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| PART I | |
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| Item 1. | Business | 5 |
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| Item 1A. | Risk Factors | 22 |
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| Item 1B. | Unresolved Staff Comments | 57 |
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| Item 1C. | Cybersecurity | 57 |
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| Item 2. | Properties | 58 |
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| Item 3. | Legal Proceedings | 58 |
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| Item 4. | Mine Safety Disclosures | 58 |
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| PART II | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 59 |
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| Item 6. | [Reserved] | 59 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 60 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 69 |
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| Item 8. | Financial Statements and Supplementary Data | 70 |
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| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 104 |
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| Item 9A. | Controls and Procedures | 104 |
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| Item 9B. | Other Information | 105 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 105 |
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| PART III | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 106 |
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| Item 11. | Executive Compensation | 106 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 106 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 106 |
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| Item 14. | Principal Accountant Fees and Services | 106 |
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| PART IV | |
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| Item 15. | Exhibits, Financial Statement Schedules | 107 |
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| | Exhibit Index | |
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| | Signatures | |
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Cautionary Note Regarding Forward-looking Statements
Unless the context requires otherwise, references in this report to “Rigetti”, the “Company”, “we”, “us”, and “our” refer to Rigetti Computing, Inc. and its consolidated subsidiaries.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. We have based these forward-looking statements on our current expectations and projections about future events. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “goal,” “objective,” “design,” “goal,” “seek,” “target,” “should,” “could,” “will,” “would” or the negative of such terms or other similar expressions.
These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Annual Report on Form 10-K.
We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. Forward-looking statements in this Annual Report on Form 10-K may include, for example, statements about:
| ● | the sufficiency of our cash resources, our expectations with respect to when we will need to obtain additional capital, including in connection with our investment commitments under the recent Collaboration Agreement (as defined below) entered into with Quanta Computer, Inc. (“Quanta”), and our ability to raise additional capital when needed and on attractive terms, |
| ● | our ability to close the Securities Purchase Agreement we entered into with Quanta, including the timing of receipt of regulatory clearance, |
| ● | our ability to achieve milestones, and/or technological advancements, including with respect to executing on our technology roadmap and developing practical applications, |
| ● | the potential of quantum computing and estimated market size and market growth including with respect to our long-term business strategies for sales of quantum computers and quantum computing as a service (“Quantum Computing as a Service,” or “QCaaS”), |
| ● | our ability and timeline to monetize our investments in quantum computing, if at all, |
| ● | the success of our partnerships and collaborations, including the recent Collaboration Agreement with Quanta, |
| ● | our ability to accelerate our development of multiple generations of quantum processors, |
| ● | customer concentration and the risk that a significant portion of our revenue currently depends on contracts with the public sector, |
| ● | the outcome of any legal proceedings that have or may be instituted against us or others, |
| ● | our ability to execute on our business strategy, including monetization of our products, |
| ● | our financial performance, growth rate and market opportunity, |
| ● | our ability to grow and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees, |
| ● | costs related to operating as a public company, |
| ● | our ability to maintain effective internal controls over financial reporting, |
| ● | changes in applicable laws or regulations, |
| ● | the possibility that we may be adversely affected by other economic, business, or competitive factors, |
| ● | the evolution of the markets in which we compete, |
| ● | our ability to implement our strategic initiatives, expansion plans and continue to innovate our existing products and services, |
| ● | unfavorable conditions in our industry, the global economy or global supply chain (including any supply chain impacts from future and ongoing military conflicts and wars around the world and sanctions related thereto), including international relations and tariffs, levels of future economic activity, inflation, interest rates and financial and credit market fluctuations, |
| ● | changes in applicable laws or regulations, including international trade measures, |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors. |
| ● | our estimates regarding expenses, profitability, future revenue, capital requirements and needs for additional financing, |
| ● | our ability or decisions to expand or maintain our existing customer base; and |
| ● | macroeconomic conditions, including global economic and geopolitical conditions, disruptions to and volatility and uncertainty in the credit and financial markets, uncertainty in levels of future economic activity, inflation and interest rates. |
These statements reflect our current views with respect to future events, are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, timeframes or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Additional information concerning these risks, uncertainties and other factors that may impact the operations, projections, and other forward-looking statements discussed herein can be found in the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.Given these risks, uncertainties, and other factors, you should not place undue reliance on these forward-looking statements. In addition, our goals and objectives are aspirational and are not guarantees or promises that such goals and objectives will be met. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we assume no obligation to update our forward-looking statements publicly, or to update the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Summary Risk Factors
Our business is subject to a number of risks of which you should be aware before making a decision to invest in our securities. These known and unknown risks, uncertainties and other factors include, without limitation:
| ● | We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations and may need additional capital sooner than planned. If we are unable to raise additional funding when needed, we may be required to delay, limit or substantially reduce our quantum computing development efforts. |
| ● | We are in our early stages and have a limited operating history, which makes it difficult to forecast our future results of operations. We have in the past failed to meet publicly announced milestones and may fail to meet projected technological milestones in the future. In addition, we have in the past changed our technology roadmap, including the anticipated milestones and timing thereof. |
| ● | We have a history of operating losses and expect to incur significant expenses and continuing losses for the foreseeable future. |
| ● | Even if the market in which we compete achieves its anticipated growth levels, our business could fail to grow at similar rates, if at all. |
| ● | Our ability to use net operating loss carryforwards and other tax attributes may be limited. |
| ● | We have not produced quantum computers with high qubit counts and we face significant barriers in our attempts to produce quantum computers, including the need to invent and develop new technology. If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail. |
| ● | Any future generations of hardware, including any future generations developed to achieve our targeted fidelities and qubit counts, or to demonstrate narrow quantum advantage or broad quantum advantage, may not occur on our anticipated timeline or at all. |
| ● | If our computers fail to achieve quantum advantage, our business, financial condition and future prospects may be harmed. Moreover, the standards by which we measure our progress may be based on assumptions and expectations that are not accurate or that may change as quantum computing evolves. |
| ● | The quantum computing industry is competitive on a global scale and we may not be successful in competing in this industry. |
| ● | We depend on a limited number of customers for a significant percentage of our revenue and the loss or temporary loss of a major customer for any reason could harm our financial condition. |
| ● | A significant portion of our revenue depends on contracts with the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business. |
| ● | Our business is currently dependent upon our relationship with our cloud providers. There are no assurances that we will be able to commercialize quantum computers from our relationships with cloud providers. |
| ● | We rely on access to high performance third party classical computing through public clouds, high performance computing centers and on-premises computing infrastructure to deliver performant quantum solutions to customers. We may not be able to maintain high quality business relationships and connectivity with these resources which could make it harder for us to reach customers or deliver solutions in a cost-effective manner. |
| ● | We depend on certain suppliers to source products. Failure to maintain our relationship with any of these suppliers could have a material adverse effect on our business. |
| ● | We have and may in the future enter into collaboration agreements and similar arrangements with third parties for the manufacturing of our products, and these arrangements may never achieve their goals. |
| ● | If we are unable to procure the necessary tools, supplies and equipment to build our quantum systems, or are unable to do so on a timely and cost-effective basis, and in sufficient quantities, we may incur significant costs or delays which could negatively affect our operations and business. |
| ● | Even if we are successful in developing quantum computing systems and executing our strategy, competitors in the industry may achieve technological breakthroughs which render our quantum computing systems obsolete or inferior to other products. |
| ● | We may be unable to reduce the cost of developing our quantum computers, which may prevent us from pricing our quantum systems competitively. |
| ● | The quantum computing industry is in its early stages and volatile, and if it does not develop, if it develops more slowly than we expect, if it develops in a manner that does not require use of our quantum computing solutions, if it encounters negative publicity or if our solution does not drive commercial engagement, the growth of our business will be harmed. |
| ● | We could suffer disruptions, outages, defects and other performance and quality problems with our quantum computing systems, our production technology partners or with the public cloud, data centers and internet infrastructure on which we rely. |
| ● | If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise. |
| ● | We have in the past identified material weaknesses in our internal control over financial reporting, leading to a restatement of our financial statements for prior periods. If we identify additional material weaknesses or if we otherwise fail to establish and maintain effective internal control over financial reporting, it may adversely affect our ability to accurately and timely report our financial results in the future, and may adversely affect investor confidence, our reputation, our ability to raise additional capital and our business operations and financial condition. |
| ● | Our failure to obtain, maintain and protect our intellectual property rights could impair our ability to protect and commercialize our proprietary products and technology. |
| ● | Sales of our securities, or perceptions of sales, by us or holders of our securities in the public markets or otherwise could cause the market price for our securities to decline and even in such case certain holders of our securities may still have an incentive to sell our securities. |
| ● | Unstable market and economic conditions have had and may continue to have serious adverse consequences on our business, financial condition and share price. |
| ● | Our warrants, including our public warrants, each entitling the holder to purchase one share of our common stock at an exercise price of $11.50 per share, that trade on the Nasdaq Capital Market under the ticker symbol “RGTIW” (“Public Warrants”), private placement warrants, each entitling the holder to purchase one share of our common stock at an exercise price of $11.50 per share (“Private Warrants”), and our Sponsor Vesting Shares (as defined herein) are accounted for as liabilities and the changes in value of our Public Warrants, Private Warrants and Sponsor Vesting Shares could have a material effect on our financial results. |
| ● | Our outstanding warrants and stock options are exercisable for Common Stock. We also issue restricted stock units to our employees. The exercise of our outstanding warrants and stock options and vesting of our outstanding restricted stock units increases the number of shares eligible for future resale in the public market, resulting in dilution to our stockholders. |
