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Item 1. Business

2023-03-30 compared with 2022-03-28 · 108 added, 136 removed, 350 unchanged (41% of the section changed)

We are developing quantum computers designed to solve the world’s most complex problems, and transform business, society and the planet for the better.

We believe that our proprietary technology, its architecture and the technology exclusively available to us through license agreements will offer us advantages both in terms of research and development, as well as the commercial value of our intended product offerings.

We are developing quantum computers designed to solve some of the world’s most complex problems, and transform business, society and the planet for the better.

We believe that our proprietary technology, our architecture and the technology exclusively available to us through license agreements will offer us advantages both in terms of research and development, as well as the commercial value of our intended product offerings.

Today, we sell access to several quantum computers of various qubit capacities and are in the process of researching and developing technologies for quantum computers with increasing computational capabilities.

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This cloud-based approach enables the broad availability of quantum-computing-as-a-service (“QCaaS”).

We are is still in the early stages of commercial growth.

We supplement our QCaaS offering with professional services focused on assisting our customers in applying quantum computing to their businesses.

We also expect to sell full quantum computing systems to customers, either over the cloud or for local access.

We are still in the early stages of commercial growth.

Since our inception, we have incurred significant operating losses.

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As of December 31, 2022, we had an accumulated deficit of $194.3 million.

We expect that trend to continue for the next few years as we prioritize reaching the technical milestones necessary to achieve an increasingly higher number of stable qubits and higher levels of fidelity than that which presently exists—prerequisites for quantum computing to reach broad quantum advantage.

We expect to continue to incur losses for the foreseeable future as we prioritize reaching the technical milestones necessary to achieve an increasingly higher number of stable qubits and higher levels of fidelity than presently exists—prerequisites for quantum computing to reach broad quantum advantage.

The Quantum Opportunity

Throughout human history, technological breakthroughs have dramatically transformed society and altered the trajectory of economic productivity.

century, it was the industrial revolution, powered by the scientific advances that brought us steam-powered machines, electricity, and advanced medicine.

In the 19th century, it was the industrial revolution, powered by the scientific advances that brought us steam-powered machines, electricity, and advanced medicine.

These technologies drastically improved human productivity and lengthened life expectancy.

century, computing—arguably the greatest of all human inventions—leveraged human intelligence to run complex calculations, paving the way for profound advances in virtually every realm of human experience, including information processing, communication, energy, transportation, biotechnology, life sciences, agriculture and industry.

Since classical computing emerged in the mid-twentieth

century, there has been exponential progress in computer design, with processing power roughly doubling every few years (Moore’s law).

In the 20th century, computing—arguably the greatest of all human inventions—leveraged human intelligence to run complex calculations, paving the way for profound advances in virtually every realm of human experience, including information processing, communication, energy, transportation, biotechnology, pharmaceuticals, agriculture and industry.

Since classical computing emerged in the mid-twentieth century, there has been exponential progress in computer design, with processing power roughly doubling every few years (Moore’s law).

The true economic and social impact of computing is difficult to measure because it has so thoroughly permeated every aspect of life, altering the trajectory of society.

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Quantum computing uses information in a fundamentally different way than classical computing.

Quantum computers are based on quantum bits (qubits), a fundamental unit that can exist in both states 0 and 1 simultaneously

(superposition).

As a result, we believe that quantum computers can address a set of hard problems classical computing may never solve.

Quantum computers are

based on quantum bits (qubits), a fundamental unit that can exist in both states 0 and 1 simultaneously (superposition).

As a result, we believe that quantum computers can address a set of problems classical computing may never solve.

The types of problems that currently defeat classical computing include:

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There are certainly thousands, if not millions, of important and fundamental unanswered questions about how the universe works and opportunities associated with the answers to those questions.

We envision a future powered by quantum computing and believe the 21 st

century is poised to be the dawn of this era.

We envision a future powered by quantum computing and believe the 21st century is poised to be the dawn of this era.

Our mission is to be the leading quantum computing company enabling the new era of quantum computing.

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We intend to build upon our technological lead by leveraging our world-class team of leaders and engineers who are pioneers in quantum computing, with proven track records in innovation and technical leadership.

To date, we have developed and assembled six generations of quantum computer prototypes and systems, have constructed quantum operating systems and software tools, and have worked with leading cloud vendors, quantum programming languages and quantum software development kits.

To date, we have developed and assembled eight generations of quantum computer prototypes and systems, have constructed quantum operating systems and software tools, and have worked with leading cloud vendors, quantum programming languages and quantum software development kits (“SDKs”).

Offering QCaaS .

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We plan to manufacture, own and operate quantum computers, with compute units offered on a usage basis.

Our quantum computing solution is currently delivered via AWS Amazon Braket, Microsoft’s Azure Quantum and Google’s Cloud Marketplace.

Our quantum computing solution is currently delivered via AWS’s Amazon Braket, Microsoft’s Azure Quantum and Google’s Cloud Marketplace.

We believe that by offering QCaaS, we can accelerate the adoption of our quantum computing solutions, while efficiently promoting quantum computing across our partner ecosystems.

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Continuing to Enhance Our Proprietary Position .

We have exclusively licensed our core technology from the University of Maryland and Duke University, and our complex technology is protected by an extensive patent portfolio.

We have exclusively licensed our core technology from the University of Maryland and Duke University (together, the “Universities”), and our complex technology is protected by an extensive patent portfolio.

We intend to continue to drive innovation in quantum computing and seek intellectual property protection where appropriate to enhance our proprietary technology position.

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The potential uses for quantum applications are widespread and address a number of problems that would be impossible to solve using classical computing technology.

According to a 2020 report from P&S Intelligence, the

total addressable market of quantum computing is expected to be approximately $65 billion by 2030.

According to a 2020 report from P&S Intelligence, the total addressable market of quantum computing is expected to be approximately $65 billion by 2030.

Below are a few of the use cases in which we believe quantum computers, if they are successfully developed, will become an important tool for businesses to remain competitive in the market over the coming years.

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If future generations of more powerful quantum computers are successfully developed, we believe that we could improve the speed and accuracy of virtual high-throughput screening and improve the molecular docking predictions used in structure-based drug discovery, dramatically reducing the development cost of new drugs and reducing the time to market.

Similarly, we believe that developing a detailed understanding of chemical reactions critical to various industries, such as catalytic reaction in battery chemistry for electric vehicles, can lead to higher performing solutions with extended energy storage capacity.

Quantum Algorithms for Monte Carlo Simulations

Monte Carlo simulations are probability simulations used to calculate the expected distribution of possible outcomes in hard-to-predict

processes involving random variables.

Monte Carlo simulations are probability simulations used to calculate the expected distribution of possible outcomes in hard-to-predict processes involving random variables.

Such simulations are used pervasively in finance, banking, logistics, economics, engineering and applied sciences.

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Optimization problems have enormous economic significance in many industries, and they often cannot be solved with classical computers due to their daunting complexity.

Quantum algorithms are naturally suited for problems in which an exponential number of possibilities must be considered before an optimized output can be identified.

Quantum algorithms are naturally suited for

problems in which an exponential number of possibilities must be considered before an optimized output can be identified.

It is widely believed that quantum computers will be able to arrive at a better approximate optimization solution than classical computers can, and with reduced computational cost and time.

One method of quantum optimization is a hybrid method called the Quantum Approximate Optimization Algorithm, in which layers of quantum computations are executed within circuit parameters optimized using classical high-

performance computers.

Because optimization issues bedevil so many complicated processes in industries ranging from logistics to pharmaceutical drug design to climate modeling, the application of quantum algorithms to optimization problems could have far-reaching

impacts on society.

Quantum Machine Learning

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Similarly, there are probability distributions that can only be efficiently distinguished from each other using a quantum computer.

In these examples, models utilizing quantum circuits can be used to capture complex internal structures in the data set much more effectively than classical models.

In other words, quantum computers can “learn” things that are beyond the capabilities of classical computers.

Quantum computing is likely to offer new machine-learning modalities, greatly improving existing classical machine learning when used in tandem with it.

Examples of areas where quantum machine learning could have an impact are risk analysis in finance, natural language processing, and classification of multivariate chemical data.

Examples of areas where quantum machine learning could have an impact are risk analysis in finance, natural language processing, and classification of multivariate data such as images and chemical structures.

Machine learning is used broadly in industry today, and we believe quantum machine learning could have a similarly broad impact.

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This last stage will see large modular quantum computers with enough power to tackle a wide array of commercial applications relevant to many sectors of the economy.

At this stage, classical computers are expected to no longer compete with quantum computers in many fields.

this stage, classical computers are expected to no longer compete with quantum computers in many fields.

The technical barrier will be the adoption of a modular quantum computer architecture that allows the scalable manufacturing of large quantum computer systems.

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Quantum computers are difficult to build and operate because the physical system of qubits must be nearly perfectly isolated from its environment to faithfully store quantum information.

Yet the system must also be

precisely controlled through the application of quantum gate operations, and it must ultimately be measured with high accuracy.

Yet the system must also be precisely controlled through the application of quantum gate operations, and it must ultimately be measured with high accuracy.

A practical quantum computer requires well-isolated, near-perfect qubits that are cheap, replicable and scalable, along with the ability to initialize, control and measure their states.

Breakthroughs in physics, engineering, and classical computing were prerequisites for building a quantum computer, which is why for many decades the task was, and in some cases remains, beyond the limits of available technology.

Breakthroughs in physics, engineering, and classical computing were prerequisites for building a quantum computer, which is why for many decades the task was beyond the limits of available technology.

To execute computational tasks, a quantum computer must be able to (i) initialize and store quantum information in qubits, (ii) operate quantum gates to modify information stored in qubits and (iii) output measurable results.

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Various aspects of a photon, such as presence/absence, polarization, frequency (color) or its temporal location can be used to represent a qubit.

Solid state :

In solid-state-based quantum computers, the qubits are engineered into the system.

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We have adopted the atom-based approach described above and use trapped atomic ions as the foundational qubits to construct practical quantum computers.

We are pursuing a modular computing architecture to scale their quantum computers, meaning that, if successful, individual quantum processing units will be connected to form increasingly powerful systems.

We are pursuing a modular computing architecture to scale our quantum computers, meaning that, if successful, individual quantum processing units will be connected to form increasingly powerful systems.

We believe that the ion trap approach offers the following advantages over other approaches:

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Trapped ion quantum computers can run at room temperature :

Solid-state qubits currently require temperatures close to absolute zero (i.e., -273.15°

C, or -459.67°

F) to minimize external interference and noise levels.

Solid-state qubits currently require temperatures close to absolute zero (i.e., -273.15°C, or -459.67°F) to minimize external interference and noise levels.

Maintaining the correct temperature requires the use of large and expensive dilution refrigerators, which can hamper a system’s long-term scalability because the cooling space, and hence the system space, is limited.

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This is because the qubits themselves are not in thermal contact with the environment, as they are electromagnetically confined in free space inside a vacuum chamber.

The laser-cooling of the qubits themselves is extremely efficient because the atomic ions have very little mass and this requires just a single low-power

laser beam (microwatts).

Although modest cryogenics (< 10 degrees above absolute zero) can be used to dramatically improve the vacuum environment, the inherent properties of the qubits themselves do not degrade at room temperature.

The laser-cooling of

the qubits themselves is extremely efficient because the atomic ions have very little mass and this requires just a single low-power laser beam (microwatts).

This allows us to minimize the system size as technology progresses, while scaling the compute power and simultaneously reducing costs.

All-to-all connectivity :

In superconducting and other solid-state architectures, individual qubits are connected via physical wires, hence a particular qubit can only communicate with a further-removed qubit by going through the qubits that lie in-between.

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Ion trap chips consist of electrodes and their electrical connections, which are built using existing technologies.

The trap chips themselves are not

quantum materials.

The trap chips themselves are not quantum materials.

They simply provide the conditions for the ion qubits to be trapped in space, and in their current state, they can be fabricated with existing conventional and standard silicon or other micro-fabrication technologies.

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Technological Complexity Creates Significant Barriers to Entry

Alongside the benefits of the trapped ion approach, there are several challenges inherent in it that serve as barriers-to-entry,

strengthening the advantages of our systems.

Alongside the benefits of the trapped ion approach, there are several challenges inherent in it that serve as barriers-to-entry, strengthening the advantages of our systems.

These key challenges include:

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One of the challenges of trapped ion quantum computing is the set of lasers required and the degree to which they must be stable to operate the system.

Traditionally, these laser systems were assembled on an optical table on a component-by-component

basis, which led to serious stability and reliability issues.

Traditionally, these laser systems were assembled on an optical table on a component-by-component basis, which led to serious stability and reliability issues.

We believe that we have resolved this issue from an engineering standpoint and that our future roadmap will further improve manufacturability.

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The conventional method to achieve UHV conditions for ion trapping experiments involves using vacuum chamber designs with carefully chosen materials, assembly procedures with cumbersome electrical connections, and a conditioning procedure to prepare and bake the chamber at elevated temperatures for extended periods of time.

We have developed new approaches that we believe will substantially reduce the time and cost to prepare the UHV environment to operate the quantum computer.

Executing high fidelity gates with all-to-all

We have developed new approaches, such as environmental conditioning, that we believe will substantially reduce the time and cost to prepare the UHV environment to operate the quantum computer.

Executing high fidelity gates with all-to-all connectivity :

While trapped ion qubits feature the highest fidelity entangling gates, it is nevertheless a major technical challenge to design a control scheme that enables all qubits in a system to form gates with each other under full software control.

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We expect that our future quantum computers based on barium ions will be faster, more powerful, more easily interconnected, and that feature more uptime for customers.

Moreover, we believe that as systems with other qubit technologies scale up, their restricted connectivity and high error-correction overhead will significantly slow down their overall computation time, which we believe will make the trapped ion approach more competitive in terms of operational speed.

Moreover, we believe that as systems with other qubit technologies scale up, their restricted

connectivity and high error-correction overhead will significantly slow down their overall computation time, which we believe will make the trapped ion approach more competitive in terms of operational speed.

Our Trapped Ion Implementation

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QPUs can have several cores, or zones for trapping chains of ions, comparable to multicore central processing unit (“CPU”) chips in classical computing.

Each core can contain up to about 100 qubits in a linear crystal, and dozens of cores can potentially be co-located

in a single QPU.

Each core can contain up to about 100 qubits in a linear crystal, and dozens of cores can potentially be co-located in a single QPU.

Within a QPU, some qubits can be physically moved between cores to accommodate quantum communication between the cores.

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This technology, known as a photonic interconnect, uses light particles to communicate between qubits while keeping information stored stably on either end of the interconnect.

The basic protocol for this photonic interconnect between ion traps in two different vacuum chambers was first realized by our co-founder

Christopher Monroe’s research team in 2007.

We believe this protocol can be combined with all-optical

switching technology to enable multi-QPU

quantum computers at large scale.

We have deep expertise in photonics;

while at Bell Labs, co-founder

Jungsang Kim led a team to build the world’s largest optical switch.

The basic protocol for this photonic interconnect between ion traps in two different vacuum chambers was first realized by our co-founder Christopher Monroe’s research team in 2007.

We believe this protocol can be combined with all-optical switching technology to enable multi-QPU quantum computers at large scale.

We have deep expertise

in photonics;

while at Bell Labs, co-founder Jungsang Kim led a team to build the world’s largest optical switch.

Photonic interconnects are designed to allow our systems to compute with entangled qubits spanning multiple QPUs, which we believe can open up the possibility of scaling quantum computers indefinitely, similar to how high-performance computers and data centers have been scaled.

Our quantum architecture is modular, meaning that if development of this architecture is successful, the number of qubits in a QPU, or the number of QPUs in a system, could be adjusted.

Our quantum architecture is modular, meaning that if development of this architecture is successful, the number of qubits in a QPU, or the number of QPUs in a system, could be scaled.

Also, by allowing for each qubit in a system to entangle with any other qubit in that system, we believe that a system’s number of quantum gates could increase rapidly with each additional qubit added.

This all-to-all

connectivity is one of the key reasons we believe our systems will be computationally powerful.

This all-to-all connectivity is one of the key reasons we believe our systems will be computationally powerful.

Gate Configuration

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Our systems employ a set of lasers and a sophisticated optical system to deliver beams precisely tailored to achieve this manipulation.

The laser beams are tailored by programming

radio frequency (“RF”) signals using state-of-the-art

digital chipsets, which are custom-configured to generate the signals for qubit manipulation.

The laser beams are tailored by programming radio frequency (“RF”) signals using state-of-the-art digital chipsets, which are custom-configured to generate the signals for qubit manipulation.

An operating system manages the quantum computer, maintaining the system in operation.

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Determining how many physical qubits are needed to form a more reliable logical qubit (the resource “overhead”) depends on both the error rate of the physical qubits and the specific error-correcting codes used.

In 2020, our co-founder

In 2020, our co-founder Dr.

Monroe’s research team at the University of Maryland demonstrated the first error-corrected qubit using 13 trapped ion qubits.

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We believe our architectural decisions will make our systems uniquely capable of achieving scale.

We have published a roadmap for scaling to larger quantum computing systems, with concrete technological innovations designed to significantly shrink the physical size of the systems and their cost per qubit.

For example, we recently announced that through our partnership with the U.S.

We have published a roadmap for scaling to larger quantum computing systems, with concrete technological innovations designed to significantly improve the performance of the systems.

For example, last year, we announced that through our partnership with the U.S.

Department of Energy’s Pacific Northwest National Laboratory (“PNNL”), we were able to shrink the barium source material down to a microscopic scale.

We believe this is significant because it will allow us to reduce the size of core system components, an important step in the creation of quantum computers small enough to be networked together.

However, meeting future milestones included in our roadmap is not guaranteed and is dependent on various technological advancements, which could take longer than expected to realize or turn out to be impossible to achieve.

However, meeting future milestones included in our

roadmap is not guaranteed and is dependent on various technological advancements, which could take longer than expected to realize or turn out to be impossible to achieve.

We believe that, with engineering advancements and firsts yet to be achieved, our quantum computers will become increasingly compact and transportable, opening up future applications of quantum computing at the edge.

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Our technical roadmap was designed to provide transparent guidance to our quantum computer users regarding when we expect certain quantum computing capabilities to become available.

As part of this roadmap, we introduced the notion of “algorithmic qubits” as a metric to measure progress.

The number of algorithmic qubits (#AQ) represents the total number of qubits that can be used to perform a quantum computational task that involves of order ~(#AQ) 2

entangling gate operations.

As part of this roadmap, we introduced the notion of “algorithmic qubits” as a metric to measure progress, and a detailed description of how to define and measure the number of algorithmic qubits (#AQ) in early 2022.

Roughly speaking, #AQ represents the total number of qubits that can be used to perform a quantum computational task that involves an order of ~(#AQ)^2 entangling gate operations in a list of quantum algorithms that reflect representative real-world use cases of a quantum computer.

This metric provides a simple and effective measure to estimate the computational power of each generation of quantum computers.

At low #AQ, the size of the problem the quantum computer can tackle is limited by the error rate of the entangling gate operations, rather than by the number of physical qubits available in the computer.

The aggressive push for improving the power of quantum

computers, including the early introduction of quantum error-correction, is intended to significantly compress the time required for reaching the point when we expect quantum computers may become commercially impactful at scale.

We believe that many of the technological components needed to accomplish the performance goals of the roadmap, such as high-fidelity gate operations, photonic interconnects and quantum error-correction, have been realized in proof-of-concept

demonstrations in trapped ion systems.

The aggressive push for improving the power of quantum computers, including the early introduction of quantum error-correction, is intended to significantly compress the time required for reaching the point when we expect quantum computers may become commercially impactful at scale.

Given our track record of engineering and technology development, we believe that, over time, we will be able to successfully translate these technology components into products, which may enable successful deployment of our quantum computers and deliver material commercial value to customers.

Our Modular Architecture is Designed to Scale with Smaller, Cheaper Systems for Each Generation

We are targeting a Modular Architecture, Designed to Scale, resulting in Smaller Systems and Cheaper Compute Power for Each Generation

The scaling of classical computer technology, which unlocked continuously growing markets over many decades, was driven by exponential growth in computational power coupled with exponential reduction in the cost of computational power for each generation (Moore’s law).

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We believe the scaling of quantum computing may follow a similar trajectory:

if the #AQ available in each generation scales dramatically, the per-AQ

cost would need to be reduced exponentially to enable true scaling of quantum computers.

Our systems have benefitted from years of architectural focus on scalability that addresses both #AQ and per-AQ

cost and, as such, we believe that if we are able to successfully solve remaining scalability challenges, these systems may become increasingly powerful and accessible in tandem.

as the #AQ available in each generation scales, the per-AQ cost is also reduced and enables true scaling of quantum computers.

Our systems have benefitted from years of architectural focus on scalability that addresses both #AQ and per-AQ cost and, as such, we believe that if we are able to successfully solve remaining scalability challenges, these systems may become increasingly powerful and accessible in tandem.

At the heart of our approach is the modular architecture that may enable such growth.

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Our Business Model

Quantum Computing and the Software-as-a-Service

Quantum Computing and the Software-as-a-Service Model

As quantum hardware matures, we expect the quantum computing industry to increasingly focus on practical applications for real-world problems, known as quantum algorithms.

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Our business model is premised on the belief that businesses with access to quantum computers will likely have a competitive advantage in the future.

We envision providing QCaaS, complemented by access to quantum experts and algorithm development capabilities, to solve the most challenging issues facing corporations, governments and other large-scale entities today.

We envision providing quantum computing services, complemented by access to quantum experts and algorithm development capabilities, to solve some of the most challenging issues facing corporations, governments and other large-scale entities today.

We intend to manufacture, own and operate quantum computers, with compute units being offered to potential customers on a QCaaS basis.

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During the development stage, our experts will assist customers in developing an algorithm to solve their business challenges.

Customers may be expected to pay for quantum compute usage, in addition

to an incremental amount for the consulting and development services provided in the creation of algorithms.

Customers may be expected to pay for quantum compute usage, in addition to an incremental amount for the consulting and development services provided in the creation of algorithms.

We may choose to sell this computing time to customers in a variety of ways.

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We also anticipate uneven revenue for this period given that the quantum computing market is still nascent.

We expect the development phase for each market to be characterized by the following go-to-market

Co-development

of quantum applications with strategic partners.

We intend to form long-term partnerships with select industry-leading companies (aligned with our technology roadmap) to co-develop

solutions for the partner and to provide an early-adopter advantage to the partner in their industry.

IonQ has announced co-development

agreements with Hyundai Motor Company to pursue solutions for battery chemistry and with GE Research to apply quantum computing to risk management.

We expect the development phase for each market to be characterized by the following go-to-market channels:

Co-development of quantum applications with strategic partners.

We intend to form long-term partnerships with select industry-leading companies (aligned with our technology roadmap) to co-develop end-to-end solutions for the partner and to provide an early-adopter advantage to the partner in their industry.

IonQ has announced co-development agreements with Hyundai Motor Company to pursue solutions for battery chemistry and with GE Research to apply quantum computing to risk management.

Preferred compute agreements with clients .

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Delivery of a full-scale quantum compute platform .

For customers who have worked alongside us in the development phase to curate deep in-house

technical expertise in quantum computing capabilities at the time quantum advantage is achieved for the customer’s application, our preferred compute agreements, cloud offerings, and dedicated hardware sales are expected to offer sufficient quantum computational capacity.

For customers who have worked alongside us in the development phase to curate deep in-house technical expertise in quantum computing capabilities at the time quantum advantage is achieved for the customer’s application, our preferred compute agreements, cloud offerings, and dedicated hardware sales are expected to offer sufficient quantum computational capacity.

Packaged solution offerings .

When appropriate, we may develop full-stack quantum solutions that can be provided directly to customers, regardless of their in-house

quantum expertise.

When appropriate, we may develop full-stack quantum solutions that can be provided directly to customers, regardless of their in-house quantum expertise.

Accelerated high-impact applications development .

We intend to provide opportunities for accelerated applications development to customers seeking compressed development timelines to solve their biggest problems and drive efficiencies.

We intend to provide opportunities for accelerated applications development to customers seeking compressed development timelines to solve some of their biggest problems and drive efficiencies.

We expect the technical complexity of the solutions required for quantum algorithms to address each application area will impact the timing of that market’s inflection point and transition from the development phase to the application phase.

During the NISQ computing era, we expect quantum machine learning to be the first solution to transition into broadly available applications.

Additional markets taking advantage of quantum material science research and optimization speed-ups

may come online next if broad-scale quantum advantage becomes accessible.

Additional markets taking advantage of quantum material science research and optimization speed-ups may come online next if broad-scale quantum advantage becomes accessible.

If our quantum computers achieve full-scale fault tolerance, a diverse array of industries, ranging from quantum chemistry to deeper optimization, may be able to be transitioned to the application phase.

Customers and Prospects

We sell access to our quantum computing solutions via AWS’s Amazon Braket, Microsoft’s Azure Quantum, and Google’s Cloud Marketplace, and directly to select customers via our own cloud service.

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Such access is currently limited to a select group of end-users.

We expect our standard offerings will include additional bundled value-add

services in exchange for an annual commitment, such as usage-based access to our cloud platform, reserved system time, consultations with solution scientists, and other application and integration support.

We expect our standard offerings will include additional bundled value-add services in exchange for an annual commitment, such as usage-based access to our cloud platform, reserved system time, consultations with solution scientists, and other application and integration support.

Quantum Computing Systems and Hardware

We are engaged with certain prospects who are interested in purchasing partial or entire quantum computing systems, either over the cloud or for local access.

We also sell certain specialized quantum computing hardware to select customers.

Government Agencies

Our customers, potential customers and partners include government agencies such as the United States Air Force Research Lab.

Government agencies and large organizations often undertake a significant evaluation process.

Our contracts with government agencies are typically structured in phases, with each phase subject to satisfaction of certain conditions.

Agreements with the University of Maryland and Duke University

Exclusive License Agreement

and other intellectual property to develop, manufacture and commercialize products for use in certain licensed fields, the scope of which would include the application of the licensed intellectual property in ion trap quantum computing.

The License Agreement provides an exclusive license under the universities’ interest in all patents (and non-exclusive

for other types of intellectual property), subject to certain governmental rights and retained rights by the universities and other non-profit

institutions to use and practice the licensed patents and technology for internal research and other non-profit

We can add patents and other intellectual property to the License Agreement through the UMD Option Agreement and Duke Option Agreement (each as defined below).

In July 2016, we entered into a license agreement with the University of Maryland and Duke University, which was subsequently amended in September 2017, October 2017, October 2018, February 2021, April 2021 and September 2021 (as amended, the “License Agreement”), under which we obtained a worldwide, royalty-free, sublicensable license under certain patents, know-how and other intellectual property to develop, manufacture and commercialize products for use in certain licensed fields, the scope of which would include the application of the licensed intellectual property in ion trap quantum computing.

The License Agreement provides an exclusive license under the Universities’ interest in all patents (and non-exclusive for other types of intellectual property), subject to certain governmental rights and retained rights by the Universities and other non-profit institutions to use and practice the licensed patents and technology for internal research and other non-profit purposes.

We also entered into an exclusive option agreement (“Option Agreement”) with each of the Universities in 2016 whereby we have the right to exclusively license additional intellectual property developed by the Universities by exercising an annual option and issuing a certain number of common shares to each of Duke University and University of Maryland.

We are obligated to use commercially reasonable efforts to commercialize the inventions covered by the licensed patent rights and achieve certain milestones, including the hiring of a Chief Executive Officer, obtaining equity financing by specified times and such other milestones that we may specify in a development plan provided by us to the universities.

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Pursuant to Duke University’s policy, Christopher Monroe and Jungsang Kim, our Chief Technology Officer and Director, may receive renumeration from Duke University relating to any stock we have issued to Duke University.

Option Agreement with the University of Maryland

In July 2016, we entered into an option agreement with the University of Maryland, which was subsequently amended in February 2021 (as amended, the “UMD Option Agreement”), under which we obtained the right to add the University of Maryland’s interests in certain intellectual property to the License Agreement including if the intellectual property was developed by Christopher Monroe or by individuals under his supervision and such intellectual property relates to the field of ion trap quantum information processing devices.

We have added patents and other intellectual property to the License Agreement pursuant to the UMD Option Agreement.

The UMD Option Agreement provided that in the event of a sale or liquidation of us during the term of the agreement, the University of Maryland could receive additional consideration from such sale or liquidation to the extent that a holder of 0.5% of our common stock would receive more than the University of Maryland would otherwise receive based on its then current holdings of our common stock.

This provision was not triggered as a result of our business combination and lapsed at the closing of the business combination in September 2021.

Option Agreement with Duke University

In July 2016, we entered into an option agreement with Duke University, which was subsequently amended in December 2020 (as amended, the “Duke Option Agreement”), under which it obtained the right to add Duke University’s interests in certain patents or other intellectual property to the License Agreement, including if they were developed by Jungsang Kim, Christopher Monroe or Kenneth Brown, a professor at Duke University, or by individuals under their respective supervision and such patents or intellectual property relates to the field of quantum information processing devices.

In July 2016, we entered into an option agreement with Duke University, which was subsequently amended in December 2020 and March 2021 (as amended, the “Duke Option Agreement”), under which it obtained the

right to add Duke University’s interests in certain patents or other intellectual property to the License Agreement, including if they were developed by Jungsang Kim, Christopher Monroe or Kenneth Brown, a professor at Duke University, or by individuals under their respective supervision and such patents or intellectual property relates to the field of quantum information processing devices.

We have added patents and other intellectual property to the License Agreement through the Duke Option Agreement.

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In March 2020, we entered into an amended and restated office lease with the University of Maryland for the lease of our corporate headquarters and our research and development and manufacturing facility.

The lease expires on December 31, 2030.

We may terminate the lease with not less than 120 days written notice beginning in year six.

This lease expires on December 31, 2030.

We may terminate this lease with not less than 120 days written notice beginning in year six.

Any early termination will result in a termination fee ranging from $2.5 million in year six to $500,000 in year ten, with each year subject to a reduction of $0.5 million.

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There are many other approaches to quantum computing that use qubit technology besides the trapped ion approach we are taking.

In some cases, conflicting marketing messages from these competitors can lead to

confusion among our potential customer base.

Large technology companies such as Google and IBM, and startup companies such as Rigetti Computing, are adopting a superconducting circuit technology approach, in which small amounts of electrical currents circulate in a loop of superconducting material (usually metal where the electrical resistance vanishes at low temperatures).

In some cases, conflicting marketing messages from these competitors can lead to confusion among our potential customer base.

Large technology companies such as Google and IBM, and startup companies such as Rigetti Computing, are adopting a superconducting circuit technology approach, in which small amounts of electrical current circulate in a loop of superconducting material (usually metal where the electrical resistance vanishes at low temperatures).

The directionality of the current flow, in such an example, can represent the two quantum states of a qubit.

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PsiQuantum uses photons (i.e., individual particles of light) as qubits, whereas Xanadu uses a combination of photons and a collective state of many photons, known as continuous variable entangled states, as the qubits.

Each company’s approach leverages silicon photonics technology to fabricate highly integrated on-chip

photonic devices to achieve scaling.

Each company’s approach leverages silicon photonics technology to fabricate highly integrated on-chip photonic devices to achieve scaling.

The advantages to this approach are that photons are cheap to generate, they can remain coherent depending on the property of the photons used as the qubit, and they integrate well with recently-developed silicon photonics technology;

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Based on publicly available information, Quantinuum processors operate with the application circuits broken down to two qubits at a time, with a bus width of two, and the ion qubits are shuffled between each gate operation.

Our processor core involves a wide-bus

architecture, where the interaction among a few dozens of atomic ion qubits can be controlled using programmable laser pulses.

Our processor core involves a wide-bus architecture, where the interaction among a few dozens of atomic ion qubits can be controlled using programmable laser pulses.

This typically allows quantum logic gates between all possible pairs of qubits in the processor core without extraneous operations, which will enable us to operate some quantum gates that are not possible on other quantum architectures.

We have also demonstrated the ability to shuttle multiple processor cores on the same chip, increasing the potential qubit capacity of a system.

We have also demonstrated the ability to

shuttle multiple processor cores on the same chip, increasing the potential qubit capacity of a system.

At scale, we believe these architectural features will confer benefits in the speed and efficiency of running algorithms.

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Lastly, there are alternative approaches to quantum computing being pursued by other private companies as well as the research departments at major universities or educational institutions.

For example, D-Wave computing produces quantum annealers, a separate form of computing technology that hopes to tackle a class of problems with some overlap to those solved by quantum computing.

To our knowledge, none of these alternative approaches has produced a commercial-grade quantum computer.

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We protect our intellectual property rights via a combination of patent, trademark and trade secret laws in the United States and other jurisdictions, as well as with contractual protections, to establish, maintain and enforce rights in its proprietary technologies.

Unpatented research, development, know-how

and engineering skills make an important contribution to our business.

Unpatented research, development, know-how and engineering skills make an important contribution to our business.

We pursue patent protection only when it is consistent with our overall strategy for safeguarding intellectual property.

In addition, we seek to protect our intellectual property rights through non-disclosure

and invention assignment agreements with our employees and consultants and through non-disclosure

agreements with business partners and other third parties.

In addition, we seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties.

We have accumulated a broad patent portfolio, both owned and exclusively licensed, across the range of technological fronts that make up our systems and will continue to protect our innovative inventions in the United States and other countries.

Our patent portfolio is deepest in the area of devices, methods and algorithms for controlling and manipulating trapped ions for quantum computing.

Our trade secrets primarily cover the design, configuration, operation and testing of its trapped-ion

quantum computers.

Our trade secrets primarily cover the design, configuration, operation and testing of its trapped-ion quantum computers.

As of March 1, 2023, we own or license, on an exclusive basis, 57 issued U.S.

patents and 99 U.S.

pending or allowed patent applications, 74 foreign patent applications, 5 pending U.S.

trademark applications, and 7 registered U.S.

patents and 136 pending or allowed U.S.

patent applications, 7 issued foreign patents and 99 pending or allowed foreign patent applications, 8 registered U.S.

trademarks and 11 pending U.S.

trademark applications, and 17 registered international trademarks and 7 pending international trademark applications.

Our issued patents expire between 2029 and 2041.

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Approximately 49% of our full-time employees are based in the greater Washington, D.C.

metropolitan area.

metropolitan area and approximately 12% of our full-time employees are based in the greater Seattle, WA metropolitan area.

We also engage a small number of consultants and contractors to supplement our permanent workforce.

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On March 7, 2021, Legacy IonQ entered into an Agreement and Plan of Merger (the “Merger Agreement”), with dMY and Ion Trap Acquisition Inc., a direct, wholly owned subsidiary of dMY (the “Merger Sub”).

Pursuant to the Merger Agreement, on September 30, 2021, the Merger Sub was merged with and into Legacy IonQ with Legacy IonQ continuing as the surviving corporation following the Merger, becoming a wholly owned subsidiary of dMY and the separate corporate existence of the Merger Sub ceased.

Commensurate with the closing of the Business Combination, dMY changed its name to IonQ, Inc.

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Our principal executive offices are located at 4505 Campus Drive, College Park, MD 20740, and our telephone number is (301) 298-7997.

corporate website address is www.ionq.com.

Our corporate website address is www.ionq.com.

Information contained on or accessible through our website is not a part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only.

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Our website address is www.ionq.com .

We make available on our website, free of charge, our Annual Reports, our Quarterly Reports on Form 10-Q

and our Current Reports on Form 8-K

and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange

Commission (the “SEC”).

We make available on our website, free of charge, our Annual Reports, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).

The SEC maintains a website that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov .

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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.

What changed 10-K

Item 1. Business