Description of Business | 1. DESCRIPTION OF BUSINESS Rigetti Computing Inc. and its subsidiaries (collectively, the “Company” or “Rigetti”), builds quantum computers and the superconducting quantum processors that power them. Through the Company’s Quantum Computing as a Service (“QCaaS”) platform, the Company’s machines can be integrated into any public, private or hybrid cloud. The Company offers product types of Platform, Research and Software Tools usage in application areas of benchmarking, chemical simulation, education/entertainment, machine learning, and optimization. The Company is located and headquartered in Berkeley, California. The Company also operates in Fremont, California, London, United Kingdom, Adelaide, Australia, British Columbia, Canada and Munich, Germany. The Company’s revenue is derived primarily from operations in the United States and the United Kingdom. Basis of Presentation On March 2, 2022 (the “Closing Date”), a merger transaction between Rigetti Holdings, Inc. (“Legacy Rigetti”) and Supernova Partners Acquisition Company II, Ltd. (“SNII”) was completed (the “Business Combination”, see Note 3). In connection with the closing of the Business Combination, the Company changed its name to Rigetti Computing, Inc. and all of SNII Class A ordinary shares and SNII Class B ordinary shares automatically converted into shares of common stock, par value $0.0001, of the Company (the “Common Stock”) on a one-for-one The Company determined that Legacy Rigetti was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (ASC) 805, Business Combination. The determination was primarily based on the following facts: • Former Legacy Rigetti stockholders have a controlling voting interest in the Company; • The Company’s board of directors as of immediately after the closing is comprised of eight board members, six seats occupied by previous Rigetti board members and one seat being occupied by a previous Supernova representative. The final eighth seat was filled by an individual who did not have ties to either Rigetti or Supernova pre-merger; • Legacy Rigetti management continues to hold executive management roles for the post-combination company and be responsible for the day-to-day Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Rigetti issuing stock for the net assets of SNII, accompanied by a recapitalization. The primary asset acquired from SNII was related to the cash amounts that was assumed at historical costs. Separately, the Company also assumed warrants that were deemed to be derivatives and meet liability classification subject to fair value adjustment measurements upon closing of the Business Combination (the “Closing”). No goodwill or other intangible assets were recorded as a result of the Business Combination. While SNII was the legal acquirer in the Business Combination, because Legacy Rigetti was deemed the accounting acquirer, the historical financial statements of Legacy Rigetti became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Rigetti prior to the Business Combination; (ii) the combined results of SNII and Legacy Rigetti following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Rigetti at their historical cost; and (iv) the Company’s equity structure for all periods presented. The equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, $0.0001 par value per share, issued to Legacy Rigetti shareholders and Legacy Rigetti convertible preferred shareholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Rigetti redeemable convertible preferred stock and Legacy Rigetti common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination. The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts, except share and per share amounts, in the notes are presented in thousands, unless otherwise specified. The condensed consolidated balance sheet as of December 31, 2021, included herein, was derived from the audited consolidated financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim results are not necessarily indicative of the results for any future interim period or for the entire year. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included as Exhibit 99.1 to the Company’s Current Report on Form 8-K, Risks and Uncertainties — COVID-19— COVID-19. COVID-19 COVID-19 Change in Fiscal Year — year-end year-end Restatement of Condensed Consolidated Financial Statements and Immaterial Correction of Prior-Period Errors On November 14, 2022, the audit committee of the Company’s board of directors (the “Audit Committee” ), based on the recommendation of, and after consultation with, the Company’s management, concluded that the Company’s previously issued unaudited interim condensed consolidated financial statements for the quarters ended March 31, 2022 and June 30, 2022 (the “Affected Financials”), as previously filed with the SEC, should no longer be relied upon and should be restated due to the matters described below. The unaudited condensed consolidated financial statements for the quarter ended June 30, 2022 are restated in this Quarterly Report on Form 10-Q/A, 10-Q Earn-out At the closing of the Company’s business combination with Supernova Partners Acquisition Company II Ltd. on March 2, 2022 (the “Closing”), (i) 2,479,000 shares of the Company’s “Common Stock, held by Supernova Partners II LLC (the “SPAC Sponsor”) (such shares, the “Promote Sponsor Vesting Shares”) became subject to vesting and are considered unvested and will only vest if, during the five year period following the Closing, the volume weighted average price of the Common Stock equals or exceeds $12.50 for any twenty trading days thirty consecutive trading days twenty trading days thirty consecutive trading days The Sponsor Vesting Shares are accounted for as liability classified instruments because the earn-out earn-out earn-out earn-out The Company assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No. 99, and concluded that the error is material to the Affected Financials based upon quantitative aspects of the error. The revised weighting used for the volatility assumption in the estimation of the fair value of the Sponsor Vesting Shares had the following impact on the unaudited condensed consolidated financial statements of the Company for the three and six months ended June 30, 2022 included in the Affected Financials: • a decrease in the Earn-out • a decrease in the gain from Change in the Fair Value of Earn-out • an increase in Net Loss and Net Loss per Share recorded in the unaudited condensed consolidated statement of operations for the period ended June 30, 2022 included in the Affected Financials; and • a decrease in the Change in the Fair value of Earn-out non-cash Earn-out Private Warrant Valuation Prior to the Business Combination, SNII issued 4,450,000 private placement warrants (“Private Warrants”). Each whole warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $11.50 per share, subject to adjustments and will expire five years after the Business Combination or earlier upon redemption or liquidation. The Company reassessed the calculations of fair value for its Private Warrants that are treated as derivative warrant liabilities for the periods ended March 31, 2022 and June 30, 2022. As part of the Company’s accounting for the derivative warrant liability related to the Private Warrants in connection with the preparation of the financial statements for the three months ended September 30, 2022, the Company evaluated the valuation assumptions used in estimating the fair value of the Private Warrants. During this evaluation, it was determined that the calculated volatility used in the valuation of the derivative warrant liability related to the Private Warrants was based on the assumption that such warrants were not subject to redemption at $10 per share but were subject to redemption at $18 per share. The Private Warrants, however, are not redeemable at either of these prices as long as the warrants are held by either the Sponsor or its permitted transferees. During the first two quarters of the 2022 fiscal year, the Private Warrants were held by the Sponsor; therefore, the Private Warrants were not redeemable at either price during such periods. The Company revised this assumption in the calculation of the volatility of the Private Warrants, which impacted the valuation of the liability related to the Private Warrants included in the Affected Financials. The Company assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No. 99, and concluded that the error is material to the Affected Financials based upon quantitative aspects of the error. The revised assumption used for the calculation of the volatility in the estimation of the fair value of the Private Warrants had the following impact on the unaudited condensed consolidated financial statements of the Company for the three and six months ended June 30, 2022 included in the Affected Financials: • an increase in the Derivative Warrant Liabilities recorded on the unaudited condensed consolidated balance sheet as of June 30, 2022 included in the Affected Financials; • an increase in the gain from the Change in the Fair Value of Derivative Warrant Liabilities for the three months ended June 30, 2022 and a decrease in the gain from the Change in the Fair Value of Derivative Warrant Liabilities for the six months ended June 30, 2022 included in the Affected Financials; • a decrease in Net Loss and Net Loss per Share for the three months ended June 30, 2022 and an increase in Net Loss and Net Loss per Share for the six months ended June 30,2022 included in the Affected Financials; and • a decrease in the Change in Fair value of Derivatives Liability recorded in the unaudited condensed consolidated statements of cash flows as supplemental disclosure of non-cash Additional Operating Expenses In addition, in connection with the preparation of the financial statements for the three months ended September 30, 2022, the Company completed its analysis with respect to the treatment of additional operating expenses relating to electrical utility fees for a portion of the electrical usage at its Berkeley location since 2019 that were not paid and recognized in prior periods. The Company has cumulatively recorded an accrual of $1.6 million as of June 30, 2022, which includes an accrual of $1.5 million recorded for the three months ended March 31, 2022, reflecting an out-of-period Trinity Warrant Valuation As part of the restatement of the financial statements for the quarters ended March 31, 2022 and June 30, 2022, the Company also recorded the correction of an immaterial error related to the valuation of the liability associated with the warrants issued to Trinity Capital Inc. in the restated financial statements for the quarter ended March 31, 2022, and reversed the out-of-period The Company recorded the following adjustments to correct the prior period errors in the financial statements as of and for the period ended June 30, 2022 such that the consolidated balance sheet and the year-to-date Restated Condensed Consolidated Balance Sheet (unaudited) As of June 30, 2022 As reported As adjusted - (a) As adjusted - (b) As adjusted - (c) As adjusted - (d) As adjusted - Total As restated Accrued expenses and other current liabilities $ 4,428 $ — $ 1,590 $ — $ — $ 1,590 $ 6,018 Total current liabilities 11,279 — 1,590 — — 1,590 12,869 Derivative warrant liabilities 8,944 — — — 3,204 3,204 12,148 Earn-out 8,925 (1,069 ) — — (1,069 ) 7,856 Total liabilities 54,765 (1,069 ) 1,590 — 3,204 3,725 58,490 Additional paid-in 401,290 6,170 — — (445 ) 5,725 407,015 Accumulated deficit (227,575 ) (5,101 ) (1,590 ) — (2,759 ) (9,450 ) (237,025 ) Total stockholders’ equity (deficit) 173,825 1,069 (1,590 ) — (3,204 ) (3,725 ) 170,100 Restated Condensed Consolidated Statements of Operations (unaudited) For the Three Months Ended June 30, 2022 As reported As adjusted - (a) As adjusted - (b) As adjusted - (c) As adjusted - (d) As adjusted - Total As restated Research and development $ 12,634 $ — $ 113 $ — $ — $ 113 $ 12,747 Total operating expenses 26,906 — 113 — — 113 27,019 Loss from operations (25,645 ) — (113 ) — — (113 ) (25,758 ) Change in fair value of derivate warrant liabilities 8,687 — — (1,331 ) 624 (707 ) 7,980 Change in fair value of earn-out 8,024 (1,458 ) — — — (1,458 ) 6,566 Total other income (expense), net 15,671 (1,458 ) — (1,331 ) 624 (2,165 ) 13,506 Net loss $ (9,974 ) $ (1,458 ) $ (113 ) $ (1,331 ) $ 624 $ (2,278 ) $ (12,252 ) Net loss per share attributed to common stockholders - basic and diluted $ (0.09 ) $ (0.02 ) $ (0.11 ) For the Six Months Ended June 30, 2022 As reported As adjusted - (a) As adjusted - (b) As adjusted - (c) As adjusted - (d) As adjusted - Total As restated Research and development $ 25,083 $ — $ 1,590 $ — $ — $ 1,590 $ 26,673 Total operating expenses 52,391 — 1,590 — — 1,590 53,981 Loss from operations (49,440 ) — (1,590 ) — — (1,590 ) (51,030 ) Change in fair value of derivate warrant liabilities 14,509 — — — (2,759 ) (2,759 ) 11,750 Change in fair value of earn-out 17,658 (5,101 ) — — (5,101 ) 12,557 Total other income (expense), net 28,996 (5,101 ) — — (2,759 ) (7,860 ) 21,136 Net loss $ (20,444 ) $ (5,101 ) $ (1,590 ) $ — $ (2,759 ) $ (9,450 ) $ (29,894 ) Net loss per share attributed to common stockholders - basic and diluted $ (0.24 ) $ (0.12 ) $ (0.36 ) Restated Condensed Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholder’s (Deficit) Equity (unaudited) as of June 30, 2022 For the Six Months Ended As reported As adjusted - (a) As adjusted - (b) As adjusted - (c) As adjusted - (d) As adjusted - Total As Restated Additional Paid-In $ 401,290 $ 6,170 $ — $ — $ (445 ) $ 5,725 $ 407,015 Accumulated deficit (227,575 ) (5,101 ) (1,590 ) — (2,759 ) (9,450 ) (237,025 ) Total Stockholders’ (Deficit) Equity 173,825 1,069 (1,590 ) — (3,204 ) (3,725 ) 170,100 Restated Condensed Consolidated Statement of Cash Flows (unaudited) For the Six Months Ended As reported As adjusted - (a) As adjusted - (b) As adjusted - (c) As adjusted - (d) As adjusted - Total As restated Net loss $ (20,444 ) $ (5,101 ) $ (1,590 ) $ — $ (2,759 ) $ (9,450 ) $ (29,894 ) Accrued expenses and other current liabilities 967 — 1,590 — — 1,590 2,557 Change in fair value of derivative warrant liabilities (14,509 ) — — — 2,759 2,759 (11,750 ) Change in fair value of earnout liability (17,658 ) 5,101 — — — 5,101 (12,557 ) Net cash used in operating activities (35,085 ) — — — — — (35,085 ) The cumulative impact of the error correction s accumulated deficit million, and the impact on stockholders’ equity (deficit) was million as of and for the period ended June 30, 2022. The impact on net loss was million for the three months ended June 30, 2022. The cumulative impact of the error correction on the Company’s net loss for the six months ended June 30, 2022 was $9.5 million. There was no impact to net cash used in operating activities for the six months ended June 30, 2022. |