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Investing in our securities involves a high degree of risk.
−Removed: Before you make a decision to buy our securities, in addition to the risks and uncertainties described above under “Special Note Regarding Forward-Looking Statements,” you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report.
+Added: Before you make a decision to buy our securities, in addition to the risks and uncertainties described above under “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report.
If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline, and you could lose all or part of your investment.
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• The quantum computing industry is competitive on a global scale and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers.
+Added: • We have experienced in the past, and could also suffer disruptions, outages, defects and other performance and quality problems with our quantum computing systems, our private cloud, our research and development activities, our testbeds, our facilities, or with the public cloud, internet, and other infrastructure on which they rely.
• Even if we are successful in developing quantum computing systems and executing our strategy, competitors in the industry may achieve technological breakthroughs that render our quantum computing systems obsolete or inferior to other products.
−Removed: We may be unable to reduce the cost per qubit, which may prevent us from pricing our quantum systems competitively.
+Added: • We may be negatively impacted by any early obsolescence of our quantum computing technology.
+Added: • We may be unable to reduce the cost per qubit sufficiently, 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 slower 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.
• If our computers fail to achieve a broad quantum advantage, our business, financial condition and future prospects may be harmed.
−Removed: We could suffer disruptions, outages, defects and other performance and quality problems with our quantum computing systems or with the public cloud and internet infrastructure on which they rely.
• We have and may continue to face supply chain issues that could delay the introduction of our product and negatively impact our business and operating results.
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• Our products may not achieve market success, but will still require significant costs to develop.
−Removed: We are highly dependent on our co-founders, and our ability to attract and retain senior management and other key employees is critical to our success.
+Added: • We are highly dependent on our key employees who have specialized knowledge, and our ability to attract and retain senior management and other key employees is critical to our success.
• We may not be able to accurately estimate the future supply and demand for our quantum computers, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue.
+Added: • Much of our revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations, acquisitions, or other means, our revenue may decrease substantially.
• Our systems depend on the use of a particular isotope of an atomic element that provides qubits for our ion trap technology.
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• Our future growth and success depend on our ability to sell effectively to large customers.
−Removed: Contracts with government and state agencies are subject to a number of challenges and risks.
−Removed: If our information technology systems, data, or physical facilities where our quantum computers are stored, or those of third parties upon which we rely, are or were compromised, we could experience adverse business consequences resulting from such compromise.
+Added: • If our information technology systems, data, or physical facilities, or those of third parties upon which we rely, are or were compromised, we could experience adverse business consequences resulting from such compromise.
• Unfavorable conditions in our industry or the global economy, could limit our ability to grow our business and negatively affect our results of operations.
−Removed: Government actions and regulations, such as tariffs and trade protection measures, may limit our ability to obtain products from our suppliers.
+Added: • Government actions and regulations, such as tariffs and trade protection measures, may adversely impact our business, including our ability to obtain products from our suppliers.
• Because our success depends, in part, on our ability to expand sales internationally, our business will be susceptible to risks associated with international operations.
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manufacturers.
+Added: • If our operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of our common stock may decline.
+Added: • Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to several factors, some of which are beyond our control, resulting in a decline in our stock price.
Risks Related to Our Financial Condition and Status as an Early Stage Company
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Our ability to generate revenues will largely be dependent on our ability to develop and produce quantum computers with increasing numbers of algorithmic qubits.
−Removed: As a result, our scalable business model has not been formed and our technical roadmap may not be realized as quickly as expected, or even at all.
−Removed: The development of our scalable business model will likely require the incurrence of a substantially higher level of costs than incurred to date, while our revenues will not substantially increase until more powerful, scalable computers are produced, that requires a number of technological advancements which may not occur on the currently anticipated
−Removed: timetable or at all.
+Added: As a result, our scalable business model has not been formed and it is possible that neither our December 2020 forward-looking technical roadmap nor our latest technical roadmap will be realized as quickly as expected, or even at all.
+Added: The development of our scalable business model will likely require the incurrence of a substantially higher level of costs than incurred to date, while our revenues will not substantially increase until more powerful, scalable computers are produced, which requires a number of technological advancements that may not occur on the currently anticipated timetable or at all.
As a result, our historical results should not be considered indicative of our future performance.
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As of December 31, 2023, we had an accumulated deficit of $352.1 million.
−Removed: We believe that we will continue to incur losses each year until at least the time we begin significant production and delivery of our quantum computers, which is not expected to occur until 2025, at the earliest, and may occur later, or never.
+Added: We believe that we will continue to incur losses each year until at least the time we begin significant production and delivery of our quantum computers.
Even with significant production, such production may never become profitable.
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We may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses.
−Removed: If we are unable to achieve and/or sustain profitability, or if we are unable to achieve the growth that we expect from these investments, it could have a material effect on our business, financial condition or results of operations.
+Added: If we are unable to achieve and/or sustain profitability, or if we are unable to achieve the growth that we expect from these investments, it could have a material adverse effect on our business, financial condition or results of operations.
Our business model is unproven and may never allow us to cover our costs.
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We have a limited frame of reference from which to evaluate the long-term performance of our products.
−Removed: There can be no assurance that we will be able to detect and fix any defects in our quantum computers prior to the sale to potential consumers.
+Added: There can be no assurance that we will be able to detect and fix any defects in our quantum computers prior to the sale to potential customers.
If our products fail to perform as expected, customers may delay deliveries, terminate further orders or initiate product recalls, each of which could adversely affect our sales and brand and could adversely affect our business, prospects and results of operations.
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Our management team may not successfully or effectively manage reporting obligations under federal securities laws.
−Removed: Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a
−Removed: significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to our management and growth.
+Added: Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to our management and growth.
The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected.
−Removed: It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.
+Added: We have and we may be required to
+Added: continue to expand our employee base and hire additional employees to support our operations as a public company, which will continue to increase our operating costs in future periods.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
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The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us.
−Removed: In addition, alternatives to quantum computing may present themselves and if they did, could substantially reduce the market for quantum computing services.
+Added: In addition, alternatives to quantum computing may present themselves, which could substantially reduce the market for quantum computing services.
Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with quantum computing solutions.
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Failure to adequately support and service our customers may inhibit our growth and ability to expand computing targets globally.
−Removed: There can be no assurance that our projections on which such targets are based will prove accurate or
−Removed: that the pace of growth or coverage of our customer infrastructure network will meet customer expectations.
+Added: There can be no assurance that our projections on which such targets are based will prove accurate or that the pace of growth or coverage of our customer infrastructure network will meet customer expectations.
Failure to grow at rates similar to that of the quantum computing industry may adversely affect our operating results and ability to effectively compete within the industry.
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• our ability to manage our growth;
+Added: • our ability to expand our sales into international markets;
• our ability to retain existing key management, integrate recent hires and attract, retain and motivate qualified personnel;
• the overall strength and stability of domestic and international economies.
−Removed: Unfavorable changes in any of these or other factors, most of which are beyond our control, could materially and adversely affect our business, financial condition and results of operations.
+Added: Unfavorable changes in any of these or other factors, many of which are beyond our control, could materially and adversely affect our business, financial condition and results of operations.
We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and we cannot be sure that additional financing will be available.
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In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans.
−Removed: Weakness and volatility in capital markets and the economy, in general or as a result of bank failures or macroeconomic conditions such as rising inflation and interest rates, could limit our access to capital markets and increase our costs of borrowing.
+Added: Weakness and volatility in capital markets and the economy, in general or as a result of bank failures or macroeconomic conditions such as high inflation and interest rates, could limit our access to capital markets and increase our costs of borrowing.
There can be no assurance that financing will be available to us on favorable terms, or at all.
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We have incurred losses during our history, do not expect to become profitable in the near future and may never achieve profitability.
−Removed: To the extent that we continue to generate taxable losses, unused losses will carry
−Removed: forward to offset future taxable income, if any, until such unused losses expire, if at all.
+Added: To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all.
As of December 31, 2023, we had U.S.
federal and state net operating loss carryforwards of approximately $143.4 million and $95.7 million, respectively.
−Removed: Our net operating loss carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities.
−Removed: Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), our federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of our stock.
+Added: Our net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service, and state tax authorities.
+Added: Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), our U.S.
+Added: federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of our stock.
An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
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• gate fidelity, error correction and miniaturization may not commercialize from the lab and scale as hoped or at all;
−Removed: it could prove more challenging and take materially longer than expected to operate parallel gates within a single ion trap and maintain gate fidelity;
+Added: • it could prove more challenging and take materially longer than expected to operate gates within a single ion trap with higher throughput while maintaining gate fidelity;
• the photonic interconnect between ion traps could prove more challenging and take longer to perfect than currently expected.
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• the gate speed in our technology could prove more difficult to improve than expected;
+Added: • it could take longer to incorporate modular architectures for additional cross-processor computational strength than currently expected, limiting our ability to realize the benefits of multicore technology;
• the scaling of fidelity with qubit number could prove poorer than expected, limiting our ability to achieve larger algorithmic qubits.
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As these markets continue to mature and new technologies and competitors enter such markets, we expect competition to intensify.
−Removed: Our current competitors include:
+Added: Our current competitors include (among others):
• large, well-established tech companies that generally compete in all of our markets, including Google, Microsoft, Amazon, Intel and IBM;
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• new or emerging entrants seeking to develop competing technologies.
−Removed: We compete based on various factors, including technology, performance, multi-cloud availability, brand recognition and reputation, customer support and differentiated capabilities, including ease of administration and use, scalability and reliability, data governance and security.
+Added: We compete based on various factors, including technology, price, performance, multi-cloud availability, brand recognition and reputation, customer support and differentiated capabilities, including ease of administration and use, scalability and reliability, data governance and security.
Many of our competitors have substantially greater brand recognition, customer relationships, and financial, technical and other resources, including an experienced sales force and sophisticated supply chain management.
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For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our platform or put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition.
−Removed: An element of our business is currently dependent upon our relationship with our cloud providers.
−Removed: There are no assurances that we will be able to commercialize quantum computers from our relationships with cloud providers.
−Removed: We currently offer our QCaaS on public clouds provided by AWS’s Amazon Braket, Microsoft’s Azure Quantum, and the Google Cloud Marketplace.
−Removed: The companies that own these public clouds have internal quantum computing efforts that are competitive to our technology.
−Removed: There is risk that one or more of these public cloud providers could use their respective control of their public clouds to embed innovations or privileged interoperating capabilities in competing products, bundle competing products, provide us with unfavorable pricing, leverage their public cloud customer relationships to exclude us from opportunities, and treat us and our customers differently with respect to terms and conditions or regulatory requirements than they would treat their similarly situated customers.
−Removed: Further, they have the resources to acquire or partner with existing and emerging providers of competing technology and thereby accelerate adoption of those competing technologies.
−Removed: All of the foregoing could make it difficult or impossible for us to provide products and services that compete favorably with those of the public cloud providers.
−Removed: Any material change in our contractual and other business relationships with our public cloud providers could result in harm to our brand and reputation and reduced use of our systems, which could have a material adverse effect on our business, financial condition and results of operations.
+Added: We have experienced in the past, and could also suffer future disruptions, outages, defects and other performance and quality problems with our quantum computing systems, our private cloud, our research and development activities, our testbeds, our facilities, or with the public cloud, internet, and other infrastructure on which they rely.
+Added: Our business depends on our quantum computing systems to be available.
+Added: We have experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with our systems.
+Added: We have also experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with the public cloud, internet, private data center providers, and other infrastructure like utility power, water supply, air conditioning, air compression, and other inputs on which our systems and their supporting services rely.
+Added: These problems can be caused by a variety of factors, including software or firmware updates, vulnerabilities and defects in proprietary software and open-source software, hardware components, human error or misconduct, capacity constraints, design limitations, denial of service attacks or other security-related incidents, foreign objects or debris, weather, construction, supply chain events, or accidents and other force majeure.
+Added: We do not have a contractual right with our public cloud providers that compensates us for any losses due to availability interruptions in the public cloud.
+Added: Any disruptions, outages, defects and other performance and quality problems with our quantum computing systems or with the public cloud, internet, and other infrastructure on which they rely, could result in reduced use of our systems, increased expenses, including service credit obligations, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
Even if we are successful in developing quantum computing systems and executing our strategy, competitors in the industry may achieve technological breakthroughs that render our quantum computing systems obsolete or inferior to other products.
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Without timely innovation and development, our quantum computing solutions could be rendered obsolete or less competitive by changing customer preferences or because of the introduction of a competitor’s newer technologies.
−Removed: We believe that many
−Removed: competing technologies will require a technological breakthrough in one or more problems related to science, fundamental physics or manufacturing.
+Added: We believe that many competing technologies will require a technological breakthrough in one or more problems related to science, fundamental physics or manufacturing.
While it is uncertain whether such technological breakthroughs will occur in the next several years, that does not preclude the possibility that such technological breakthroughs could eventually occur.
Any technological breakthroughs that render our technology obsolete or inferior to other products could have a material effect on our business, financial condition or results of operations.
−Removed: We may be unable to reduce the cost per qubit, which may prevent us from pricing our quantum systems competitively.
+Added: We may be negatively impacted by any obsolescence of earlier generations of our quantum computing technology.
+Added: We depreciate the cost of our quantum computing systems over their expected useful lives.
+Added: However, product cycles or quantum computing systems may change periodically due to changes in innovation in the industry, and we may decide to update our products or production processes more quickly than expected, resulting in obsolescence of all or part of our quantum computing systems prior to the end of the previously expected useful life.
+Added: Moreover, we may need to alter the way in which we deliver our products due to changes in engineering and production expertise and efficiency.
+Added: We may be unable to reduce the cost per qubit sufficiently, which may prevent us from pricing our quantum systems competitively.
Our projections are dependent on the cost per qubit decreasing over the next several years as our quantum computers advance.
These cost projections are based on economies of scale due to demand for our computer systems, technological innovation and negotiations with third-party parts suppliers.
−Removed: If these cost savings do not materialize, the cost per qubit may be higher than projected, making our quantum computing solution less competitive than those produced by our competitors, which could have a material effect on our business, financial condition or results of operations.
+Added: If these cost savings do not materialize, the cost per qubit may be higher than projected, making our quantum computing solution less competitive than those produced by our competitors, which could have a material adverse effect on our business, financial condition or results of operations.
+Added: An element of our business is currently dependent upon our relationship with our cloud providers.
+Added: There are no assurances that we will be able to commercialize quantum computers from our relationships with cloud providers.
+Added: We currently offer our QCaaS on public clouds provided by AWS’s Amazon Braket, Microsoft’s Azure Quantum, and the Google Cloud Marketplace.
+Added: The companies that own these public clouds have internal quantum computing efforts that are competitive to our technology.
+Added: There is risk that one or more of these public cloud providers could use their respective control of their public clouds to embed innovations or privileged interoperating capabilities in competing products, bundle competing products, provide us
+Added: with unfavorable pricing, leverage their public cloud customer relationships to exclude us from opportunities, and treat us and our end users differently with respect to terms and conditions or regulatory requirements than they would treat their similarly situated customers.
+Added: Further, they have the resources to acquire or partner with existing and emerging providers of competing technology and thereby accelerate adoption of those competing technologies.
+Added: All of the foregoing could make it difficult or impossible for us to provide products and services that compete favorably with those of the public cloud providers.
+Added: Any material change in our contractual and other business relationships with our public cloud providers could result in harm to our brand and reputation and reduced use of our systems, which could have a material adverse effect on our business, financial condition and results of operations.
The quantum computing industry is in its early stages and volatile, and if it does not develop, if it develops slower 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.
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However, such problems may never be solvable by quantum computing technology.
−Removed: If our clients and partners do not perceive the benefits of our solution, or if our solution does not drive member engagement, then our market may not develop at all, or it may develop slower than we expect.
+Added: If our clients and partners do not perceive the benefits of our solution, or if our solution does not drive customer engagement, then our market may not develop at all, or it may develop slower than we expect.
If any of these events occur, it could have a material adverse effect on our business, financial condition or results of operations.
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If any of these events occur, it could have a material adverse effect on our business, financial condition or results of operations.
−Removed: We could suffer disruptions, outages, defects and other performance and quality problems with our quantum computing systems or with the public cloud and internet infrastructure on which they rely.
−Removed: Our business depends on our quantum computing systems to be available.
−Removed: We have experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with our systems.
−Removed: 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.
−Removed: These problems can be caused by a variety of factors, including failed introductions of new functionality, vulnerabilities and defects in proprietary and open-source software, hardware components, human error or misconduct, capacity constraints, design limitations or denial of service attacks or other security-related incidents.
−Removed: We do not have a contractual right with our public cloud providers that compensates us for any losses due to availability interruptions in the public cloud.
−Removed: Any disruptions, outages, defects and other performance and quality problems with our quantum computing system or with the public cloud and internet infrastructure on which it relies, could result in reduced use of our systems, increased expenses, including service credit obligations, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.
We have and may continue to face supply chain issues that could delay the introduction of our product and negatively impact our business and operating results.
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• 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;
−Removed: any reductions or interruption in supply, including disruptions on our global supply chain as a result of the global chip shortage, or the Russia-Ukraine war and any indirect effects thereof;
+Added: • any reductions or interruption in supply, including disruptions on our global supply chain as a result of the global chip shortage, geopolitical tensions in and around Ukraine, Israel and other areas of the world and any indirect effects thereof;
• financial problems of either manufacturers or component suppliers;
+Added: • intentional sabotage by a malicious actor or actors;
• significantly increased freight charges, or raw material costs and other expenses associated with our business;
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To the extent we are unable to effectively develop and market a quantum computing system to address these challenges and attain market acceptance, our business, operating results and financial condition may be adversely affected.
−Removed: We are highly dependent on our co-founders, and our ability to attract and retain senior management and other key employees, such as quantum physicists and other key technical employees, is critical to our success.
+Added: In earlier stages of our life cycle, we were highly dependent on our key employees, including our founders.
+Added: As we are evolving from being a science company to an engineering company, our ability to attract and retain senior management and other key employees, such as quantum physicists and other key technical employees, is critical to our success.
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.
−Removed: Our future success is highly dependent on our ability to attract and retain our executive officers, key employees and other qualified personnel, including our co-founders, Jungsang Kim, our Chief Technology Officer, and Christopher Monroe, our Chief Scientist.
+Added: Our future success is highly dependent on our ability to attract and retain our executive officers, key employees and other qualified personnel, including our employees who have specialized knowledge.
As we build our brand and become more well known, there is increased risk that competitors or other companies may seek to hire our personnel.
−Removed: The loss of the services provided by these individuals will adversely impact the achievement of our business strategy.
+Added: The loss of the services provided by these individuals could adversely impact the achievement of our business strategy.
These individuals could leave our employment at any time, as they are “at will” employees.
−Removed: A loss of one of our co-founders, a member of senior management, or an engineer or other key employee particularly to a competitor, could also place us at a competitive disadvantage.
−Removed: Effective succession planning is also important to our long-term success.
−Removed: Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.
+Added: A loss of one of our key employees, particularly to a competitor, could also place us at a competitive disadvantage.
+Added: Effective succession planning is important to our long-term success, and failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.
Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees.
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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.
−Removed: If we cannot attract, train and retain qualified personnel, including our co-founders, 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.
+Added: 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.
We may not be able to accurately estimate the future supply and demand for our quantum computers, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue.
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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.
−Removed: If we fail to order sufficient quantities of product components in a timely manner, the delivery of quantum computers and related compute time to our potential customers could be delayed, which would harm our business, financial condition and operating results.
+Added: If we fail to order sufficient quantities of product components in a timely manner, the delivery of quantum computers and related compute time to our potential customers could be delayed.
+Added: Additionally, if we fail to accurately forecast customer demand, we may experience an excess or obsolescence of materials and supplies.
+Added: Excess or obsolete materials and supplies may result in write-downs or write-offs.
+Added: Our inability to effectively manage our forecasted supply and demand and on hand materials and supplies could adversely impact our results of operations and financial condition, and could result in loss of revenue, increased costs, or delays that could adversely impact customer success.
Our systems depend on the use of a particular isotope of an atomic element that provides qubits for our ion trap technology.
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While we are currently looking to engage additional suppliers, there is no guarantee we will be able to establish or maintain relationships with such additional suppliers on terms satisfactory to us.
−Removed: Reliance on any single supplier increases the risks associated with being unable to obtain the necessary atomic samples because the supplier may have laboratory constraints, can be subject to unanticipated shutdowns and/or may be affected by natural disasters and other catastrophic events.
+Added: Reliance on any single supplier
+Added: increases the risks associated with being unable to obtain the necessary atomic samples because the supplier may have laboratory constraints, can be subject to unanticipated shutdowns and/or may be affected by natural disasters and other catastrophic events.
Some of these factors may be completely out of our and our suppliers’ control.
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Programming for quantum computing requires unique tools, software, hardware, and development environments.
−Removed: We have focused our efforts on creating quantum computing hardware, the operating system for such hardware and a suite of low-level software programs that optimize execution of quantum algorithms on our hardware.
−Removed: Further up the software stack, we rely on third parties to create higher level quantum programming languages, SDKs, and application libraries.
+Added: We have focused our efforts on creating quantum computing hardware, the system control platform for such hardware and a suite of low-level software programs that optimize execution of quantum algorithms on our hardware.
+Added: Further up the software stack, we rely on third parties to create and advance higher level quantum programming languages, SDKs, and application libraries.
Such third-party software and programming is essential to operating our quantum computing products and services.
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We have entered into, and may enter into, contracts, partnerships and other arrangements with customers to develop, test and run quantum algorithms specific to their business.
−Removed: The success of these contracts and partnerships is dependent on our customer’s ability to implement useful and scalable algorithms for their portfolio.
+Added: The success of these contracts and partnerships is dependent on our customer’s ability to identify, implement, and realize useful and scalable algorithms for their portfolio at a speed commensurate with the pace of hardware, software, and technological development.
These arrangements are also dependent on the availability of time and resources to develop and optimize these algorithms.
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To the extent our customers are unable to effectively develop or utilize resources to advance algorithmic-use cases, our business, operating results and financial condition may be adversely impacted.
+Added: Much of our revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations or acquisitions, our revenue may decrease substantially.
+Added: We have a high degree of revenue concentration, and we expect to continue to experience significant revenue concentration for the foreseeable future.
+Added: Our customers’ demand for our products may fluctuate due to factors beyond our control.
+Added: A disruption in our relationship with any of our customers could adversely affect our business.
+Added: Our inability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue.
+Added: The loss of, or restrictions on our ability to sell to, one or more of our major customers, or any significant reduction in orders from customers could have a material adverse effect on our operating results and financial condition.
Our future growth and success depends in part on our ability to sell effectively to government entities and large enterprises.
−Removed: Our customers and potential customers include government agencies and large enterprises.
+Added: Our customers and potential customers include domestic and international government agencies and large enterprises.
Therefore, our future success will depend on our ability to effectively sell our products to such customers.
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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.
+Added: Additionally, such government contracts may limit our ability to do business with foreign governments or prevent us from selling our products in certain countries.
Government agencies and large organizations often undertake a significant evaluation process that results in a lengthy sales cycle.
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Cost cutting, including through consolidation and elimination of duplicative organizations, has become a major initiative for certain departments within the U.S.
−Removed: The funding of our programs is subject to the
+Added: The funding of our programs is subject to the overall U.S.
government budget and appropriation decisions and processes, which are driven by numerous factors, including geo-political events and macroeconomic conditions.
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In addition, reduction in government priorities and requirements could impact the funding, or the timing of funding, of our programs, which could negatively impact our results of operations and financial condition.
−Removed: Contracts with government and state agencies are subject to a number of challenges and risks.
−Removed: Contracts with government and state agencies are subject to a number of challenges and risks.
+Added: Contracts with domestic and international government and state agencies are subject to a number of challenges and risks.
+Added: Contracts with domestic and international government and state agencies are subject to a number of challenges and risks.
The bidding process for government contracts can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate revenue.
−Removed: We also must comply with laws and regulations relating to the formation, administration, and performance of contracts, which provide public sector customers rights, many of which are not typically found in commercial contracts.
+Added: We also must comply with both local and international laws and regulations relating to the formation, administration, and performance of contracts, which provide public sector customers rights, many of which are not typically found in commercial contracts.
For example, in 2021, the U.S.
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leadership in quantum computing, and in September 2022, the National Security Administration (NSA) shared guidance on the importance of cybersecurity readiness against would-be adversaries developing quantum systems.
+Added: In September 2023, the U.S.
+Added: Department of Defense increased its funding for the CHIPS Act, which will directly advance U.S.
+Added: technology in many areas, including quantum.
Any changes to government regulations as a result of this demonstrated focus on quantum computing could affect our ability to enter into, or the profitability of, contracts with government entities.
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geographies or with certain non-U.S.
+Added: Conversely, our perceived relationship with non-U.S.
+Added: governments or government entities could adversely affect our business prospects with the U.S.
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:
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• ability to maintain facility clearances required to perform on classified contracts for U.S.
−Removed: federal government and foreign government agencies, as applicable;
+Added: government and foreign government agencies, as applicable;
• 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;
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• the adoption of new laws or regulations or changes to existing laws or regulations;
−Removed: 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;
+Added: • budgetary constraints, including automatic reductions as a result of “sequestration,” operating under continuing resolutions, disruptions from government shutdowns, 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;
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• increased or unexpected costs or unanticipated delays caused by other factors outside of our control.
−Removed: Any such event or activity, among others, could cause governments and governmental agencies to delay or refrain entering into contracts with us and/or purchasing our computers in the future, reduce the size or timing of payment 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.
−Removed: If our information technology systems, data, or physical facilities where our quantum computers are stored, or those of third parties upon which we rely, are or were compromised, we could experience adverse business consequences resulting from such compromise.
−Removed: In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “Processing”) personal data and other sensitive information, including intellectual property, proprietary and confidential business data, trade secrets, sensitive third-party data, business plans, transactions, and financial information of our own, our partners, our customers, or other third parties (collectively, “Sensitive Data”).
−Removed: We and the third parties upon which we rely may process Sensitive Data, and, as a result, we and the third parties upon which we rely face a variety of evolving threats to our information technology systems, data, or physical facilities where our quantum computers are stored, including but not limited to ransomware attacks, which could cause security incidents.
−Removed: Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our Sensitive Data and information technology systems, and those of the third parties upon which we rely.
+Added: Any such event or activity, 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 payment 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.
+Added: If our information technology systems, data, or physical facilities, or those of third parties upon which we rely, are or were compromised, we could experience adverse business consequences resulting from such compromise.
+Added: In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “Processing”) personal data and other sensitive information, including intellectual property, proprietary and confidential business data, trade secrets, sensitive third-party data, business plans, transactions, and financial information of our own, our partners, our vendors and their own supply chains, our customers, or other third parties (collectively, “Sensitive Data”).
+Added: We and the third parties upon which we rely may process Sensitive Data, and, as a result, we and the third parties upon which we rely face a variety of evolving threats to our information technology systems, data, and physical facilities (such as those where our quantum computers are stored), including but not limited to ransomware attacks or advanced persistent threats, which could cause security incidents.
+Added: Additionally, Sensitive Data could be leaked, disclosed or revealed as a result of or in connection with our employee’s, personnel’s, or vendor’s use of generative AI technologies.
+Added: Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our Sensitive Data and information
+Added: technology systems, and those of the third parties upon which we rely.
Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
law enforcement agencies have indicated to us that quantum computing technology is of particular interest to certain threat actors, including nation state and other malicious actors, who may steal our Sensitive Data, including our intellectual property or other proprietary or confidential information, including our trade secrets.
+Added: Our employees, contractors, affiliates, and/or related parties may have already been directly targeted by nation state actors and may be so targeted in the future.
Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state and nation-state-supported actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
During times of war and other major conflicts, we, the third parties upon which we rely, and our customers 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 distribute our services.
−Removed: We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
+Added: We and the third parties upon which we rely may be subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
In particular, severe ransomware attacks are becoming increasingly prevalent and could lead to significant interruptions in our operations, loss of Sensitive Data and income, reputational harm, and diversion of funds.
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In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.
−Removed: Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our Sensitive Data (including proprietary information and intellectual property) or our information technology systems, or those of the third parties upon whom we rely.
+Added: Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our Sensitive Data (including proprietary information and intellectual property) or our information technology systems, or those of the
+Added: third parties upon whom we rely.
A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.
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We take steps to detect and remediate vulnerabilities in our information technology systems (including in our services), but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit vulnerabilities change frequently and, are often sophisticated in nature.
−Removed: Therefore, such vulnerabilities could be exploited but, may not be detected until after a
−Removed: security incident has occurred.
+Added: Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred;
+Added: and, we may not be able to anticipate or detect attacks or vulnerabilities, even after implementing these security measures.
These vulnerabilities pose material risks to our business.
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As a result, we may be unable to implement adequate preventative and responsive measures to stop or mitigate security breaches before or while they are occurring.
+Added: Finally, incidents that may appear to be minor when assessed individually, may become material, at a later date, when considered in the aggregate.
Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.
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Unfavorable conditions in our industry or the global economy, could limit our ability to grow our business and negatively affect our results of operations.
−Removed: Our results of operations may vary based on the impact of changes in our industry or the global economy on the company or our customers and potential customers.
−Removed: The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, higher interest rates and uncertainty about economic stability.
+Added: Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers and potential customers.
+Added: The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in customer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, higher interest rates and uncertainty about economic stability.
For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets and any future public health crises could result in similar impacts on the global economy.
−Removed: Similarly, the Russia-Ukraine war has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets.
+Added: Similarly, geopolitical tensions in and around Ukraine, Israel and other areas of the world have created extreme volatility in the global capital markets and are expected to have further global economic consequences, including disruptions of the global supply chain and energy markets, and further acts of war, terror, or responses to each could result in similar or increased impacts on the global economy.
Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.
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Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities.
−Removed: We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.
−Removed: Government actions and regulations, such as tariffs and trade protection measures, may limit our ability to obtain products from our suppliers.
+Added: We cannot predict the timing, location, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.
+Added: Government actions and regulations, such as tariffs and trade protection measures, may adversely impact our business, including our ability to obtain products from our suppliers.
Political challenges between the United States and countries in which our suppliers are located, including China, and changes to trade policies, including tariff rates and customs duties, trade relations between the United States and China and other macroeconomic issues could adversely impact our business.
Specifically, United States-China trade relations remain uncertain.
−Removed: The United States administration has announced tariffs on certain products imported into the United States with China as the country of origin, and China has imposed tariffs in response to the actions of the United States.
+Added: The United States administration imposes tariffs on certain products imported into the United States with China as the country of origin, and China has imposed tariffs in response to the actions of the United States.
+Added: government continues to add additional entities, in China and elsewhere, to restricted party lists impacting the ability of U.S.
+Added: companies to provide items, and, in certain cases, services, to these entities and, in some cases, to receive items or services from these entities.
+Added: government also continues to increase end-use restrictions on the provision of items and service to China and other countries including end-uses related to advanced computing.
There is also a possibility of future tariffs, trade protection measures or other restrictions imposed on our products or on our customers by the United States, China or other countries that could have a material adverse effect on our business.
−Removed: Our technology may be deemed a matter of national security and as such our customer base may be tightly restricted.
−Removed: We may accept government grants that place restrictions on our ability to operate.
+Added: In addition, the Chinese government exercises significant control over China’s economy through the allocation of resources, control of the incurrence and payment of foreign currency-denominated obligations, setting of monetary policy and provision of preferential treatment to particular industries or companies.
+Added: Changes in any of these policies, laws and regulations could adversely affect the overall economy in China or our Chinese suppliers, which could harm our business through higher supply costs, reduced availability or both.
+Added: Also, due to concerns with the security of products and services from certain telecommunications equipment and services companies based in China, U.S.
+Added: Congress has enacted bans on the use of certain Chinese-origin components or systems either in items sold to the U.S.
+Added: government or in the internal networks of government contractors and subcontractors (even if those networks are not used for government-related projects).
+Added: Further, the Chinese government has responded to these U.S.
+Added: actions by indicating its intention to develop an unreliable entity list, which may limit the ability of companies on the list to engage in business with Chinese counterparties.
+Added: In June 2022, the import restrictions contained in the Uyghur Forced Labor Prevention Act ("UFLPA") became effective.
+Added: The UFLPA creates a rebuttable presumption that any goods mined, produced or manufactured, wholly or in part, in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or produced by a listed entity, were made with forced labor and would therefore not be entitled to entry at any U.S.
+Added: Importers are required to present clear and convincing evidence that such goods are not made with forced labor.
+Added: While we do not source items from the XUAR or from listed parties, and we have increased our supply chain diligence, there is risk that our ability to import components and products may be adversely affected by the UFLPA.
+Added: Given the relatively fluid regulatory environment in China and the United States and uncertainty regarding how the U.S.
+Added: government or Chinese and other foreign governments will act with respect to tariffs and international trade agreements and policies, a trade war, further governmental action related to tariffs or international trade policies, or additional tax or other regulatory changes in the future could directly and adversely impact our financial results and results of operations.
+Added: We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, what products may be subject to such actions or what actions may be taken by the other countries in retaliation.
+Added: If we are unable to obtain or use components for inclusion in our products, if component prices increase significantly or if we are unable to export or sell our products to any of our customers, our business, liquidity, financial condition and/or results of operations would be materially and adversely affected.
Acquisitions, divestitures, strategic investments and strategic partnerships could disrupt our business and harm our financial condition and operating results.
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Any strategic transaction might not strengthen our competitive position, may increase some of our risks, and may be viewed negatively by our customers, partners or investors.
−Removed: Even if we successfully complete a strategic transaction, we may not be able to effectively integrate the acquired business, technology, systems, control environment, solutions, personnel or operations into our business.
−Removed: We may experience unexpected changes in how we are required to account for strategic transactions pursuant to accounting principles generally accepted in the United States of America (“U.S.
+Added: Even if we successfully complete a strategic transaction, we may not be able to effectively
+Added: integrate the acquired business, technology, systems, control environment, solutions, personnel or operations into our business.
+Added: We may experience unexpected changes in how we are required to account for strategic transactions pursuant to U.S.
GAAP and may not achieve the anticipated benefits of any strategic transaction.
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Because our success depends, in part, on our ability to expand sales internationally, our business will be susceptible to risks associated with international operations.
−Removed: We currently maintain offices and/or have personnel in the United States and Canada, and recently expanded operations to Germany, Israel, and Canada.
−Removed: We expect to continue to expand our international operations by developing a sales and operations presence in other international markets, which may include opening offices in new jurisdictions.
+Added: We currently maintain offices and/or have personnel in the United States, Canada, and Israel, and recently expanded into Germany and Switzerland.
+Added: We expect to continue to expand our international operations by developing our sales and operations presence in these and other international markets, which may include opening offices in new jurisdictions.
Any additional international expansion efforts that we are undertaking and may undertake may not be successful.
−Removed: In addition, conducting international operations subjects us to new risks,
−Removed: some of which we have not generally faced in the United States or other countries where we currently operate.
+Added: In addition, conducting international operations subjects us to new risks, some of which we have not generally faced in the United States or other countries where we currently operate.
These risks include, among other things:
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• 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;
−Removed: 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;
+Added: • 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 notices 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 partners;
+Added: • increased or unexpected supply chain challenges or delays;
• differing technology standards;
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• 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;
−Removed: 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;
+Added: • increased costs involved with recruiting and retaining an expanded employee population, including highly skilled workers and leaders in the quantum computing industry, outside the United States through cash and equity-based incentive programs, and 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 our foreign-based revenue or increase the cost of our foreign operations;
−Removed: global public health threats;
+Added: • global public health threats or geopolitical events such as tensions in and around Ukraine, Israel and other areas of the world;
• 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;
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Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful.
−Removed: invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business, financial condition, revenues, results of operations or cash flows will suffer.
+Added: If we invest substantial time and resources to expand our international operations and are unable to do so successfully, in a timely manner, our business, financial condition, revenues, results of operations or cash flows will suffer.
We may be unable to keep current with changes in government requirements as they change from time to time.
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Furthermore, we cannot predict the rate at which our quantum computers will be accepted in international markets by potential customers.
−Removed: We have a limited sales presence in Germany and Israel;
−Removed: and, as a result, our sales, support and engineering organization outside the United States is substantially smaller than our U.S.
+Added: Our sales, support and engineering organization outside the United States is substantially smaller than our U.S.
sales organization.
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Additionally, such foreign currency exchange rate fluctuations could make it more difficult to detect underlying trends in our business and results of operations.
+Added: We may attempt to mitigate a portion of these risks through foreign currency hedging based on our judgment of the appropriate trade-offs among risk, opportunity, and exposure.
+Added: Any future hedging activities may not offset the full, or in some cases any, adverse financial impact resulting from unfavorable movement in foreign currency exchange rates, which could adversely affect our financial condition and results of operations.
Our international operations may subject us to greater than anticipated tax liabilities.
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The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to any future intercompany arrangement or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.
−Removed: If such a challenge or disagreement were to occur, and our position
−Removed: was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.
−Removed: Our financial statements could fail to reflect adequate reserves to cover such a contingency.
+Added: If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.
+Added: Our consolidated financial statements could fail to reflect adequate reserves to cover such a contingency.
Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
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Our business is exposed to risks associated with litigation, investigations and regulatory proceedings.
−Removed: We may face legal, administrative and regulatory proceedings, claims, demands and/or investigations involving stockholder, consumer, competition and/or other issues relating to our business.
+Added: We may face legal, administrative and regulatory proceedings, claims, demands and/or investigations involving stockholders, customers, competition and/or other issues relating to our business.
Litigation and regulatory proceedings are inherently uncertain, and adverse rulings could occur, including monetary damages, or an injunction stopping us from engaging in certain business practices, or requiring other remedies, such as compulsory licensing of patents.
For example, on January 12, 2021, dMY Technology Group, Inc.
−Removed: II, dMY Sponsor II, LLC, dMY and dMY Sponsor III, LLC (“Sponsor”) accepted service of a lawsuit where we are named as counterclaim defendants in an underlying action by and between GTY Technology Holdings, Inc.
−Removed: (“GTY”), dMY Technology Group, Inc.
−Removed: and dMY Sponsor, LLC, dMY Sponsor II, LLC, dMY Technology Group Inc.
+Added: II, dMY Sponsor II, LLC, dMY, and dMY Sponsor III, LLC (“Sponsor”) accepted service of a lawsuit where they were named as counterclaim defendants in an underlying action by and between GTY Technology Holdings, Inc.
+Added: (“GTY”), dMY Technology Holdings Inc., dMY Sponsor, LLC, dMY Sponsor II, LLC, dMY Technology Group Inc.
II, dMY and Sponsor (collectively “dMY Defendants”) and Carter Glatt (“Glatt”) and Captains Neck Holdings LLC (“Captains Neck”), an entity of which Mr.
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The underlying lawsuit contains claims arising from Glatt’s termination of employment from GTY, including theft and misappropriation of confidential GTY information, breach of contract, breach of the duties of loyalty and fiduciary duty and conversion.
−Removed: Glatt has responded to the underlying lawsuit by adding members of the Sponsor and officers of dMY as additional counterclaim defendants (collectively with the dMY Defendants, Glatt and Captains Neck, the “Counterclaim Defendants”) and adding Dune Acquisition Holdings LLC, a newly formed special purpose acquisition company, as a counterclaimant and asserting claims for breach of contract, fraudulent misrepresentation, negligent misrepresentation, tortious interference with business relations, quantum meruit and unjust enrichment.
−Removed: The Counterclaim Defendants have denied the claims against them and have a motion to dismiss the suit.
+Added: Glatt responded to the underlying lawsuit by adding members of the Sponsor and officers of dMY as additional counterclaim defendants (collectively with the dMY Defendants Glatt and Captains Neck, the “Counterclaim Defendants”) and adding Dune Acquisition Holdings LLC, a newly formed special purpose acquisition company, as a counterclaimant and asserting claims for breach of contract, fraudulent misrepresentation, negligent misrepresentation, tortious interference with business relations, quantum meruit and unjust enrichment.
+Added: dMY and the Company have never employed Glatt nor maintained any business agreements with him.
+Added: The Counterclaim Defendants denied the claims against them and filed a motion to dismiss the suit.
+Added: During 2023, the court dismissed the claims against dMY Technology Group, Inc.
+Added: III (“dMY III”), the former legal registrant of IonQ, Inc and the case is now considered closed.
In May 2022, a securities class action complaint captioned Leacock v.
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IonQ, Inc., Case No.
−Removed: 8:22-cv-01306-DLB (the “Fisher Litigation”) was filed by a stockholder against the Company and certain of the Company’s current officers (the “IonQ Defendants”).
+Added: 8:22-cv-01306-DLB (the “Fisher Litigation”) was filed by a stockholder against the Company and certain of the Company’s current officers (“IonQ Defendants”).
Both the Leacock Litigation and Fisher Litigation, which have been consolidated into a single action, allege violations of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act and seek damages.
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The consolidated amended complaint was filed on November 22, 2022.
−Removed: As part of the consolidated amended complaint, certain members of the Company’s board of directors (the “Board”) as well as other dMY related defendants (“Additional Defendants”) have been added as defendants to the case.
+Added: As part of the consolidated amended complaint, certain members of the Company’s board of directors as well as other dMY-related defendants (“Additional Defendants”) have been added as defendants to the case.
On February 7, 2023, the IonQ Defendants and the Additional Defendants each filed a motion to dismiss the consolidated amended complaint.
−Removed: Both the IonQ Defendants and the Additional Defendants believe that the allegations in the various complaints are without merit and intend to defend the matters vigorously.
+Added: On March 23, 2023, lead plaintiffs filed their omnibus opposition to the motions to dismiss.
+Added: On April 26, 2023, the IonQ Defendants and the Additional Defendants each filed a reply in support of the motions to dismiss.
+Added: On September 28, 2023, the District Court of Maryland issued an order dismissing plaintiffs' claims against the IonQ Defendants and the Additional Defendants with prejudice and directed the clerk to close the case.
+Added: On October 26, 2023, the plaintiffs filed a motion for post-judgment relief, seeking to amend their consolidated amended complaint.
+Added: The IonQ Defendants and Additional Defendants filed oppositions to plaintiffs’ motion on December 1, 2023, and plaintiffs filed their reply on January 8, 2024.
+Added: Both the IonQ Defendants and Additional Defendants intend to defend the matters vigorously.
+Added: Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from the associated suit.
These proceedings and any additional investigations, inquiries or litigation by various regulators may harm our reputation regardless of the outcome of any such action.
The outcome of any litigation, regardless of its merits, is inherently uncertain.
−Removed: Any claims and lawsuits, and the disposition of such claims and lawsuits, could be
−Removed: time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims.
+Added: Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims.
Negative perceptions of our business may result in additional regulation, enforcement actions by the government and increased litigation, or harm to our ability to attract or retain customers or strategic partners, any of which may affect our business.
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We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy.
+Added: Certain of our activities are subject to regulations relating to use of radioactive material, compliance with which may be costly, and a failure to comply with these regulations may materially and adversely affect our business.
+Added: Various atomic species are used in trapped-ion systems in academic and commercial settings, including isotopes of elemental ions.
+Added: Some of these atomic isotopes are radioactive.
+Added: We use certain radioactive materials in our research, development, and production activities.
+Added: As a result of our utilization of radioactive material, we and some of our suppliers and distributors are subject to regulation by United States governmental authorities, such as the FDA, the Nuclear Regulatory Commission (“NRC”), and state and local regulatory agencies, which is intended to ensure we remain in compliance with laws governing products and activities which emit, produce, or control radiation.
+Added: These regulations govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale, marketing, and disposal of our activities and products.
+Added: We are also subject to international laws and regulations that apply to the utilization of radioactive materials.
+Added: These are often comparable to, if not more stringent than, the equivalent regulations in the United States.
+Added: Although we believe that our safety procedures for handling such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated.
+Added: In the event of such an accident, we could be held liable for any damages that result or penalized with fines, and any such liability could exceed our resources.
We are subject to requirements relating to environmental and safety regulations and environmental remediation matters, which could adversely affect our business, results of operation and reputation.
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• 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.
+Added: • granting the U.S.
+Added: government certain rights to inventions, data, software codes and related material that we develop under government-funded contracts and subcontracts, which may permit the U.S.
+Added: government to disclose or license this information to third parties, including, in some instances, our competitors;
+Added: • requirements to fulfill government contracts assigned ratings under the Defense Priorities and Allocations System Program ahead of our commercial contracts, which could prevent us from meeting our commercial customer contracts’ requirements or schedules;
• public disclosures of certain contract and company information;
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Our actual or perceived failure to comply with such obligations could lead to adverse business consequences.
−Removed: Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
+Added: Our data storage and processing activities, including the establishment and operation of future quantum data centers, may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other obligations relating to data privacy, data sovereignty and
+Added: Laws and regulations governing privacy, data protection and data sovereignty are rapidly evolving, extensive, complex, and include inconsistencies and uncertainties that may conflict with other rules or our practices.
+Added: Further, new laws, rules, and regulations could be enacted with which we are not familiar or with which our current practices do not comply.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
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Other states, such as Virginia and Colorado, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels.
+Added: Our employees and personnel use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal information in generative AI technologies is subject to various privacy laws and other privacy obligations.
Additionally, several states and localities have enacted measures related to the use of artificial intelligence and machine learning in products and services.
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We publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
−Removed: If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
+Added: If these policies, materials or statements are found to be deficient, lacking in
+Added: transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty.
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If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to:
−Removed: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);
+Added: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar events);
litigation (including class-action claims);
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Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management.
−Removed: In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions,
−Removed: settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.
+Added: In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.
We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.
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Customs regulations, and various economic and trade sanctions regulations administered by the U.S.
−Removed: Treasury Department’s Office of Foreign Assets Controls.
+Added: Treasury Department’s Office of Foreign Assets Control.
export control and economic sanctions laws include restrictions or prohibitions on the sale or supply of certain products, technologies, and services to U.S.
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and, in extreme cases, the incarceration of responsible employees or managers.
−Removed: In addition, changes in our products or technologies or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our products and technologies in international markets or, in some cases, prevent the export or import of our products and technologies to certain countries, governments or persons altogether.
+Added: In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements and have enacted laws that could limit our ability to distribute our products and technologies or could limit our end customers’ ability to implement our services in those countries.
+Added: Changes in our products or technologies or changes in applicable export or import laws and regulations also may create delays in the introduction and sale of our products and technologies in international markets or, in some cases, prevent the export or import of our products and technologies to certain countries,
+Added: governments or persons altogether.
Any change in export or import laws and regulations, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons or technologies targeted by such laws and regulations, could also result in decreased use of our products and technologies, or in our decreased ability to export or sell our products and technologies to existing or potential customers.
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For example, we license patents (some of which are foundational patents) and other intellectual property from the University of Maryland and Duke University on an exclusive basis.
−Removed: If the license agreement with these universities terminates, or if any of the other agreements under which we acquired or licensed, or will acquire or license, material intellectual property rights is terminated, we could lose the ability to develop and operate our business.
+Added: If the license agreement with these universities terminates, or if any of the other agreements under which we acquired or licensed, or will acquire or license, material intellectual property rights is terminated, we could lose our rights to use key technologies to develop and operate our business.
We are heavily reliant upon licenses to certain patent rights and other intellectual property from third parties that are important or necessary to the development of our products.
−Removed: In particular, our quantum computing technology is dependent on our license agreement with University of Maryland and Duke University.
−Removed: Significant intellectual property developed by our co-founders, Jungsang Kim, our Chief Technology Officer, and Christopher Monroe, our Chief Scientist, has been and is required to be assigned to the Universities as a result of Dr.
+Added: In particular, our quantum computing technology is dependent on our license agreement with University of Maryland and Duke University, or the Universities.
+Added: Significant intellectual property developed by our co-founders, Jungsang Kim, our Chief Technology Officer, and Christopher Monroe, has been and is required to be assigned to the Universities as a result of Dr.
Monroe’s employment by the Universities, and certain such intellectual property is licensed pursuant to the license agreement with the Universities.
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If we fail to comply with our obligations under these agreements, or we are subject to an insolvency-related event, the licensor may have the right to terminate these agreements, in which event we would not be able to develop, market or otherwise commercialize products covered by these agreements, including if any of the foregoing were to occur with respect to our license agreement with the Universities.
−Removed: Our business could significantly suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.
+Added: Our business could significantly suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, or if we are unable to enter into necessary licenses on acceptable terms.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues, and certain provisions in intellectual property license agreements may be susceptible to multiple interpretations.
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We may not be able to prevent unauthorized use of our intellectual property.
−Removed: We rely upon a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret
−Removed: laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies.
+Added: We rely upon a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies.
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.
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patents will be issued.
−Removed: Even if our patent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents will be contested, circumvented, invalidated or limited in scope in the future.
+Added: Even if our patent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents – including any of the issued patents exclusively licensed to us – will be contested, circumvented, invalidated, found to be unenforceable or limited in scope in the future.
The rights granted under any issued patents may not provide us with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement than in the United States.
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The intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications.
−Removed: In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that it needs to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results.
+Added: In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results.
We may face patent infringement and other intellectual property claims that could be costly to defend, result in injunctions and significant damage awards or other costs (including indemnification of third parties or costly licensing arrangements (if licenses are available at all)) and limit our ability to use certain key technologies in the future or require development of non-infringing products, services, or technologies, which could result in a significant expenditure and otherwise harm our business.
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The market price of our common stock may be highly volatile and may fluctuate or decline significantly in response to numerous factors, some of which are beyond our control.
+Added: It is possible that an active trading market will not be sustained.
The securities markets have experienced and continue to experience significant volatility.
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• announcements by competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, or capital commitments;
−Removed: the impact of any future bank failures, public health crises or geopolitical events such as the Russia-Ukraine war;
+Added: • the impact of any future bank failures, public health crises or geopolitical events such as tensions in and around Ukraine, Israel and other areas of the world;
• the impact of any of the foregoing on our management, employees, partners, customers, and operating results.
Following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against such company.
−Removed: Such litigation could result in substantial costs and a diversion of management’s attention and resources.
+Added: Such litigation could result in substantial costs and a diversion of
+Added: management’s attention and resources.
See also “ —Risks Related to Litigation and Government Regulation—Our business is exposed to risks associated with litigation, investigations and regulatory proceedings .”
+Added: If our operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of our common stock may decline.
+Added: We have historically and may continue to, but are not obligated to, provide public guidance on our expected operating and financial results for future periods.
+Added: Any such guidance will consist of forward-looking statements, subject to the risks and uncertainties described in this filing and in our other public filings and public statements.
+Added: Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty, such as the current global economic uncertainty being experienced.
+Added: If, in the future, our operating or financial results for a particular period do not meet any guidance provided or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline as well.
+Added: There can be no assurance that we will continue to issue public guidance in the future.
+Added: Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to several factors, some of which are beyond our control, resulting in a decline in our stock price.
+Added: Our quarterly operating results may fluctuate significantly because of several factors, including:
+Added: • labor availability and costs for hourly and management personnel;
+Added: • profitability of our products, especially in new markets;
+Added: • changes in interest rates;
+Added: • impairment of long-lived assets;
+Added: • macroeconomic conditions, both nationally and locally;
+Added: • size and scope of our revenue arrangements with our customers;
+Added: • negative publicity relating to our products;
+Added: • changes in customer preferences and competitive conditions;
+Added: • the loss of strategic relationships or existing contracts with any customer;
+Added: • lengthy customer sales cycle, leading to difficulty in forecasting the timing of purchasing decisions;
+Added: • expansion to new markets;
+Added: • fluctuations in commodity prices.
Short sellers may engage in manipulative activity intended to drive down the market price of our common stock, which could also result in related regulatory and governmental scrutiny, among other effects.
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Department of Justice, could result in a material diversion of our management’s time and could have a material adverse effect on our business and results of operations.
−Removed: There may not be an active trading market for our common stock or public warrants, which may make it difficult to sell such securities.
−Removed: It is possible that an active trading market will not be sustained.
−Removed: This would make it difficult for you to sell shares of our common stock or public warrants at an attractive price or at all.
Our ability to timely raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all.
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We cannot be certain when or if the operations of our business will generate sufficient cash to fund our ongoing operations or the growth of our business.
−Removed: We intend to make investments to support our current business and may require additional funds to respond to business challenges, including the need to develop or enhance our technology, improve our operating infrastructure or acquire complementary businesses and technologies.
+Added: We intend to make investments to support our current business and may require additional funds to respond to business challenges, including the need to develop or enhance our technology, improve our operating infrastructure or
+Added: acquire complementary businesses and technologies.
Additional financing may not be available on favorable terms, if at all.
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As a result, stockholders will bear the risk of future issuances of debt or equity securities reducing the value of their common stock and diluting their interest.
−Removed: A small number of stockholders will continue to have substantial control over us, which may limit other stockholders’ ability to influence corporate matters and delay or prevent a third party from acquiring control over us.
−Removed: As of December 31, 2022, our directors and executive officers of, and beneficial owners of 5% or more of our voting securities and their respective affiliates beneficially own, in the aggregate, approximately 20% of our outstanding common stock.
−Removed: This concentration of ownership may have a negative impact on the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders.
−Removed: In addition, these stockholders will be able to exercise influence over all matters requiring stockholder approval, including the election of directors and approval of corporate transactions, such as a merger or other sale of us or our assets.
−Removed: This concentration of ownership could limit stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit the other stockholders.
There can be no assurance that we will be able to comply with the continued listing standards of the New York Stock Exchange (“NYSE”).
If we fail to satisfy the continued listing requirements of NYSE, such as the corporate governance requirements or the minimum share price requirement, NYSE may take steps to delist our securities.
−Removed: delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so.
+Added: Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the NYSE minimum share price requirement or prevent future non-compliance with NYSE’s listing requirements.
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The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time-consuming, costly, and complicated.
−Removed: In connection with the preparation of our financial statements as of and for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting specifically related to our financial statement close process.
−Removed: Although we have remediated the material weakness as of December 31, 2022, there can be no assurance that the controls put in place will remain effective or that any additional controls needed will be designed and implemented timely to prevent material misstatements in our consolidated financial statements in future periods.
+Added: There can be no assurance that the controls put in place will remain effective or that any additional controls needed will be designed and implemented timely to prevent material misstatements in our consolidated financial statements in future periods.
If we identify material weaknesses in our internal control over financial reporting in the future, if we are unable to comply with the requirements of Section 404 of Sarbanes-Oxley Act of 2002 in a timely manner, or if we are unable to assert that our internal control over financial reporting is effective, we will be unable to certify that our internal control over financial reporting is effective.
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We could become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources.
−Removed: If our operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of our common stock may decline.
−Removed: We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods.
−Removed: Any such guidance will consist of forward-looking statements, subject to the risks and uncertainties described in this filing and in our other public filings and public statements.
−Removed: Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty, such as the current global economic uncertainty being experienced.
−Removed: If, in the future, our operating or financial results for a particular period do not meet any guidance provided or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline as well.
−Removed: Even if we do issue public guidance, there can be no assurance that we will continue to do so in the future.
−Removed: Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due several factors, some of which are beyond our control, resulting in a decline in our stock price.
−Removed: Our quarterly operating results may fluctuate significantly because of several factors, including:
−Removed: labor availability and costs for hourly and management personnel;
−Removed: profitability of our products, especially in new markets;
−Removed: changes in interest rates;
−Removed: impairment of long-lived assets;
−Removed: macroeconomic conditions, both nationally and locally;
−Removed: size and scope of our revenue arrangements with our customers;
−Removed: negative publicity relating to products we serve;
−Removed: changes in consumer preferences and competitive conditions;
−Removed: expansion to new markets;
−Removed: fluctuations in commodity prices.
We will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.
−Removed: We face increased legal, accounting, insurance, administrative and other costs and expenses as a public company that we did not incur as a private company.
+Added: We face increased legal, accounting, insurance, administrative and other costs and expenses as a public company.
Sarbanes-Oxley, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board (“PCAOB”) and the securities exchanges, impose additional reporting and other obligations on public companies.
−Removed: Compliance with public company requirements will continue to increase costs and make certain activities more time-consuming.
+Added: Compliance with public company requirements will continue to increase costs and make
+Added: certain activities more time-consuming.
A number of those requirements require us to carry out activities we have not done previously.
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Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
−Removed: We qualify as an emerging growth company as well as a smaller reporting company.
−Removed: The reduced public company reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.
−Removed: We qualify as an emerging growth company under SEC rules.
−Removed: As an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.
−Removed: These provisions include:
−Removed: (1) presenting only two years of audited financial statements;
−Removed: (2) presenting only two years of related selected financial data and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
−Removed: (3) an exemption from compliance with the auditor attestation requirement in the assessment of internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley;
−Removed: (4) not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
−Removed: (5) reduced disclosure obligations regarding executive compensation arrangements in periodic reports, registration statements, and proxy statements;
−Removed: (6) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: As a result, the information we provide will be different than the information that is available with respect to other public companies that are not emerging growth companies.
−Removed: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and the market price of our common stock may be more volatile.
−Removed: We will remain an emerging growth company until the earliest of:
−Removed: (1) December 31, 2025;
−Removed: (2) the last day of the fiscal year in which we have gross revenue exceeding $1.235 billion;
−Removed: (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three year period;
−Removed: and (4) the last day of the year in which we are deemed to be a large accelerated filer, which means the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
−Removed: Additionally, we qualify as a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
−Removed: Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
−Removed: We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of common stock held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter.
−Removed: To the extent we take advantage of such reduced disclosure obligations, this may also make comparison of our financial statements with other public companies difficult or impossible.
+Added: We no longer qualify as an emerging growth company as of December 31, 2023 and, as a result, we will no longer be able to avail ourselves of certain reduced reporting requirements applicable to emerging growth companies.
+Added: As a result of the market value of our common stock held by non-affiliates as of June 30, 2023 (the last day of our second quarter) exceeding $700.0 million, we became a large accelerated filer under the Exchange Act as of December 31, 2023, and no longer qualify as an “emerging growth company.” We were also a smaller reporting company as defined in the Exchange Act until June 30, 2023.
+Added: However, we may continue to use the scaled disclosures permitted for a smaller reporting company through our annual report on Form 10-K for the fiscal year ended December 31, 2023 and must begin providing non-scaled larger company disclosure in our first quarterly report in our next fiscal year (i.e., the quarterly report for the three-month period ended March 31, 2024).
+Added: As a large accelerated filer, we are subject to certain disclosure and compliance requirements that apply to other public companies but did not previously apply to us due to our status as an emerging growth company.
+Added: These requirements include, but are not limited to:
+Added: • the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);
+Added: • the requirement that we provide three years of audited financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”
+Added: • compliance with any requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or supplement to the auditors' report providing additional information about the audit and the financial statements;
+Added: • the requirement that we provide more detailed disclosures regarding executive compensation;
+Added: • compliance with the required public company effective dates for any new or revised accounting standards;
+Added: • the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.
+Added: We expect that compliance with these additional requirements will substantially increase our legal and financial compliance costs.
+Added: In addition, any failure to comply with these additional requirements in a timely manner, or at all, could have an adverse effect on our business and results of operations and could cause a decline in the price of our common stock.
We may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our common stock.
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• the amount of cash available per share, including for payment of dividends, if any, may decrease;
−Removed: the relative voting strength of each previously outstanding common stock may be diminished;
+Added: • the relative voting strength of each previously outstanding share of common stock may be diminished;
• the market price of our common stock may decline.
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Our public warrants are issued in registered form under the Warrant Agreement between the warrant agent and us.
−Removed: The Warrant Agreement provides that the terms of the public warrants may be amended without the
−Removed: consent of any holder to cure any ambiguity or correct any defective provision, 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.
+Added: The Warrant Agreement provides that the terms of the public warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, 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.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment.
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Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent an acquisition by a third party that could otherwise be in the interests of stockholders.
−Removed: Our second amended and restated certificate of incorporation (“Certificate of Incorporation”) and amended and restated bylaws (“Bylaws”) contain several provisions that may make it more difficult or expensive for a
−Removed: third party to acquire control of us without the approval of the Board.
+Added: Our second amended and restated certificate of incorporation (“Certificate of Incorporation”) and amended and restated bylaws (“Bylaws”) contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of the Board.
These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following:
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• limiting the ability of stockholders to act by written consent;
−Removed: restrictions on business combinations with interested stockholder;
+Added: • restrictions on business combinations with an interested stockholder;
• in certain cases, the approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal the Bylaws, or amend or repeal certain provisions of the Certificate of Incorporation;
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It further provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolutions of any complaint asserting a cause of action arising under the Securities Act.
−Removed: The exclusive forum clauses described above shall not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive
−Removed: jurisdiction.
+Added: The exclusive forum clauses described above shall not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
Although these provisions are expected to benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against directors and officers.
−Removed: The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation have been challenged in legal proceedings and there is uncertainty as to whether a court would enforce such provisions.
+Added: The enforceability of similar choice of forum provisions in other companies’ certificates of
+Added: incorporation have been challenged in legal proceedings and there is uncertainty as to whether a court would enforce such provisions.
In addition, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
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These provisions of our Certificate of Incorporation and Bylaws could discourage lawsuits against directors and officers, which could reduce the market price of our common stock.
−Removed: Unresolved Staff Comments.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.