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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-03-28 · 517 added, 1042 removed, 834 unchanged (65% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e)

and 15d-15(e)

under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)

and 15d-15(e)

under the Exchange Act), as of the end of the period covered by this Annual Report.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2021, our disclosure controls and procedures were not effective at a reasonable assurance level as a result of the material weakness that existed in our internal control over financial reporting as described below, and which continues to exist.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2022, our disclosure controls and procedures were effective in providing reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act was recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information was accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Accordingly, we believe that the consolidated financial statements included in this Annual Report do fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Management’s Annual Report on Internal Control Over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting as allowed by the SEC for reverse acquisitions between an issuer and a private operating company when it is not possible to conduct an assessment of the private operating company’s internal control over financial reporting in the period between the consummation date of the reverse acquisition and the date of management’s assessment of internal control over financial reporting (see Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance & Disclosure Interpretations).

As discussed elsewhere in this Annual Report, we completed a business combination on September 30, 2021 pursuant to which we acquired Legacy IonQ.

Prior to the business combination, we were a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses.

As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date, as our operations prior to the business combination were insignificant compared to those of the consolidated entity post-business combination.

As a result, management was unable, without incurring unreasonable effort or expense, to complete an assessment of our internal control over financial reporting as of December 31, 2021.

Material Weakness in Internal Control Over Financial Reporting

In connection with the preparation of our financial statements as of and for the fiscal 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.

Specifically,

Although we recently added accounting and financial reporting personnel with requisite knowledge and experience in the application of U.S.

GAAP and SEC rules, the Company is still in process of formalizing its processes and procedures, establishing clear authorities and approvals and segregating duties to facilitate accurate and timely financial reporting.

Our financial accounting system has limited functionality and does not facilitate effective information technology general controls relevant to financial reporting.

Additionally, elements of our close process are managed and processed outside the accounting system, increasing the risk of error.

This material weakness could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Efforts to Address the Material Weakness

In light of the material weakness identified, we are implementing a remediation plan which includes measures designed to improve our internal control over financial reporting to remediate this material weakness.

These measures include adding resources (both internal and external) as well as improving the control environment around financial systems and processes.

In 2021, the Company completed the following remedial actions:

Hired additional full-time accounting personnel with appropriate levels of experience, and augmented skills gaps with external experts;

Established and implemented policies surrounding the approval of transactions, related to, but not limited to, account reconciliations and journal entries;

Selected and began implementing a financial accounting system that can support effective information technology general controls as well as the anticipated growth of the business.

Our management believes that these actions, and additional actions to be taken under our remediation plan, are sufficient to remediate the material weakness identified and strengthen our internal control over financial reporting.

The actions we are taking are subject to ongoing senior management review, as well as Audit Committee oversight.

The material weakness will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

We conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.

Based on our evaluation, we have concluded that our internal control over financial reporting was effective as of December 31, 2022.

Remediation of Previously Identified Material Weakness

As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2021, management concluded that there was a material weakness in our internal control over financial reporting

specifically related to our financial statement close process.

In response to the material weakness identified, management developed and implemented a remediation plan to address the underlying causes of the material weakness, which was subject to senior management review and oversight of the audit committee of the Board (the “Audit Committee”).

The remediation plan included:

hiring additional full-time accounting personnel with appropriate levels of experience, and augmenting skills gaps with external experts;

establishing and implementing policies surrounding the approval of transactions, related to, but not limited to, account reconciliations and journal entries;

implementing a financial accounting system that supports effective information technology general controls, as well as the anticipated growth of the business.

Implementation of the remediation plan described above and the resulting improvements in controls have strengthened our internal control over financial reporting and have addressed the related material weakness that was identified as of December 31, 2021.

As part of our assessment of internal control over financial reporting, management tested and evaluated all internal controls to assess whether they were designed and operating effectively as of December 31, 2022.

Management determined that its internal controls over financial reporting were designed and operating effectively to prevent and detect a material misstatement due to error or fraud and therefore concluded that the material weakness was remediated.

Attestation Report of the Registered Public Accounting Firm

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Changes in Internal Control over Financial Reporting

Except as described above under Remediation Plan, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of

the Exchange Act that occurred during the period covered by this Annual Report on Form 10-K that

has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except as described above under “Remediation of Previously Identified Material Weakness,” there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

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Not applicable.

Certain information required by Part III is omitted from this report because we will file with the SEC a definitive proxy statement pursuant to Regulation 14A (the “2023 Proxy Statement”), no later than 120 days after the end of our fiscal year, and certain information included therein is incorporated herein by reference.

Directors, Executive Officers and Corporate Governance.

The brief biographies below include information, as of March 15, 2022, regarding the specific and particular experience, qualifications, attributes and skills for each member of our board of directors.

Information About Our Directors

Information regarding directors required by this item will be contained in our 2023 Proxy Statement under the caption “Information Regarding Director Nominees and Current Directors,” and is hereby incorporated by reference.

Information About Our Executive Officers

The following table sets forth information regarding our executive officers who are not listed above as members of our Board as of March 15, 2023:

Peter Chapman

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Chief Technology Officer and Director

Craig Barratt

Chairman of the Board

Ronald Bernal

Niccolo de Masi

Peter Chapman

has served as a member of our board of directors and president and chief executive officer since the closing of the business combination in September 2021.

Christopher Monroe

Chief Scientist

Thomas Kramer

Chief Financial Officer

Rima Alameddine

Chief Revenue Officer

Laurie Babinski

General Counsel and Secretary

Peter Chapman has served as a member of our Board and president and chief executive officer since the closing of the Business Combination in September 2021.

Chapman previously served as Legacy IonQ’s president and chief executive officer and a member of its board of directors since May 2019.

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We believe Mr.

Chapman is well qualified to serve as a member of our board of directors because of his prior leadership and officer positions at technology and software companies.

has served as a member of our board of directors and chief strategy officer since the closing of the business combination in September 2021.

Kim is the co-founder

of Legacy IonQ and served as its chief strategy officer and a member of its board of directors since September 2015.

Kim assumed the role of chief technology officer in 2020.

Chapman is well qualified to serve as a member of our Board because of his prior leadership and officer positions at technology and software companies.

Jungsang Kim has served as a member of our Board and chief strategy officer since the closing of the Business Combination in September 2021.

Kim is the co-founder of Legacy IonQ and served as its chief technology officer and a member of its board of directors since September 2015.

Kim assumed the role of chief technology officer in May 2020.

Kim has served as assistant/associate/full professor in the Department of Electrical and Computer Engineering, Department of Physics and Department of Computer Science at Duke University since June 2004.

From 2006 to 2020, Dr.

From August 2006 to February 2020, Dr.

Kim was also the founder and president and chief executive officer of Applied Quantum Technologies, Inc.

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We believe Dr.

Kim is well qualified to serve as a member of our board of directors because of his extensive research in electrical and computer engineering and quantum mechanics.

Craig Barratt

has served as a member of our board of directors and chairman of the board since the closing of the business combination in September 2021.

Barratt served as a member of Legacy IonQ’s board of directors since January 2021.

Until May 2020, Dr.

Barratt served as senior vice president and general manager of the Connectivity Group of Intel Corporation, a semiconductor company, since its acquisition of Barefoot Networks, Inc., a computer networking company, in July 2019, where he previously served as president and chief executive officer since April 2017.

From June 2013 to January 2017, Dr.

Barratt held several different roles at Google, including senior vice president, access and energy and advisor.

Barratt previously served as president of Qualcomm Atheros, the networking and connectivity subsidiary of Qualcomm Inc., and as president, chief executive officer and a director of Atheros Communications, Inc., a fabless semiconductor company, until its acquisition by Qualcomm.

Barratt has also served as a member of the board of directors of Intuitive Surgical, Inc., a robotic-assisted surgery company, since April 2011 and as chairman of the board of directors since April 2020.

Barratt received a B.E.

in electrical engineering and a B.S.

in pure mathematics and physics from the

University of Sydney, Australia as well as an M.S.

in electrical engineering from Stanford University.

We believe Dr.

Barratt is qualified to serve as a member of our board of directors because of his senior leadership roles at industry leading companies in the technology sector.

Ronald Bernal

has served as a member of our board of directors since the closing of the business combination in September 2021.

Bernal served as a member of Legacy IonQ’s board of directors since February 2017.

Bernal has served as a venture partner at New Enterprise Associates since February 2010.

From May 2006 to February 2010, Mr.

Bernal was a partner at Sequel Venture Partners prior to joining New Enterprise Associates.

Prior to that, Mr.

Bernal was a partner at Sutter Hill Ventures and was vice president of operations and chief development officer at Cisco Systems, Inc.

Bernal currently serves on the board of directors of Cohere Technologies, Inc., and Tigera Inc.

Bernal received a B.S.

in electrical engineering from DeVry Institute of Technology.

We believe Mr.

Bernal is qualified to serve as a member of our board of directors because of his integral involvement in the technology industry, generally, and management roles at global venture capital firms.

has served as a member of our board of directors since the closing of the business combination in September 2021.

Byers served as a member of Legacy IonQ’s board of directors since February 2017.

In March 2021, Dr.

Byers founded Byers Capital, a venture capital investment firm.

Prior to founding Byers Capital, Dr.

Byers was a general partner at GV (formerly Google Ventures), a venture capital investment firm, from April 2010 to March 2021.

Byers has served as a member of the board of directors of Magenta Therapeutics since April 2017, and is currently Chairman of the board of directors of Pact Pharma, Inc.

and previously served as their president from February 2018 to October 2018.

Byers also serves on the board of directors of several private companies, including Spotlight Therapeutics.

Prior to joining GV, Dr.

Byers helped start two companies, led research projects on biomedical engineering at Stanford University and was an angel investor.

Byers received a Ph.D.

in bioengineering from Stanford University and holds a B.S in biomedical engineering and a B.S in economics from Duke University.

We believe Dr.

Byers is qualified to serve as a member of our board of directors because of his substantial involvement with venture capital investment firms and prior board positions at various biotechnology companies.

Niccolo de Masi

has served as a member of our board of directors since the closing of the business combination in September 2021, and was the chief executive officer and board member of our predecessor, dMY Technology Group, Inc.

III, since inception.

Since June and December 2020, respectively, Mr.

de Masi has also served as the chief executive officer and director of dMY Technology Group, Inc.

II and dMY Technology Group, Inc.

He has also been the co-chairman

of the board of directors of AdMY Technology Group, Inc.

since January 2021.

From January 2020 to December 2020, Mr.

de Masi served as Chief Executive Officer of dMY Technology Group, Inc.

and has served as director of Rush Street Interactive, Inc.

since December 2020, following its business combination with dMY Technology Group, Inc.

Since January 2010, Mr.

de Masi has been a member of the board of directors of Glu Mobile Inc., a publicly traded mobile gaming company.

Since December 2014, he has served as chairman and he served as interim chairman from July 2014 to December 2014.

From January 2010 to November 2016, he served as its president and chief executive officer.

From February 2019 to March 2020, Mr.

de Masi was the chief innovation officer at Resideo Technologies, Inc., a publicly traded securities solutions company.

From October 2018 to January 2020, he served as a member of its board of directors and from February 2019 until January 2020 he served as its president of products and solutions.

From November 2016 until October 2018, Mr.

de Masi previously served as the president of Essential Products, Inc.

de Masi served on the board of directors of Xura, Inc.

and its audit committee from November 2015 until August 2016.

de Masi was also previously the chief executive officer and Director of Hands-On

Mobile and Monstermob Ltd.

Since November 2015, Mr.

de Masi has served on the Leadership Council of the UCLA Grand Challenge.

de Masi received a B.A.

in physics from Cambridge University.

We believe Mr.

de Masi is qualified to serve as a member of our board of directors because of his breadth of experience as both an officer and board member at a variety of publicly traded technology companies.

has served as a member of our board of directors since December 2021.

Since April 2019, Mr.

Singh has served as Executive Vice President and Chief Financial Officer of Arm Limited, a British

semiconductor and software design company, where he leads the global finance organization as well as corporate IT operations, procurement and enterprise security teams.

From November 2016 to April 2019, Mr.

Singh served as Senior Vice President and Chief Financial Officer, and from March 2016 to November 2016, as Chief Strategy and Marketing Officer, of Unisys Corp., a publicly listed company.

Prior to that, Mr.

Singh was a Managing Director at SunTrust Bank’s equities unit, and a Senior Vice President in finance at Comcast Corporation.

Singh is currently a member of the board of directors of Affinity Federal Credit Union, a U.S.

financial services firm.

Singh has also advised startups as a member of Columbia University’s Entrepreneurship Advisory Board, and participates as a project advisor for the U.S.

Department of Homeland Security on national security and critical infrastructure issues.

Singh received an M.B.A.

in finance from New York University and holds M.S.

degrees in engineering from Columbia University.

We believe Mr.

Singh is qualified to serve as a member of our board of directors because of his finance and corporate management roles within various organizations and his general involvement in the technology and infrastructure industry.

has served as a member of our board of directors since the closing of the business combination in September 2021, and was the chief financial officer and chairman of the board of directors of our predecessor, dMY Technology Group, Inc.

III, since inception.

Since April 2021, Mr.

You has served on the board of directors of Genius Sports Ltd., a publicly traded sports data and technology company, after its acquisition of dMY Technology Group II, where Mr.

You had served as a director since June 2020.

Since March 2021, Mr.

You has served on the board of directors of Coupang, Inc, a south Korean publicly traded e-commerce

Since December 2020, Mr.

You has also served as the chairman of dMY Technology Group, Inc.

From January 2020 to December 2020, Mr.

You served as chairman of the board of directors of dMY Technology Group, Inc.

and has served as director of Rush Street Interactive, Inc.

since December 2020, following its business combination with dMY Technology Group, Inc.

Since January 2019, Mr.

You has served as a member of the board of directors of Broadcom Inc., a publicly traded semiconductor and software company.

In September 2016, Mr.

You founded GTY Technology Holdings, Inc.

”), a publicly traded technology company.

From September 2016 until February 2019, Mr.

You served as its president, chief financial officer and director when GTY consummated its initial business combination.

From February 2019 to May 2019, he served as its president and from February 2019 through August 2019 he served as its chief financial officer.

Since May 2019, he has served as its vice chairman of the board of directors.

From May 7, 2019 to May 20, 2019, Mr.

You also served as GTY’s president.

From February 2008 to September 2016, Mr.

You served as the executive vice president of EMC Corporation (formerly NYSE:

EMC) in the office of the chairman.

You was chief executive officer at BearingPoint (formerly KPMG Consulting, Inc.) as well as chief financial officer of Oracle and Accenture.

You also previously spent 14 years on Wall Street, including serving as a managing director in the Investment Banking Division of Morgan Stanley, where he headed the Computer and Business Services Group.

From 2004 to October 2016, Mr.

You served as a director of Korn/Ferry International.

From 2004 to 2005, he served as a director of Oracle Japan, Since August 2016, Mr.

You has been a trustee of the U.S.

Olympic Committee Foundation.

You received a B.A.

in economics from Harvard College and an M.A.

in economics from Yale University.

We believe Mr.

You is qualified to serve as a member of our board of directors because of his extensive and varied experience as both a senior executive and board member at a variety of publicly traded technology and software companies.

Executive Officers

The following table sets forth information regarding our executive officers who are not listed above a members of our board of directors as of March 15, 2022, other than with respect to Ms.

Babinski whose employment with us commenced on March 28, 2022:

Executive Officers

Christopher Monroe

Chief Scientist

Thomas Kramer

Chief Financial Officer

Laurie Babinski

General Counsel and Secretary

Christopher Monroe

has served as our chief scientist since the closing of the business combination in September 2021.

Monroe is the co-founder

of Legacy IonQ and served as its chief scientist since September 2016.

Kim is well qualified to serve as a member of our Board because of his extensive research in electrical and computer engineering and quantum mechanics.

Christopher Monroe has served as our chief scientist since the closing of the Business Combination in September 2021.

Monroe is the co-founder of Legacy IonQ and served as its chief scientist since September 2016.

From August 2018 until May 2019, Dr.

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Monroe has served as a Professor of Electrical Computer Engineering and Physics at Duke University since January 2021.

Monroe held various positions at the University of Maryland, including from January 2021 to present as a College Park Professor, from 2015 to December 2020 as a Distinguished University Professor of Physics, from September 2018 to December 2020 as a Professor of Electrical and Computer Engineering, and from September 2007 to December 2020 as a Bice Zorn Professor of Physics.

September 2018 to December 2020 as a Professor of Electrical and Computer Engineering, and from September 2007 to December 2020 as a Bice Zorn Professor of Physics.

From 2014 to December 2020, Dr.

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Monroe also held various academic and research positions at the University of Michigan, Ann Arbor, University of Colorado, Boulder, and the National Institute of Standards and Technology.

Monroe serves on advisory boards at several academic institutions, including the Max Planck Institute of Quantum Optics (since 2018), the CalTech Institute for Quantum Information (since 2018), the Center for Quantum Technology, National University of Singapore (since 2018).

Monroe serves on advisory boards at several academic institutions, including the Max Planck Institute of Quantum Optics and the Center for Quantum Technology, National University of Singapore.

Monroe received an S.B.

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in physics from the University of Colorado, Boulder.

Thomas Kramer

has served as our chief financial officer since the closing of the business combination in September 2021, and as our secretary from September 2021 to March 2022.

Thomas Kramer has served as our chief financial officer since the closing of the Business Combination in September 2021, and as our secretary from September 2021 to March 2022.

Kramer served as Legacy IonQ’s chief financial officer since February 2021.

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in economics from the Norwegian School of Economics.

Laurie Babinski

has served as our general counsel and secretary since March 2022.

Rima Alameddine has served as our chief revenue officer since December 2022.

Previously, Ms.

Alameddine served as the Vice President, Enterprise Sales, Healthcare, Life Science and Manufacturing, Americas, of NVIDIA Corporation, a publicly listed company, from November 2018 to December 2022.

From July 2016 to October 2018, Ms.

Alameddine served as the Vice President, Enterprise Sales, East and Central United States, of NVIDIA.

Prior to this, between September 1998 and July 2016, Ms.

Alameddine served in various roles at Cisco Systems, Inc., a publicly listed company, including Director, Enterprise Sales, New York from August 2012 to 2016 and Director, Enterprise Sales, Financial Services, from November 2010 to July 2012.

Alameddine holds an M.S.

in computer engineering and a B.S.

in computer and communications engineering from Syracuse University and the American University of Beirut, respectively.

Laurie Babinski has served as our general counsel and secretary since March 2022.

From December 2019 to March 2022, Ms.

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in Journalism and Spanish from Pepperdine University.

Family Relationships

There are no family relationships among any of our directors or executive officers.

Audit Committee

The audit committee consists of Messrs.

Blake Byers, Niccolo de Masi, Inder Singh and Harry You, each of whom our board of directors has determined satisfies the independence requirements under NYSE listing standards and Rule 10A-3(b)(1) of

the Exchange Act.

The chair of the audit committee is Mr.

Our board has determined that Mr.

You is an “audit committee financial expert” within the meaning of SEC regulations.

Each member of the audit committee can read and understand fundamental financial statements in accordance with applicable requirements.

In arriving at these determinations, our board has examined each audit committee member’s scope of experience and the nature of their employment.

The primary purpose of the audit committee is to discharge the responsibilities of the board of directors with respect to the corporate accounting and financial reporting processes, systems of internal control and financial statement audits, and to oversee the independent registered public accounting firm.

Specific responsibilities of the audit committee include:

helping the board of directors oversee corporate accounting and financial reporting processes;

managing the selection, engagement, qualifications, independence and performance of a qualified firm to serve as the independent registered public accounting firm to audit the financial statements;

discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, the interim and year-end operating

developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

reviewing related person transactions;

obtaining and reviewing a report by the independent registered public accounting firm at least annually that describes internal quality control procedures, any material issues with such procedures and any steps taken to deal with such issues when required by applicable law;

approving or, as permitted, pre-approving, audit

and permissible non-audit services

to be performed by the independent registered public accounting firm.

Identification of Audit Committee and Financial Experts

Information regarding our Audit Committee required by this item will be contained in our 2023 Proxy Statement under the caption “Information Regarding the Board of Directors and Corporate Governance,” and is hereby incorporated by reference.

Material Changes to Procedures for Recommending Directors

Information regarding procedures for recommending directors required by this item will be contained in our 2023 Proxy Statement under the caption “Information Regarding the Board of Directors and Corporate Governance,” and is hereby incorporated by reference.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors.

The Code of Conduct is available at the investors section of our website at www.ionq.com.

Any amendments to the Code of Conduct, or any waivers of its requirements, are expected to be disclosed on our website to the extent required by applicable rules and exchange requirements.

Information regarding our Code of Business Conduct and Ethics ( the “Code of Conduct”), required by this item will be contained in our 2023 Proxy Statement under the caption “Information Regarding the Board of Directors and Corporate Governance—Code of Conduct and Ethics,” and is hereby incorporated by reference.

The full text of our Code of Conduct is available at the investors section of our website at www.ionq.com.

The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors, certain officers, including our executive officers, and persons who own more than 10% of our common stock to report to the SEC their initial ownership of our common stock and any subsequent changes in that ownership.

The SEC has established specific due dates for these reports and we are required to disclose in in this Annual Report any late filings or failures to file.

Based solely on our review of such reports filed electronically with the SEC and written representations from reporting persons that no other reports were required during the fiscal year ended December 31, 2021, we believe that all of our directors and officers complied with all Section 16(a) filing requirements applicable to them.

Executive Compensation.

Information regarding compliance with Section 16(a) of the Exchange Act required by this item will be contained in our 2023 Proxy Statement under the caption “Delinquent Section 16(a) Reports,” if any, and is hereby incorporated by reference.

Executive Compensation.

Summary Compensation Table

The following table sets forth information for each of the last two completed fiscal years regarding compensation awarded to or earned by our Chief Executive Officer, our former Chief Executive Officer and the two other most highly compensated executive officers (the “named executive officers”) during the fiscal years indicated:

Name and Principal Position

Option Awards

Peter Chapman

President and Chief Executive Officer

Chief Technology Officer

Thomas Kramer (3)

Chief Financial Officer

Niccolo de Masi (4)

Former Chief Executive Officer

The amounts in this column reflect the aggregate grant date fair value of the shares underlying option awards granted in the applicable year, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for stock-based compensation transactions.

The assumptions we used in valuing these awards are described in Note 13 to our consolidated financial statements included elsewhere in this Annual Report.

These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options.

Amounts in this column represent 401(k) matching contribution for Mr.

Chapman and Mr.

Kramer began employment with us on February 15, 2021.

de Masi resigned as the chief executive officer upon closing of the business combination.

Amount represents annual fees paid to Mr.

de Masi for his service on our board of directors.

Outstanding Equity Awards as of December 31, 2021

The following table presents information regarding outstanding option and stock awards held by the named executive officers as of December 31, 2021.

All awards were granted pursuant to the 2015 Plan.

Option Awards (5)

Stock Awards (5)

(#) exercisable

unexercisable

Peter Chapman

Thomas Kramer

Niccolo de Masi

10% of the shares of common stock underlying the option vested on the six month anniversary of the vesting commencement date and 1/54 th

of the remaining shares shall vest on the last day of each month thereafter, subject to the holder remaining in continuous service with the Company on each vesting date.

The shares of common stock underlying the option vested or shall vest 1/54 th

on the last day of each month commencing on the Vesting Commencement Date, subject to the holder remaining in Continuous Service with the Company on each vesting date.

Consists of shares of restricted stock issued pursuant to the early exercise of Mr.

Kramer’s option award granted in February 2021 and that remain subject to our repurchase right in accordance with the vesting schedule of the option.

The market value of unvested shares is calculated by multiplying the number of unvested shares by the closing market price of our common stock on NYSE on December 31, 2021, the last trading day of the year, which was $16.70 per share.

If a named executive officer experiences a covered termination during a change in control period, any then outstanding unvested shares of common stock subject to this option will become fully vested and exercisable.

See the section below titled “—Change in Control Severance Plan” below for additional information.

Employment Arrangements

Each of the named executive officers is an at-will

employee with certain rights to advance notice prior to termination as provided under the Change in Control Severance Plan.

Each named executive officer is eligible to participate in the IonQ, Inc.

Change in Control Severance Plan under the terms and conditions of such plan, see the section below titled “—Change in Control Severance Plan” below for additional information.

Peter Chapman

In September 2021, we entered into an amended and restated offer letter agreement with Mr.

Chapman which governs the current terms of his employment as our Chief Executive Officer.

Chapman’s current annual base salary for 2021 was $350,000.

Chapman is eligible to participate in any bonus plan that may be established for executive officers and is also eligible for reimbursement of business expenses and to participate in our standard employee benefit plans and programs.

In September 2021, we entered into an amended and restated offer letter agreement with Dr.

Kim that established an employment relationship and governs the current terms of his employment as our Chief Technology Officer.

Kim’s annual base salary for 2021 was $280,000.

Kim is also eligible for reimbursement of business expenses.

Kim was granted an option to purchase 404,845 shares of common stock in March 2021, with an exercise price of $2.39 per share.

Thomas Kramer

In September 2021, we entered into an amended and restated offer letter agreement with Mr.

Kramer which governs the current terms of his employment as our Chief Financial Officer.

Kramer’s current annual base salary for 2021 was $200,000.

Kramer is eligible to participate in any bonus plan that may be established for executive officers and is also eligible for reimbursement of business expenses and to participate in our standard employee benefit plans and programs.

In connection with commencement of his employment in 2021, Mr.

Kramer was granted an option to purchase 2,701,844 shares of common stock with an exercise price of $2.39 per share.

Change in Control Severance Plan

Upon the closing of the business combination, each of the executive officers, including the named executive officers, became eligible to receive severance benefits under the terms of the IonQ, Inc.

Change in Control Severance Plan.

The Change in Control Severance Plan provides for severance benefits upon a “covered termination” that occurs outside of or during a “change in control period” (each as described below).

Upon a covered termination that occurs outside of a change in control period, the “change in control period,” participants will be entitled to (1) a payment equal to the participant’s base salary for a period of months (12 months for Mr.

6 months for Dr.

Kramer) less applicable tax withholdings to be paid in equal installments on our regular payroll schedule or in a lump sum, as we determine, and in compliance with Section 409A of the Code, and (2) payment of continued group health benefits for a period of time matching the applicable severance term.

Upon a covered termination that occurs during a change in control period, participants will be entitled to (1) a payment equal to the participant’s base salary for a period of months (12 months for Mr.

Kramer) less applicable tax withholdings to be paid in equal installments on the Company’s regular payroll schedule or in a lump sum, as we determine, and in compliance with Section 409A of the Code;

(2) a payment equal to a multiple of the participant’s target annual bonus (100% for Mr.

Kramer) less applicable tax withholdings to be paid in equal installments on our regular payroll schedule or in a lump sum, as we determine, and in compliance with Section 409A of the Code;

(3) payment of continued group health benefits and full accelerated vesting of all outstanding equity awards subject to time-based vesting.

All severance benefits under the Change in Control Severance Plan are subject to the participant’s execution of an effective release of claims in favor of us and compliance with the terms of any confidential information agreement, proprietary information and inventions agreement and any other agreement between the participant and IonQ.

For purposes of the Change in Control Severance Plan, a “covered termination” is a termination of employment by IonQ without “cause,” as defined in the Change in Control Severance Plan, or as a result of the participant’s resignation for “good reason,” as defined in the Change in Control Severance Plan, in either case, not as a result of death or disability.

For purposes of the Change in Control Severance Plan, a “change in control period” is the period of time beginning on the date on which a “change in control,” as defined in our 2021 Equity Incentive Plan (“2021 Plan”), becomes effective and ending on the first anniversary of the effective date of such change in control.

Health and Welfare Benefits;

Our named executive officers are eligible to participate in our employee benefit plans, including medical, dental, vision, disability and life insurance plans, in each case on the same basis as all of our other full-time employees.

Part-time employees, including Dr.

Kim, are not eligible to participate in our employee benefit plans.

We generally do not provide perquisites or personal benefits to our named executive officers, except in limited circumstances, and we did not provide any perquisites or personal benefits to our named executive officers in 2021.

Our named executive officers (other than Dr.

Kim) are eligible to participate in a defined contribution retirement plan that provides eligible U.S.

employees with an opportunity to save for retirement on a tax advantaged basis.

Eligible employees may defer eligible compensation on a pre-tax

(Roth) basis, up to the statutorily prescribed annual limits on contributions under the Code.

Contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions.

We currently make matching contributions into the 401(k) plan on behalf of participants equal to 100% on participant contributions up to 5% of their compensation.

Participants are always vested in their contributions to the plan.

Participants vest in their company matching and nonelective contributions under a one to five-year graded vesting schedule.

The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code.

As a tax-qualified

retirement plan, contributions to the 401(k) plan (except for Roth contributions) and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.

Director Compensation

Cash Compensation

We maintain a non-employee

director compensation policy, pursuant to which the non-executive

chair receives an annual base retainer of $50,000, and each other non-employee

director receives an annual base retainer of $30,000.

In addition, our non-employee

directors receive the following cash compensation for committee services, as applicable:

each chair of our audit, compensation and nominating and corporate governance committees receives an additional annual retainer of $20,000, $12,000 and $8,000, respectively;

each other member of our audit, compensation and nominating and corporate governance committees receives an additional annual retainer of $8,000, $6,000 and $4,000, respectively.

These retainers are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment will be prorated for any portion of such quarter that the director is not serving on the Board or the applicable committee.

We also reimburse each of our directors for their travel expenses incurred in connection with their attendance at Board and committee meetings.

Equity Compensation

Initial Grant

For each newly appointed or elected director, an initial grant of restricted stock units (“RSU Award”) and option to purchase shares of common stock (“Stock Option Award”) with an aggregate fair market value as of the grant date equal to $400,000, with such value split equally between the RSU Award and Stock Option Award.

The Initial Grant will vest over a three-year period, with one-third

of the Initial Grant vesting on each anniversary of the grant date, such that the Initial Grant is fully vested on the third anniversary of the date of grant, subject to continuous service as a member of the Board through such vesting date.

On the first business day following each annual stockholder meeting (“Annual Meeting”), each director who continues to serve as a non-employee

member of the Board following such Annual Meeting (excluding any Eligible Director who is first appointed or elected by the Board at the Annual Meeting) will be granted an RSU Award and an Stock Option Award with an aggregate fair market value as of the grant date equal to $200,000, with such value split equally between the RSU Award and Stock Option Award.

The Annual Grant will vest in full on the earlier of (i) the date of the following year’s Annual Meeting (or the date immediately prior to the next Annual Meeting if the non-employee

director’s service as a director ends at such Annual Meeting due to the director’s failure to be re-elected

or the director not standing for re-election),

or (ii) the one-year

anniversary measured from the date of grant, subject in all cases to continued service as a member of the Board through such vesting date.

With respect to a director who is first elected or appointed to the Board on a date other than the date of the Annual Meeting, upon the first Annual Meeting following such director’s first joining the Board, such director’s first Annual Grant will be pro-rated

to reflect the time between such director’s election or appointment date and the date of such first Annual Meeting.

Vesting Acceleration

In the event of a change of control (as defined in our 2021 Plan), any unvested portion of an equity award granted to our non-employee

directors will fully vest and, if applicable, become exercisable immediately prior to the effective date of such change of control, subject to the non-employee

director’s continuous service with us on the effective date of the change of control.

Election to Receive Equity in Lieu of Cash Compensation

Each non-employee director may elect to receive fully vested RSU Awards in lieu of his or her cash compensation.

Such RSU Awards are issued on a quarterly basis, in arrears, and the number of such restricted stock units is calculated by dividing (1) the aggregate amount of cash compensation otherwise payable to such director divided by (2) the closing sales price per share of our common stock on the last day of the fiscal quarter in which the service occurred, rounded down to the nearest whole share.

Notwithstanding the foregoing, any member of our board of directors that is entitled to the above compensation may elect to forego all or a portion of such compensation from time to time by giving notice to the General Counsel of the Company.

Director Compensation Table

The following table sets forth information regarding the compensation earned for service on the Board by our non-employee

directors during the year ended December 31, 2021.

As a named executive officer, the compensation received by Mr.

de Masi is shown above in “—Executive Compensation—Summary Compensation Table.”

Fees Earned or

Awards (1)(5)

Darla Anderson (3)

Craig Barratt

Ronald Bernal

Francesca Luthi (3)

The amounts reported in this column reflect the aggregate grant date fair value of the shares underlying option awards granted to our directors as computed in accordance with ASC Topic 718.

See Note 13 to our consolidated financial statements included elsewhere in this Annual Report for a discussion of assumptions made us in determining the aggregate grant date fair value of our option awards.

Note that the amounts reported in this column reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the directors upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options.

In connection with Mr.

Barratt’s appointment to Legacy IonQ, he was granted a stock option to purchase 926,347 shares of our common stock.

The shares of common stock underlying the option vested or shall vest 1/36 th

on the last day of each month commencing on December 30, 2020, subject to the holder remaining in Continuous Service with the Company on each vesting date.

The option contains an early exercisable provision and was fully exercised by Mr.

Resigned from our board of directors upon completion of the business combination on September 30, 2021.

In January 2022, Mr.

Singh received a Stock Option Award of 33,570 shares of our common stock and an RSU Award of 11,190 shares of our common stock in connection with his appointment to our board of directors in December 2021.

The following table provides information regarding the aggregate number of equity awards granted to our non-employee

directors that were outstanding as of December 31, 2021:

Restricted Stock

Outstanding at

Option Awards

Outstanding at

Darla Anderson

Craig Barratt

Ronald Bernal

Francesca Luthi

Consists of shares of restricted stock issued pursuant to the early exercise of the stock option granted to Mr.

Barratt in connection with this appointment to Legacy IonQ that remain subject to our repurchase right in accordance with the vesting schedule of the stock option.

Information regarding our executive compensation required by this item will be contained in our 2023 Proxy Statement under the captions “Executive Compensation,” “Director Compensation” and “Information Regarding the Board of Directors and Corporate Governance—Information Regarding Committees of the Board of Directors—Compensation Committee—Compensation Committee Interlocks and Insider Participation,” and is hereby incorporated by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of shares of our common stock as of March 15, 2022 by (i) each named executive officer, (ii) each director, (iii) all directors and executive officers as a group and (iv) each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our outstanding common stock.

Other than as set forth in this table, we are not aware of any person or group that holds greater than 5% of our outstanding common stock.

Beneficial ownership of securities is determined according to the rules of the SEC and generally means, with respect to a security, that a person or entity possesses sole or shared voting or investment power of such security, including options and warrants that are currently exercisable or will be exercisable within 60 days of March 15, 2022.

Options to purchase shares of our common stock that are exercisable within 60 days of March 15, 2022 are deemed to be beneficially owned by the person holding these options for the purpose of computing percentage ownership of that person, but they are not treated as outstanding for the purpose of computing any other person’s ownership percentage.

This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13G or 13D filed with the SEC.

Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that all persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them.

Applicable percentages are based on 197,671,494 shares of common stock outstanding as of December 31, 2021, adjusted as required by rules promulgated by the SEC.

Name and Address of Beneficial Owner (1)

Amount & Nature of

Percent of Class

(Common Stock)

5% Stockholders:

Entities affiliated with New Enterprise Associates (2)

Entities affiliated with GV (3)

Named Executive Officers and Directors:

Peter Chapman (4)

Jungsang Kim (5)

Thomas Kramer (6)

Craig Barratt (7)

Ronald Bernal (2)

Niccolo de Masi (8)

All executive officers and directors as a group (11 persons)

Less than 1%.

Unless otherwise noted, the business address of each of the beneficial owners is c/o IonQ, Inc., 4505 Campus Drive, College Park, MD 20740.

Consists of (i) 29,229,659 shares of common stock held by New Enterprise Associates 15, L.P.

(“NEA 15”) and (ii) 48,193 shares of common stock held by NEA Ventures 2016, L.P (“NEA Ventures”).

The shares directly held by NEA 15 are indirectly held by NEA Partners 15, L.P.

(“NEA Partners 15”), the sole general partner of NEA 15, NEA 15 GP, LLC (“NEA 15 LLC”), the sole general partner of NEA Partners 15 and each of the individual managers of NEA 15 LLC.

The individual Managers of NEA 15 LLC (collectively, the “Managers”) are Forest Baskett, Anthony A.

Florence, Mohamad Makhzoumi, Peter Sonsini and

The shares directly held by NEA Ventures are indirectly held by Karen P.

Welsh, the general partner of NEA Ventures.

NEA Partners 15, NEA 15 LLC and the Managers share voting and dispositive power with regard to the securities directly held by NEA 15.

Welsh has voting and dispositive power with regard to the securities directly held by NEA Ventures.

Ron Bernal, a member of our board of directors, and a Venture Partner at New Enterprise Associates, Inc.

(“NEA”), has no voting or investment control over any of the shares held by NEA 15 and NEA Ventures.

All indirect holders of the above referenced securities disclaim beneficial ownership therein except to the extent of their actual pecuniary interest.

Consists of (i) 4,556,532 shares of common stock held by GV 2019, L.P.

and (ii) 17,350,506 shares of common stock held by GV 2016, L.P.

GV 2019 GP, L.P.

(the general partner of GV 2019, L.P.), GV 2019 GP, L.L.C., (the general partner of GV 2019 GP, L.P.), Alphabet Holdings LLC (the managing member of GV 2019 GP, L.L.C.), XXVI Holdings Inc.

(the managing member of Alphabet Holdings LLC) and Alphabet Inc.

(the controlling stockholder of XXVI Holdings Inc.) may each be deemed to have sole voting and investment power over the securities held by GV 2019, L.P.

GV 2016 GP, L.P.

(the general partner of GV 2016, L.P.), GV 2016 GP, L.L.C.

(the general partner of GV 2016 GP, L.P.), Alphabet Holdings LLC (the managing member of GV 2016 GP, L.L.C.), XXVI Holdings Inc.

(the managing member of Alphabet Holdings LLC) and Alphabet Inc.

(the controlling stockholder of XXVI Holdings Inc.) may each be deemed to have sole voting and investment power over the securities held by GV 2016, L.P.

The principal business address of GV 2019, L.P., GV 2019 GP, L.P., GV 2019 GP, L.L.C., GV 2016, L.P., GV 2016 GP, L.P., GV 2016 GP, L.L.C., Alphabet Holdings LLC, XXVI Holdings Inc.

and Alphabet Inc.

is 1600 Amphitheatre Parkway, Mountain View, California 94043.

Reflects shares of common stock issuable to Mr.

Chapman pursuant to options exercisable within 60 days of March 15, 2022.

Consists of (i) 6,422,352 shares of common stock held by Mr.

Kim, (ii) 391,347 shares of common stock issuable to Mr.

Kim pursuant to options exercisable within 60 days of March 15, 2022, and (iii) 809,691 shares of common stock held by the Jungsang Kim Irrevocable Trusts For Children, dated January 27, 2021.

Consists of 675,464 shares of common stock held by Mr.

Kramer, a portion of which are subject to a repurchase right.

Consists of 926,347 shares of common stock held by the Barratt-Oakley Trust dated November 29, 2004, of which Mr.

Barratt is a trustee.

A portion of these shares are subject to a repurchase right.

Consists of 7,425,000 shares of common stock held by dMY Sponsor III, LLC (the “Sponsor”).

de Masi are members of the Sponsor, and Mr.

You is the manager of the Sponsor.

Accordingly, Mr.

You has voting and investment discretion with respect to the common stock held of record by the Sponsor.

di Masi has no voting or investment control over any of the shares and disclaims any beneficial ownership of any securities held by the Sponsor.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2021.

Plan Category

Number of securities

to be issued upon

options, warrants and

Weighted-average

exercise price of

outstanding options,

warrants and rights

Number of securities

remaining available

future issuance under

equity compensation

plans (excluding

securities reflected in

Equity compensation plans approved by stockholders:

2015 Equity Incentive Plan (1)

2021 Equity Incentive Plan

2021 Employee Stock Purchase Plan

Equity compensation plans not approved by stockholders

Following the adoption of the 2021 Plan, no additional equity awards have been or will be granted under the 2015 Plan.

The number of shares of common stock reserved for issuance under the 2021 Plan will automatically increase on January 1 of each year, beginning on January 1, 2022 and continuing through and including January 1, 2031, in an amount equal to (1) 5% of the fully-diluted common stock on December 31 of the preceding year (as defined in the 2021 Plan), or (2) a lesser number of shares of common stock determined by the board of directors prior to the date of the increase (which may be zero).

Pursuant to the terms of the 2021 Plan, the number of shares available under the 2021 Plan was increased by 12,947,703 shares effective January 1, 2022.

The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1 of each year, beginning on January 1, 2022 and continuing through and including January 1, 2031, by the lesser of (1) 1% of the fully-diluted common stock on December 31 of the preceding calendar year (inclusive of the share reserve for the ESPP and of the 2021 Plan), (2) a number of shares equal to two times the initial share reserve, or (3) such lesser number of shares of common stock as determined by the board (which may be zero).

Pursuant to the terms of the ESPP, no shares were added to the reserve on January 1, 2022.

Ownership of Securities

Information regarding ownership of our securities required by this item will be contained in our 2023 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management,” and is hereby incorporated by reference.

Equity Compensation Plan Information

Information regarding our equity compensation plans required by this item will be contained in our 2023 Proxy Statement under the caption “Equity Compensation Plan Information,” and is hereby incorporated by reference.

Certain Relationships and Related Transactions, and Director Independence.

Policies and Procedures Regarding Transactions with Related Persons

We have adopted a written related person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and oversight of “related person transactions.” For purposes of the policy only, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we or any of our subsidiaries are participants involving an amount that exceeds $120,000, in which any “related person” has a material interest.

Transactions involving compensation for services provided to us as an employee, consultant or director will not be considered related person transactions under this policy.

A related person is any executive officer, director, nominee to become a director or a holder of more than 5% of any class of our voting securities (including the common stock), including any of their immediate family members and affiliates, including entities owned or controlled by such persons.

Under the policy, the related person in question or, in the case of transactions with a holder of more than 5% of any class of our voting securities, an officer with knowledge of a proposed transaction, must present information regarding the proposed related person transaction to the audit committee (or, where review by the audit committee would be inappropriate, to another independent body of the board) for review.

To identify related person transactions in advance, we will rely on information supplied by our executive officers, directors and certain significant stockholders.

In considering related person transactions, the audit committee will take into account the relevant available facts and circumstances, which may include, but are not limited to:

the risks, costs, and benefits to us;

the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the terms of the transaction;

the availability of other sources for comparable services or products;

the terms available to or from, as the case may be, unrelated third parties.

The audit committee will approve only those transactions that it determines are fair to us and in our best interests.

All of the transactions described above were entered into prior to the adoption of such policy.

Related Person Transactions

Other than compensation arrangements for our directors and executive officers, the following is a description of transactions since January 1, 2019 to which we were a party or will be a party, in which:

the amounts involved exceeded or will exceed $120,000;

any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.

dMY Relationships and Related Person Transactions

Founder Shares

On September 14, 2020, the Sponsor subscribed for 7,187,500 Founder Shares for a total subscription price of $25,000, and fully paid for these on November 17, 2020.

In October 2020, the Sponsor transferred 25,000 Founder Shares to each of Darla Anderson, Francesca Luthi and Charles E.

Wert, dMY’s directors.

On November 12, 2020, dMY effected a 1:1.1 stock split of the Class B Stock, resulting in an aggregate of 7,906,250 shares outstanding.

All shares and associated amounts have been retroactively restated to reflect the stock split.

The Sponsor agreed to forfeit up to 1,031,250 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares will represent 20.0% of dMY’s issued and outstanding shares after the dMY IPO.

On November 17, 2020, the underwriters partially exercised their over-allotment option to purchase 2,500,000 Public Units;

thus, only 406,250 Founder Shares were forfeited, resulting in an aggregate of 7,500,000 Founder Shares outstanding.

The Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of:

(A) one year after the completion of the initial business combination or earlier if, subsequent to the business combination, the closing price of the Class A Stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading

day period commencing at least 150 days after the initial business combination and (B) the date following the completion of the business combination on which IonQ completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the stockholders having the right to exchange their Common Stock for cash, securities or other property.

Private Placement Warrants

Simultaneously with the closing of the dMY IPO, dMY consummated the Private Placement of 4,000,000 Private Placement Warrants at a price of $2.00 per Private Placement Warrant to the Sponsor, generating gross proceeds of $8.0 million (including approximately $7.95 million in cash and approximately $50,000 in subscription receivable).

Each whole Private Placement Warrant is exercisable for one whole share of Class A Stock at a price of $11.50 per share.

A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the dMY IPO held in the Trust Account.

The Private Placement Warrants are non-redeemable

for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.

The Sponsor exercised the Private Placement Warrants on a cashless basis in December 2021 and received 2.2 million shares of our common stock.

Related Party Loans

On September 14, 2020, the Sponsor agreed to loan dMY an aggregate of up to $200,000 to cover expenses related to the dMY IPO pursuant to the Note.

This loan was non-interest

bearing and was paid off upon the completion of the dMY IPO.

Administrative Services Agreement

dMY entered into an agreement that provides that, commencing on the date of the dMY IPO continuing until the earlier of dMY’s consummation of an initial business combination and dMY’s liquidation, dMY paid the Sponsor a total of $10,000 per month for office space, secretarial and administrative services provided to members of dMY’s management team.

The Sponsor, executive officers and directors, or any of their respective affiliates were reimbursed for any out-of-pocket

expenses incurred in connection with activities on dMY’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.

dMY’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or dMY’s or their affiliates.

Private Placements of Securities by Legacy IonQ Prior to the Closing of the Business Combination

Preferred Stock Financing

Between August 2019 and November 2019, Legacy IonQ issued and sold an aggregate of 11,166,941 shares of Legacy IonQ Series B-1

preferred stock at a purchase price of $5.5757 per share, for an aggregate purchase price

of $62.3 million.

Each share of Legacy IonQ Series B-1

preferred stock was canceled and converted into the right to receive the number of shares of common stock equal to the Exchange Ratio (as defined in the Merger Agreement) upon the consummation of the business combination.

The table below sets forth the number of shares of Legacy IonQ Series B-1

preferred stock purchased by Legacy IonQ’s related parties:

Shares of Series B-1

Preferred Stock

Total Purchase

New Enterprise Associates 15, L.P.

GV 2019, L.P.

Ronald Bernal, a member of our board of directors, is a partner of New Enterprise Associates 15, L.P., a beneficial owner of greater than 5% of our capital stock.

Blake Byers, a member of our board of directors, was previously a partner of GV 2019, L.P., a beneficial owner of greater than 5% of our capital stock.

Business Combination Related Person Transactions

PIPE Investment

In connection with the execution of the Merger Agreement, dMY entered into subscription agreements with the PIPE investors, pursuant to which the PIPE investors agreed to purchase, and dMY agreed to sell the PIPE investors, an aggregate of 34,500,000 shares of dMY common stock, for a purchase price of $10.00 per share and an aggregate purchase price of $345.0 million, in the PIPE investment.

The table below sets forth the number of shares of dMY common stock to be purchased by our related parties in the PIPE offering:

Shares of dMY common stock

Total Purchase Price

Blake Byers (1)

New Enterprise Associates 15, L.P.

GV 2016, L.P.

Blake Byers, a member of our board of directors, was previously a partner of GV 2016, L.P., a beneficial owner of greater than 5% of our capital stock.

Ronald Bernal, a member of our board of directors, is a partner of New Enterprise Associates 15, L.P., a beneficial owner of greater than 5% of our capital stock.

Stockholder Support Agreement

On March 7, 2021, dMY, Legacy IonQ and certain Legacy IonQ stockholders, including holders affiliated with members of Legacy IonQ’s board of directors and beneficial owners of greater than 5% of Legacy IonQ’s capital stock, representing 54.88% of the voting power of Legacy IonQ’s then-outstanding shares of capital stock, entered into the Stockholder Support Agreement, whereby such Legacy IonQ stockholders agreed to, among other things, promptly (and in any event within three business days) following the SEC declaring effective the proxy statement/prospectus, vote or provide consent with respect to the securities of Legacy IonQ set forth in the Stockholder Support Agreement, in favor of the approval and adoption of the Merger Agreement and the transactions contemplated therein.

Additionally, such Legacy IonQ stockholders agreed, among other things, to not transfer any securities of Legacy IonQ set forth in the Stockholder Support Agreement from March 7, 2021 until the earlier of the effective time or the termination of the Merger Agreement in accordance with its terms, subject to certain exceptions.

Amended and Restated Registration Rights Agreement

In connection with the closing of the business combination, we, the Sponsor, the former dMY directors and certain of our securityholders entered into an amended and restated registration rights agreement.

Pursuant to the

agreement, we agreed that we will file with the SEC a registration statement registering the resale of certain securities held by or issuable to such holders, and we will use reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof.

In certain circumstances, certain holders can demand up to two underwritten offerings in any 12 month period, and certain holders are entitled to piggyback registration rights.

In connection with the business combination, the Sponsor, the current management of Legacy IonQ, the former dMY directors and certain stockholders of Legacy IonQ entered into a lock-up

agreement, which we refer to as the “Lock-Up

Agreements.” The parties to such Lock-Up

Agreements agree not to, without the prior written consent of the Board, during the applicable lock-up

sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option, right or warrant to purchase or otherwise transfer, dispose of or agree to transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, any shares of common stock held by it immediately after closing (including common stock acquired as part of the PIPE investment or issued in exchange for, or on conversion or exercise of, any securities issued as part of the PIPE investment), any shares of common stock issuable upon the exercise of options to purchase shares of common stock held by it immediately after closing, or any securities convertible into or exercisable or exchangeable for common stock held by it immediately after closing (the “Lock-Up

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Lock-Up

Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or

publicly announce any intention to effect any transaction specified in the foregoing clauses.

Pursuant to the Lock-Up

Agreement, the parties agreed to transfer restrictions as follows:

(i) certain stockholders of Legacy IonQ will be restricted until the earlier of (x) March 30, 2022 (180 days after the closing date) and (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares for cash, securities or other property;

(ii) members of our management will be restricted until the earlier of (x) 365 days after the closing date, (y) the day after the date on which the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading

day period commencing at least 180 days after the closing date and (z) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares for cash, securities or other property;

and (iii) members of dMY’s board of directors and the Sponsor will be restricted until the earlier of (x) 365 days after the closing date, (y) the day after the date on which the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading

day period commencing at least 150 days after the closing date and (z) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares for cash, securities or other property.

In addition, the PIPE investors have agreed to be bound by lock-up

provisions with respect to their subscribed shares.

periods for strategic investors vary between 6 and 18 months, subject to certain conditions, depending on the number of shares of common stock subscribed for by each strategic investor and a number of other factors.

Venture capital and other investors have agreed to be bound by lock-up

provisions with respect to their subscribed shares for a period of 180 days, subject to the terms of their subscription agreements or, in the case of certain investors that were previously investors in dMY, the Lock-Up

Agreement described above.

Indemnification Agreements

Our Certificate of Incorporation contains provisions limiting the liability of executive officers and directors, and the Bylaws provide that we will indemnify each of our executive officers and directors to the fullest extent permitted under Delaware law.

The Certificate of Incorporation and the Bylaws also provide the board of directors with discretion to indemnify certain key employees when determined appropriate by the board.

We have entered into indemnification agreements with all of our directors and executive officers and certain other key employees.

The indemnification agreements provide that we will indemnify each of our directors, executive officers, and other key employees against any and all expenses incurred by such director, executive officer, or other key employee because of his or her status as one of our directors, executive officers, or other key employees, to the fullest extent permitted by Delaware law, the Certificate of Incorporation and the Bylaws.

In addition, the indemnification agreements provide that, to the fullest extent permitted by Delaware law, we will advance all expenses incurred by our directors, executive officers, and other key employees in connection with a legal proceeding involving his or her status as a director, executive officer, or key employee.

Board of Directors Independence

The Board has reviewed the independence of each director.

Based on information provided by each director concerning his background, employment and affiliations, the Board determined that none of the directors, other than Messrs.

Chapman and Kim, has any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of the directors is “independent” as that term is defined under the NYSE listing standards.

In making these determinations, the board considered the current and prior relationships that each non-employee director

has with us and all other facts and circumstances the board deemed relevant in determining their independence, including the beneficial ownership of our securities by each non-employee director

and the transactions described above.

Principal Accountant Fees and Services.

Changes in Registrant’s Certifying Accountant.

As previously disclosed, in connection with the closing of the business combination on September 30, 2021, WithumSmith+Brown, PC, (“Withum”) was dismissed as our independent registered public accounting firm.

This decision was approved by the Board.

Withum served as the independent registered public accounting firm for dMY prior to the business combination.

The Board approved the appointment of Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm on September 30, 2021.

Ernst & Young served as the independent registered public accounting firm for Legacy IonQ prior to the business combination.

Information regarding related transactions and director independence required by this item will be contained in our 2023 Proxy Statement under the captions “Transactions with Related Persons” and “Information Regarding the Board of Directors and Corporate Governance—Independence of Our Board of Directors,” and is hereby incorporated by reference.

Principal Accountant Fees and Services.

The following tables present the aggregate fees billed by Ernst & Young and Withum to us (including Legacy IonQ, in the case of Ernst & Young) for the fiscal years ended December 31, 2021 and 2020.

Ernst & Young

Audit fees (1)

Audit-related fees

All other fees

Audit fees in 2021 consisted of fees billed for professional services rendered for the audit of IonQ, Inc.’s 2021 consolidated financial statements, the reviews of 2021 interim condensed consolidated financial statements, audit services in connection with the accounting for the business combination, and audit services provided in connection with other regulatory filings and offerings, including the regulatory filings associated with the business combination and related financings.

Audit fees for 2020 consisted of fees billed for professional services rendered for the audit of Legacy IonQ’s consolidated financial statements (2019 and 2020), the reviews of the applicable historical interim condensed consolidated financial statements, and audit services provided in connection with other regulatory filings and offerings, including the regulatory filings associated with the business combination and related financings.

Audit fees (1)

Audit-related fees

All other fees

Audit fees in 2021 consisted of fees billed for professional services rendered for the audit of dMY’s restated 2020 annual financial statements, interim reviews of dMY’s quarterly financial statements, and services that were normally provided by Withum in connection with regulatory filings.

Audit fees in 2020 include fees billed for professional services rendered for the audit of dMY’s annual financial statements and other required filings with the SEC.

Tax fees consisted of fees billed for professional services relating to tax compliance services.

All fees were pre-approved

by our Audit Committee.

Policies and Procedures

Our Audit Committee approves all audit and pre-approves

all non-audit

services provided by Ernst & Young before it is engaged by us to render non-audit

services to ensure that the provision of these services does not impair the auditor’s independence.

These services may include audit-related services, tax services and other non-audit

The pre-approval

requirement set forth above does not apply with respect to non-audit

all such services do not, in the aggregate, amount to more than 5% of the total fees paid by us to Ernst & Young during the fiscal year in which the services are provided;

such services were not recognized as non-audit

services at the time of the relevant engagement;

such services are promptly brought to the attention of and approved by the Audit Committee (or its delegate) prior to the completion of the annual audit.

The Audit Committee elected to delegate pre-approval

authority to the chair of the Audit Committee to approve any one or more individual permitted non-audit

The chair will report any pre-approval

granted at the next meeting of the Audit Committee.

Information regarding accounting fees and services required by this item will be contained in our 2023 Proxy Statement in Proposal 2 under the captions “Principal Accountant Fees and Services” and “Pre-Approval Policies and Procedures” and is hereby incorporated by reference.

Exhibit and Financial Statement Schedules.

The financial statements schedules and exhibits filed as part of

this Annual Report are as follows:

The financial statements schedules and exhibits filed as part of this Annual Report are as follows:

(a)(1) Financial Statements

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Convertible Redeemable Preferred Stock, Warrants and Stockholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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(a)(2) Financial Statement Schedules

All other schedules are omitted because they are not required or the required information is included in the financial statements or notes thereto.

All other financial statement schedules are omitted because they are not required or the required information is included in the financial statements or notes thereto.

(a)(3) Exhibits

The exhibits required to be filed as part of this report are listed in the Exhibit List attached hereto and are incorporated herein by reference.

The exhibits required to be filed as part of this Annual Report on Form 10-K are listed in the Exhibit List attached hereto and are incorporated herein by reference.

Agreement and Plan of Merger, dated as of March 7, 2021, by and among dMY Technology Group, Inc.

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001-39694), filed with the SEC on November 17, 2020).

Description of the Registrant’s Securities.

Description of the Registrant’s Securities (incorporated herein by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K (File No.

001-39694), filed with the SEC on March 28, 2022).

Amended and Restated Registration Rights Agreement, dated September 30, 2021, between and among the investors party thereto and IonQ, Inc.

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001-39694), filed with the SEC on March 8, 2021).

Form of Sponsor Support Agreement (incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K (File No.

001-39694), filed with the SEC on March 8, 2021).

Form of Stockholder Support Agreement (incorporated herein by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K (File No.

001-39694), filed with the SEC on March 8, 2021).

Form of Lock-Up Agreement (incorporated herein by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K (File No.

001-39694), filed with the SEC on March 8, 2021).

Change in Control Severance Plan and Summary Plan Description (incorporated herein by reference to Exhibit 10.36 to the Company’s Registration Statement on Form S-4/A (File No.

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Forms of Option Grant Notice and Option Agreement under 2021 Equity Incentive Plan.

Form of Restricted Stock Unit Grant Notice and Unit Award Agreement under 2021 Equity Incentive Plan.

Form of Restricted Stock Unit Grant Notice and Unit Award Agreement under 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

001-39694), filed with the SEC on August 15, 2022).

2021 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K (File No.

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Amendment No.

3 to Exclusive License Agreement, dated February 1, 2021, between the University of Maryland and IonQ, Inc.

(incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No.

001-39694), filed with the SEC on May 16, 2022).

Amendment No.

4 to Exclusive License Agreement, dated April 27, 2021, between Duke University, the University of Maryland and IonQ, Inc.

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Amendment No.

4 to Exclusive License Agreement, dated February 1, 2021, between the University of Maryland and IonQ, Inc.

(incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No.

001-39694), filed with the SEC on May 16, 2022).

Amendment No.

5 to Exclusive License Agreement, dated September 10, 2021, between Duke University and IonQ, Inc.

(incorporated herein by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K (File No.

001-39694), filed with the SEC on March 28, 2022).

Amendment No.

5 to Exclusive License Agreement, dated September 24, 2021, between the University of Maryland and IonQ, Inc.

(incorporated herein by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K (File No.

001-39694), filed with the SEC on March 28, 2022).

Amendment No.

6 to Exclusive License Agreement, dated January 23, 2023, between Duke University and IonQ, Inc.

Exclusive Option Agreement, dated July 15, 2016, between Duke University and IonQ, Inc.

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333-254840), filed with the SEC on June 17, 2021).

Non-Employee Director Compensation Policy.

Non-Employee Director Compensation Policy (incorporated herein by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K (File No.

001-39694), filed with the SEC on March 28, 2022).

List of Subsidiaries of Company (incorporated herein by reference to Exhibit 21.1 to the Company’s Current Report on Form 8-K (File No.

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Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101).

Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K),

irrespective of any general incorporation language contained in such filing.

Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act (whether made before or after the date of the Form10-K),irrespective of any general incorporation language contained in such filing.

Indicates a management contract or compensatory plan.

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The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report on Form 10-K

to be signed on its behalf by the undersigned, thereunto duly authorized .

Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(1)(5).

The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

March 30, 2023

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POWER OF ATTORNEY

and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K,

and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact

and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact

and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report on Form 10-K

has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Each person whose individual signature appears below hereby authorizes and appoints Peter Chapman and Thomas Kramer, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

/s/ Peter Chapman

Peter Chapman

President and Chief Executive

Officer and Director

President and Chief Executive Officer and Director

(Principal Executive Officer)

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Craig Barratt

Chairman of the Board of Directors

Chair of the Board of Directors

March 30, 2023

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March 30, 2023

/s/ Blake Byers

/s/ Kathryn Chou

March 30, 2023

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/s/ Jungsang Kim

Chief Technology Officer

Co-Founder, Chief Technology Officer

March 30, 2023

/s/ Wendy Thomas

March 30, 2023

/s/ Harry You

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 42 )

Consolidated Balance Sheets

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Changes in Convertible Redeemable Preferred Stock, Warrants and Stockholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of IonQ, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in convertible redeemable preferred stock, warrants and stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

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(in thousands, except share and per share data)

As of December 31,

Current assets:

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Accounts receivable

Prepaid expenses and other current assets ($ 612 and $ 1,013 attributable to related parties)

Prepaid expenses and other current assets

Total current assets

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Operating lease right-of-use

assets ($ 4,032 and $ 4,296 attributable to related parties)

Intangible assets, net

Other noncurrent assets ($ 1,845 and $ 2,365 attributable to related parties)

Liabilities, Convertible Redeemable Preferred Stock and Warrants, and Stockholders’ Equity

Other noncurrent assets

Liabilities and Stockholders’ Equity

Current liabilities:

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Accrued expenses

Current portion of operating lease liabilities ($ 568 and $ 495 attributable to related parties)

Unearned revenue ($ 2,821 and zero attributable to related parties)

Current portion of operating lease liabilities

Unearned revenue

Current portion of stock option early exercise liabilities

Total current liabilities

Operating lease liabilities, net of current portion ($ 3,643 and $ 3,776 attributable to related parties)

Operating lease liabilities, net of current portion

Unearned revenue, net of current portion

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Warrant liabilities

Other noncurrent liabilities

Total liabilities

Commitments and contingencies (see Note 10)

Convertible Redeemable Preferred Stock and Warrants:

Series A convertible redeemable preferred stock;

$ 0.0001 par value per share;

2,000,000 shares authorized;

after giving effect to the recapitalization there is no convertible redeemable preferred stock issued or outstanding as of December 31, 2021 and 2020

Series B convertible redeemable preferred stock;

$ 0.0001 par value per share;

9,753,798 shares authorized;

after giving effect to the recapitalization there is no convertible redeemable preferred stock issued or outstanding as of December 31, 2021 and 2020

convertible redeemable preferred stock;

$ 0.0001 par value per share;

13,217,404 shares authorized;

after giving effect to the recapitalization there is no convertible redeemable preferred stock issued or outstanding as of December 31, 2021 and 2020

Warrants for Series B-1

convertible redeemable preferred stock;

after giving effect to the recapitalization there are no warrants for convertible redeemable preferred stock issued or outstanding as of December 31, 2021 and 2020

Stockholders’ Equity:

Common stock $ 0.0001 par value;

1,000,000,000 and 160,318,719 shares authorized as of December 31, 2021 and December 31, 2020, respectively;

1,000,000,000 shares authorized;

199,862,123 and 195,630,975 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

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Accumulated deficit

other comprehensive loss

Accumulated other comprehensive loss

Total stockholders’ equity

Total Liabilities, Convertible Redeemable Preferred Stock and Warrants, and Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part of these consolidated financial statements.

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(in thousands, except share and per share data)

Year Ended December 31,

Costs and expenses:

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Change in fair value of warrant liabilities

Interest income, net

Offering costs associated with warrants

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Net loss per share attributable to common stockholders—basic and diluted

Weighted average shares used in computing net loss per share attributable to common stockholders—basic and diluted

Weighted average shares used in computing net loss per share attributable to common

stockholders—basic and diluted

The accompanying notes are an integral part of these consolidated financial statements.

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(in thousands)

Year Ended December 31,

Other comprehensive loss, net of reclassification adjustments:

Unrealized loss on available-for-sale

Change in unrealized loss on available-for-sale

securities, net

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The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Changes in Convertible Redeemable Preferred Stock, Warrants and Stockholders’ Equity

(in thousands, except share and per share data)

Convertible Redeemable Preferred Stock

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)

Stockholders’ Equity

Additional Paid -

Comprehensive

Stockholders’

Equity/(Deficit)

Balance, December 31, 2020

Retroactive application of recapitalization

Adjusted balance, beginning of period

Issuance of common stock in consideration for research and development arrangement

Vesting of warrant issued to a customer

Other comprehensive loss

Equity instruments issued in consideration for intellectual property and research and development arrangements

Stock options exercised

Vesting of restricted common stock

Merger and PIPE transaction, net of transaction costs

Stock-based compensation

Warrants exercised

Balance, December 31, 2021

Other comprehensive loss

Equity instruments issued in consideration for intellectual property and research and development arrangements

Stock options exercised

Vesting of restricted common stock

Merger and PIPE transaction, net of transaction costs

Issuance of common stock from the settlement of restricted stock units

Stock-based compensation

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Balance, December 31, 2022

The shares of the Company’s common and convertible redeemable preferred stock and warrants, prior to the Business Combination (as defined in Note 1) have been retroactively restated to reflect the exchange ratio established in the Business Combination.

Legacy IonQ’s convertible redeemable preferred stock and warrants previously classified as mezzanine equity were retroactively adjusted, converted into common stock, and reclassified to permanent equity because of the reverse recapitalization as described in Note 1.

The accompanying notes are an integral part of these consolidated financial statements.

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(in thousands)

Year Ended December 31,

Cash flows from operating activities :

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Prepaid expenses and other current assets

Other noncurrent assets

Accounts payable

Accrued expenses

Operating lease liabilities

Unearned revenue

Other assets and liabilities

Net cash used in operating activities

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Capitalized software development costs

Purchases of available-for-sale

Intangible asset acquisition costs

Purchases of available-for-sale

Maturities and sales of available-for-sale

Business acquired

Net cash used in investing activities

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Proceeds from stock options exercised

Repurchase of early exercised stock options

Tax withholding receipts related to vested and released restricted stock units

Tax withholding payments related to vested and released restricted stock units

Proceeds from public warrants exercised

Proceeds from merger and PIPE transaction, net of transaction costs

Repurchase of early exercised stock options

Proceeds from merger and PIPE transactions, net of transaction costs

Net cash provided by financing activities

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Supplemental disclosures of non-cash

investing and financing activities

Net change in cash ,

cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at the beginning of the period

Cash, cash equivalents and restricted cash at the end of the period

Supplemental disclosures of non-cash investing and financing transactions:

Issuance of common stock for intellectual property

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Noncash reclassification of warrant liabilities to equity upon exercise

Vesting of customer warrants

Bonus settled in restricted stock units

The accompanying notes are an integral part of these consolidated financial statements.

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and Legacy IonQ changed its name to IonQ Quantum, Inc.

After the Business Combination, IonQ’s common stock and public warrants are traded on the New York Stock Exchange (“NYSE”) under the symbols “IONQ” and “IONQ WS,” respectively.

Unless otherwise indicated, references in this Annual Report on Form 10-K

to the “Company” and “IonQ” refer to the consolidated operations of IonQ, Inc.

and IonQ Quantum, Inc.

and IonQ Quantum, Inc subsequent to the Business Combination.

References to “dMY” refer to the company prior to the consummation of the Business Combination and references to “Legacy IonQ” refer to IonQ, Inc.

prior to the consummation of the Business Combination.

IonQ is engaged in quantum computing and develops general-purpose quantum computing systems designed to solve the world’s most complex problems, and transform business, society, and the planet for the better.

Prior to 2019, the Company built certain quantum computing systems solely for research & development purposes.

IonQ is engaged in quantum computing and develops general-purpose quantum computing systems designed to solve some of the world’s most complex problems, and transform business, society, and the planet for the better.

To operate the quantum computing systems, the Company has developed custom hardware, custom firmware, and an operating system to orchestrate the quantum computers.

During 2019, the Company began to commercialize its quantum computing systems and entered into its first significant customer agreements.

Currently, the Company permits customers to use the quantum computing systems through a quantum-computing-as-a-service

(“QCaaS”) platform.

Business Combination

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Because Legacy IonQ was deemed the accounting acquirer in the Business Combination, the historical financial statements of Legacy IonQ are the historical financial statements of the Company upon the consummation of the Business Combination.

As a result, the financial statements included in this report reflect:

As a result, the consolidated financial statements included in this report reflect:

(i) the historical operating results of Legacy IonQ prior to the Business Combination;

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and (iii) the assets and liabilities of Legacy IonQ stated at their historical cost.

In accordance with guidance applicable to these circumstances, the equity structure has been retroactively restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s common stock, $ 0.0001 par value per share, issued to Legacy IonQ’s stockholders in connection with the Business Combination.

As such, the shares and corresponding capital amounts and earnings per share related to Legacy IonQ convertible redeemable preferred stock and warrants and Legacy IonQ common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination.

In accordance with guidance applicable to these circumstances, the equity structure has been retroactively restated in all comparative periods to reflect the number of shares of the Company’s common stock, $ 0.0001 par value per share, issued to Legacy IonQ’s stockholders in connection with the Business Combination.

retroactively restated as shares reflecting the exchange ratio established in the Business Combination.

All exercise prices for stock options and customer warrants have similarly been retroactively restated to reflect the exchange ratio established in the Business Combination.

At the Closing Date, the consummation of the Merger provided approximately $ 636.0 million of gross proceeds, including $ 345.0 million from the PIPE investment in common stock at $ 10.00 per share.

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Additionally, approximately $ 4.3 million in offering costs were allocated to liability-classified warrants assumed in the Merger and expensed upon the close of the Business Combination.

Sponsor Support Agreement

Concurrently with the execution of the Merger Agreement, certain former dMY stockholders entered into a sponsor support agreement.

Under the sponsor support agreement, and effective upon the consummation of the Business Combination, 10 % of the dMY Class B common stock (or 750,000 shares), which were converted into shares of common stock at the consummation of the Business Combination, were unvested and subject to certain vesting and forfeiture provisions (the “Vesting Shares”).

These provisions provide that (i) one-third

of the Vesting Shares shall vest at such time as (x) the closing price of common stock equals or exceeds $12.50 for any 20 trading days during any period of 30 consecutive trading days or (y) IonQ consummates a subsequent transaction (as defined) on or before the date that is five years after the consummation of the Business Combination, (ii) one-third

of the Vesting Shares shall vest at such time as (x) the closing price of common stock equals or exceeds $15.00 for any 20 trading days during any period of 30 consecutive trading days or (y) IonQ consummates a subsequent transaction (as defined), on or before the date that is five years after the consummation of the Business Combination and (iii) one-third

of the Vesting Shares shall vest at such time as (x) the closing price of common stock equals or exceeds $17.50 for any 20 trading days during any period of 30 consecutive trading days or (y) IonQ consummates a subsequent transaction (as defined), on or before the date that is five years after the consummation of the Business Combination.

The Vesting Shares are accounted for as equity classified instruments and were included as merger consideration as part of the reverse recapitalization and recorded in additional paid-in

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GAAP as determined by the Financial Accounting Standards Board (“FASB”).

Such consolidated financial statements include the accounts of IonQ and its wholly owned subsidiary.

Such consolidated financial statements include the accounts

of IonQ and its wholly owned subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

Emerging Growth Company

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups

Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, the Company’s financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

As a result, the Company’s consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The Company remains an emerging growth company until the earliest of (i) December 31, 2025, (ii) the last day of the fiscal year in which the Company has total annual gross revenue of at least $ 1.235 billion, (iii) the last day of the fiscal year in which the Company is deemed to be a large accelerated filer, which means the market value of the Company’s common stock that is held by non-affiliates

exceeds $ 700.0 million as of the prior June 30th or (iv) the date on which the Company has issued more than $ 1.0 billion in non-convertible

exceeds $ 700.0 million as of the prior June 30th or (iv) the date on which the Company has issued more than $ 1.0 billion in no

n-convertible

debt securities during the prior three-year period.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP and regulations of the U.S.

Securities and Exchange Commission requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes.

The preparation of consolidated financial statements in conformity with U.S.

GAAP and regulations of the SEC requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.

Significant estimates and judgments are inherent in the analysis and measurement of items including, but not limited to:

revenue recognition, capitalization of internally developed software and quantum computing costs, useful lives of long-lived assets, commitments and contingencies, fair value of available-for-sale

securities, forecasts and assumptions used in determining the fair value of historically granted common stock, stock options and warrants prior to the Business Combination and forecasts and assumptions used in determining the fair value of private placement warrant liabilities.

revenue recognition, capitalization of internally developed software and quantum computing costs, useful lives of long-lived assets, and fair value of available-for-sale

Management bases its estimates and assumptions on historical experience, expectations, forecasts, and on various other factors that are believed to be reasonable under the circumstances.

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Assets and liabilities that are measured at fair value on a non-recurring

basis include property and equipment and intangible assets.

The Company recognizes these items at fair value when they are considered to be impaired or upon initial recognition when acquired through a business combination or an asset acquisition.

The fair value of these assets and liabilities are determined with valuation techniques using the best information available and may include quoted market prices, market comparable and discounted cash flow models.

Due to their short-term nature, the carrying amounts reported in the Company’s financial statements approximates the fair value for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks, checking deposits and money market funds.

basis include property and equipment, intangible assets, and goodwill.

The Company recognizes these items at fair value when they are considered to be

impaired or upon initial recognition when acquired through a business combination or an asset acquisition.

Due to their short-term nature, the carrying amounts reported in the Company’s consolidated financial statements approximates the fair value for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash in banks, checking deposits, money market funds, and certain commercial paper and U.S.

government and agency securities.

The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.

Restricted cash collateralizing letters of credit is included in other noncurrent assets in the consolidated balance sheets

The Company issues letters of credits in the ordinary course of business, including for lease arrangements.

As of December 31, 2022, letters of credit totaling $ 2.0 million were outstanding.

The following table provides a reconciliation of cash and restricted cash included in the consolidated balance sheets to the amounts included in the statements of cash flows (in thousands):

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash in the consolidated statements of cash flows

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are non-interest

bearing and stated at the gross invoiced amount.

A receivable is recorded when the Company has an unconditional right to receive payment based on the satisfaction of performance obligations.

bearing and represent amounts billed and currently due from customers at the gross invoiced amount as well as unbilled amounts related to unconditional rights for consideration to be received for services performed but not yet invoiced.

A receivable is recorded when the Company has an unconditional right to receive payment.

Accounts receivable consists of the following at December 31, 2022 and 2021 (in thousands):

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Unbilled accounts receivable

Total accounts receivable

On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance or if any accounts should be written off.

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The Company did no t have any allowance for doubtful accounts as of December 31, 2022 and 2021.

Materials and Supplies

Materials and supplies are carried at average cost and recorded in prepaid expenses and other current assets in the consolidated balance sheets.

Materials and supplies used in the production of quantum computing systems to be made commercially available are capitalized to property and equipment when installed.

Materials and supplies used for maintenance or research and development efforts are expensed when consumed.

The Company capitalized $ 1.3 million of materials and supplies to property and equipment for the year ended December 31, 2022.

Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments.

Investments are classified as available-for-sale

The Company primarily invests in debt securities and classifies its investments as available-for-sale

at the time of purchase if they are available to support either current or future operations.

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Investments not considered cash equivalents, with remaining contractual maturities of one year or less from the balance sheet date are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments.

All investments are recorded at their estimated fair value, and any unrealized gains and losses are recorded in

accumulated other comprehensive income (loss).

All investments are recorded at their estimated fair value, and any unrealized gains and losses are recorded in accumulated other comprehensive loss.

Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the consolidated statements of operations in other income (expense), net.

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Historical cost of fixed assets is the cost as of the date acquired.

Prior to 2019, the Company built certain quantum computing systems solely for research and development purposes and these quantum computing systems were deemed to have no alternative future use.

In 2019, the Company began to commercialize its quantum computing systems via the offering of QCaaS and quantum computing systems built thereafter were determined to provide a probable future economic benefit.

As a result, hardware and labor costs associated with the building of such quantum computing systems were capitalized.

Hardware and labor costs associated with the building of quantum computing systems are capitalized.

Costs to maintain quantum computing systems are expensed as incurred.

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.

Useful lives are as follows:

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Shorter of the lease term or the estimated useful life of the related asset

Effective October 1, 2022, the Company revised the accounting useful life of quantum computing systems, which was determined to be a change in accounting estimate and is being applied prospectively.

This change in accounting estimate is not material for the year ended December 31, 2022.

The estimated useful life for quantum computing systems was previously 2 years.

The Company determines if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use

(“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on our consolidated balance sheets.

(“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the Company’s consolidated balance sheets.

As of December 31, 2022, the Company has no financing lease arrangements.

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The Company records a ROU asset and lease liability in connection with its operating leases.

The Company’s lease portfolio is comprised primarily of a real estate lease, which is accounted for as an operating lease.

The Company’s lease portfolio is comprised primarily of real estate leases, which are accounted for as operating leases.

The Company elected the practical expedient to not separate lease and non-lease

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The Company generally uses the base non-cancelable

lease term when determining the ROU assets and lease liabilities.

lease term when determining the ROU

assets and lease liabilities.

Intangible Assets, Net

The Company’s intangible assets include website domain costs, patents, intellectual property and trademarks.

Intangible assets with identifiable useful lives such as patents and intellectual property are initially valued at acquisition cost and are amortized over their estimated useful lives using the straight-line method, which is generally 20 years.

The Company’s intangible assets include website domain costs, patents, intellectual property, developed technology and trademarks.

Intangible assets with identifiable useful lives are initially valued at acquisition cost and are amortized over their estimated useful lives using the straight-line method.

With respect to patents, acquisition costs include external legal and patent application costs.

Intangible assets with indefinite useful lives are assessed for impairment at least annually.

Intangible assets with indefinite useful lives, such as trademarks, are assessed for impairment at least annually.

Capitalized Internally Developed Software

Capitalized internally developed software, which is included in intangible assets, net, consists of costs to purchase and develop internal-use

software, which the Company uses to provide services to its customers.

software, which the Company primarily uses to provide services to its customers.

The costs to purchase and develop internal-use

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Any costs incurred during subsequent efforts to upgrade and enhance the functionality of the software are also capitalized.

Once this software is ready for use as part of the Company’s service offerings, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be 3 years.

Once this software is ready for its intended use, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be 3 years.

During the years ended December 31, 2022 and 2021, the Company capitalized $ 3.2 million and $ 1.7 million in internal-use

software costs, respectively.

The Company amortized $ 0.8 million sand and $ 0.3 million of capitalized internally developed software costs during the years ended December 31, 2021 and 2020, respectively.

The Company amortized $ 1.5 million and $ 0.8 million of capitalized internally developed software costs during the years ended December 31, 2022 and 2021, respectively.

Goodwill is the excess of the purchase price ove

r the fai r values assigned to the net assets acquired in a business combination.

The Company tests goodwill for impairment on an annual basis, which it has determined to be the first day of the fiscal fourth quarter, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company tests goodwill qualitatively, or quantitatively by comparing the fair value of the reporting unit with the unit’s carrying amount.

No impairment loss was recognized for the year ended December 31,

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment and other long-term assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount.

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Early exercises of options are not deemed to be substantive exercises for accounting purposes and accordingly, amounts received for early exercises are recorded as a liability.

These amounts are reclassified to common stock and additional paid-in capital as the underlying shares vest.

These amounts are reclassified to common stock and additional paid-in

capital as the underlying shares vest.

Warrant Liabilities

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The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

The warrants of dMY assumed in the Business Combination are classified as liabilities and remeasured at each reporting period (as more fully described in Note 12).

warrants of dMY assumed in the Business Combination are classified as liabilities and remeasured at each reporting period (as more fully described in Note 13).

The determination of the fair value of the warrant liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.

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Revenue Recognition

The Company derives revenue from providing access to its QCaaS and professional services related to co-developing

algorithms on the quantum computing systems.

The Company derives revenue from providing access to its QCaaS, consulting services related to co-developing

algorithms on the quantum computing systems, and from contracts associated with the design, development, and construction of specialized quantum computing systems together with related services.

The Company applies the provisions of the FASB Accounting Standards Update (“ASU”), Revenue from Contracts with Customers (“ASC 606”), and all related applicable guidance.

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The Company has determined that its QCaaS contracts represent a combined, stand-ready performance obligation to provide access to its quantum computing systems together with related maintenance and support.

The transaction price generally includes a variable fee based on usage of its quantum computing systems and may include a fixed fee for a minimum volume of usage to be made available over a defined period of access.

transaction price may consist of a variable fee based on usage of its quantum computing systems or a fixed fee for a minimum volume of usage to be made available over a defined period of access.

Fixed fee arrangements may also include a variable component whereby customers pay an amount for usage over contractual minimums contained in the contracts.

For contracts with a fixed transaction price, the fixed fee is recognized as QCaaS subscription-based revenues on a straight-line basis over the access period.

The Company has determined that contracts that contain consulting services related to

co-developing

quantum computing algorithms and the ability to use its quantum computing systems to run such algorithms represent a combined performance obligation that is satisfied over-time with revenue recognized based on the efforts incurred to date relative to the total expected effort.

For contracts with a fixed transaction price, the fixed fee is recognized on a straight-line basis over the access period or associated measure of progress for the Company’s consulting services contracts.

For contracts without fixed fees, variable usage fees are billed and recognized during the period of such usage.

As of December 31, 2021 and 2020, all of the revenue recognized by the Company was recognized based on transfer of service over time.

There were no revenues recognized at a point in time.

Certain of the Company’s contracts contain multiple performance obligations, most commonly in contracts for specialized quantum computing systems together with related maintenance and support.

Such contracts may also include access to the Company’s QCaaS.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied.

When there are multiple performance obligations in a contract, the Company allocates the transaction price to each performance obligation based on its standalone selling price when available.

We determine standalone selling price based on the observable price of a product or service when we sell the products or services separately in similar circumstances and to similar customers.

When the standalone selling price is not known, due to it being either highly variable or uncertain, the Company allocates the transaction price using the residual approach.

Performance obligations are satisfied over time if the customer receives the benefits as we perform the work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and we have a contractual right to payment for performance to date.

Revenue is recognized on performance obligations satisfied over time based on the efforts incurred to date relative to the total expected effort.

As of December 31, 2022 and 2021, substantially all of the revenue recognized by the Company was recognized based on transfer of service over time.

Revenues recognized at a point in time were not material.

In arrangements with cloud service providers, the cloud service provider is considered the customer and IonQ does not have any contractual relationships with the cloud service providers’ end users.

For these arrangements, revenue is recognized at the amount charged to the cloud service provider and does not reflect any mark-up

For these arrangements, revenue is recognized at the amount charged to the cloud service prov i

der and does not reflect any mark-up

to the end user.

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and (iii) goods or services promised are a single performance obligation.

The Company has entered into one revenue

arrangement in which it granted warrants to the counterparty.

Refer to Note 11—Warrant Transaction Agreement for further information on the customer warrants.

Billed and unbilled accounts receivable relate to the Company’s rights to consideration as performance obligations are satisfied when the rights to payment become unconditional but for the passage of time.

Consideration payable to a customer includes cash amounts that an entity pays, or expects to pay, to the customer.

For arrangements that contain consideration payable to a customer, the Company uses judgment in determining whether such payments are a reduction of the transaction price or a payment to the customer for a distinct good or service.

In 2019, the Company has entered into one revenue arrangement in which it granted warrants to the counterparty.

Refer to Note 12 for further information on the customer warrants.

The variable fees associated with the QCaaS are generally billed a month in arrears.

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liabilities in the Company’s consolidated balance sheets.

As of December 31, 2021, approximately $ 22.1 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable

The Company expects to recognize revenue of $ 7.2 million, $6.7 million and $5.2 million related to these remaining performance obligations in the years ended December 31, 2022, 2023 and 2024, respectively, with the remainder recognized thereafter.

The Company has not estimated the timing of revenue recognition for the remaining unsatisfied performance obligations related to usage-based contracts as the timing of customer usage cannot be predicted given the limited historical data.

Total deferred revenues, including both current and noncurrent, were $5.0 million and $1.4 million at December 31, 2021 and 2020, respectively.

The change in deferred revenue for the year ended December 31, 2021 was primarily due to cash payments received for which the performance obligation was not satisfied prior to the end of the period, partially offset by revenue recognized during the period, of which $0.2 million was included in the deferred revenue balance at December 31, 2020 .

As of December 31, 2022, approximately $ 30.5

million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable

contracts, including both funded (firm orders for which funding has been both authorized and appropriated by the customer) and unfunded (firm orders for which funding has not been appropriated) orders.

The Company expects approximately 60 %

of the remaining performance obligations to be recognized as revenue within the next twelve months .

The following table summarizes the changes in unearned revenue for the years ended December 31, 2022 and 2021 (in thousands):

Beginning balance

Revenue recognized

New deferrals, net

Ending balance

For contractual arrangements where consideration is paid up-front,

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payment of consideration does not represent a significant financing component.

Cost to Obtain a Contract

Assets Recognized from Costs to Obtain a Contract

Sales commissions paid to employees and third parties are considered incremental costs to obtain a contract with a customer.

These costs are capitalized in the period a customer contract is executed and are amortized as an expense consistent with the transfer of the goods or services to the customer.

Capitalized costs are recorded in prepaid expenses and other current assets and other noncurrent assets in the consolidated balance sheets.

Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less.

For the years ended December 31, 2021 and 2020, the Company has not incurred any material incremental costs of obtaining contracts.

As of December 31, 2022 and 2021, total capitalized costs were $ 1.0 million and zero , respectively.

Amortization expense was less than

$ 0.1 million and zero for the years ended December 31, 2022 and 2021, respectively.

Cost of Revenue

Cost of revenue primarily consists of expenses related to delivering the Company’s services, including direct labor costs, direct service costs and allocated shared resources.

Cost of revenue excludes depreciation and amortization related to the Company’s quantum computing systems and related software.

Cost of revenue excludes depreciation and amortization related to the Company’s quantum computing systems and related software and developed technology.

Research and Development

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Unlike a standard computer, design and development efforts continue throughout the useful life of the Company’s quantum computing systems to ensure proper calibration and optimal functionality.

Research and development expenses also include purchased hardware and software costs related to quantum computing

systems constructed for research purposes that are not probable of providing future economic benefit and have no alternate future use.

Research and development expenses also include purchased hardware and software costs related to quantum computing systems constructed for research purposes that are not probable of providing future economic benefit and have no alternate future use.

In December 2020, the Company amended its option agreement with Duke University (“Duke”), and under this amendment, the Company issued common shares to Duke in consideration for research and development services through July 15, 2026.

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In February 2021, the Company and the University of Maryland (“UMD”) amended the option agreement with UMD pursuant to which the Company issued shares of common stock to UMD as a nonrefundable upfront payment in exchange for research and development services by UMD and rights to any potential future intellectual property developed through July 2021.

The amended arrangement is considered a research and development service arrangement and recorded as a prepayment based on the fair value of the common stock issued on the effective date of the amendment and amortized over the term of the arrangement as services are received.

See Note 7—Agreements with UMD and Duke for further information.

The amended arrangement is considered a research a nd

development service arrangement and recorded as a prepayment based on the fair value of the common stock issued on the effective date of the amendment and amortized over the term of the arrangement as services are received.

Refer to Note 8 for further information on the Duke and UMD agreements.

Advertising Costs

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The Company records forfeitures as they occur.

Stock-based compensation cost for restricted stock units is measured based on the fair value of the Company’s common stock on the grant date.

For awards with a performance-based vesting condition, the Company records stock-based compensation cost if it is probable that the performance condition will be achieved.

The Company records stock-based compensation expense for incentive compensation liabilities based on estimated payments to employees for which the Company expects to settle the liability by granting restricted stock units.

For these awards, stock-based compensation expense is accrued commencing at the service inception date, which generally precedes the grant date, through the end of the requisite service period.

The Company obtained third-party valuations to estimate the fair value of its common stock for awards granted prior to the Business Combination, for purposes of measuring stock-based compensation expense.

The third-party valuations were prepared using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants (“AICPA”) Accounting & Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

The third-party valuations were prepared using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants (“AICPA”) Accounting & Va

luation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Income taxes are accounted for using the asset and liability method.

Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes.

Deferred income taxes are provided

for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes.

Such deferred income taxes primarily relate to the difference between the tax bases of assets and liabilities and their financial reporting amounts.

Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are

expected to be settled or realized.

Excess tax benefits or tax deficiencies from stock option exercises are recognized in the income tax provision in the period in which they occur.

The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is more-likely-than-

Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized.

Excess tax benefits or tax deficiencies from stock option exercises are recognized in the income

tax provision in the period in which they occur.

The Company records a valuation allowance when it determines, based on available positive and negative evidence, that it is more-likely-than-not

that some portion or all of its deferred tax assets will not be realized.

The Company determines the realizability of its deferred tax assets primarily based on the reversal of existing taxable temporary differences and projections of future taxable income (exclusive of reversing temporary differences and carryforwards).

Company determines the realizability of its deferred tax assets primarily based on the reversal of existing taxable temporary differences and projections of future taxable income (exclusive of reversing temporary differences and carryforwards).

In evaluating such projections, the Company considers its history of profitability, the competitive environment, and general economic conditions.

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Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments, and trade accounts receivable.

The Company maintains the majority of its cash, cash equivalents and investments with two financial institutions, both of which management believes to be financially sound and with minimal credit risk.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, investments, and trade accounts receivable.

The Company maintains the majority of its cash, cash equivalents, restricted cash and investments with two financial institutions.

The Company’s deposits periodically exceed amounts guaranteed by the Federal Deposit Insurance Corporation.

While the Company has not experienced any losses in such accounts, the recent failure of Silicon Valley Bank (“SVB”), at which the Company held cash and cash equivalents in multiple accounts, exposed the Company to limited credit risk prior to the completion by the Federal Deposit Insurance Corporation of the resolution of SVB in a manner that fully protected all depositors.

The Company’s accounts receivable are derived from customers primarily located in the U.S.

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Credit losses historically have not been material.

Significant customers are those which represent more than 10 %

of the Company’s total revenue or gross accounts receivable.

The Company’s revenue was primarily from two significant customers for the year ended December 31, 2021.

While we generated revenue in 2020, we executed an arrangement with a customer for the issuance of a warrant to purchase shares of Legacy IonQ Series B-1 convertible redeemable preferred stock.

The warrant was evaluated and considered to represent consideration provided to a customer and as such, the recognition of the warrant expense is recorded as a reduction in revenue as revenue is earned under the contract.

Other than this customer, the Company did not have any other significant customers for the year ended December 31, 2020.

The Company’s accounts receivable was from two significant customers as of December 31, 2021 and 2020.

Significant customers are those

represent more than 10 % of the Company’s total revenue.

The Company’s revenue was primarily from three significant customers for the year ended December 31, 2022, and from two significant customers for the year ended December 31, 2021.

Earnings (Loss) Per Share

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If the Company reports a net loss, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be antidilutive.

Earnings (loss) per share calculations for all periods have been retroactively restated to reflect the conversion of the Company’s convertible redeemable preferred stock and the equivalent number of shares reflecting the exchange ratio established in the reverse capitalization.

The following table sets forth the computation of basic and diluted loss per share attributable to common stockholders (in thousands, except share and per share data):

Year Ended December 31,

Net loss attributable to common stockholders

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Net loss per share attributable to common stockholders—basic and diluted

In periods with a reported net loss, the effect of anti-dilutive stock options, unvested common stock (including unvested restricted common stock) and warrants are excluded and diluted loss per share is equal to basic loss per share.

In periods with a reported net loss, the effect of anti-dilutive stock options, unvested restricted stock units, unvested common stock (including unvested restricted common stock) and warrants are excluded and diluted loss per share is equal to basic loss per share.

The following is a summary of the weighted average common stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive:

Year Ended December 31

Common stock options outstanding

Warrants to purchase common stock

Unvested common stock

Public and private warrants

Unvested founders’ shares

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to defer and recognize as an asset.

The guidance is effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.

The Company adopted this standard effective January 1, 2021 prospectively to all new implementation costs incurred after adoption.

The adoption of this standard had no material impact on the Company’s consolidated financial statements and related disclosures.

Unvested Vesting Shares

Unvested restricted stock units

Unvested common stock

Recently Issued Accounting Standards Not Yet Adopted

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is effective for annual reporting periods beginning after December 15, 2022, with early adoption permitted.

Based on the composition of the Company’s trade receivables and other financial assets, current market conditions and historical credit loss activity, the adoption of this standard is not expected to have a material impact on the Company’s financial statements and related disclosures.

The Company will adopt this standard in the first quarter of 2023.

In August 2020, the FASB issued ASU 2020-06,

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The Company does not expect adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

CASH EQUIVALENTS AND INVESTMENTS

The following table summarizes the Company’s unrealized gains and losses and estimated fair value of cash equivalents and investments in available-for-sale

On December 30, 2022, the Company acquired the assets of Entangled Networks Ltd.

for total cash consideration of $ 1.0 million.

The acquisition supports the Company’s efforts to build large-scale quantum computers by enabling computation across multiple distributed quantum processors.

As part of the preliminary

purchase price allocation, the Company recorded $ 0.3 million in identifiable intangible assets and $ 0.7 million in goodwill .

CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS

The following table summarizes the Company’s unrealized gains and losses and estimated fair value of cash equivalents, restricted cash and investments in available-for-sale

securities recorded in the consolidated balance sheets (in thousands):

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AS OF DECEMBER 31, 2021

Money market funds

Cash and money market funds

Commercial paper

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US government and agency

Total cash equivalents and investments

Total cash equivalents, restricted cash and investments

Unrealized losses related to investments were primarily a result of interest rate fluctuations, and none of the investments held as of December 31, 2022, have been in a continuous unrealized loss position for greater than one year.

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investments to be other-than-temporarily impaired nor does the Company intend, or believe it is more likely than not, that it will be required to sell the investments in an unrealized loss position before the recovery of the associated amortized cost basis.

The estimated fair value of the Company’s cash equivalents and investments in available-for-sale

The estimated fair value of the Company’s cash equivalents, restricted cash and investments in available-for-sale

securities as of December 31, 2022, aggregated by investment category and classified by contractual maturity date, is as follows (in thousands):

1 Year or Less

1 Year or Greater

Money market funds

Cash and money market funds

Commercial paper

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December 31, 2022:

Cash equivalents:

Money market funds (1)

Commercial paper

US government and agency

Total cash equivalents

Cash, cash equivalents and restricted cash:

Cash and money market funds (1)

Total cash, cash equivalents and restricted cash

Short-term investments:

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Corporate notes and bonds

Municipal bon ds

US government and agency

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December 31, 2021:

Cash and cash equivalents (1)

Includes money market funds associated with the Company’s overnight investment sweep account.

Cash, cash equivalents, and restricted cash:

Cash and money market funds (1)

Commercial paper

US government and agency

Total cash, cash equivalents and restricted cash

Short-term investments:

Commercial paper

Corporate notes and bonds

Municipal bonds

US government and agency

Total short-term investments

Long-term investments :

Corporate notes and bonds

US government and agency

Total long-term investments

Public warrants

Includes money market funds associated with the Company’s overnight investment sweep account and collateralizing letters of credit.

The Company’s warrant liabilities are comprised of the public warrants.

The private placement warrants were fully exercised as of December 31, 2021.

Refer to Note 12 – Warrant Liabilities for further information.

Refer to Note 13 for further information.

Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period.

There were no transfers between levels during the period.

As of December 31, 2021, the public warrants were publicly traded

at $ 6.49 per warrant.

There were no transfers between levels during the years ended December 31, 2022 and 2021.

As of December 31, 2022, the public warrants were publicly traded at

$ 0.73 per warrant.

The private placement warrants were marked to fair value on the date of exercise.

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Inherent in the valuation were assumptions related to expected stock-price volatility, expected term, risk-free interest rate and dividend yield.

The Company estimated the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants.

life of the warrants.

The risk-free interest rate was based on the U.S.

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The expected life of the warrants was assumed to be equivalent to their remaining contractual term.

The dividend rate was based on the historical rate, which the Company anticipates remaining at zero.

The dividend rate was based on the historical rate, which the Company anticipate d

remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurement inputs for the private placement warrants as of the date the private placement warrants were exercised.

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Dividend yield

The Company did not have any Level 3 assets or liabilities as of December 31, 2021 as the private placement warrants were fully exercised.

A rollforward of the fair value of the private placement warrants is as follows (in thousands):

Fair value as of December 31, 2020

Assumed as part of the Business Combination

Change in valuation inputs

Exercise of private placement warrants

Fair Value as of December 31, 2021

The Company did not have any Level 3 assets or liabilities as of December 31, 2022 or 2021, as the private placement warrants were fully exercised.

PROPERTY AND EQUIPMENT, NET

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accumulated depreciation

Net property and equipment

Property and equipment, net

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 4.0 million and $ 1.7 million, respectively.

INTANGIBLE ASSETS, NET

Intangible assets as of December 31, 2021 and 2020 are composed of the following (in thousands):

Intangible assets as of December 31, 2022 and 2021, are composed of the following (in thousands, except as otherwise noted):

December 31, 2022

Website and other

Developed technology

Internally developed software

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Exclusive License Agreement

The Company entered into an exclusive license agreement (“License Agreement”) in 2016 with UMD and Duke.

The Company entered into an exclusive license agreement (“License Agreement”) in July 2016 with UMD and Duke.

The License Agreement grants to the Company an exclusive, perpetual license (“Initial Patents”) to certain patents, know-how

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In exchange for the Initial Patents, UMD and Duke received an aggregate of 142,886 common shares after giving effect to the recapitalization.

On February 1, 2021, the Company and UMD executed two amendments to the License Agreement granting exclusive rights to license additional intellectual property in exchange for a total of 257,198 common shares after

On February 1, 2021, the Company and UMD executed two amendments to the License Agreement granting exclusive rights to license additional intellectual property in exchange for a total of 257,198

common shares after

giving effect to the recapitalization.

Management evaluated the amendments and concluded that the arrangements qualify as equity-classified instruments and recorded an intangible asset and additional paid-in

capital based on the fair value of the shares at the date the amendments were executed of $ 1.6 million.

Management evaluated the amendments and concluded that the arrangements qualify as equity-classified instruments and recorded an intangible asset and additional

capital based on the fair value of the shares at the date the amendments were executed of $

The shares for each executed amendment were issued during the year ended December

Exclusive Option Agreements

The Company also entered into an exclusive option agreement (“Option Agreement”) with each of UMD and Duke in 2016 whereby on the anniversary of the effective date of the License Agreement for a period of 5 years, the Company has the right to acquire additional intellectual property developed by UMD and Duke (the “Additional Patents” and together with the Initial Patents, the “Licensed Patents”) by exercising an annual option and issuing common shares each to Duke and UMD in consideration for the Additional Patents.

years, the Company has the right to exclusively license additional intellectual property developed by UMD and Duke (the “Additional Patents” and together with the Initial Patents, the “Licensed Patents”) by exercising an annual option and issuing common shares each to Duke and UMD in consideration for the Additional Patents.

The amount issued to UMD and Duke pursuant to the option over the 5 -year

s equal to an aggregate of 642,995 common shares to each university after giving effect to the recapitalization.

term was equal to an aggregate of 642,995 common shares to each university after giving effect to the recapitalization.

The Company may elect not to exercise the option if there was not a minimum number of intellectual property developed in a given year and then the Option Agreement would extend another year .

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Under the terms of the amended Option Agreement, the issuance of shares is a nonrefundable upfront payment in exchange for research and development services by Duke whereby the Company will obtain rights to any potential future intellectual property developed during the term.

As such, the fair value of the shares of common stock issued to Duke of $ 2.9 million was recorded as a prepaid expense and is being amortized over the term of the arrangement as services are received.

The Company recognized $ 0.5 million and $ 19 thousand of research and development expense related to the agreement with Duke during the years ended December 31, 2021 and 2020 ,

respectively.

As such, the fair value of the shares of common stock was recorded as a prepaid expense and is being amortized over the term of the arrangement as services are received.

The Company recognized $ 0.5 million

of research and development expense related to the agreement with Duke during each of the years ended December 31, 2022 and 2021.

In February 2021, the Company and UMD amended the UMD Option Agreement pursuant to which the Company issued the remaining 128,599 shares of common stock after giving effect to the recapitalization to UMD as a nonrefundable upfront payment in exchange for research and development services by UMD and rights to any potential future intellectual property developed through July 2021.

The fair value of the shares issued to UMD was $ 0.8 million.

The Company recognized $ 0.8 million of research and development expense associated with the UMD Option Agreement amendment for the year

ended December 31, 2021.

The UMD Option Agreement was not executed as of December 31, 2020 and therefore no research and development expense was recognized for the ye a

ended December 31, 2020.

Additionally, under the terms of the License Agreement and Option Agreement, UMD and Duke were provided an exit guarantee if a sale or liquidation of the Company would occur that provides for the following:

The Company recognized $ 0.8 million of research and development expense associated with the UMD Option Agreement amendment for the year ended December 31, 2021.

The UMD Option Agreement was fully amortized in 2021 and therefore no research and development expense was recognized for the year ended December 31, 2022.

Additionally, under the terms of the License Agreement and Option Agreement, UMD was provided an exit guarantee if a sale or liquidation of the Company would occur that provides for the following:

acceleration of the issuance of common stock as if exercised through the License Agreement,

additional consideration equal to the consideration which a holder of one-half

additional consideration equal to the consideration that

a holder of one-half

of one percent ( 0.5 %) of the common stock of the Company, on a fully-diluted basis, would have received in the sale to the extent it exceeds the amount UMD and Duke shall be entitled to as a result of ownership at the time of sale.

In December 2020, the Company and Duke amended the Duke Option Agreement to remove the exit guarantee.

Additionally, the exit guarantee with UMD lapsed as a result of the Business Combination in September 2021.

The exit guarantee with UMD lapsed as a result of the Business Combination in September 2021.

The useful life of the Licensed Patents derived from the License Agreement and the Option Agreement is the remaining legal life at the time of acquisition.

The value of the Licensed Patents is based on the fair value of the common stock given as consideration on the effective date of each agreement and exercise of option.

The asset is amortized over the useful life of the Licensed Patents.

The value of the Licensed Patents is based on the fair value of the

common stock given as consideration on the effective date of each agreement and exercise of option.

The asset is amortized

over the useful life of the Licensed Patents.

ACCRUED EXPENSES

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To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying financial statements.

Shareholder Lawsuit

In May 2022, a securities class action complaint captioned Leacock v.

., Case No.8:22-cv-01306,

was filed by a stockholder of the Company in the United States District Court for the District of Maryland (the “Leacock Litigation”) against the Company and certain of the Company’s current officers.

In June 2022, a securities class action complaint captioned Fisher v.

., Case No.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.

In September 2022, the Court appointed lead plaintiffs and counsel for lead plaintiffs, and ordered lead plaintiffs to file a consolidated amended complaint.

The consolidated amended complaint was filed on November 22, 2022.

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.

Both the IonQ Defendants and Additional Defendants believe that the allegations in the complaints are without merit and intend to defend the matters vigorously.

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.

Glatt Litigation

On January 12, 2021, dMY Technology Group, Inc.

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.

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.

(“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.

II, dMY and Sponsor (collectively “dMY Defendants”)

and Carter Glatt (“Glatt”) and Captains Neck Holdings LLC (“Captains Neck”), an entity of which Mr.

Glatt is a member.

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Although the outcome of this matter cannot be predicted with certainty and the impact of the final resolution of this matter on the Company’s results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of this matter will have a material adverse effect on the Company’s future consolidated financial position, future results of operations or cash flows.

CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

amended and restated certificate of incorporation authorizes us to issue up to 1,000,000,000 shares of common stock, $ 0.0001 par value per share, and 20,000,000 shares of preferred stock, par value $ 0.0001 per share.

Convertible Redeemable Preferred Stock

Legacy IonQ’s convertible redeemable preferred stock previously classified as mezzanine equity was retroactively adjusted, converted into common stock, and reclassified to permanent equity because of the reverse recapitalization as described in Note 1.

No shares of Legacy IonQ convertible redeemable preferred stock were issued during the years ended December 31, 2021 and 2020 requiring adjustment as a result of the reverse recapitalization.

STOCKHOLDERS’ EQUITY

Our second amended and restated certificate of incorporation authorizes us to issue up to 1,000,000,000 shares of common stock, $ 0.0001 par value per share, and 20,000,000 shares of preferred stock, par value $ 0.0001 per share.

Preferred Stock

amended and restated certificate of incorporation, our board of directors may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 20,000,000 shares of preferred stock in one or more series and authorize their issuance.

Under our second amended and restated certificate of incorporation, our board of directors may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 20,000,000 shares of preferred stock in one or more series and authorize their issuance.

These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock.

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Holders of common stock are entitled to one vote per share on matters to be voted on by stockholders.

The Company’s

second amended and restated

certificate of incorporation and bylaws do not provide for cumulative voting rights.

The Company’s second amended and restated certificate of incorporation and bylaws do not provide for cumulative voting rights.

Subject to preferences that may be applicable to any then outstanding preferred stock, the holders of common stock may be entitled to receive dividends out of legally available funds if the board of directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the board of directors may determine.

We do not anticipate paying any cash dividends in the foreseeable future.

We do not anticipate paying any cash dividends in the foreseeable

In the event of our voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up,

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Holders of the Company’s common stock have no preemptive or other subscription rights, and there are no sinking fund or redemption provisions applicable to the common stock.

The rights, preferences, and privileges of

the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s preferred stock that may be issued.

Currently no preferred stock has been issued as of December 31, 2021.

Founders’ Shares

Upon incorporation of the Company, the founders of the Company (the “Founders”) purchased an aggregate 16.2 million shares of common stock at a purchase price $ 0.0006 per share after giving effect to the recapitalization.

Subsequently, on July 25, 2016, upon the introduction of a new third-party investor, the

Company imposed a share restriction on an aggregate of 12.1 million of the Founders’ shares (the “Restricted Shares”), after giving effect to the recapitalization.

If the Founders terminate their relationship with the Company for any reason, the Company will have the right to repurchase such shares for the initial purchase price and the repurchase period will begin from such termination date until 120 days after the termination date;

provided, however ,

that if the Founders terminate their relationship with the Company or are otherwise terminated for good cause (each, a “Release Event”), in each case, within 12 months of a deemed liquidation event, the Company may not repurchase the shares.

Payment for the Restricted Shares will be made in cash if the Company exercises its option to repurchase the Founder’s shares.

Of the Restricted Shares subject to the repurchase option, 1/48 th

of the Restricted Shares shall be released from the repurchase option on each monthly anniversary from July 25, 2016 until all Restricted Shares are released from the repurchase option.

All Founders’ Shares were fully vested as of December 31, 2020.

See Note 13— Stock Based Compensation for further information.

The rights, preferences, and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s preferred stock that may be issued.

Common Stock Reserved for Issuance

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WARRANT TRANSACTION AGREEMENT

In November 2019, contemporaneously with a revenue arrangement, the Company entered into a contract, pursuant to which the Company agreed to issue to a customer a warrant to acquire shares of Legacy IonQ Series B-1

preferred stock (the “Warrant Shares”), subject to certain vesting events.

Upon closing of the Business Combination, these warrants exercisable for Legacy IonQ Series B-1 preferred stock were

assumed by the Company and converted into a warrant to purchase a number of shares of common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Legacy IonQ common stock issuable upon conversion of a share of Legacy IonQ Series B-1 preferred stock and

(b) the Exchange Ratio (as defined in the Super 8-K filed

with the SEC on October 4, 2021), at an exercise price per share (rounded up to the nearest whole cent) equal to (i) the exercise price per share of such Legacy IonQ Warrant Shares divided by (ii) the Exchange Ratio.

In November 2019, contemporaneously with a revenue arrangement, the Company entered into a contract, pursuant to which the Company agreed to issue to a customer warrants to acquire shares of Legacy IonQ Series B-1 preferred stock (the “Warrant Shares”), subject to certain vesting events.

Upon closing of the Business Combination, these warrants exercisable for Legacy IonQ Series B-1 preferred stock were assumed by the Company and converted into a warrant to purchase a number of shares of common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Legacy IonQ common stock issuable upon conversion of a share of Legacy IonQ Series B-1 preferred stock and(b) the Exchange Ratio (as defined in the Super 8-K filed with the SEC on October 4, 2021), at an exercise price per share (rounded up to the nearest whole cent) equal to (i) the exercise price per share of such Legacy IonQ Warrant Shares divided by (ii) the Exchange Ratio.

Except as specifically provided in the Merger Agreement, the Warrant Shares will have the same terms and be subject to the same conditions (including applicable vesting conditions) as set forth in the Legacy IonQ warrant agreement.

As of December 31, 2021, the contract allows for the customer to acquire up to 8,301,202 shares of common stock in the Company.

As of December 31, 2022, the contract allows for the customer to acquire up to

8,301,202 shares of common stock in the Company.

As the Warrant Shares were issued in connection with an existing commercial agreement with a customer, the value of the Warrant Shares was determined to be consideration payable to the customer and consequently is treated as a reduction to revenue recognized under the corresponding revenue arrangement.

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The fair value of the Warrant Shares at the date of issuance was determined to be $ 8.7 million.

During the year ended December 31, 2020, Warrant Shares with a fair value of $ 0.6 million vested.

This fair value of the unamortized warrants is recorded within other noncurrent assets and the Warrant Shares are amortized over time as the related customer revenue is earned.

During the years ended December 31, 2021 and 2020, $ 0.5 million and $ 0.04 million of the warrant amortization was recorded as a reduction of the related customer revenue.

As of December 31, 2021, the contract asset was fully amortized.

As discussed further in Note 1, the Warrant Shares were retroactively adjusted, converted to warrants for common stock and are presented in permanent equity as a result of the recapitalization as described in Note 1.

During 2020, Warrant Shares with a fair value of $ 0.6 million vested.

This fair value of the unamortized warrants was recorded within other noncurrent assets and the Warrant Shares are amortized over time as the related customer revenue is earned.

During the year ended December 31, 2021, $ 0.5 million of the warrant amortization was recorded as a reduction of the related customer revenue.

As of December 31, 2021, the contract asset was fully amortized, and therefore no warrant amortization was recorded as a reduction of the related customer revenue during the year ended December 31, 2022.

WARRANT LIABILITIES

The Company assumed 11,500,000 warrants, comprised of 7,500,000 public warrants and 4,000,000 private placement warrants, on September 30, 2021 as part of the Business Combination.

As of December 31, 2021, there were 5,233,018 public warrants to purchase common stock outstanding.

There were no private placement warrants outstanding as of December 31, 2021.

Each warrant entitles the registered holder to purchase one share of common stock at a price of $ 11.50 per share.

here were 5,231,486

5,233,018 of public warrants to purchase common stock outstanding as of December 31, 2022 and 2021, respectively.

There were no private placement warrants outstanding as of December 31, 2022 and 2021.

Each warrant entitles the registered holder to purchase one share of common stock at a price of

$ 11.50 per share.

Public warrants

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upon a minimum of 30 days’ prior written notice of redemption ;

if, and only if, the closing price of common stock equals or exceeds $ 18.00 per share (as adjusted) for any 20 trading days within a 30 -trading

day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

if, and only if, the closing price of common stock equals or exceeds $ 18.00 per share (as adjusted) for any 20 trading days within a

period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

Redemption of warrants for when the price per share of common stock equals or exceeds $ 10.00

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in whole and not in part;

market value (as defined within the warrant agreement) of the common stock except as otherwise described within the warrant agreement;

at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the fair market value (as defined within the warrant agreement) of the common stock except as otherwise described within the warrant agreement;

and upon a minimum of 30 days’ prior written notice of redemption;

if, and only if, the closing price of common stock equals or exceeds $ 10.00 per public share (as adjusted) for any 20 trading days within the 30 -trading

if, and only if, the closing price of common stock equals or exceeds $ 10.00 per public share (as adjusted) for any 20 trading days within the

day period ending three trading days before the Company sends notice of redemption to the warrant holders.

No public warrants were redeemed as of December 31, 2021.

No public warrants were redeemed by the Company as of December 31, 2022.

Private placement warrants

The private placement warrants are identical to the public warrants, except that the private placement warrants and the shares of common stock issuable upon exercise of the private placement warrants will not be transferable, assignable, or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Additionally, the private placement warrants will be non-redeemable

so long as they are held by dMY Sponsor III, LLC or its permitted transferees.

Otherwise, the private placement warrants have terms and provisions that are identical to those of the public warrants, including as to exercise price, exercisability and exercise period.

The private placement warrants were identical to the public warrants, except that the private placement warrants and the shares of common stock issuable upon exercise of the private placement warrants were not transferable, assignable, or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Additionally, the private placement warrants were non-redeemable

so long as they were held by dMY Sponsor III, LLC or its permitted transferees.

Otherwise, the private placement warrants had terms and provisions that were identical to those of the public warrants, including as to exercise price, exercisability and exercise period.

In December 2021, 4.0 million private placement warrants were exercised on a cashless basis, resulting in the net issuance of 2.2 million shares.

There are no private placement warrants outstanding as of December 31, 2021.

STOCK-BASED COMPENSATION

Equity Incentive Plans

The Company has a 2015 Equity Incentive Plan (the “2015 Plan”), which provided for the grant of stock-based compensation in the form of awards of options, stock appreciation rights, restricted stock awards and restricted stock units, to certain officers, directors, employees, consultants, and advisors to purchase shares of the Company’s common stock.

Upon the Closing of the Business Combination, no further awards will be made pursuant to the 2015 Plan and all outstanding Legacy IonQ stock options under the 2015 Plan were assumed by the Company.

The Company has a 2015 Equity Incentive Plan (the “2015 Plan”), which provided for the grant of share-based compensation to certain officers, directors, employees, consultants, and advisors.

Upon the closing of the Business Combination, no further awards were made pursuant to the 2015 Plan and all outstanding Legacy IonQ stock options under the 2015 Plan were assumed by the Company.

Each Legacy IonQ stock option issued and outstanding immediately prior to the Business Combination was converted into an option to purchase shares of common stock of the Company equal to the product of (a) the number of shares of Legacy IonQ common stock subject to such Legacy IonQ stock option agreement immediately prior to the Business Combination and (b) the exchange ratio at an exercise price equal to the (i) the exercise price per share of such Legacy IonQ stock option divided by (ii) the exchange ratio.

Such stock options will continue to be governed by the terms of the 2015 Plan and the stock option agreements thereunder, until such outstanding options are exercised or until they terminate or expire by their terms.

For awards granted under the 2015 Plan, vesting generally occurs over four to five years from the date of grant and all options granted have a contractual term

Vested options held at the date of an employee’s termination may be exercised within three months.

In August 2021, the Company’s board of directors adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and the stockholders approved the 2021 Plan in September 2021.

The 2021 Plan became effective immediately upon the closing of the Business Combination.

The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors, and consultants.

Initially, a maximum of 26,235,000 shares of common stock may be issued under the 2021 Plan.

For awards granted under the 2015 Plan, vesting generally occurs over four to five years from the date of grant.

In August 2021, the Company’s board of directors adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which

was subsequently approved by the Company’s stockholders in September 2021, and became effective upon the closing of the Business Combination.

The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSU”), performance awards and other forms of awards to employees, directors, and consultants.

The number of shares of the Company’s common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year, beginning on January 1, 2022, and continuing through and including January 1, 2031, by 5 % of the Fully Diluted Common Stock (as defined in the 2021 Plan) outstanding on December 31 of the preceding year, or a lesser number of shares determined by the Company’s board of directors prior to such increase.

No shares or awards were granted under the 2021 Plan as of December 31, 2021.

As of January 1, 2023, the number of shares reserved for issuance under the 2021 Plan increased by 13,587,593 .

For awards granted under the 2021 Plan, vesting terms range from one to four years from the date of grant.

As of December 31, 2022, the Company had 23,415,625 shares available for grant under the 2021 Plan.

Under both equity incentive plans, all options granted have a contractual term of 10 years.

Stock Options

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The Black-Scholes option- pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option.

Expected Volatility—As the Company was privately held at the date of the grant and there has been no public market for its common stock prior to closing the Business Combination, the expected volatility is based on the average historical stock price volatility of comparable publicly- traded companies in its industry peer group, financial, and market capitalization data.

Expected Term—The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding.

Expected Volatility

—As the Company was privately held until 2021 and there has been limited

history of a public market for its common stock prior to closing the Business Combination, the expected volatility is based on the average historical stock price volatility of comparable publicly-traded companies in its industry peer group, financial, and market capitalization data.

Expected Term

—The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding.

The Company has estimated the expected term of its employee awards using the SAB Topic 14 Simplified Method allowed by the FASB and SEC, for calculating expected term as it has limited historical exercise data to provide a reasonable basis upon which to otherwise estimate expected term.

Certain of the Company’s options began vesting prior to the grant date, in which case the Company uses the remaining vesting term at the grant date in the expected term calculation.

Risk-Free Interest Rate—The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed

Risk-Free Interest Rate

—The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed

treasury securities with contract maturities equal to the expected term.

Dividend Yield—The Company has not declared or paid dividends to date and does not anticipate declaring dividends.

Dividend Yield

—The Company has not declared or paid dividends to date and does not anticipate declaring dividends.

As such, the dividend yield has been estimated to be zero.

Fair Value of Underlying Common Stock—Because the Company’s common stock was not yet publicly traded on the date of grant, the Company estimated the fair value of common stock prior to closing the Business Combination.

The Board of Directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved.

The factors considered include, but are not limited to:

Fair Value of Underlying Common Stock

—For options granted under the 2015 Plan, because the Company’s common stock was not yet publicly traded on the date of grant, the Company estimated the fair value of common stock prior to closing the Business Combination.

The board of directors considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards were approved.

The factors considered included, but were not limited to:

(i) the results of contemporaneous independent third-party valuations of the Company’s common stock;

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(v) current business conditions and projections;

(vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions;

(vi) the likelihood of achieving a liquidity event, such as an initial

public offering or sale of the Company, given prevailing market conditions;

and (vii) precedent transactions involving the Company’s shares.

For options granted under the 2021 Plan, the Company utilizes the closing stock price on the date of grant as the fair value of the common stock underlying such options.

The assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2022 and 2021, are as follows:

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Dividend yield

A summary of the stock option activity is as follows:

The stock option activity is summarized in the following table:

(in millions)

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Outstanding as of December 31, 2022

Cancelled/ Forfeited

Outstanding as of December 31, 2021

Exercisable as of December 31, 2022

Exercisable and expected to vest at December 31, 2021

The total intrinsic value of options exercised was $ 54.4 million

and $ 3.8 million for the years ended December 31, 2021 and 2020, respectively.

The weighted-average grant date fair value per share for the stock options granted during the years ended December 31, 2021 and 2020 was $ 5.83 and $ 0.76 , respectively.

The aggregate grant-date fair value of options vested during the years ended December 31, 2021 and 2020 was $ 7.4 million

and $ 1.0 million, respectively.

As of December 31, 2021, the total unrecognized compensation related to unvested stock option awards was $ 30.4 million, which the Company expects to recognize over a weighted-average period of approximately 2.0 years.

Exercisable and expected to vest as of December 31, 2022

The following table summarizes additional information on stock option grants, vesting and exercises (in millions, except per share amounts):

Total intrinsic value of options exercised

Aggregate grant-date fair value of options vested

Weighted-average grant date fair value per share for options granted

Early Exercised Stock Options

As of December 31, 2021 and 2020, there were 1,420,662 and no shares respectively, subject to repurchase related to stock options early exercised and unvested.

These amounts are reclassified to common stock and additional paid-in capital as the underlying shares vest.

As of December 31, 2021, the Company recorded a liability related to these shares subject to repurchase in the amount of $ 3.1 million in its consolidated balance sheet.

The Company did not have any early exercises of stock options prior to 2021, and as a result, there was no such liability balance as of December 31, 2020.

As of December 31, 2022 and 2021, there were 905,128 and 1,420,662 shares, respectively, subject to repurchase related to stock options early exercised and unvested.

As of December 31, 2022 and 2021, the Company recorded a liability related to these shares subject to repurchase in the amount of $ 2.0 million and $ 3.1 million, respectively, in its consolidated balance sheets.

During 2021, we exercised our right to repurchase 0.4 million shares related to the early exercise of stock options.

The unvested shares were repurchased for $ 1.0 million from an employee in connection with the termination of their service.

Unvested Restricted Stock – Founder’s Shares

In addition to the unvested common shares outstanding described above at “Early Exercised Stock Options,” the Company issued restricted stock to its founders.

The fair value of the restricted shares determined based on the fair market value of Legacy IonQ’s common stock on July 25, 2016, the date the restriction was put into place, was $ 1.2 million.

A summary of the unvested restricted shares activity is as follows:

Average Grant

Date Fair Value

Unvested Balance as of December 31, 2019

Unvested Balance as of December 31, 2020

The aggregate grant-date fair value of restricted shares vested was $ 170 thousand for the year ended December 31, 2020.

As of December 31, 2020, all restricted shares have vested and there were no new founders’ shares issued during 2021.

Total stock based compensation expense for both stock option awards and unvested restricted shares is as follows (in thousands):

Years Ended December 31,

Restricted Stock Units

The RSU activity is summarized in the following table:

Outstanding as of December 31, 2021

Outstanding as of December 31, 2022

Expected to vest after December 31, 2022

During the year ended December 31, 2022, the Company granted 81,134 RSUs related to the settlement of an accrued bonus liability.

Stock-Based Compensation Expense

Total stock-based compensation expense for stock option awards and RSU awards, which are included in the consolidated financial statements, is as follows (in thousands):

Cost of revenue

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Capitalized stock-based compensation—Intangibles and fixed assets

Capitalized stock-based compensation—Other current assets

Total stock-based compensation

Unrecognized Stock-Based Compensation

A summary of our remaining unrecognized compensation expense and the weighted-average remaining amortization period as of December 31, 2022, related to our non-vested

stock options and RSU awards is presented below (in millions, except time period amounts):

Period (Years)

Restricted stock units

Stock options

Employee Stock Purchase Plan

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The ESPP provides for an annual increase on January 1 of each year, beginning on January 1, 2022, and continuing through and including January 1, 2031, equal to the lesser of (i) 1 % of the fully diluted shares of common stock outstanding on the last day of the prior fiscal year, (ii) 10,708,000 shares, or (iii) a lesser number of shares determined by the Company’s board of directors prior to such increase.

The board of directors elected not to approve the annual increase of ESPP shares on January 1, 2023.

Under the terms of the ESPP, eligible employees can elect to acquire shares of the Company’s common stock through periodic payroll deductions during a series of offering periods.

Purchases under the ESPP are affected on the last business day of each offering period at a 15 % discount to the lower of closing price on that day or the closing price on the first day of the offering period.

As of December 31, 2021, no shares of common stock had been issued under the ESPP and no offering period has been set by the board of directors.

The current and deferred components of the provision for income taxes for both Federal and State jurisdictions are zero

for both of the years ended December 31, 2021 and 2020.

The Company’s provision for incom e

taxes differs from the amount determined by applying the applicable federal statutory tax rate to the loss before income taxes due to the valuation allowance for the net deferred income tax assets.

As of December 31, 2022, no shares of common stock had been issued under the ESPP and no offering period had been set by the board of directors.

The current and deferred components of the provision for income taxes for both Federal, State and foreign jurisdictions

are zero for both of the years ended December 31, 2022 and 2021.

The Company’s provision for income taxes differs from the amount determined by applying the applicable federal statutory tax rate to the loss before income taxes due to the valuation allowance for the net deferred income tax assets.

A reconciliation of the U.S.

statutory tax rate to our effective tax rate is presented below:

Years Ended December 31,

federal statutory income tax rate

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Change in tax rates

Provision to return and deferred tax adjustments

Valuation allowance

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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021, were as follows (in thousands):

Deferred tax assets:

Accrued bonus

Deferred revenue

Non-qualified stock compensation

Stock-based compensation

Accrued expenses

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Net operating loss carryforwards

Capitalized R&D costs

Total deferred tax assets

Valuation allowance

Total deferred tax assets net of valuation allowance

Total deferred tax assets ,

net of valuation allowance

Deferred tax liabilities:

Depreciation and amortization

Right of use assets

Capitalized patents

Internally developed software

Capitalized R&D costs

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Net deferred tax assets (liabilities)

The Company had U.S.

federal and state net operating loss c a

rryforwards of approximately $ 14.1

million as of December 31, 2021.

The Company’s net operating loss carryforwards generated prior to January 1, 2018 of $ 1.1 million will begin to expire, if not utilized, in 2036.

The Company’s net operating loss carry forwards generated after

December 31, 2017 will carryforward indefinitely.

The following table summarizes the activity in the Company’s valuation allowance against its gross deferred tax assets (in thousands):

Beginning balance

Charged to costs and expenses

Charged (credited) to other accounts

Ending balance

The Company had pre-tax U.S.

federal and state net operating loss carryforwards of approximately $ 96.3 million and $ 69.5 million, respectively, as of December 31, 2022.

The Company’s net operating loss carryforwards generated prior to January 1, 2018 of

1.1 million will begin to expire, if not utilized, in 2036.

The Company’s net operating loss carry forwards generated after December 31, 2017, will carryforward indefinitely.

As of December 31, 2022, the Company had U.S.

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The deductibility of such credits and net operating losses (“NOL”) may be limited.

Under Section 383 and 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which generally occurs if the percentage of the corporation’s stock owned by 5 % stockholders increases by more than 50 % over a three-year period, the corporation’s ability to use its pre-change,

credits and NOL carryforwards and other pre-change

tax attributes to offset its post-change income, may be limited.

We have not determined if we have experienced Section 383/382 ownership changes in the past and if a portion of our NOL and tax credit carryforwards are subject to an annual limitation.

In addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.

If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is significantly limited, it would harm our future operating results by effectively increasing our future tax obligations.

Under Section s

383 and 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which generally occurs if the percentage of the corporation’s stock owned by 5 % stockholders increases by more than 50 % over a three-year period, the corporation’s ability to use its pre-change credits and NOL carryforwards and other pre-change tax attributes to offset its post-change income, may be limited.

The Company has not determined if it has experienced Section 383/382 ownership changes in the past and if a portion of its NOL and tax credit carryforwards are subject to an annual limitation.

In addition, the Company may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of its control.

If the Company determines that an ownership change has occurred and its ability to use its

historical NOL and tax credit carryforwards is significantly limited, it would harm the Company’s future operating results by effectively increasing its future tax obligations.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets.

Based on the Company’s history of operating losses, including a three-year cumulative loss position as of December 31, 2022 and 2021, the Company has concluded that it is not more likely than not that its deferred income tax assets will be realized.

Accordingly, the Company has provided a full valuation allowance, for each of

the years ended December 31, 2021 and 2020.

The net increase in the valuation allowance of $ 8.6 million

is due to the current year operating losses.

Accordingly, the Company has provided a full valuation allowance, for each of the years ended December 31, 2022 and 2021.

The net increase in the valuation allowance of $ 27.8 million is due to the impacts of capitalized research and development and current year operating losses.

The Company is generally subject to a three-year statute of limitations by major tax jurisdictions.

The current tax years that are subject for examination are tax years 201 8

through 2020, although tax years dating back to 201 6

remain open up to the tax attribute amounts carried forward for future use.

The Company has one operating lease for its corporate headquarters that is also used for its research and development functions.

The lease was amended in March 2020 to extend the terms of the agreement for the existing premise and lease additional expansion premise and in December 2020 to provide additional rent adjustments.

The amended leases were entered into with UMD.

Refer to Note 17—Related Party Transactions for further information.

The Company determined the modified lease for the original premises and the lease for the expansion premises were both operating leases.

The March 2020 amendment was determined to represent a modification to the existing lease with two lease components for both the original premises and expansion premises.

The lease commencement date for the expansion premises was in December 2020.

The modified lease for the original premises was reassessed utilizing an incremental borrowing rate at the effective date of the amendment.

In December 2020, the original premise was further reassessed due to a rent adjustment associated with lessor assets paid for by the Company.

For the original premises, these reassessments resulted in the recognition of an additional ROU asset and lease liabilit

y of $ 0.6 million in March 2020 and $ 0.1 million in December 2020.

At the lease commencement date for the expansion premise, the Company recorded a ROU asset and lease liability of $ 2.8 million.

As of December 31, 2021 and 2020, the weighted- average remaining lease term was 9 years and 10 years, respectively.

The weighted-average discount rate was 11.9 % at December 31, 2021 and 2020, respectively.

The current tax

years that are subject for examination are tax years 201 9

through 202 1

, although tax years dating back to 2016 remain open up to the tax attribute amounts carried forward for future use.

The Company has one operating lease for its corporate headquarters with UMD that is also used for its research and development functions.

As of December 31, 2022 and 2021, the weighted-average remaining lease term was

9 years, respectively.

The weighted-average discount rate was

11.9 % at both December 31, 2022 and 2021.

The components of lease cost were as follows (in thousands):

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Cash payments included in the measurement of operating lease liabilities

Operating lease right-of-use assets recognized in exchange for new operating lease obligations

As of December 31, 2022, maturities of operating lease liabilities are as follows (in thousands):

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Present value of operating lease liabilities

In December 2022, the Company entered into a lease agreement for approximately 65,000 square feet in Bothell, Washington, which will commence in 2023 and expire in 2030 , with total future lease payments of approximately $ 9.7 million.

EMPLOYEE BENEFIT PLAN

The Company has a 401(k) savings plan (the “401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.

Under the 401(k) Plan, participating employees may elect to contribute up to 100 % of their eligible compensation, subject to certain limitations.

The Company has a 401(k) savings plan (the “401(k) Plan”), which qualifies

as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.

Under the 401(k) Plan, participating employees may elect to contribute up to

100 % of their eligible compensation, subject to certain limitations.

The 401(k) Plan provides for a discretionary employer-matching contribution.

The Company made a matching contribution of $ 0.5 million and $ 0.3 million to the 401(k) Plan for the years ended December 31, 2021 and 2020, respectively.

The Company made a matching contribution of $

0.9 million and $

0.5 million to the 401(k) Plan for the years ended December 31, 2022 and 2021, respectively.

RELATED PARTY TRANSACTIONS

Transactions with UMD and Duke

As described in Note 7—Agreements with UMD and Duke, the Company entered into a License Agreement and Option Agreement with UMD and Duke whereby the Company, in the normal course of business, has licensed certain intellectual property and, in the case of the Amendment to the Duke and UMD Option Agreement, has purchased research and development services.

The Company considers these agreements to be related party

transactions because during 2021 and 2020, the Company’s Co-founder

As described in Note 8, the Company entered into a License Agreement and Option Agreement with UMD and Duke whereby the Company, in the normal course of business, has licensed certain intellectual property and, in

the case of the amendments to the Option Agreements, has purchased research and development services.

The Company considers these agreements to be related party transactions because the Company’s Co-founder

and Chief Technology Officer served as a professor at Duke and the Company’s Co-founder

and Chief Scientist served as a professor at the UMD.

and Chief Scientist served as a professor at UMD.

During 2021, the Company’s Chief Scientist moved to Duke and each, in their role as professors at Duke, are leading the research subject to the License Agreement and Option Agreement with Duke as of December 31, 2022.

In addition, the Company entered into an amendment to its operating lease for office space with the UMD.

The lease was amended with UMD in March 2020 to extend the terms of the agreement for the existing premise and lease additional expansion premise and was amended in December 2020 to provide additional rent adjustments.

Refer to Note 15 – Leases, for additional information regarding the Company’s leases.

In September 2021, the Company entered into a multiyear deal with UMD to provide certain quantum computing services and facility access related to the National Quantum Lab at UMD in exchange for payments totaling $ 14 million over 3 years.

The Company’s results from transactions with UMD and Duke, as reflected in the Consolidated Statements of Operations are detailed below (in thousands):

Year Ended December 31,

In addition, the Company has an operating lease for office space with UMD.

tember 2021, the Company entered into a contract with UMD to provide certain quantum computing services and facility access (the “UMD Quantum Agreement”) related to the National Quantum Lab at UMD in exchange for payments totaling $

Over the term of the contract, the Company estimates that it will make

payments to UMD of approximately $

million, including a pledge to establish the IonQ Endowed Professorship in the College of Computer, Mathematical and Natural Sciences at UMD with a

contribution of $ 1.0 million.

The pledge and other estimated payments to UMD will not be an exchange for distinct goods or services under the provisions of ASC 606 and therefore are considered a reduction of the transaction price for the UMD Quantum Agreement.

The transaction price is currently estimated at $ 12.6 million, reflecting this reduction.

In July 2022, the Company entered into an agreement to provide customized quantum computing hardware to UMD for a transaction price of $ 0.7 million.

The Company’s results from transactions with related parties, as reflected in the consolidated statements of operations are detailed below.

0.5 million related to the amortization of a research and development arrangement with Duke for each of the years ended December 31, 2022 and 2021, all transactions in the table below relate to the Company’s arrangements with UMD (in thousands):

Cost of revenue

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General and administrative

The Company has the following balances related to transactions with UMD and Duke, as reflected in the Consolidated Balance Sheets:

Year Ended December 31,

Included in research and development expenses is non-cash amortization associated with the Exclusive Option Agreements with UMD and Duke of $

0.5 million and $

1.3 million for the years ended December 31, 2022 and 2021, respectively.

Also included in research and development expenses is $

0.6 million in allocated rent expense for each of the years ended December 31, 2022 and 2021.

The Company has the following balances related to transactions with related parties, as reflected in the consolidated balance sheets.

0.5 million prepaid expenses and other current assets as of both December 31, 2022 and 2021, and $

1.3 million and $

1.8 million in other noncurrent assets as of December 31, 2022 and 2021, respectively, which relate to prepaid services to Duke under the Option agreement, all transactions in the table below relate to the Company’s arrangements with UMD (in thousands):

Prepaid expenses and other current assets

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operating lease liabilities

SUBSEQUENT EVENTS

In January 2022, the Company granted an aggregate of 1,687,669 restricted stock units (“RSUs”) and 900,170 stock options to certain directors, employees and consultants of the Company under the 2021 Equity Incentive Plan.

The awards represent the contingent right to receive shares of the Company’s common stock, substantially all of which vest over a four -year period based on continuous service .

GEOGRAPHIC INFORMATION

Revenue generated for customers located in the United States was approximately

90 % of revenue for the years ended December 31, 2022 and 2021, respectively.

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 9A. Controls and Procedures