities financings or other capital sources. ​ Critical Accounting Policies and Estimates This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
Critical Accounting Estimates This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements included in this Annual Report on Form 10-K, which have been prepared in accordance with GAAP.
As of February 15, 2024 there are no remaining shares available for sale under our prior Purchase Agreement with B. Riley, the agreement has terminated.
There are no remaining shares available for sale under the Purchase Agreement, and the Purchase Agreement has terminated.
Any such shares held by the Sponsor Holders that remain unvested after the fifth anniversary of the Closing will be forfeited.
Any such shares held by the Sponsor Holders that remain unvested after the fifth anniversary of the closing of the Business Combination will be forfeited. The price thresholds for vesting under the sponsor support agreement are $12.50 and $15.00.
Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Following the Business Combination, we still qualify as an emerging growth company and plan to take advantage of the extended transition period that emerging growth company status permits.
Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Revenue related to cost share contracts is recognized as the reimbursable costs are incurred. 90 Table of Contents For fixed price milestone-based contracts, revenue is recognized based on the input measure explained above as control is expected to transfer over the time period a milestone is completed.
For fixed price milestone-based contracts, revenue is recognized based on the input measure explained above as control is expected to transfer over the time period a milestone is completed. Revenue related to the sale of QPUs and custom quantum computing components is recognized at a point in time, and upon customer acceptance for custom quantum computing components.
Cash used in operating activities was reduced by $12.1 million to $50.6 million during the year ended December 31, 2023, from $62.7 million during the year ended December 31, 2022. Our net loss increased by $3.6 million to $75.1 million during the year ended December 31, 2023.
Cash used in operating activities during the year ended December 31, 2024 of $50.6 million was virtually unchanged when compared to the year ended December 31, 2023. Our net loss increased by $125.9 million to $201.0 million during the year ended December 31, 2024.
On the consummation of the Business Combination, we recorded a liability related to the Private Warrants of $9.6 million, with an offsetting entry to additional paid-in capital.
On the consummation of the Business Combination, we recorded a liability related to the Private Warrants of $9.6 million, with an offsetting entry to additional paid-in capital . There are a number of variables impacting the Black-Scholes option-pricing model used to value the derivative liability for the Private Warrants. The most impactful variable is the price of our Common Stock.
The table above does not include amounts owed for purchases of capital equipment; supplies; materials; or fixed or minimum services under non-cancelable contracts. ​ ​ Cash Flows Used in Operating Activities Our cash flows from operating activities are significantly affected by our ability to achieve significant growth to offset expenditures related to research and development, and selling, general and administrative activities.
Cash Flows Used in Operating Activities Our cash flows from operating activities are significantly affected by our ability to achieve significant growth to offset expenditures related to research and development, and selling, general and administrative activities.
Revenue related to the sale of QPUs and custom quantum computing components is recognized at a point in time, and upon customer acceptance for custom quantum computing components. Our fixed fee development contracts vary in term from one to five years, with the majority of such contracts having a term of 18 months to two years.
Our fixed fee development contracts vary in term from one to five years, with the majority of such contracts having a term of six months to two years.
If these conditions persist and deepen, we could experience an inability to access additional capital, or our liquidity could otherwise be impacted. If we are unable to raise capital when needed and on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs and/or other efforts.
If we are unable to raise capital when needed and on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs and/or other efforts. A recession or market corrections resulting from the impact of macroeconomic conditions could materially affect our business and the value of our securities.
Each whole warrant entitles the holder to purchase one share of our Common Stock at a price of $11.50 per share, subject to adjustments and will expire five years after the Merger or earlier upon redemption or liquidation. The Private Warrants do not meet the derivative scope exception and are accounted for as derivative liabilities.
Each whole warrant entitles the holder to purchase one share of our Common Stock at a price of $11.50 per share, subject to adjustments and will expire on March 2, 2027 at 5:00 p.m., New York City time or earlier upon redemption or liquidation.
As of December 31, 2023, we had an accumulated deficit of $353.8 million. 77 Table of Contents We believe that our existing cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs into early in the third quarter of 2025, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions.
We believe that our existing cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs for at least the next three years and possibly longer based on our current business plan, and expectations and assumptions considering current macroeconomic conditions.
Net cash provided by investing activities during the year ended December 31, 2023 improved by $107.8 million when compared to the year ended December 31, 2022, due to maturities of available-for-sale securities and decreased purchases of property and equipment. 87 Table of Contents Cash Flows Provided by Financing Activities Cash provided by financing activities during the year ended December 31 , 2023 totaled $13.2 million, reflecting $20.5 million of proceeds, net of commissions, from the sale of 13.4 million shares of common stock to B.
In connection with the repayments, prepayment and final payment fees under the loan agreement, we terminated the loan agreement. Cash provided by financing activities during the year ended December 31 , 2023 totaled $13.2 million, reflecting $20.5 million of proceeds, net of commissions, from the sale of 13.4 million shares of common stock to B.
We anticipate that interest income will decline in future periods due to our expected use of cash, cash equivalents and available-for-sale securities to fund our operating expenses, including research and development initiatives and investment in our technology roadmap. ​ Change in Fair Value of Warrant Liabilities A discussion of the change in the fair value of warrant liabilities is included in Note 11 to our consolidated financial statements for the year ended December 31, 2023, included elsewhere in this Annual Report on Form 10-K.
Change in Fair Value of Warrant Liabilities A discussion of the change in the fair value of warrant liabilities is included in Note 9 to our consolidated financial statements for the year ended December 31, 2024, included elsewhere in this Annual Report on Form 10-K.
Interest Income Interest income was $5.1 million for the year ended December 31, 2023 compared to $2.4 million for the year ended December 31, 2022. The increase in interest income is due to higher rates of interest earned on our investments, including cash equivalents and available-for-sale securities.
Interest Income Interest income remained consistent at $5.1 million for each of the years ended December 31, 2024 and December 31, 2023. Slight changes in interest income during the years ended December 31, 2024 and December 31, 2023 were due to fluctuations in the balances of our invested cash and available-for-sale investments and rates of interest earned on our investments.
See Note 8 – Goodwill of our consolidated financial statements for the year ended December 31, 2023 included elsewhere in this Annual Report on Form 10-K for additional information on how the impairment was measured. We have determined that the Company is a single reporting unit.
A discussion regarding the prepayment of our outstanding debt with Trinity Capital Inc. is included in Note 8 to our consolidated financial statements for the year ended December 31, 2024, included elsewhere in this Annual Report on Form 10-K.
Revenue Recognition Revenue consists primarily of our contracts that provide access to Rigetti quantum computing systems, collaborative research services, professional services, and the sale of QPUs and custom quantum computing components. Access to Rigetti quantum computing systems can be purchased as a quantum computing subscription, or on a usage basis for a specified quantity of hours.
The $12.50 vesting condition for 2,479,000 shares of Common Stock held by the Sponsor Holders was satisfied in February 2025. Revenue Recognition Revenue consists primarily of our contracts that provide access to Rigetti quantum computing systems, collaborative research services, professional services, and the sale of QPUs and custom quantum computing components.
The aggregate fair value of the Sponsor Vesting Shares at the time of the Business Combination Closing was estimated using a Monte Carlo simulation model and was determined to be $20.4 million. 89 Table of Contents As of December 31, 2023, the Earn-Out Triggering Events were not achieved for any of the tranches, and as such, the Company adjusted the carrying amount of the liability to its estimated fair value of $2.2 million with the change in fair value of the earn-out liabilities recorded in the consolidated statements of operations each reporting period.
The aggregate fair value of the Sponsor Vesting Shares at the time of the closing of the Business Combination was estimated using a Monte Carlo simulation model and was determined to be $20.4 million. There are a number of variables impacting the Monte Carlo simulation model used to value the Earn-Out liability.
Cash used in investing activities during the year ended December 31, 2022 totaled $107.0 million, resulting from purchases of $22.7 million of property and equipment and $84.3 million of available-for-sale securities. Investments in property and equipment relate primarily to process computing equipment, quantum computing refrigerators, and development tools for our chip fabrication facility.
Investments in property and equipment relate primarily to process computing equipment, quantum computing refrigerators, and development tools for our chip fabrication facility.
Key Components of Results of Operations Revenue We generate revenue through our development contracts, as well as from our sales of QPUs, and our QCaaS offerings and other services including training and provision of quantum computing components.
For further discussion of the potential impacts of macroeconomic events on our business, financial condition, and operating results, see the section titled “Risk Factors,” including the risk factor titled “ Unfavorable conditions in our industry or the global economy could limit our ability to grow our business and negatively affect our results of operations.” ​ ​ ​ ​ ​ ​ 61 Table of Contents Key Components of Results of Operations Revenue We generate revenue through our development contracts, as well as from our sales of QPUs, and our QCaaS offerings and other services including training and provision of quantum computing components.
The decrease in revenue during the year ended December 31, 2023 reflects typical variability in the timing of revenue recognition from development contracts. Revenue from development contracts and QPU sales is expected to vary in terms of timing and size, resulting in significant fluctuations in revenue levels in future periods.
The timing and delivery of sales of QPUs and QCaaS will also vary and impact revenue in any given quarterly or annual period. Revenue is expected to vary in terms of timing and size, resulting in significant fluctuations in revenue levels in future periods.
Operating Expenses Research and Development Research and development expenses decreased by $7.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Salaries and employee benefit expenses decreased by $2.5 million and stock-based compensation decreased by $4.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Selling, General and Administrative Selling, general and administrative expenses decreased by $3.3 million for the year ended December 31, 2024, when compared to the year ended December 31, 2023.
In February 2023, we announced an updated business strategy, including revisions to our technology roadmap. In connection with this updated strategy, we implemented a workforce reduction beginning in February 2023 to focus the organization and our resources on nearer-term strategic priorities and our efforts to achieve narrow quantum advantage.
In connection with this updated strategy, we implemented a workforce reduction in order to focus the organization and its resources on nearer-term strategic priorities. The reduction in the workforce impacted approximately 50 employees or approximately 28% of our then workforce. Affected employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance.
These decreases were partially offset by a $0.5 million increase in depreciation expense for the year ended December 31, 2023 due to purchases of property and equipment, compared to the year ended December 31, 2022.
Net cash provided by investing activities during the year ended December 31, 2024 decreased by $79.1 million when compared to the year ended December 31, 2023, due to higher purchases of available-for-sale securities and property and equipment, offset in part by higher maturities of available-for-sale securities.
As of December 31, 2023, we had an accumulated deficit of $353.8 million, and we expect to incur additional losses for the foreseeable future. In connection with the closing of the Business Combination on March 2, 2022, we received net proceeds of $225.6 million.
As of December 31, 2024, we had an accumulated deficit of $554.7 million, and we expect to incur additional losses for the foreseeable future. On November 27, 2024, we closed securities purchase agreements with two institutional investors pursuant to which we received net proceeds of $96.0 million from the sale of 50,000,000 shares of our common stock.
We expect selling, general and administrative expenses to increase as we grow our business, particularly to the extent we achieve narrow and broad quantum advantage, and subsequently enhance our product and service offerings, expand our customer base, and implement new marketing strategies. 83 Table of Contents Goodwill Impairment Goodwill impairment decreased by $5.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We expect selling, general and administrative expenses to increase over the longer term, particularly after we potentially achieve quantum advantage, and plan to subsequently enhance our sales and service offerings, expand our customer base, and implement new marketing strategies. Restructuring In February 2023, we announced an updated business strategy, including revisions to our technology roadmap.
The change in the fair value of the Forward Warrant Agreement was recorded as part of selling, general and administrative expenses in our consolidated statements of operations each reporting period until it expired.
As of December 31, 2024 and December 31, 2023, the fair value of the earn-out liabilities was $45.9 million and $2.2 million, respectively, with the change in the fair value of the earn-out liabilities recorded in the consolidated statements of operations each reporting period.
The decreases for the year ended December 31, 2023 are primarily due to a reduction in stock-based compensation of $27.8 million, partially offset by unfavorable fluctuations in the fair value of the Ampere Forward Agreement of $8.0 million.
The decrease for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was primarily due to $2.2 million of expense recognized in the year ended December 31, 2023 for the forward agreement with Ampere Computing and a $0.8 million impairment charge recognized in the year ended December 31, 2023 for deferred offering costs.
As of December 31, 2023, the fair value of the Public Warrants decreased to $1.3 million with the change in fair value of derivative warrant liabilities recorded in the consolidated statements of operations each reporting period. Other Derivative Warrant Liabilities We currently do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
The derivative liability for the Private Warrants will correspondingly increase or decrease as the price of our Common Stock increases or decreases. 67 Table of Contents As of December 31, 2024 and December 31, 2023 the fair value of the derivative liability for the Private Warrants was $22.8 million and $1.6 million, respectively, with the change in the fair value of the derivative warrant liabilities recorded in the consolidated statements of operations each reporting period.
Removed
Accordingly, based on our estimates and current business plan, we expect that we will need to obtain additional capital by early in the third quarter of 2025, in order to fund our research and development efforts and business objectives as currently planned.
Added
Our operating plan may change because of factors currently unknown, and we may need to seek additional funds sooner than planned, through public or private equity or debt financing or other sources, such as strategic collaborations or other transactions.
Removed
Our estimate does not assume any additional financing, and there is no assurance 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.
Added
In addition, we may seek additional capital even if we believe that we have sufficient funds for current or future operating plans. Key achievements include the launch of our 84-qubit Ankaa-3 system, our newest flagship quantum computer featuring an extensive hardware redesign.
Removed
Key achievements include the launch of the Ankaa 84- qubit Ankaa™-2 system to customers via Rigetti Quantum Cloud Services (QCS). The Ankaa-2 system achieved 98% median 2-qubit fidelity, which represents a 2.5x performance improvement compared to our previous QPUs.
Added
We also achieved major two-qubit gate fidelity milestones with Ankaa-3: successfully halving error rates in 2024 to achieve a 99.0% median two-qubit iSWAP gate fidelity, as well as demonstrating a 99.5% median two-qubit fidelity with fSim gates. 60 Table of Contents In 2025, we plan to introduce the next generation of our modular system architecture, while aiming to continue to increase fidelities.
Removed
We continue to plan to: ● Continue working to improve the performance of our QPUs with the goal of reaching at least 99% 2-qubit gate fidelity on an anticipated Ankaa-3 84 qubit system by the end of 2024. ● If the above target is achieved, we plan to shift focus to scaling to develop Lyra, an anticipated 336-qubit system.
Added
By mid-year 2025, we expect to release a 36-qubit system based on four 9-qubit chips tiled together, with a targeted 2x reduction in error rates from our error rates achieved at the end of 2024.
Removed
We also plan to pursue sales of Novera™ , our first commercially available QPU launched in 2023, which features a 9-qubit chip, tunable couplers for fast 2-qubit operations and a 5-qubit chip for testing single-qubit operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule12b-2 of the Exchange Act and are not required to provide the information required under this item. ​ 92 Table of Contents
Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule12b-2 of the Exchange Act and are not required to provide the information required under this item. ​ 69 Table of Contents

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