Rigetti Computing Inc
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
RGTI$11.75+19.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001558370-24-007606
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001558370-24-011594
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 111 current paragraphs.
67 unchanged; 34 reworded; 8 added; 26 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Salaries, employee related costs and stock-based compensation expenses decreased by $0.9 million and $2.5 million for the three and six months ended June 30, 2024, respectively, primarily because more engineering time was used to deliver revenue in the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023. Our February 2023 restructuring also contributed to the reduction in salaries and employee related costs for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. IT costs decreased by $0.9 million and $1.9 million for the three and six months ended June 30, 2024, respectively, primarily due to savings from R&D related IT systems rationalization. Facilities costs increased by $0.8 million and $1.2 million for the three and six months ended June 30, 2024, respectively, primarily due to higher personal property taxes. All other costs decreased by $0.3 million and $0.4 million for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively.
Current report
Selling, general and administrative expenses increased by $0.5 million and decreased by $1.9 million for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively.
Current report
The increase in the three months ended June 30, 2024 was primarily due to additional employee, IT and recruiting costs, offset in part by lower public company compliance and insurance costs.
Current report
The decrease in the six months ended June 30, 2024 was due to a $1.4 million reduction in salaries and employee related costs, primarily related to our February 2023 restructuring. Costs mostly related to public company compliance decreased by $0.6 million, because many of these activities were either performed more efficiently or have been brought in house. The Ampere Forward Agreement which expired in October 2023 and an impairment charge for deferred offering costs added $2.0 million to selling, general and administrative expenses for the six months ended June 30, 2023. These decreases were partially offset by an increase in stock compensation expenses of $0.9 million for the six months ended June 30, 2024. Stock compensation expenses were favorably impacted during the six months ended June 30, 2023 due to forfeitures resulting from the February 2023 restructuring. Spending for cybersecurity and other IT related initiatives increased by $0.6 million. All other expenses increased by $0.6 million for the six months ended June 30, 2024, when compared to six months ended June 30, 2023.
Current report
Amended Loan Agreement – Trinity Capital
Current report
As of June 30, 2024, the total principal amount outstanding under the Amended Loan Agreement was $16.2 million. The Amended Loan Agreement bears interest at a rate equal to the greater of 11% or the US Prime Rate plus 7.50% per annum, payable monthly, and is secured by a first-priority security interest in substantially all of our assets.
Current report
There have been no material changes to our critical accounting estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current report
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. Within our Annual Report on Form 10-K for the year ended December 31, 2023, we have disclosed our critical accounting estimates that we believe have the greatest potential impact on our consolidated financial statements. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.
Removed paragraphs (26)
Previous report
Selling, general and administrative expenses decreased by $2.4 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the following factors:
Previous report
Loan and Security Agreement
Previous report
In January 2022, we entered into the Third Amendment to the Loan Agreement with Trinity to increase the debt commitment by $5.0 million to $32.0 million thereunder. The amendment allowed us to draw an additional $5.0 million immediately with an additional $8.0 million to be drawn at the sole discretion of the lender. We drew the additional $5.0 million upon signing the amendment. The Third Amendment also included an extension of the requirement to raise an additional $75.0 million of equity which was satisfied through the Business Combination and a defined exit fee for the additional $5.0 million to be at 20% of the advanced funds under the Third Amendment. In conjunction with the amendment, we also guaranteed payment of all monetary amounts owed and performance of all covenants, obligations and liabilities. As of March 31, 2024, the total principal amount outstanding under the Loan Agreement was $19.3 million. The Loan Agreement is secured by a first-priority security interest in substantially all of our assets.
Previous report
While our significant accounting policies are described in the Notes to our condensed consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, we believe the following critical accounting policies and estimates are most important to understanding and evaluating our reported financial results.
Previous report
Public and Private Warrants
Previous report
Prior to the Business Combination, SNII issued 4,450,000 private placement warrants (“Private Warrants”) and 8,625,000 public warrants (“Public Warrants” and collectively, “Warrants”). As of March 31 2024, there were 13,074,972 Warrants outstanding, consisting of 3,272,834 Private Warrants and 9,802,138 Public Warrants. 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.
Previous report
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. Therefore, the Private Warrants are not considered indexed to our stock and should be classified as a liability.
Previous report
Since the Private Warrants meet the definition of a derivative, we recorded the Private Warrants as liabilities in the condensed consolidated balance sheet at fair value upon the closing of the Business Combination, with subsequent changes in the fair value recognized in the condensed consolidated statements of operations at each reporting date. The fair value of the Private Warrants was measured using the Black-Scholes option-pricing model at each measurement date.
Previous report
The Public Warrants also fail to meet the indexation guidance in ASC 815 and are accounted for as liabilities as the Public Warrants include a provision whereby in a scenario in which there is not an effective registration statement, the warrant holders have a cap, 0.361 shares of Common Stock per warrant (subject to adjustment), on the issuable number of shares in a cashless exercise.
Previous report
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.
Previous report
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. As of March 31, 2024, the fair value of the Private Warrants decreased to $3.1 million, with the change in fair value of the derivative warrant liabilities recorded in the condensed consolidated statements of operations each reporting period.
Previous report
Similarly, on the consummation of the Business Combination, we recorded a liability related to the Public Warrants of $16.3 million, with an offsetting entry to additional paid-in capital. As of March 31, 2024, the fair value of the Public Warrants decreased to $2.4 million with the change in fair value of derivative warrant liabilities recorded in the condensed consolidated statements of operations each reporting period.
Previous report
Other Derivative Warrant Liabilities
Previous report
We currently do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 815, “Derivatives and Hedging” (“ASC 815”) at the initial recognition date.
Previous report
Earn-Out Liabilities
Previous report
Upon the closing of the Business Combination on March 2, 2022, SNII, Supernova Partners II, LLC and SNII’s directors and officers (collectively the “Sponsor Holders”) subjected certain shares of Common Stock that it owns (the “Sponsor Vesting Shares”) to forfeiture for a five-year period following the closing of the Business Combination, with vesting occurring only if thresholds related to the weighted average price of Common Stock are met for the duration of various specified consecutive day trading periods following the closing of the Business Combination (the “Earn-out Triggering Events”). Any such shares held by the Sponsor Holders that have not vested by the fifth anniversary of the closing of the Business Combination will be forfeited.
Previous report
The Sponsor Vesting Shares are accounted for as liability classified instruments because the Earn-Out Triggering Events that determine the number of Sponsor Vesting Shares to be earned back by the Sponsor Holders include outcomes that are not solely indexed to our Common Stock. 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.
Previous report
As of March 31, 2024, 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 $3.8 million with the change in fair value of the earn-out liability recorded in the condensed consolidated statements of operations each reporting period.
Previous report
Revenue Recognition
Previous report
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. 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. Revenue related to usage-based access to Rigetti quantum computing systems is recognized over
Previous report
time as the systems are accessed using an output method based on compute credit hours expended. Revenue related to collaborative research services and professional services is recognized over time based on completed milestones or hours or costs incurred as appropriate. 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.
Previous report
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.
Previous report
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. When establishing the pricing for our fixed fee arrangements, we determine the pricing based on estimated costs to complete and expected margins taking into account the scope of work outlined within the contract being evaluated and our historical experience with similar services and contracts. Actual costs incurred over the period in which these contracts are fulfilled could vary from these estimates and therefore, these estimates are subject to uncertainty. On a quarterly basis, management reviews the progress with respect to each contract and its related milestones and evaluates whether any changes in estimates exist. As a result of the quarterly reviews, revisions in the estimated effort to complete the contract are reflected in the period in which the change is identified. These revisions may impact the overall progress related to transfer of control and therefore result in either increases or decreases in revenues as well as increases or decreases in fulfillment costs and contract margins. In accordance, with ASC No. 250, Accounting Changes and Error Corrections, any changes in estimates are reflected in our condensed consolidated statements of operations in the period in which the circumstances that give rise to the revision become known to management. To date, we have not experienced any changes in estimates that have had a material impact on our results from operations or financial position.
Previous report
When our contracts with customers contain multiple performance obligations, the transaction price is allocated on a relative standalone selling price basis to each performance obligation. We typically determine standalone selling price based on observable selling prices of our products and services. In instances where standalone selling price is not directly observable, standalone selling price is determined using information that may include market conditions and other observable inputs. Stand-alone selling price is typically established as a range. In situations in which the stated contract price for a performance obligation is outside of the applicable standalone selling price range and has a different pattern of transfer to the customer than the other performance obligations in the contract, we will reallocate the total transaction price to each performance obligation based on the relative standalone selling price of each.
Previous report
The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. Revenue is recorded based on the transaction price, which includes fixed consideration and estimates of variable consideration. 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.
Previous report
Our contracts with customers may include renewal or other options at fixed prices. Determining whether such options are considered distinct performance obligations that provide the customer with a material right and therefore should be accounted for separately requires significant judgment. Judgment is required to determine the standalone selling price for each renewal option to determine whether the renewal pricing is reflective of standalone selling price or is reflective of a discount that would provide the customer with a material right. Based on our assessment of standalone selling prices, we determined that there were no significant material rights provided to our customers requiring separate recognition.
Reworded paragraphs (34)
Previous wording
We have been generating revenue since 2018, primarily 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 2022, respectively, and our net loss was$20.8 million for the three months ended March 31, 2024. We expect to continue to incur additional losses for the foreseeable future as we invest in research, development, and infrastructure consistent with our long-term business strategy. As of March 31, 2024, we had an accumulated deficit of $374.5 million.
Current wording
We have been generating revenue since 2018, primarily 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 2022, respectively, and our net loss was$33.2 million for the six months ended June 30, 2024. We expect to continue to incur additional losses for the foreseeable future as we invest in research, development, and infrastructure consistent with our long-term business strategy. As of June 30, 2024, we had an accumulated deficit of $387.0 million.
Previous wording
We believe that our existing cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs until midway through the fourth quarter of 2025, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions. Accordingly, based on our estimates and current business plan, we expect that we will need to obtain additional capital by midway through the fourth quarter of 2025, in order to fund our research and development efforts and business objectives as currently planned. Our estimate does not assume any additional financing, and there is no assurance that additional financing will be available.
Current wording
We believe that our existing cash, cash equivalents and marketable securities should be sufficient to meet our anticipated operating cash needs until midway through the first quarter of 2026, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions. Accordingly, based on our estimates and current business plan, we expect that we will need to obtain additional capital to fund our research and development efforts and business objectives as currently planned. Our estimate does not assume any additional financing, and there is no assurance that additional financing will be available.
Previous wording
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 other efforts. However, like many other companies, we are taking actions to monitor our operations to account for the increases in the cost of capital. Specifically, this includes efforts to enhance our operational efficiency, including with respect to capital expenditures, maximize our R&D productivity spend through strategic collaborations, and being highly selective in hiring top-tier talent.
Current wording
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 other efforts. However, like many other companies, we are continuing to take actions to monitor our operations to account for the increases in the cost of capital. Specifically, this includes efforts to enhance our operational efficiency, including with respect to capital expenditures, maximize our R&D productivity spend through strategic collaborations, and being highly selective in hiring top-tier talent.
Previous wording
Our operating expenses primarily consist of research and development, and selling, general and administrative expenses. Sales and marketing expenses became less significant following the reduction in workforce and strategic realignment we announced in February 2023. For this reason, sales and marketing and general administrative expenses have been combined and are now reported as selling, general and administrative. Related amounts for all prior periods have been reclassified to conform with this presentation.
Current wording
Our operating expenses primarily consist of research and development, and selling, general and administrative expenses.
Previous wording
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. We expect selling, general and administrative expenses to increase as we grow our business, particularlyto 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.
Current wording
of QPUs and providing development contracts, QCaaS offerings and other services. We expect selling, general and administrative expenses to increase as we grow our business, particularlyto the extent we achieve narrow and broad quantum advantage, and anticipate subsequently enhancing our product and service offerings, expanding our customer base, and implementing new marketing strategies.
Previous wording
Comparison of the Three Months Ended March 31, 2024 and 2023
Current wording
Comparison of the Three and Six Months Ended June 30, 2024 and 2023
Previous wording
Revenue increased by $0.9 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. 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. Theincreasein revenue during the three months ended March 31, 2024 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.
Current wording
Revenue decreased by $0.2 million and increased by $0.6 million for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively. Increases in revenue from development contracts and sales of QPUs for the three and six months ended June 30, 2024 were mostly offset by a decrease in QCaaS revenue. 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 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.
Previous wording
For the next few years, we expect much of our revenue to be generated from development contracts and sales of QPUs.
Current wording
For the next few years, we expect much of our revenue to be generated from development contracts and anticipated sales of on-premises QPUs.
Previous wording
Cost of revenue increased by $1.0 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Theincreasein cost of revenue during the three months ended March 31, 2024 is primarily due to changes in the composition of our revenue and variability in the pricing and terms of our development contracts. During the three months ended March 31, 2024, we entered into a new contract to deliver a 24 qubit quantum computing system with higher costs and a lower gross margin profile than most of our other contracts, contributing to the increase in cost of revenue and lower gross margin percentage for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Current wording
Cost of revenue increased by $0.5 million and $1.5 million for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively. Theincreasein cost of revenue during the three and six months ended June 30, 2024 is primarily due to changes in the composition of our revenue and variability in the pricing and terms of our development contracts. During the three and six months ended June 30, 2024, we entered into a new contract to deliver a 24-qubit quantum computing system with higher costs and a lower gross margin profile than most of our other contracts, contributing to the increase in cost of revenue and lower gross margin percentage for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023.
Previous wording
Research and development expenses decreased by $2.2 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the following factors:
Current wording
Research and development expenses decreased by $1.3 million and $3.6 million for the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively.
Previous wording
Our outstanding debt carries a variable rate of interest. Interest expenses decreased by $0.4 million for the three months ended March 31, 2024 when compared to the three months ended March 31, 2023. The reduction in interest expense was due to the lower outstanding balance of principal at March 31, 2024 compared to March 31, 2023, due to principal repayments, offset in part by the impact of increases in the prime interest rate that occurred throughout 2023.
Current wording
Our outstanding debt carries a variable rate of interest. Interest expenses decreased by $0.6 million and $1.0 million during the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, respectively. The reduction in interest expense was due to the lower outstanding balance of principal at June 30, 2024, when compared to June 30, 2023, due to principal repayments, offset in part by the impact of increases in the prime interest rate that occurred throughout 2023.
Previous wording
Interest income was $1.1 million during the three months ended March 31, 2024, down from $1.3 million during the three months ended March 31, 2023. The decrease in interest income is due to lower balances of invested cash and available-for-sale investments during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, offset in part by higher rates of interest earned on our investments.
Current wording
Interest income was $1.2 million and $2.3 million for the three and six months ended June 30, 2024, down from $1.2 million and $2.5 million for the three and six months ended June 30, 2023, respectively. The decrease in interest income is due to lower balances of invested cash and available-for-sale investments during the three and six months ended June 30, 2024, when compared to the three and six months ended June 30, 2023, offset in part by higher rates of interest earned on our investments.
Previous wording
A discussion of the change in the fair value of the warrant liabilities is included in Note 8 to our condensed consolidated financial statements for the three months ended March 31, 2024, included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
A discussion of the change in the fair value of the warrant liabilities is included in Note 8 to our condensed consolidated financial statements for the three and six months ended June 30, 2024, included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The change in fair value of our warrant liabilities for the three months ended March 31, 2024 and 2023, was a loss of $2.6 million and $0.9 million, respectively. The increase in loss for the three months ended March 31, 2024 was primarily due to the change in our stock price and related share price volatility.
Current wording
The change in fair value of our warrant liabilities for the three and six months ended June 30, 2024 was a gain of $2.1 million and a loss $0.5 million, respectively. The change in fair value of our warrant liabilities for the three and six months ended June 30, 2023 wasminimal and a loss of $0.9 million, respectively The change in fair value for the three and six months ended June 30, 2024 was primarily due to the change in our stock price and related share price volatility.
Previous wording
A discussion of the change in the fair value of the earn-out liabilities is included in Note 9 to our condensed consolidated financial statements for the three months ended March 31, 2024, included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
A discussion of the change in the fair value of the earn-out liabilities is included in Note 9 to our condensed consolidated financial statements for the three and six months ended June 30, 2024, included elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
The change in fair value of our earn-out liabilities for the three months ended March 31, 2024 and 2023, was a loss of $1.6 million and $0.3 million, respectively. The increase in loss for the three months ended March 31, 2024 was primarily due to the change in our stock price and related share price volatility.
Current wording
The change in fair value of our earn-out liabilities for the three and six months ended June 30, 2024 was a gain of $1.3 million and a loss of $0.3 million, respectively. The change in fair value of our earn-out liabilities for three and six months ended June 30, 2023 was a loss of $0.4 million and $0.6 million, respectively. The change in fair value for the three and six months ended June 30, 2024 was primarily due to the change in our stock price and related share price volatility.
Previous wording
We did not record income tax expense during the three months ended March 31, 2024 or 2023 due to the Company’s loss position and full valuation allowance.
Current wording
We did not record income tax expense during the three and six months ended June 30, 2024 or 2023 due to the Company’s loss position and full valuation allowance.
Previous wording
We have incurred net losses and negative cash flows since inception. Historically, we have financed our operations primarily through proceeds from the Business Combination (see Note 2 to our condensed consolidated financial statements for the three months ended March 31, 2024), issuance of common stock, preferred stock, warrants, convertible notes, venture backed debt and revenues. Our net losses were $75.1 million and $71.5 million for the years ended December 31, 2023 and 2022, respectively, and our net loss was$20.8 million for the three months ended March 31, 2024. We expect to continue to incur additional losses for the foreseeable future as we invest in research, development, and infrastructure consistent with our long-term business strategy. As of March 31, 2024, we had an accumulated deficit of $374.5 million.
Current wording
We have incurred net losses and negative cash flows since inception. Historically, we have financed our operations primarily through proceeds from the Business Combination (see Note 2 to our condensed consolidated financial statements for the three and six months ended June 30, 2024), issuance of common stock, preferred stock, warrants, convertible notes, venture backed debt and revenues. Our net losses were $75.1 million and $71.5 million for the years ended December 31, 2023 and 2022, respectively, and our net loss was$33.2 million for the six months ended June 30, 2024. We expect to continue to incur additional losses for the foreseeable future as we invest in research, development, and infrastructure consistent with our long-term business strategy. As of June 30, 2024, we had an accumulated deficit of $387.0 million.
Previous wording
We received net proceeds of $225.6 million from the closing of the Business Combination on March 2, 2022. During the three months ended March 31, 2024, we received proceeds of $12.8 million, from the sale of 10,056,799 shares of our common stock to B. Riley under a Purchase Agreement which has since terminated, because there are no remaining shares available for sale under the agreement. On March 15, 2024, we entered into an ATM Sales Agreement pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $100,000,000, subject to certain limitations as set forth in the ATM Sales Agreement. During the three months ended March 31, 2024, we received net proceeds of $11.0 million from the sale of 6,645,982 shares of our common stock under the ATM sales agreement. During the month of April 2024, we received an additional $9.0 million of net proceeds from the sale of 6,320,000 shares of common stock under the ATM sales agreement.
Current wording
We received net proceeds of $225.6 million from the closing of the Business Combination on March 2, 2022. During the three months ended March 31, 2024, we received proceeds of $12.8 million, from the sale of 10,056,799 shares of our common stock to B. Riley under a Purchase Agreement which has since terminated, because there are no remaining shares available for sale under the agreement. On March 15, 2024, we entered into an ATM Sales Agreement pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $100,000,000, subject to certain limitations as set forth in the ATM Sales Agreement. During the six months ended June 30, 2024, we received net proceeds of $26.8 million from the sale of 19,423,375 shares of our common stock under the ATM sales agreement. During the month of July 2024, we received an additional $12.0 million of net proceeds from the sale of 11,294,746 shares of common stock under the ATM sales agreement.
Previous wording
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 12 months, and to midway through the fourth quarter of 2025, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions. Based on our estimates and current business plan, we expect that we will need to obtain additional capital by midway through the fourth quarter of 2025 to fund our research and development efforts and business objectives as currently planned. Our estimate does not assume any additional financing and we cannot be sure that additional financing will be available. If we are unable to raise additional funding when needed and on attractive terms, we may be required to delay, limit or substantially reduce our quantum computing development efforts. We have based these estimates on assumptions that may prove to be wrong and we could use our available capital resources sooner than we currently expect, and future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section under Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
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 12 months, and to midway through the first quarter of 2026, based on our current business plan, and expectations and assumptions considering current macroeconomic conditions. Based on our estimates and current business plan, we expect that we will need to obtain additional capital to fund our research and development efforts and business objectives as currently planned. Our estimate does not assume any additional financing and we cannot be sure that additional financing will be available. If we are unable to raise additional funding when needed and on attractive terms, we may be required to delay, limit or substantially reduce our quantum computing development efforts. We have based these estimates on assumptions that may prove to be wrong and we could use our available capital resources sooner than we currently expect, and future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section under Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
We will require a significant amount of cash for expenditure as we invest in ongoing research and development and business operations. Until such time as we can generate significant revenue from sales of QPUs, our development contracts and other services, including our QCaaS offering, we expect to finance our cash needs primarily through our existing cash, cash equivalents and available-for-sale investments, potential securities financings or other capital sources. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.
Current wording
We will require a significant amount of cash for expenditure as we invest in ongoing research and development and business operations. Until such time as we can generate significant revenue from sales of QPUs, our development contracts and other services, including our QCaaS offerings, we expect to finance our cash needs primarily through our existing cash, cash equivalents and available-for-sale investments, potential securities financings or other capital sources. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.
Previous wording
Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed and on attractive terms, we may be required to delay, limit, or substantially reduce our quantum computing development efforts. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section under Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Furthermore, we currently have on file with the SEC an effective shelf registration statement on Form S-3, which allows us to offer and sell up to an aggregate amount of $250.0 million of any combination of common stock, common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon exercise of warrants from time to time, pursuant to which we have entered into an ATM offering for the sale of up to an aggregate amount of $100 million of common stock from time to time, of which $79.5 million of common stock remains available for sale as of the date hereof.
Current wording
Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed and on attractive terms, we may be required to delay, limit, or substantially reduce our quantum computing development efforts. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section under Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Furthermore, we currently have on file with the SEC an effective shelf registration statement on Form S-3, which allows us to offer and sell up to an aggregate amount of $250.0 million of any combination of common stock, common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon exercise of warrants from time to time, pursuant to which we have entered into an ATM offering for the sale of up to an aggregate amount of $100 million of common stock from time to time, of which $60.2 million of common stock remains available for sale as of the date hereof.
Previous wording
Financing obligations consist of payments related to the Loan and Security Agreement. Operating lease obligations consist of obligations under non-cancelable operating leases for our offices, facilities and equipment. The table above does not include amounts owed for purchases of capital equipment; supplies; materials; or fixed or minimum services under non-cancelable contracts.
Current wording
Financing obligations consist of payments related to the Amended Loan Agreement with Trinity Capital. Operating lease obligations consist of obligations under non-cancelable operating leases for our offices, facilities and equipment. The table above does not include amounts owed for purchases of capital equipment; supplies; materials; or fixed or minimum services under non-cancelable contracts.
Previous wording
Net cash used in operating activities during the three months ended March 31, 2024 was $13.1 million, primarily resulting from our net loss of $20.8 million, partially offset by non-cash expenses totaling $8.8 million. Changes in operating assets and liabilities had a $1.2 million negative impact on net cash used in operating activities during the three months ended March 31, 2024.
Current wording
Net cash used in operating activities during the six months ended June 30, 2024 was $26.7 million, primarily resulting from our net loss of $33.2 million, partially offset by non-cash expenses totaling $10.0 million. Changes in operating assets and liabilities had a $3.4 million negative impact on net cash used in operating activities during the six months ended June 30, 2024.
Previous wording
Net cash used in operating activities during thethree months ended March 31, 2023 was $15.5 million, primarily resulting from our net loss of $23.4 million, partially offset by non-cash expenses totaling $7.1 million. Changes in operating assets and liabilities had a $0.8 million negative impact on net cash used in operating activities during the three months ended March 31, 2023.
Current wording
Net cash used in operating activities during the six months ended June 30, 2023 was $33.6 million, primarily resulting from our net loss of $40.3 million, partially offset by non-cash expenses totaling $12.7 million. Changes in operating assets and liabilities had a $6.0 million negative impact on net cash used in operating activities during the six months ended June 30, 2023.
Previous wording
Cash used in operating activities was reduced by $2.4 million to $13.1 million during the three months ended March 31, 2024, from $15.5 million for the three months ended March 31, 2023. Our net loss from operations decreased by $2.6 million to $20.8 million for three months ended March 31, 2024. Non-cash charges impacting our net loss from operations increased by $1.7 million to $8.8 million during the three months ended March 31, 2024, from $7.1 million during the three months ended March 31, 2023. Operating assets and liabilities had a $0.4 million negative impact on the change in cash used in operating activities during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Current wording
Cash used in operating activities was reduced by $6.9 million to $26.7 million duringthe six months ended June 30, 2024, from $33.6 million for the six months ended June 30, 2023. Our net loss from operations decreased by $7.1 million to $33.2 million for the six months ended June 30, 2024. Non-cash charges impacting our net loss from operations decreased by $2.7 million to $10.0 million during the six months ended June 30, 2024, from $12.7 million during the six months ended June 30, 2023. Operating assets and liabilities had a $2.6 million favorable impact on the change in cash used in operating activities during the six months ended June 30, 2024, compared to the three months ended June 30, 2023.
Previous wording
Cash used in investing activities during the three months ended March 31, 2023 totaled $15.0 million, resulting from $38.5 million of purchases of available-for-sale securities and $4.8 million of purchases of property and equipment, offset in part by $28.3 million of maturities of available-for-sale securities.
Current wording
Cash used in investing activities during the six months ended June 30, 2024 totaled $7.0 million, resulting from $76.0 million of purchases of available-for-sale securities and $7.5 million of purchases of property and equipment, offset in part by $76.5 million of maturities of available-for-sale securities.
Previous wording
Cash provided by investing activities during the three months ended March 31, 2024 totaled $6.2 million, resulting from $39.0 million of maturities of available-for-sale securities, partially offset by $27.3 million of purchases of available-for-sale securities and $5.5 million of purchases of property and equipment.
Current wording
Cash used in investing activities during the six months ended June 30, 2023 totaled $2.8 million, resulting from $57.6 million of purchases of available-for-sale securities and $5.7 million of purchases of property and equipment, offset in part by $60.6 million of maturities of available-for-sale securities.
Previous wording
Net cash provided by investing activities during the three months ended March 31, 2024 increased by $21.2 million when compared to the three months ended March 31, 2023, primarily due to an increase in maturities of available-for-sale securities and decreased purchases of available-for-sale securities.
Current wording
Net cash used in investing activities during the six months ended June 30, 2024 increased by $4.2 million when compared to the six months ended June 30, 2023, primarily due to an increase in purchases of property and equipment and fluctuations in the level of investment in available-for-sale securities.
Previous wording
Cash Flows Provided by (Used in) Financing Activities
Current wording
Cash Flows Provided by Financing Activities
Previous wording
Cash provided by financing activities during the three months ended March 31, 2024 totaled $20.7 million. We received net proceeds of $12.8 million from the sale of 10,056,799 shares of common stock to B. Riley through our prior Purchase Agreement and net proceeds of $11.0 million from the sale of 6,645,982 shares of common stock pursuant to our ATM program. Proceeds from the sale of common stock were offset in part by principal payments of $3.0 million under the Loan Agreement and payments of $0.2 million for deferred offering costs.
Current wording
Cash provided by financing activities during the six months ended June 30, 2024 totaled $33.1 million. We received net proceeds of $12.8 million from the sale of 10,056,799 shares of common stock to B. Riley through our prior Purchase Agreement and net proceeds of $26.8 million from the sale of 19,423,375 shares of common stock pursuant to our ATM program. Proceeds from the sale of common stock were offset in part by principal payments of $6.2 million under the Amended Loan Agreement with Trinity Capital and payments of $0.4 million for deferred offering costs.
Previous wording
Cash used in financing activities during the three months ended March 31, 2023 totaled $1.2 million, reflecting $1.8 million of principal payments under the Loan Agreement and payments of $0.1 million for deferred offering costs, offset in part by proceeds from the exercise of stock options and warrants totaling $0.8 million.
Current wording
Cash provided by financing activities during the six months ended June 30, 2023 totaled $0.3 million, reflecting $2.3 million of proceeds from the sale of 1,869,419 shares of common stock to B. Riley through the Purchase Agreement and $0.9 million of proceeds from the exercise of stock options and warrants, offset in part by principal payments of $2.9 million under the Amended Loan Agreement with Trinity Capital and payments of $0.1 million for deferred financing costs.
Previous wording
Net cash provided by financing activities during the three months ended March 31, 2024 increased by $21.9 million when compared to the three months ended March 31, 2023, largely due to the sale of common through our prior Purchase Agreement with B. Riley and our ATM program. We expect to satisfy our cash needs primarily through on-hand cash, cash equivalents and available-for-sale investments, the sale of common stock through the ATM Agreement, subject to market and other conditions, and other potential securities financings or capital sources.
Current wording
Net cash provided by financing activities during the six months ended June 30, 2024 increased by $32.8 million when compared to thesix months ended June 30, 2023, primarily due to the sale of common stock through our prior Purchase Agreement with B. Riley and our ATM program in the six months ended June 30, 2024. We expect to satisfy our cash needs primarily through on-hand cash, cash equivalents and available-for-sale investments, the sale of common stock through the ATM Agreement, subject to market and other conditions, and other potential securities financings or capital sources.
Previous wording
Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions that affect revenue and expenses during the reporting periods. Our estimates are based on historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Current wording
This discussion and analysis of financial condition and results of operations is based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions pertaining to revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
Cash Flows Used in Investing Activities
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cash Flows Provided by (Used in) Investing Activities
Previous report — wording carried elsewhere
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP.