Rigetti Computing, Inc. 10-K

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule12b-2 of the Exchange Act and are not required to provide the information required under this item. ​ 92 Table of Contents ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA RIGETTI COMPUTING, INC. ​ INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ Report of Independent Registered Public Accounting Firm ( PCAOB ID # 243 ) ​ 94 Consolidated Financial Statements ​ ​ Consolidated Balance Sheets ​ 95 Consolidated Statements of Operations ​ 96 Consolidated Statements of Comprehensive Loss ​ 97 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) ​ 98 Consolidated Statements of Cash Flows ​ 99 Notes to Consolidated Financial Statements ​ 100 ​ ​ 93 Table of Contents Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Rigetti Computing, Inc. Berkeley, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Rigetti Computing, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2021. Spokane, Washington March 14, 2024 ​ 94 Table of Contents RIGETTI COMPUTING, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Assets Current assets: Cash and cash equivalents ​ $ 21,392 ​ $ 57,888 Available-for-sale investments ​ ​ 78,537 ​ ​ 84,923 Accounts receivable ​ ​ 5,029 ​ ​ 6,235 Prepaid expenses and other current assets ​ ​ 2,709 ​ ​ 2,450 Forward contract—assets ​ ​ — ​ ​ 2,229 Deferred offering costs ​ ​ — ​ ​ 742 Total current assets ​ ​ 107,667 ​ ​ 154,467 Property and equipment, net ​ ​ 44,483 ​ ​ 39,530 Operating lease right-of-use assets ​ ​ 7,634 ​ ​ 9,316 Other assets ​ ​ 129 ​ ​ 129 Total assets ​ $ 159,913 ​ $ 203,442 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable ​ $ 5,772 ​ $ 1,938 Accrued expenses and other current liabilities ​ ​ 8,563 ​ ​ 8,205 Deferred revenue ​ ​ 343 ​ ​ 961 Current portion of debt ​ ​ 12,164 ​ ​ 8,303 Current portion of operating lease liabilities ​ ​ 2,210 ​ ​ 2,345 Total current liabilities ​ ​ 29,052 ​ ​ 21,752 Debt, less current portion ​ ​ 9,894 ​ ​ 20,635 Operating lease liabilities, less current portion ​ ​ 6,297 ​ ​ 7,858 Derivative warrant liabilities ​ ​ 2,927 ​ ​ 1,767 Earn-out liabilities ​ ​ 2,155 ​ ​ 1,206 Total liabilities ​ ​ 50,325 ​ ​ 53,218 Commitments and contingencies (Note 21) ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ Preferred stock, par value $ 0.0001 per share, 10,000,000 shares authorized, none outstanding ​ ​ — ​ ​ — Common stock, par value $ 0.0001 per share, 1,000,000,000 shares authorized, 147,066,336 shares issued and outstanding at December 31, 2023 and 125,257,233 shares issued and outstanding at December 31, 2022 ​ ​ 14 ​ ​ 12 Additional paid-in capital ​ ​ 463,089 ​ ​ 429,025 Accumulated other comprehensive income (loss) ​ ​ 244 ​ ​ ( 161 ) Accumulated deficit ​ ​ ( 353,759 ) ​ ​ ( 278,652 ) Total stockholders’ equity ​ ​ 109,588 ​ ​ 150,224 Total liabilities and stockholders’ equity ​ $ 159,913 ​ $ 203,442 ​ See accompanying notes to consolidated financial statements. ​ 95 Table of Contents RIGETTI COMPUTING, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Revenue ​ $ 12,008 ​ $ 13,102 Cost of revenue ​ ​ 2,800 ​ ​ 2,873 Total gross profit ​ ​ 9,208 ​ ​ 10,229 Operating expenses: ​ ​ ​ ​ Research and development ​ ​ 52,768 ​ ​ 59,952 Selling, general and administrative ​ ​ 27,744 ​ ​ 53,980 Goodwill impairment ​ ​ — ​ ​ 5,377 Restructuring ​ ​ 991 ​ ​ — Total operating expenses ​ ​ 81,503 ​ ​ 119,309 Loss from operations ​ ​ ( 72,295 ) ​ ​ ( 109,080 ) Other income (expense), net ​ ​ ​ ​ Interest expense ​ ​ ( 5,779 ) ​ ​ ( 5,286 ) Interest income ​ ​ 5,076 ​ ​ 2,433 Change in fair value of derivative warrant liabilities ​ ​ ( 1,160 ) ​ ​ 22,132 Change in fair value of earn-out liabilities ​ ​ ( 949 ) ​ ​ 19,207 Transaction costs ​ ​ — ​ ​ ( 927 ) Total other (expense) income, net ​ ​ ( 2,812 ) ​ ​ 37,559 Net loss before provision for income taxes ​ ​ ( 75,107 ) ​ ​ ( 71,521 ) Provision for income taxes ​ ​ — ​ ​ — Net loss ​ $ ( 75,107 ) ​ $ ( 71,521 ) Net loss per share attributable to common stockholders - basic and diluted ​ $ ( 0.57 ) ​ $ ( 0.70 ) Weighted average shares used in computing net loss per share attributable to common stockholders – basic and diluted ​ ​ 131,977 ​ ​ 102,301 ​ See accompanying notes to consolidated financial statements. ​ 96 Table of Contents RIGETTI COMPUTING, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Net loss ​ $ ( 75,107 ) ​ $ ( 71,521 ) Other comprehensive income (loss): ​ ​ ​ ​ Foreign currency translation adjustments ​ ​ 80 ​ ​ 101 Unrealized gains (losses) on available-for-sale debt securities ​ ​ 325 ​ ​ ( 314 ) Total other comprehensive income (loss) before income taxes ​ ​ 405 ​ ​ ( 213 ) Income taxes ​ ​ — ​ ​ — Total other comprehensive income (loss) after income taxes ​ ​ 405 ​ ​ ( 213 ) Total comprehensive loss ​ $ ( 74,702 ) ​ $ ( 71,734 ) ​ See accompanying notes to consolidated financial statements. ​ 97 Table of Contents RIGETTI COMPUTING, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Total ​ ​ Redeemable Convertible ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Stockholders’ ​ ​ Preferred Stock* ​ ​ Common Stock* ​ Paid-In ​ Comprehensive ​ Accumulated ​ Equity ​ Shares Amount Shares Amount Capital Gain (Loss) Deficit (Deficit) Balance at December 31, 2021 77,697 $ 81,253 ​ 18,221 $ 2 $ 135,549 $ 52 $ ( 207,131 ) $ ( 71,528 ) Issuance of common stock upon conversion of legacy Series C and Series C‑1 preferred stock in connection with the Business Combination (Note 3) ( 77,697 ) ​ ( 81,253 ) ​ 57,380 ​ 6 ​ 81,517 ​ — ​ — ​ 81,523 Issuance of common stock upon exercise of stock options — ​ — ​ 2,768 ​ — ​ 1,020 ​ — ​ — ​ 1,020 Issuance of common stock upon exercise of common stock warrants — ​ — ​ 4,819 ​ — ​ 5,048 ​ — ​ — ​ 5,048 Issuance of common stock through Business Combination and PIPE financing, net of transaction costs and derivative liabilities — ​ — ​ 34,851 ​ 3 ​ 159,535 ​ — ​ — ​ 159,538 Issuance of common stock upon release of RSUs — ​ — ​ 7,047 ​ 1 ​ ( 1 ) ​ — ​ — ​ — Reclassification of loan and security agreement warrants to equity — ​ — ​ — ​ — ​ 6,370 ​ — ​ — ​ 6,370 Settlement of the first tranche of forward contract — ​ — ​ — ​ — ​ ( 3,305 ) ​ — ​ — ​ ( 3,305 ) Capitalization of deferred costs to equity upon share issuance — ​ — ​ — ​ — ​ ( 1,520 ) ​ — ​ — ​ ( 1,520 ) Issuance of common stock pursuant to the Common Stock Purchase Agreement - B. Riley — ​ — ​ 171 ​ — ​ — ​ — ​ — ​ — Stock-based compensation — ​ — ​ — ​ — ​ 44,812 ​ — ​ — ​ 44,812 Foreign currency translation gain — ​ — ​ — ​ — ​ — ​ 101 ​ — ​ 101 Change in unrealized gain (loss) on available-for-sale securities — ​ — ​ — ​ — ​ — ​ ( 314 ) ​ — ​ ( 314 ) Net loss — ​ — ​ — ​ — ​ — ​ — ​ ( 71,521 ) ​ ( 71,521 ) Balance, December 31, 2022 — ​ — ​ 125,257 ​ 12 ​ 429,025 ​ ( 161 ) ​ ( 278,652 ) ​ 150,224 Issuance of common stock upon exercise of stock options — ​ — ​ 4,046 ​ — ​ 1,121 ​ — ​ — ​ 1,121 Issuance of common stock upon exercise of common stock warrants — ​ — ​ 479 ​ — ​ 5 ​ — ​ — ​ 5 Issuance of common stock upon release of RSUs — ​ — ​ 3,863 ​ — ​ — ​ — ​ — ​ — Proceeds from sale of common stock pursuant to the Common Stock Purchase Agreement - B. Riley — ​ — ​ 13,421 ​ 2 ​ 20,542 ​ — ​ — ​ 20,544 Capitalization of deferred costs to equity upon share issuance — ​ — ​ — ​ — ​ ( 13 ) ​ — ​ — ​ ( 13 ) Stock-based compensation — ​ — ​ — ​ — ​ 12,409 ​ — ​ — ​ 12,409 Foreign currency translation gain — ​ — ​ — ​ — ​ — ​ 80 ​ — ​ 80 Change in unrealized gain (loss) on available-for-sale securities — ​ — ​ — ​ — ​ — ​ 325 ​ — ​ 325 Net loss — ​ — ​ — ​ — ​ — ​ — ​ ( 75,107 ) ​ ( 75,107 ) Balance, December 31, 2023 — ​ $ — ​ 147,066 ​ $ 14 ​ $ 463,089 ​ $ 244 ​ $ ( 353,759 ) ​ $ 109,588 * Shares of legacy Redeemable Convertible Series C Preferred Stock, Redeemable Convertible Series C-1 Preferred Stock, legacy Class A Common Stock, and legacy Class B Common Stock have been retroactively restated to give effect to the Business Combination. See accompanying notes to consolidated financial statements. ​ 98 Table of Contents RIGETTI COMPUTING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 75,107 ) ​ $ ( 71,521 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 7,426 ​ ​ 7,017 Stock-based compensation ​ ​ 12,409 ​ ​ 44,812 Change in fair value of earn-out liabilities ​ ​ 949 ​ ​ ( 19,207 ) Change in fair value of derivative warrant liabilities ​ ​ 1,160 ​ ​ ( 22,132 ) Change in fair value of forward contract ​ ​ 2,229 ​ ​ ( 5,764 ) Impairment of deferred offering costs ​ ​ 836 ​ ​ — Accretion of available-for-sale securities ​ ​ ( 3,121 ) ​ ​ ( 949 ) Amortization of debt issuance costs, commitment fees and accretion of debt end-of-term liabilities ​ ​ 1,453 ​ ​ 1,468 Non-cash lease expense ​ ​ 1,682 ​ ​ 537 Goodwill impairment ​ ​ — ​ ​ 5,377 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 1,206 ​ ​ ( 4,692 ) Prepaid expenses, other current assets and other assets ​ ​ ( 259 ) ​ ​ ( 1,065 ) Deferred revenue ​ ​ ( 618 ) ​ ​ ( 24 ) Accounts payable ​ ​ 895 ​ ​ ( 707 ) Accrued expenses and operating lease liabilities ​ ​ ( 1,719 ) ​ ​ 4,456 Other liabilities ​ ​ — ​ ​ ( 295 ) Net cash used in operating activities ​ ​ ( 50,579 ) ​ ​ ( 62,689 ) Cash flows from investing activities: ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 9,059 ) ​ ​ ( 22,737 ) Purchases of available-for-sale securities ​ ​ ( 109,252 ) ​ ​ ( 84,287 ) Maturities of available-for-sale securities ​ ​ 119,084 ​ ​ — Net cash provided by (used in) investing activities ​ ​ 773 ​ ​ ( 107,024 ) Cash flows from financing activities: ​ ​ ​ ​ Proceeds from Business Combination, net of transaction costs paid ​ ​ — ​ ​ 225,604 Transaction costs paid directly by Rigetti ​ ​ — ​ ​ ( 18,842 ) Proceeds from issuance of notes payable ​ ​ — ​ ​ 5,000 Payments of principal of notes payable ​ ​ ( 8,333 ) ​ ​ ( 1,291 ) Payments of debt issuance costs ​ ​ — ​ ​ ( 85 ) Payment of loan and security agreement exit fees ​ ​ — ​ ​ ( 1,000 ) Payments of offering costs ​ ​ ( 107 ) ​ ​ — Proceeds from sale of common stock through Common Stock Purchase Agreement ​ ​ 20,544 ​ ​ — Proceeds from issuance of common stock upon exercise of stock options and warrants ​ ​ 1,126 ​ ​ 6,068 Net cash provided by financing activities ​ ​ 13,230 ​ ​ 215,454 Effects of exchange rate changes on cash and cash equivalents ​ ​ 80 ​ ​ 101 Net (decrease) increase in cash and cash equivalents ​ ​ ( 36,496 ) ​ ​ 45,842 Cash and cash equivalents – beginning of period ​ ​ 57,888 ​ ​ 12,046 Cash and cash equivalents – end of period ​ $ 21,392 ​ $ 57,888 Supplemental disclosures of other cash flow information: ​ ​ ​ ​ Cash paid for interest ​ $ 4,340 ​ $ 3,819 Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Initial fair value of earn-out liability acquired in merger ​ ​ — ​ ​ 20,413 Initial fair value of private placement and public warrant liability acquired in merger ​ ​ — ​ ​ 22,932 Reclassification of loan and security agreement warrants to equity ​ ​ — ​ ​ 6,370 Settlement of the first tranche of forward contract ​ ​ — ​ ​ 3,305 Capitalization of deferred costs to equity upon share issuance ​ ​ 13 ​ ​ 1,520 Purchases of property and equipment recorded in accounts payable ​ ​ 3,612 ​ ​ 673 Purchases of property and equipment recorded in accrued expenses ​ ​ 1,019 ​ ​ 639 Unrealized Gain (Loss) on short term investments ​ ​ 325 ​ ​ ( 314 ) Right-of-use assets recorded on adoption of ASU 2016‑02 ​ ​ — ​ ​ 6,270 Operating lease liabilities recorded on adoption of ASU 2016‑02 ​ ​ — ​ ​ 6,620 Lease liabilities arising from obtaining right-of-use assets ​ ​ — ​ ​ 4,892 ​ See accompanying notes to consolidated financial statements. ​ 99 Table of Contents RIGETTI COMPUTING, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Description of Business Rigetti Computing, Inc. and its subsidiaries (collectively, the “Company” or “Rigetti”), builds quantum computers and the superconducting quantum processors that power them . The Company markets a 9-qubit quantum processing unit (QPU) under the Novera™ QPU trade name. Through the Company’s Quantum Computing as a Service (“QCaaS”) platform, the Company’s machines can be integrated into any public, private or hybrid cloud. The Company is located and headquartered in Berkeley, California. The Company also operates in Fremont, California; London, United Kingdom; Adelaide, Australia and British Columbia, Canada. The Company’s revenue is derived primarily from operations in the United States and the United Kingdom. (2) Summary of Significant Accounting Policies Basis of Presentation On March 2, 2022 (the “Closing Date”), a merger transaction between Rigetti Holdings, Inc. (“Legacy Rigetti”) and Supernova Partners Acquisition Company II, Ltd. (“SNII”) was completed (the “Business Combination”, see Note 3). In connection with the closing of the Business Combination, the Company changed its name to Rigetti Computing, Inc. and all of SNII Class A ordinary shares and SNII Class B ordinary shares automatically converted into shares of Common Stock, par value $ 0.0001 , of the Company (the “Common Stock”) on a one -for-one basis. The SNII Public Warrants and the Private Warrants held by SNII became warrants for Common Stock. The Company’s Common Stock and Public Warrants trade on the Nasdaq Capital Market under the ticker symbols “RGTI” and “RGTIW,” respectively. For more information on this transaction, see Note 3. The Company determined that Legacy Rigetti was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (ASC) 805, Business Combination. The determination was primarily based on the following facts: ● Former Legacy Rigetti stockholders have a controlling voting interest in the Company; ● The Company’s board of directors as of immediately after the closing is comprised of eight board members, six seats occupied by previous Rigetti board members and one seat being occupied by a previous Supernova representative. The eighth seat at the time was filled by an individual who did not have ties to either Rigetti or Supernova pre–Business Combination; and ● Legacy Rigetti management continued to hold executive management roles for the post-combination company and be responsible for the day-to-day operations. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Rigetti issuing stock for the net assets of SNII, accompanied by a recapitalization. The primary asset acquired from SNII was cash that was assumed at historical costs. Separately, the Company also assumed warrants that were deemed to be derivatives and meet liability classification subject to fair value adjustment measurements upon closing of the Business Combination (the “Closing”). No goodwill or other intangible assets were recorded because of the Business Combination. While SNII was the legal acquirer in the Business Combination because Legacy Rigetti was deemed the accounting acquirer, the historical financial statements of Legacy Rigetti became the historical financial statements of the combined company, upon the consummation of the Business Combination. 100 Table of Contents As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Rigetti prior to the Business Combination; (ii) the combined results of SNII and Legacy Rigetti following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Rigetti at their historical cost; and (iv) the Company’s equity structure for all periods presented. The equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s Common Stock, issued to Legacy Rigetti shareholders and Legacy Rigetti convertible preferred shareholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Rigetti redeemable convertible preferred stock and Legacy Rigetti Common Stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination. Risks and Uncertainties The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology. Based on the Company’s forecasts, the Company believes that its existing cash and cash equivalents and available for sale investments should be sufficient to meet its anticipated operating cash needs for at least the next 12 months from the issuance date of these financial statements based on the Company’s current business plan and expectations and assumptions considering current macroeconomic conditions. Macroeconomic Conditions Economic conditions in some parts of the world have been worsening, with disruptions to, and volatility and uncertainty in, the credit and financial markets in the U.S. and worldwide resulting from the effects of inflation and interest rates. These conditions have been further exacerbated by recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, the ongoing military conflict involving Russia and Ukraine and sanctions related thereto, the state of war between Israel and Hamas and the related risk of a larger regional conflict. It is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted. If these conditions persist and deepen, the Company could experience an inability to access additional capital, or its liquidity could otherwise be impacted. If the Company is unable to raise capital when needed and on attractive terms, it would be forced to delay, reduce or eliminate its research and development programs and other efforts. Principles of Consolidation The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. 101 Table of Contents Emerging Growth Company Following the Business Combination, the Company qualifies as an emerging growth company (‘‘EGC’’) as defined in the Jumpstart our Business Startups (‘‘JOBS’’) Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they apply to private companies. The Company intends to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date the Company (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates. Use of Estimates The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates include, but are not limited to, the fair value of share-based awards, the fair value of derivative warrant liabilities, the fair value of Sponsor Vesting Shares issued in connection with the Business Combination (See Note 3), accrued liabilities and contingencies, depreciation and amortization periods, revenue recognition and accounting for income taxes. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment and adjusts when facts and circumstances dictate. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. Reclassifications Sales and marketing expenses became less significant following the reduction in workforce and strategic realignment the Company announced in February 2023. For this reason, sales and marketing and general administrative expenses have been combined and are now reported as selling, general and administrative. Related amounts for all prior periods have been reclassified to conform with this presentation. Segments Operating segments are defined as components of an entity for which discrete financial information is available and that information is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is its CODM, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The Company’s CODM allocates resources and assesses financial performance based upon discrete financial information presented on a consolidated basis. There are no segment managers who are held accountable by the CODM, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. As such, the Company has determined that it operates in one operating and reportable segment. ​ Foreign Currency Translation and Transactions ​ The Company’s reporting currency is the US dollar. The functional currencies of the Company’s foreign subsidiaries are their respective local currencies (UK pounds sterling, Australian dollar and Canadian dollar), which are the monetary unit of account of the principal economic environment in which the Company’s foreign subsidiaries operate. Assets and liabilities of the foreign subsidiaries are translated into US dollars at exchange rates in effect at each period end. Revenues and expenses are translated at average exchange rates in effect during the period. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. 102 Table of Contents Foreign currency transaction gains and losses resulting from or expected to result from transactions denominated in a currency other than the functional currency are recognized in other income (expense), net in the consolidated statements of operations and have not been material for all periods presented. Comprehensive Loss Comprehensive loss consists of two components including net loss and total other comprehensive income (loss) after taxes. The Company’s total other comprehensive income (loss) consists of foreign currency translation adjustments that result from consolidation of its foreign subsidiaries and unrealized gain or loss on available-for-sale securities. Cash and Cash Equivalents The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of funds maintained in demand deposit accounts and money market accounts. Cash and cash equivalent balances, at times, may exceed federally insured limits. Cash equivalents are stated at fair value. Investments The Company determines the classification of its investment securities at the time of purchase. All investments in fixed income securities with remaining maturities at the date of purchase of more than three months are presently classified as available-for-sale and may be sold in response to changes in interest rates, prepayment risk or other market factors. Investments classified as available for sale are recorded at fair value in the consolidated balance sheets and are classified as short-term or long-term assets based on their maturity date and expectations regarding sales. Fair values are primarily determined using quoted market prices or valuations provided by external investment managers who obtain them from a variety of industry standard data providers. ​ Unrealized gains and losses on available for sale investments are included as a separate component of accumulated other comprehensive income (loss), until realized. The Company evaluates its investments to assess whether those in an unrealized loss position are other than temporarily impaired. Impairments are considered other than temporary if they are related to a deterioration in credit risk or if it is likely the Company will sell the securities before recovery of the amortized cost basis. Realized gains and losses and declines in value determined to be other than temporary are determined based on the specific identification method and are reported in other income (expense), net in the statements of operations. See Note 5 for further information regarding fair value. ​ Interest income and dividends are recognized in interest income on an accrual basis. Premiums and discounts on debt securities are amortized as an adjustment to interest income over the period to maturity of the related security using the effective interest method. ​ Accounts Receivable Accounts receivable are recorded at invoice value, net of allowance for credit losses. Unbilled receivables are included in accounts receivable and include amounts that were invoiced subsequent to the period end for which revenue was recognized in advance of the right to invoice. Expected credit losses for uncollectible receivable balances consider both current conditions and reasonable and supportable forecasts of future conditions. Current conditions considered include predefined aging criteria, as well as specified events that indicate the balance due is not collectible. Reasonable and supportable forecasts used in determining the probability of future collections consider publicly available macroeconomic data and whether future credit losses are expected to differ from historical losses. The Company is not party to any off-balance sheet arrangements that would require an allowance for credit losses. As of December 31, 2023 and December 31, 2022, respectively, the Company does not have any allowances for credit losses. 103 Table of Contents Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets include prepaid software, prepaid insurance, other prepaid expenses and other current assets, all of which are expected to be recognized or realized within the next 12 months. Deferred Offering Costs The Company capitalizes certain legal, accounting, and other third-party fees that are directly associated with the Business Combination or issuance of shares under a registration statement filed with the SEC. After consummation of the Business Combination or issuance of shares, costs allocated to equity-classified instruments are recorded as a reduction to additional paid-in capital. The Company expenses costs allocated to liability-classified instruments. The Company incurred $ 2.3 million of offering costs for the year ended December 31, 2022, which were related to filing new registration statements with the SEC after the close of the Business Combination. These costs were incremental to those disclosed in Note 3. Included in this amount were $ 0.7 million of offering costs which were deferred as of December 31, 2022, relating to the Purchase Agreement described in Note 14. The Company was not able to sell common stock under the Purchase Agreement for an extended period in early 2023 while its share price was trading below $ 1.00 per share. As a result, the Company recognized $ 0.8 million of impairment charges in 2023 for previously deferred offering costs, primarily related to the Purchase Agreement, which were recorded as selling, general and administrative expense in the accompanying consolidated statement of operations. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets. ​ ​ ​ Furniture and information technology hardware (IT Hardware) 3 years Process Equipment 7 years Quantum computing fridges 3 - 10 years Leasehold and other improvements Shorter of the lease-term or estimated useful-life ​ Expenditures for repairs and maintenance are expensed as incurred. Upon disposition, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in other income (expense), net in the consolidated statements of operations. Impairment of Long-Lived Assets Long-lived assets, which consist of property and equipment and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset (asset group) may not be recoverable. When such events or changes in circumstances occur, the Company performs an undiscounted cash flow analysis to determine if an impairment exists and, if so, an impairment loss would be recorded based on the excess of the carrying amount of the asset (asset group) over its fair value. During the years ended December 31, 2023 and December 31, 2022, respectively, the Company determined there were triggering events related to share price declines or expected near term losses and an undiscounted cash flow analysis was performed. Based on the results of this analysis, the Company’s long-lived assets were not impaired and no impairment charges were recorded. 104 Table of Contents Leases ​ The Company determines if an arrangement is or contains a lease at inception. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments consist primarily of the fixed payments under the arrangement. ​ The Company generally uses an incremental borrowing rate estimated based on the information available at the lease commencement date to determine the present value of lease payments unless the implicit rate is readily determinable. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ​ The Company accounts for lease and non-lease components as a single lease component for office leases. Lease and non-lease components for all other leases are generally accounted for separately. Additionally, the Company does not record leases on the balance sheet that, at the lease commencement date, have a lease term of 12 months or less. ​ Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, less current portion in the accompanying consolidated balance sheets. ​ Goodwill Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill has an indefinite useful life and is not amortized. The Company reviews its goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of the Company may exceed its fair value. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the Company is less than its carrying amount, including goodwill. If that is the case, the Company performs a quantitative impairment test, and, if the carrying amount of the Company exceeds its fair value, then the Company will recognize an impairment charge for the amount by which its carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill. The Company determined a triggering event existed in the fourth quarter of 2022 resulting from the sustained decline in the Company’s stock price. A quantitative impairment test was performed and as a result, the Company recognized a $ 5.4 million goodwill impairment charge for the year ended December 31, 2022. The Company’s goodwill was fully written-off as of December 31, 2022. Deferred Financing Costs The incremental cost, including the fair value of warrants, directly associated with obtaining debt financing is capitalized as deferred financing costs upon the issuance of the debt and amortized over the term of the related debt agreement using the effective-interest method with such amortized amounts included as a component of interest expense in the consolidated statements of operations. Unamortized deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt obligation. Public and Private Warrants ​ At the Closing Date of the Business Combination, SNII had 4,450,000 Private Warrants and 8,625,000 Public Warrants outstanding. Each whole warrant entitles the holder to purchase one share of the Company’s Common Stock at a price of $ 11.50 per share, subject to adjustments, and will expire five years after the Business Combination or earlier upon redemption or liquidation. ​ 105 Table of Contents The Private Warrants do not meet the derivative scope exception and are accounted for as derivative liabilities. Specifically, the Private Warrants contain provisions that cause the settlement amounts to be dependent upon the characteristics of the holder of the warrant which is not an input into the pricing of a fixed-for-fixed option on equity shares. Therefore, the Private Warrants are not considered indexed to the Company’s stock and should be classified as a liability. Since the Private Warrants meet the definition of a derivative, the Company recorded the Private Warrants as liabilities in the consolidated balance sheet at fair value upon the closing, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. The fair value of the Private Warrants are measured using the Black-Scholes option-pricing model. ​ The Public Warrants also fail to meet the indexation guidance in Accounting Standards Codification (“ASC”) Topic 815 , Derivatives and Hedging (“ASC 815”), and are accounted for as liabilities because they include a provision whereby if there is not an e f fective registration statement, the warrant holders have a cap of 0.361 shares of Common Stock per warrant (subject to adjustment), on the issuable number of shares in a cashless exercise. Subsequent to the separate listing and trading of the Public Warrants, their fair value has been measured based on the observable listed trading prices for such warrants. ​ See Notes 5 and 11 for further information regarding the fair value of the Public and Private Warrants. Derivative Warrant Liabilities The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 815, at the initial recognition date. ​ Other than the Public and Private Warrants noted above, the Company also issued warrants to Trinity Capital which were recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period until exercised. The fair value of the warrant liabilities issued were initially measured using the Black- Scholes model and are subsequently remeasured at each reporting period with changes recorded as a component of other income (expense), net in the consolidated statements of operations. During the year ended December 31, 2022 these warrants were exercised and are no longer outstanding. Earn-Out Liabilities At the closing of the Business Combination, the Sponsor subjected the Sponsor Vesting Shares to forfeiture and vesting conditions as of the Closing Date, with vesting occurring only if thresholds related to the weighted average price of Common Stock are met for the duration of various specified consecutive day trading periods during the five-year period following the Closing as described in Note 3 (the “Earn-Out Triggering Events”). Any such shares held by the Sponsor that remain unvested after the fifth anniversary of the Closing will be forfeited. These Sponsor Vesting Shares are accounted for as liability classified instruments because the Earn-Out Triggering Events that determine the number of Sponsor Vesting Shares to be earned back by the Sponsor include outcomes that are not solely indexed to the Common Stock of the Company. The aggregate fair value of the Sponsor Vesting Shares on the Closing Date was estimated using a Monte Carlo simulation model. The earn-out liabilities are adjusted to fair value each reporting period using the Monte Carlo simulation model until such time as the Earn-Out Triggering Events are achieved or the Sponsor Vesting Shares are forfeited. As of December 31, 2023, the Earn-Out Triggering Events were not achieved for any of the tranches of Sponsor Vesting Shares. See Note 12 for further information regarding the earn-out liabilities. ​ 106 Table of Contents Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers and accounts for certain contract costs in accordance with ASC 340-40, Other Assets and Deferred Costs—Contracts with Customers. The Company recognizes revenue from contracts with customers by applying the following five-step model: ● Identify the contract with a customer ● Identify the performance obligations in the contract ● Determine the transaction price ● Allocate the transaction price to the performance obligations in the contract ● Recognize revenue when (or as) performance obligations are satisfied The Company generates revenue through its Quantum Computing as a Service (“QCaaS”), sales of QPUs and custom computing components, and development contracts and other services. ​ Access to Rigetti quantum computing systems can be purchased as a quantum computing subscription, or on a usage basis for a specified quantity of hours. Revenue related to subscription-based access to (“QCaaS”) is recognized over time as access to the systems is provided on a ratable basis over the subscription term, which can range from six months to two years . This time-based input measure of progress provides a faithful depiction of the transfer of the services because the benefits the customer obtains generally equals the benefit from its access to the systems throughout the subscription term. Revenue related to usage-based access to Rigetti quantum computing systems is recognized over time as the systems are accessed using an output method based on compute credit hours expended. The Company believes this output method provides a faithful depiction of the transfer of the services because the customer has purchased a specified quantity of hours of usage that diminishes each time an hour is expended and therefore each hour of access to the systems is considered a discrete delivery of underlying services in these arrangements. Revenue related to the sale of QPUs, including Novera™ , and custom quantum computing components is recognized at a point in time when obligations under the terms of the contract with our customer are satisfied, generally with the transfer of control upon shipment for sales of QPUs, and upon customer acceptance for sales of custom quantum computing components. Development contracts are generally multi-year, non-recurring arrangements in which the Company provides professional services regarding practical applications of quantum computing to technology and business problems within the customer’s industry or organization and assists the customer in developing quantum algorithms and applications that will provide commercial value to the customer in areas of business interest. Development contracts are typically fixed fee arrangements invoiced on a milestone basis but may also be invoiced on a time and materials or cost reimbursement basis in certain cases. Revenue related to development contracts and other services is recognized over time based on completed milestones or hours or costs incurred as appropriate. Revenue for partially completed milestones deemed probable of being met is recognized using an input measure based on actual labor hours incurred to date relative to total estimated labor hours needed to complete the milestone. The Company believes this input measure of progress provides a faithful depiction of the transfer of the services because it closely depicts the Company’s efforts or inputs to the satisfaction of the performance obligation. 107 Table of Contents When the Company’s contracts with customers contain multiple performance obligations, the transaction price is allocated on a relative standalone selling price basis to each performance obligation. The Company typically determines standalone selling price based on observable selling prices of its products and services. In instances where standalone selling price is not directly observable, standalone selling price is determined using information that may include market conditions and other observable inputs. Standalone selling price is typically established as a range. In situations in which the stated contract price for a performance obligation is outside of the applicable standalone selling price range and has a different pattern of transfer to the customer than the other performance obligations in the contract, the Company will reallocate the total transaction price to each performance obligation based on the relative standalone selling price of each. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and services to the customer. Revenue is recorded based on the transaction price, which includes fixed consideration and estimates of variable consideration. The amount of variable consideration included in the transaction price is constrained and is included only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company’s contracts with customers may include renewal or other options at fixed prices. Determining whether such options are considered distinct performance obligations that provide the customer with a material right and therefore should be accounted for separately requires significant judgment. Judgment is required to determine the standalone selling price for each renewal option to determine whether the renewal pricing is reflective of standalone selling price or is reflective of a discount that would provide the customer with a material right. Based on the Company’s assessment of standalone selling prices, the Company determined that there were no significant material rights provided to its customers requiring separate recognition. The timing of revenue recognition may not align with the right to invoice the customer. The Company records accounts receivable when it has the unconditional right to issue an invoice and receive payment, regardless of whether revenue has been recognized. If revenue has not yet been recognized, a contract liability (deferred revenue) is also recorded. If revenue is recognized in advance of the right to invoice, a contract asset or unbilled receivable is recorded, depending on whether the Company’s right to consideration is considered conditional or unconditional. Unbilled receivables are included within accounts receivable in the consolidated balance sheets. In instances where the timing of revenue recognition differs from the timing of the right to invoice, the Company has determined that a significant financing component generally does not exist. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing the products and services and not to receive financing from or provide financing to the customer. Additionally, the Company has elected the practical expedient that permits an entity not to recognize a significant financing component if the time between the transfer of a good or service and payment is one year or less. Payment terms on invoiced amounts are typically net 30 days. The Company does not offer rights of return for its products and services in the normal course of business, and contracts generally do not include service-type warranties that provide any incremental service to the customer beyond providing assurance that the goods and services conform to applicable specifications or customer-specific or subjective acceptance provisions. The Company also excludes from revenue government-assessed and imposed taxes on revenue-generating activities that are invoiced to customers. Costs of Obtaining and Fulfilling Contracts The Company has elected to apply the practical expedient to expense contract acquisition costs as incurred when the expected amortization period is one year or less. Cost of Revenue Cost of revenue consists of direct and indirect costs associated with providing its QCaaS offerings, sales of QPUs and custom computing components, and development contracts and other services. Cost of revenue includes employee 108 Table of Contents related costs, material costs and an allocation of facility costs, depreciation and amortization associated with the delivery of goods and services to customers. Research and Development Research and development costs are expensed as incurred. Research and development expenses include compensation, employee benefits, stock-based compensation, outside consultant fees, allocation of facility costs, depreciation and amortization, materials and components purchased for research and development. Selling, General and Administrative Selling, general and administrative expenses include compensation, employee benefits, stock-based compensation, professional service fees, allocation of facility costs, depreciation and amortization associated with general selling and administrative overhead activities. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2023 and December 31, 2022, respectively, the Company has recorded a full valuation allowance against its deferred tax assets. The Company recognizes the effect of income tax positions only if it is more likely than not that those positions will be sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense. Net Loss Per Share Basic net loss per common share is computed by dividing the net loss available to Common Stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Diluted net loss per common share is computed by dividing the net loss available to Common Stockholders adjusted by any preferred stock dividends declared during the period by the weighted average number of common shares and potential common shares outstanding when the impact is not antidilutive. Potential common shares from stock options, unvested restricted stock units and Common Stock warrants are computed using the treasury stock method, while those from convertible Series C and C-1 Preferred Stock are computed using the if-converted method. Contingently issuable shares are included in basic net loss per share only when there is no circumstance under which those shares would not be issued. Shares issuable for little or no cash consideration shall be considered outstanding common shares and included in the computation of basic net loss per share. 109 Table of Contents Stock-Based Compensation The Company accounts for share-based compensation in accordance with ASC 718, Compensation – Stock Compensation . The Company’s share-based compensation awards are all equity-classified and consist of stock options, restricted stock units (“RSU”) and restricted stock awards (“RSA”). Most stock options have service vesting conditions ranging from 1 to 5 years . Some stock options include both market-based and service based vesting conditions. Most RSUs granted under the Rigetti Computing, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) have service vesting conditions ranging from 1 to 4 years . Some RSUs granted under the 2022 plan include both market-based and service-based vesting conditions. RSUs granted under the Rigetti & Co., Inc. 2013 Equity Incentive Plan (the “2013 Plan”) have a 4 -year service vesting condition and a performance condition linked to the occurrence of a liquidity event defined as a change-in-control event, successful initial public offering, or successful merger with a special purpose acquisition company, which was satisfied at the Closing. RSAs are fully vested on the grant date. The Company occasionally issues awards that might have different vesting conditions. Compensation expense is based on the grant-date fair value of the awards and recognized over the requisite service period using a straight-line method for awards that have a service only vesting condition. Compensation expense for awards with service and performance and/or market conditions is recognized using a graded vesting method. Compensation expense for RSAs is recognized fully on the grant date. Compensation expenses for awards with a market condition are recognized over the requite service period regardless of whether the market condition is met unless the service requirement is not met. The Company has elected to account for forfeitures of employee stock awards as they occur. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments in the form of U.S government agency bonds and corporate bonds, and trade accounts receivable. The Company’s cash and cash equivalents and short-term investments are placed with high-credit-quality financial institutions, and at times exceed federally insured limits. To date, the Company has not experienced any credit loss relating to its cash and cash equivalents or short-term investments. Fair Value Measurements The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3—Inputs are unobservable for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. ​ ​ 110 Table of Contents Recently Adopted Accounting Pronouncements In 2016, the FASB issued ASU 2016-13 “ Financial Instruments - Credit Losses” which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model which will be based on an estimate of current expected credit loss; and (ii) provides for recording credit losses on available-for-sale debt securities through an allowance account. The standard also requires certain incremental disclosures. Subsequently, the FASB issued several ASUs to clarify, improve, or defer the adoption of ASU 2016-13. The Company adopted ASU 2016-13 on January 1, 2023. The Company determined that the adoption of this standard did not result in a material impact to the consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB issued this update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The ASU is effective for the Company after December 15, 2024, and interim periods within those fiscal years, with early adoption permitted. The Company is still evaluating the impact of this pronouncement on the consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt - (Topic 815) (“ASU No. 2020-06”), which simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. ASU No. 2020-06 is effective for the Company as of January 1, 2024. The Company determined that the adoption of this standard will not result in a material impact on the consolidated financial statements. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. The Company is still evaluating the impact of this pronouncement on the consolidated financial statements. In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is still evaluating the impact of this pronouncement on the consolidated financial statements. 111 Table of Contents ( 3) Business Combination As discussed in Note 2, on March 2, 2022, the Business Combination was completed. Pursuant to the Company’s certificate of incorporation, as amended on March 2, 2022, the Company is authorized to issue 1,000,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par value $ 0.0001 , of the Company (the “Preferred Stock”). The holders of shares of Common Stock are entitled to one vote for each share of Common Stock held. The Preferred Stock is non-voting. No shares of Preferred Stock were issued and outstanding as of December 31, 2023 and December 31, 2022, respectively. On March 1, 2022, prior to the Closing, as contemplated by that certain Agreement and Plan of Merger dated as of October 6, 2021, as amended on December 23, 2021 and January 10, 2022 (as amended, the “Merger Agreement”), by and among SNII, Supernova Merger Sub, Inc., Supernova Romeo Merger Sub, LLC and Legacy Rigetti and following approval by SNII’s shareholders at an extraordinary general meeting of shareholders held on February 28, 2022 (the “Extraordinary General Meeting”), SNII filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation (the “Certificate of Incorporation”) and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SNII was domesticated and continues as a Delaware corporation, changing its name to “Rigetti Computing, Inc.” As a result of and upon the effective time of the Domestication (which occurred on March 1, 2022), among other things (1) each then issued and outstanding Class A ordinary share, par value $ 0.0001 per share, of SNII (“SNII Class A ordinary share”) converted automatically, on a one -for-one basis, into a share of Common Stock; (2) each then issued and outstanding Class B ordinary share, par value $ 0.0001 per share, of SNII (“SNII Class B ordinary share”) converted automatically, on a one -for-one basis, into a share of Common Stock; (3) each then issued and outstanding whole warrant of SNII to purchase one SNII Class A ordinary share converted automatically into a Public Warrant to acquire one share of Common Stock at an exercise price of $ 11.50 per share pursuant to the Warrant Agreement, dated March 1, 2021, between SNII and American Stock Transfer & Trust Company, as warrant agent; and (4) each then issued and outstanding unit of SNII (the “SNII Units”) was separated and converted automatically into one share of Common Stock and one-fourth of one Warrant. Immediately prior to the effective time of the Business Combination, each share of Legacy Rigetti’s Series C preferred stock and Series C-1 preferred stock (collectively, the “Legacy Rigetti Preferred Stock”) with Par Value of $ 0.000001 converted into shares of Common Stock of Legacy Rigetti (“Legacy Rigetti Common Stock”) in accordance with the Amended and Restated Certificate of Incorporation of Legacy Rigetti (such conversion, the “Legacy Rigetti Preferred Conversion”). As a result of the Business Combination, among other things (1) all outstanding shares of Legacy Rigetti Common Stock as of immediately prior to the Closing (including Legacy Rigetti Common Stock resulting from the Legacy Rigetti Preferred Stock Conversion), were exchanged at an exchange ratio of 0.7870 (the “Exchange Ratio”) for an aggregate of 78,959,579 shares of Common Stock; (2) each warrant to purchase Legacy Rigetti Common Stock converted into a warrant to purchase shares of Common Stock (“Assumed Warrant”), with each Assumed Warrant subject to the same terms and conditions as were applicable to the original Legacy Rigetti warrant and having an exercise price and number of shares of Common Stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement; (3) each option to purchase Legacy Rigetti Common Stock converted into an option to purchase shares of Common Stock (“Assumed Option”), with each Assumed Option subject to the same terms and conditions as were applicable to the original Legacy Rigetti option and with an exercise price and number of shares of Common Stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement, and; (4) each Legacy Rigetti restricted stock unit award converted into a restricted stock unit award to receive shares of Common Stock (“Assumed RSU Award”), with each Assumed RSU Award subject to the same terms and conditions as were applicable to the Legacy Rigetti restricted stock unit award, and with the number of shares of Common Stock to which the Assumed RSU Award converted based on the Exchange Ratio and other terms contained in the Merger Agreement. ​ 112 Table of Contents In connection with the execution of the Merger Agreement, SNII entered into a sponsor support agreement (the “Sponsor Support Agreement”) with Supernova Partners II, LLC (the “Sponsor”), Legacy Rigetti and SNII’s directors and officers. Pursuant to the Sponsor Support Agreement, the Sponsor and SNII’s directors and officers (“Sponsor Holders”), among other things, agreed to vote all of their shares of SNII capital stock in favor of the approval of the Business Combination. In addition, pursuant to the Sponsor Support Agreement, (i) 2,479,000 shares of Common Stock held by the Sponsor Holders became unvested and subject to forfeiture as of the Closing and will only vest if, during the five year period following the Closing, the volume weighted average price of Common Stock equals or exceeds $ 12.50 for any twenty trading days within a period of thirty consecutive trading days (such shares, the “Promote Sponsor Vesting Shares”), and (ii) 580,273 shares of Common Stock held by the Sponsor Holders became unvested and subject to forfeiture as of the Closing and will only vest if, during the five year period following the Closing, the volume weighted average price of Common Stock equals or exceeds $ 15.00 for any twenty trading days within a period of thirty consecutive trading days (such shares, the “Sponsor Redemption-Based Vesting Shares,” and, collectively with the Promote Sponsor Vesting Shares, the “Sponsor Vesting Shares”). Any such shares held by the Sponsor Holders that remain unvested after the fifth anniversary of the Closing will be forfeited (Refer to Note 12 for additional information related to the Earn-Out Liabilities for the Sponsor Vesting Shares). Concurrently with the execution of the Merger Agreement, SNII entered into Subscription Agreements (the “Initial Subscription Agreements”) with certain investors (together, the “Initial PIPE Investors”), pursuant to which the Initial PIPE Investors agreed to subscribe for and purchase, and SNII agreed to issue and sell to the Initial PIPE Investors, an aggregate of 10,251,000 shares of Common Stock at a price of $ 10.00 per share, for aggregate gross proceeds of $ 102.5 Million (the “Initial PIPE Financing”). On December 23, 2021, SNII entered into Subscription Agreements (the “Subsequent Subscription Agreements”, and together with the Initial Subscription Agreements, the “Subscription Agreements”) with two “accredited investors” (as such term is defined in Rule 501 of Regulation D) (the “Subsequent PIPE Investors”, and together with the Initial PIPE Investors, the “PIPE Investors”) pursuant to which the Subsequent PIPE Investors agreed to subscribe for and purchase, and SNII agreed to issue and sell to the Subsequent PIPE Investors, an aggregate of 4,390,244 shares of Common Stock at a price of $ 10.25 per share, for aggregate gross proceeds of $ 45.0 Million (the “Subsequent PIPE Financing”, and together with the Initial PIPE Financing, the “PIPE Financing”). Pursuant to the Subscription Agreements, Rigetti agreed to provide PIPE Investors with certain registration rights with respect to the shares purchased as part of the PIPE Financing. The PIPE Financing was consummated immediately prior to the Business Combination. The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, SNII was treated as the “acquired” company for financial reporting purposes. In accounting for the Business Combination and after redemptions, net proceeds received by the Company totaled $ 225.6 million. The table below shows the net proceeds from business combination and PIPE financing (in thousands): ​ ​ ​ ​ ​ ​ Cash - SNII trust and cash (net of redemption) ​ $ 77,769 Cash - PIPE ​ ​ 147,510 Cash - SNII operating account ​ ​ 325 Net proceeds from Business Combination and PIPE ​ $ 225,604 ​ ​ Transaction costs consist of direct legal, accounting and other fees relating to the consummation of the Business Combination. Legacy Rigetti transaction costs specific and directly attributable to the business combination totaled $ 20.65 million. These costs were initially capitalized as incurred in deferred offering assets on the consolidated balance sheets. Upon the Closing, transaction costs related to the issuance of shares were recognized in stockholders’ equity while costs associated with the Public Warrants, Private Warrants and the Earnout Liabilities related to the Sponsor Vesting Shares were expensed in the consolidated statements of operations. Of the total transaction costs of $ 20.65 million, $ 19.75 million was recorded to additional paid-in capital as a reduction of proceeds and the remaining $ 0.9 million was expensed during the year ended December 31, 2022. Cash transaction costs paid during the year ended December 31, 2022 totaled $ 16.7 million. Bonuses paid to certain employees related to the business combination during the year ended December 31, 2022 totaled $ 2.1 million. The amount recorded to additional paid-in-capital was $ 159.6 million, comprised of $ 225.6 million net proceeds less $ 19.8 million of transaction costs, $ 16.3 million recognized for the Public Warrant liabilities, $ 9.6 million recognized for the Private Warrant liabilities, and $ 20.4 million recognized for the Earnout Liabilities related to the Sponsor Vesting Shares. 113 Table of Contents The number of shares of Common Stock issued immediately following the consummation of the Business Combination was as follows: ​ ​ ​ ​ Common Stock—SNII Class A, outstanding prior to Business Combination 34,500,000 Less: redemption of SNII Class A ordinary shares ( 22,915,538 ) Common Stock—SNII Class A ordinary shares 11,584,462 Common Stock—SNII Class B ordinary shares* 8,625,000 Shares issued in PIPE 14,641,244 Business Combination and PIPE shares 34,850,706 Common Stock—Legacy Rigetti** 18,221,069 Common Stock—exercise of Legacy Rigetti stock options immediately prior to the closing** 1,123,539 Common Stock—exercise of Legacy Rigetti warrants immediately prior to the closing** 2,234,408 Common Stock—upon conversion of Legacy Rigetti Series C preferred stock** 54,478,261 Common Stock—upon conversion of Legacy Rigetti Series C‑1 preferred stock** 2,902,302 Total shares of Common Stock immediately after Business Combination 113,810,285 * Includes (i) 2,479,000 shares of “Promote Sponsor Vesting Shares” and (ii) 580,273 shares of “Sponsor Redemption-Based Vesting Shares” ** All outstanding shares of Legacy Rigetti Common Stock as of immediately prior to the Closing (including Legacy Rigetti Common Stock resulting from the Legacy Rigetti Preferred Stock Conversion), were exchanged at an exchange ratio of 0.7870 (the “Exchange Ratio”). The conversion ratio to Legacy Rigetti Common Stock for the Legacy Series C Preferred Stock was one -for-one and for Legacy Series C-1 Preferred Stock was eight -for-one. ​ (4) Investments All investments in fixed income securities are classified as available-for-sale in the consolidated balance sheets. Fixed income securities are recorded at their estimated fair value. The amortized cost, gross unrealized holding gains and losses included in other comprehensive income (loss) and the fair value of the fixed income securities at December 31, 2023 and December 31, 2022, respectively, are presented in the tables below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Amortized Unrealized Unrealized Fair ​ Cost Gains Losses Value Available-for-sale investments: ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury securities ​ $ 45,252 ​ $ 18 ​ $ — ​ $ 45,270 U.S. government agency bonds ​ ​ 7,933 ​ ​ — ​ ​ ( 6 ) ​ ​ 7,927 Corporate bonds ​ ​ 25,341 ​ ​ 6 ​ ​ ( 7 ) ​ ​ 25,340 Available-for-sale investments – short-term ​ $ 78,526 ​ $ 24 ​ $ ( 13 ) ​ $ 78,537 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Amortized Unrealized Unrealized Fair ​ Cost Gains Losses Value Available-for-sale investments: ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury securities ​ $ 58,514 ​ $ — ​ $ ( 304 ) ​ $ 58,210 Corporate bonds ​ ​ 3,581 ​ ​ — ​ ​ ( 10 ) ​ ​ 3,571 Commercial paper ​ ​ 23,142 ​ ​ — ​ ​ — ​ ​ 23,142 Available-for-sale investments – short-term ​ $ 85,237 ​ $ — ​ $ ( 314 ) ​ $ 84,923 ​ ​ The Company invests in highly rated investment grade debt securities. All of the Company’s available-for-sale securities have final maturities of one year or less. The Company reviews the individual securities that have unrealized losses on a regular basis. The Company evaluates whether it has the intention to sell any of these investments and whether it is more likely than not that it will be required to sell any of them before recovery of the amortized cost basis. Neither of these criteria were met as of December 31, 2023 or December 31, 2022, respectively. 114 Table of Contents The Company additionally evaluates whether the decline in fair value of the securities below their amortized cost basis is related to credit losses or other factors. Based on this evaluation, the Company determined that the unrealized losses for its available-for-sale securities were primarily attributable to changes in interest rates and non-credit-related factors. Accordingly, the Company determined that none of the unrealized losses were other-than-temporary, and that recognition of an impairment charge was not required as of December 31, 2023 or December 31, 2022, respectively. As of December 31, 2023, there were 8 securities that were in an unrealized loss position with a market value of $ 28 million, with the largest loss for any single security being inconsequential. None of the Company’s available-for-sale securities have been in an unrealized loss position for more than one year. No available-for-sale securities were sold during the years ended December 31, 2023 or December 31, 2022, respectively. See Note 5 for additional information regarding the fair value of the Company’s investments. ​ (5) Fair Value Measurements The following tables present the fair value hierarchy used to measure the Company’s financial assets and liabilities that are measured as of December 31, 2023 and December 31, 2022, respectively (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 15,681 ​ $ — ​ $ — Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. treasury securities ​ ​ — ​ ​ 45,270 ​ ​ — U.S. government agency bonds ​ ​ — ​ ​ 7,927 ​ ​ — Corporate bonds ​ ​ 25,340 ​ ​ — ​ ​ — Total Assets ​ $ 41,021 ​ $ 53,197 ​ $ — Liabilities ​ ​ ​ ​ ​ ​ Derivative warrant liability – Public Warrants ​ $ 1,323 ​ $ — ​ $ — Derivative warrant liability – Private Warrants ​ ​ — ​ ​ — ​ ​ 1,604 Earn-out liabilities ​ ​ — ​ ​ — ​ ​ 2,155 Total Liabilities ​ $ 1,323 ​ $ — ​ $ 3,759 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ Money Market Funds ​ $ 36,346 ​ $ — ​ $ — Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S treasury securities ​ ​ 58,210 ​ ​ — ​ ​ — Corporate bonds ​ ​ — ​ ​ 3,571 ​ ​ — Commercial paper ​ ​ — ​ ​ 23,142 ​ ​ — Forward Warrant Agreement ​ ​ — ​ ​ — ​ ​ 2,229 Total Assets ​ $ 94,556 ​ $ 26,713 ​ $ 2,229 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative warrant liability – Public Warrants ​ $ 699 ​ $ — ​ $ — Derivative warrant liability – Private Warrants ​ ​ — ​ ​ — ​ ​ 1,068 Earn-out liabilities ​ ​ — ​ ​ — ​ ​ 1,206 Total Liabilities ​ $ 699 ​ $ — ​ $ 2,274 ​ As of December 31, 2023 and December 31, 2022, respectively, the Company has recorded the following financial instruments subject to fair value measurements: 1) Derivative warrant liabilities—Public Warrants and Private Warrants, 2) Forward Warrant Agreement, 3) Available-for-sale securities and 4) Earnout liabilities. 115 Table of Contents The Company also has long-term debt and a line of credit that provides for variable interest, and therefore, the carrying value approximates the fair value. The carrying values of the long-term debt and line of credit as of December 31, 2023 and December 31, 2022, respectively, represent the original principal amounts borrowed, accretion of final payment fees, less principal payments and unamortized debt issuance costs. The fair value of the Public Warrants has been measured based on the observable listed prices for such warrants, a Level 1 measurement. Long-term debt and a line of credit issued by the Company are classified within Level 2. The fair value of the Company’s Level 2 financial assets are determined by using inputs based on quoted market prices for similar instruments. The carrying value of the long-term debt and line of credit approximates its fair value given their maturity and variable interest rates. All other financial instruments are classified as Level 3 instruments as they all include unobservable inputs. The Private Warrants were initially measured at fair value using a Black Scholes model. As of December 31, 2022, the Company estimated the fair value of the Forward Warrant Agreement using a forward analysis with unobservable inputs which included selected risk-free rate and probability outcomes. The Forward Warrant Agreement had no value as of December 31, 2023 because Ampere’s obligation to make the additional payment under the Forward Warrant Agreement expired in October 2023 without taking effect. The fair value of the Earn-out liabilities is estimated using a Monte Carlo simulation model. As of December 31, 2021, the Company recorded a derivative warrant liability for the Trinity Warrants (as defined below) at fair value using a Black-Scholes option model with unobservable inputs including volatility. The Company estimates the volatility of its ordinary share warrants based on implied volatility from the Company’s publicly traded warrants and from historical volatility of select peer company’s ordinary shares that matches the expected remaining life of the warrants. On June 2, 2022, all outstanding Trinity Warrants were exercised into shares of the Company’s Common Stock. The Company has further described the key aspects of the fair value measurements described above in Notes 6, 11 and 12 to the consolidated financial statements. During the year ended December 31, 2023, the Company reduced the estimated probability of occurrence for the Forward Warrant Agreement from 50 % to 0 % because Ampere’s obligation to make the additional payment under the Forward Warrant Agreement expired in October 2023 without taking effect. There were no other changes in fair value measurement techniques during the years ended December 31, 2023 or December 31, 2022. There were no transfers in or out of Level 3 of the fair value hierarchy during the years ended December 31, 2023 or December 31, 2022, except that during the year ended December 31, 2023, the derivative liability for 1,177,166 warrants was transferred from Level 3 to Level 1 of the fair value hierarchy because the warrants were converted from Private Warrants to Public Warrants. The transfer had a $ 0.5 million favorable impact on the Company’s net loss. Current estimates of fair value may differ from the amounts presented. A summary of the changes in the fair value of the Company’s Level 3 financial instruments during the years ended December 31, 2023, and December 31, 2022, respectively, is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative Derivative Forward ​ ​ ​ ​ ​ warrant liability - ​ warrant liability - ​ Warrant ​ Earn-out ​ Trinity Warrants Private Warrants Agreement Liabilities Balance – December 31, 2022 ​ $ — ​ $ 1,068 ​ $ ( 2,229 ) ​ $ 1,206 Change in fair value during the year ​ ​ — ​ ​ 1,064 ​ ​ 2,229 ​ ​ 949 Transfer from Private Warrants to Public Warrants during the year ​ ​ — ​ ​ ( 528 ) ​ ​ — ​ ​ — Balance – December 31, 2023 ​ $ — ​ $ 1,604 ​ $ — ​ $ 2,155 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance – December 31, 2021 ​ $ 4,355 ​ $ — ​ $ 230 ​ $ — Initial measurement upon Business Combination March 2, 2022 (Note 3) ​ ​ — ​ ​ 9,612 ​ ​ — ​ ​ 20,413 Change in fair value during the year ​ ​ 2,015 ​ ​ ( 8,544 ) ​ ​ ( 5,764 ) ​ ​ ( 19,207 ) Extinguishment due to exercise of the warrants ​ ​ ( 6,370 ) ​ ​ — ​ ​ 3,305 ​ ​ — Balance – December 31, 2022 ​ $ — ​ $ 1,068 ​ $ ( 2,229 ) ​ $ 1,206 ​ ​ 116 Table of Contents (6) Forward Warrant Agreement In connection with the execution of the Merger Agreement in October 2021 (See Note 2), Rigetti entered into a warrant subscription agreement (“Forward Warrant Agreement”) with a strategic partner, Ampere Computing LLC (“Ampere”) for the purchase of a warrant for an aggregate purchase price (including amounts from exercise) of $ 10.0 million. The Forward Warrant Agreement provided for the issuance of a warrant for the purchase of up to an aggregate of 1,000,000 shares of Common Stock at an exercise price of $ 0.0001 . The purchase of the warrant was conditioned upon, among other things, the consummation of the Business Combination and the entry into a collaboration agreement between Rigetti and Ampere. The parties entered into the collaboration agreement in January 2022. Ampere was required to pay $ 5.0 million to Rigetti no later than the later of (i) the Closing and (ii) June 30, 2022. On June 30, 2022, pursuant to the Forward Warrant Agreement, the Company issued the warrant to Ampere upon receipt of an aggregate of $ 5.0 million (including the exercise price), and upon such payment and issuance, 500,000 shares of the Company’s Common Stock vested under the warrant and were immediately exercised by Ampere pursuant to the terms of the warrant. Ampere was required to pay an additional $ 5.0 million to Rigetti no later than the closing date of the listing of Ampere’s capital stock on a stock exchange, provided that if the listing had not occurred by the second anniversary of the Forward Warrant Agreement (October 2023), Ampere was not obligated to make the additional payment. Ampere’s obligation to make the additional $ 5.0 million payment has now expired. The Company filed a registration statement, pursuant to a Registration Rights Agreement with Ampere, registering the resale of the initial 500,000 shares issued under the warrant which was declared effective during the year ended December 31, 2022. The Company evaluated the Forward Warrant Agreement as a derivative in conjunction with the guidance of ASC 480, “Distinguishing Liabilities from Equity”. The Company calculated the fair value of the Forward Warrant Agreement at inception using the Forward Contract Pricing methodology. The Forward Warrant Agreement was subsequently re-measured at each reporting period using the Forward Contract Pricing methodology with the change in fair value recorded in selling, general and administrative expense in the consolidated statement of operations. During the year ended December 31, 2023, the Company reduced the estimated probability of occurrence for the Forward Warrant Agreement from 50 % to 0 % because Ampere’s obligation to make the additional payment under the Forward Warrant Agreement expired without taking effect. As a result, the Forward Warrant Agreement had no value as of December 31, 2023. The calculated fair value of the Forward Warrant Agreement as of December 31, 2022 (derivative asset) was $ 2.2 million. The change in the fair value of the Forward Warrant Agreement during the years ended December 31, 2023 and December 31, 2022 was a loss of $ 2.2 million and a gain of $ 5.8 million, respectively. The following table represents key valuation assumptions for the Forward Warrant Agreement as of December 31, 2022: ​ ​ ​ ​ ​ ​ Valuation Assumptions December 31, 2022 ​ Holding period (in years) 0.767 ​ Risk-free rate (%) 4.69 % ​ Probability of the contingency occurring (%) 50 % ​ Underlying value per share ​ $ 0.73 ​ ​ ​ ​ 117 Table of Contents (7) Property and Equipment, Net Property and equipment as of December 31, 2023 and 2022 are composed of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Quantum computing fridges ​ $ 39,801 ​ $ 30,218 Process equipment ​ 25,121 ​ 23,330 Leasehold improvements ​ 8,372 ​ 7,561 IT Hardware ​ 3,245 ​ 3,035 Furniture and other assets ​ 1,246 ​ 1,246 Total property and equipment ​ ​ 77,785 ​ ​ 65,390 Less: Accumulated depreciation and amortization ​ ( 33,302 ) ​ ( 25,860 ) Property and equipment - net ​ $ 44,483 ​ $ 39,530 ​ As of December 31, 2023 and December 31, 2022, 99.95 % and 98.8 %, respectively, of the total gross property and equipment was located in the United States, and 0.05 % and 1.2 % respectively, of the total gross property and equipment was located in the United Kingdom. Total depreciation and amortization expense for the years ended December 31, 2023 and December 31, 2022 was $ 7.4 million and $ 7.0 million, respectively . (8) Goodwill The following table sets forth the change in goodwill for the year ended December 31, 2022 (in thousands): ​ ​ ​ ​ Balance as of December 31, 2021 $ 5,377 Goodwill acquired ​ — Impairment charge ​ ​ ( 5,377 ) Balance as of December 31, 2022 ​ $ — ​ During the year ended December 31, 2022, the Company conducted its annual goodwill impairment testing using qualitative and qualitative factors that indicated a possible impairment of goodwill. Under the qualitative assessment, management considered relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, Company performance and events directly affecting the Company. It was noted that the Company experienced a sustained decline in stock price resulting in a triggering event for goodwill impairment. As a result, further quantitative analysis was conducted to determine the extent to which the Company’s carrying value exceeded its fair value as of December 31, 2022. Fair value for the quantitative analysis was based on the Company’s market capitalization adjusted for a control premium determined from market comparable transactions. Based on the quantitative analysis, it was determined that the Company’s fair value was significantly less than its carrying value, resulting in a non-cash goodwill impairment charge of $ 5.4 million for the year ended December 31, 2022. 118 Table of Contents (9) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Utilities ​ $ 2,273 ​ $ 1,818 Property and other taxes ​ 2,039 ​ 1,161 Property and equipment ​ 1,019 ​ 639 Payroll and other payroll costs ​ 1,654 ​ 781 Subcontractor cost ​ 775 ​ 804 Accrued interest ​ 297 ​ 314 Professional and subscription fees ​ 220 ​ 2,044 Others ​ 286 ​ 644 ​ ​ $ 8,563 ​ $ 8,205 ​ ​ ​ ( 10) Financing Arrangements Loan and Security Agreement In March 2021, the Company entered into an agreement (the “Loan Agreement”) with Trinity Capital Inc. (“Trinity”) to secure a debt commitment of $ 12.0 million (the “Tranche A”) which was drawn at the closing. The term loan is collateralized by a first-priority, senior secured interest in substantially all of the Company’s assets. In conjunction with the Loan Agreement, the Company issued Trinity a warrant to purchase shares of Common Stock (the “Initial Trinity Warrants”) which was recorded at fair value using the Black-Scholes model, see Note 11 for the fair value assumptions. The Loan Agreement contains customary representations, warranties and covenants; however, the Loan Agreement does not include any financial covenants. In May 2021, the Loan Agreement was modified to increase the overall debt commitment by $ 15.0 million (the “Tranche B” or the “First Loan Agreement Amendment”) and $ 8.0 million of the additional commitment was drawn at the closing and the remaining commitment of $ 7.0 million was available at the Company’s option at any time through March 10, 2022 subject to certain conditions. The Company drew the remaining $ 7.0 million in November 2021. In conjunction with the First Loan Agreement Amendment, the Company cancelled the Initial Trinity Warrants and issued 995,099 ( 783,129 shares post conversion upon the closing of the Business Combination) warrants to purchase the Common Stock (the “Trinity Warrants”) which was an incremental cost allocated between Tranche A and Tranche B, see Note 11 for further information on the Trinity Warrants. The First Loan Agreement Amendment was considered a modification for accounting purposes. The Company capitalized $ 2.8 million of debt issuance costs which consist of incremental costs incurred for the lenders and third-party legal firms as well as the fair value of the warrant issued in conjunction with the term loan. On October 21, 2021, the Company entered into a second amendment to the Loan Agreement (the “Second Loan Agreement Amendment”), which modified the date requiring the Company to deliver evidence of completion of the PIPE Financing and execution of a definitive merger agreement with a special purpose acquisition company to October 31, 2021. Under the Second Loan Agreement Amendment, the maturity date was modified to be the date equal to 48 months from the first payment date of each specific cash advance. Subject to an interest only period of 19 months following each specific cash advance date, the term loan incurs interest at a rate of the greater of 11 % or the US Prime Rate plus 7.50 % per annum , payable monthly . The Term Loan Agreement includes certain negative covenants, primarily consisting of restrictions on the Company’s ability to incur indebtedness, pay dividends, execute fundamental change transactions, and other specified actions. 119 Table of Contents In January 2022, the Loan Agreement was modified to increase the overall debt commitment by $ 5.0 million (the “Tranche C” or the “Third Loan Agreement Amendment”) which was drawn on January 27, 2022. Subject to an interest only period of 19 months , Tranche C incurs interest at a rate of the greater of 11 % or the US Prime Rate plus 7.50 % per annum , payable monthly , until the maturity date of February 1, 2026 . Other modifications per the Third Loan Agreement Amendment included an extension of the requirement to raise an additional $ 75 million of equity until April 1, 2022, and a defined exit fee for the additional $ 5.0 million to be at 20 % of the advanced funds under the amendment. The Company met the requirement to raise additional equity of $ 75 million through the Business Combination mentioned in Note 3. The Company paid an exit fee of $ 1.0 million which is 20 % of the Tranche C amount upon the consummation of the Business Combination. The exit fee was capitalized as a debt issuance cost and is amortized using the effective interest method over the life of Tranche C. The exit fee was not applicable to Tranche A or Tranche B. In conjunction with the Third Loan Agreement Amendment, the Company also guaranteed payment of all monetary amounts owed and performance of all covenants, obligations and liabilities. In addition, the Company is required to pay a final payment fee equal to 2.75 % of the aggregate amount of all term loan advances. The final payment fee is being accreted and amortized into interest expense using the effective interest rate method over the term of the loan. The effective interest rate for all tranches of the debt was approximately 22.5 % and 19.7 % as of December 31, 2023 and December 31, 2022, respectively. Long term debt and the unamortized discount balances are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 Outstanding principal amount ​ $ 22,376 ​ $ 30,709 Add: accreted liability of final payment fee ​ ​ 673 ​ ​ 407 Less: unamortized debt discount, long-term ​ ​ ( 224 ) ​ ​ ( 990 ) Less: current portion of long-term debt principal ​ ​ ( 12,931 ) ​ ​ ( 9,491 ) Debt – net of current portion ​ $ 9,894 ​ $ 20,635 Current portion of long-term debt – principal ​ ​ 12,931 ​ ​ 9,491 Less: current portion of unamortized debt discount ​ ​ ( 767 ) ​ ​ ( 1,188 ) Debt – current portion ​ $ 12,164 ​ $ 8,303 ​ During the years ended December 31, 2023 and December 31, 2022, the Company recorded interest expense of $ 5.8 million and $ 5.3 million, respectively, which includes accretion of the end of term liability, amortization of the commitment fee asset and amortization of debt issuance costs totaling $ 1.5 million each year. The unamortized debt discount as of December 31, 2023 and December 31, 2022 of $ 1.0 million and $ 2.2 million, respectively, is offset against the carrying value of the term loan in the consolidated balance sheets. Scheduled principal payments on total outstanding debt are as follows: ​ ​ ​ ​ ​ December 31, 2023 2024 ​ $ 12,931 2025 ​ ​ 9,047 2026 ​ ​ 398 ​ ​ $ 22,376 ​ 120 Table of Contents ​ ( 11) Warrants As a result of the Business Combination (see Note 3), the Company has retroactively adjusted the number and corresponding strike price of Rigetti warrants outstanding prior to March 2, 2022, the date of the Business Combination, to give effect to the Exchange Ratio used to determine the number of shares of Common Stock into which they were converted. Liability Classified Warrants Public Warrants Each Public Warrant entitles the holder to the right to purchase one share of Common Stock at an exercise price of $ 11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. The Company may elect to redeem the Public Warrants subject to certain conditions, in whole and not in part, at a price of $ 0.01 per Public Warrant if (i) 30 days’ prior written notice of redemption is provided to the holders, and (ii) the last reported sale price of the Company’s Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders have a period of 30 days to exercise for cash, or on a cashless basis. As of December 31, 2023, there were 9,802,138 Public Warrants issued and outstanding (Refer to Note 5 for fair value measurement). The Public Warrants are accounted for as a derivative liability. The fair value of the Public Warrants is measured at each reporting period based on the listed price for the warrants, with subsequent changes in the fair value recognized in the consolidated statement of operations at each reporting date. The calculated fair value of the derivative liability for the Public Warrants as of December 31, 2023 and December 31, 2022 was $ 1.3 million and $ 0.7 million, respectively. The change in the fair value of the Public Warrants included in the consolidated statement of operations during the years ended December 31, 2023 and December 31, 2022 was a loss of $ 0.6 million and a gain of $ 15.6 million, respectively. Private Warrants The Private Warrants may not be redeemed by the Company so long as the Private Warrants are held by the initial purchasers, or such purchasers’ permitted transferees. The Private Warrants have terms and provisions identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period, except if the Private Warrants are held by someone other than the initial purchasers’ permitted transferees, then the Private Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. On August 18, 2022, the Private Warrants were transferred from the initial purchasers to permitted transferees and remain unredeemable by the Company as of December 31, 2023. The Private Warrants are accounted for as a derivative liability. The fair value of the Private Warrants is determined using the Black- Scholes option-pricing model, with subsequent changes in the fair value recognized in the consolidated statements of operations at each reporting date. The calculated fair value of the derivative liability for the Private Warrants as of December 31, 2023 and December 31, 2022 was $ 1.6 million and $ 1.1 million, respectively. The change in the fair value of the Private Warrants included in the consolidated statements of operations during the years ended December 31, 2023 and December 31, 2022 was a loss of $ 0.5 million and a gain of $ 8.5 million, respectively. 121 Table of Contents Significant inputs into the Black-Scholes option-pricing models used to value the Private Warrants at December 31, 2023, December 31, 2022 and March 2, 2022 (initial recognition date) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Valuation Assumptions December 31, 2023 December 31, 2022 March 2, 2022 ​ Stock Price ​ $ 0.98 ​ $ 0.73 ​ $ 9.43 ​ Strike Price ​ $ 11.50 ​ $ 11.50 ​ $ 11.50 ​ Volatility (annual) (%) ​ ​ 144.50 % ​ ​ 109.26 % ​ ​ 30.66 % ​ Risk-free rate (%) ​ ​ 4.00 % ​ ​ 4.04 % ​ ​ 1.74 % ​ Estimated time to expiration (years) ​ ​ 3.17 ​ ​ 4.17 ​ ​ 5.00 ​ Dividend yield (%) ​ ​ — ​ ​ — ​ ​ — ​ ​ During the year ended December 31, 2023, 1,177,166 Private Warrants were converted to Public Warrants due to certain transfers from the initial purchasers to other holders. Trinity Warrants The Initial Trinity Warrants were issued in March of 2021 for the purchase of 313,252 shares of common stock, and additional warrants to purchase 469,877 shares of common stock were issued in connection with the Tranche B Amendment, see Note 10. Therefore, there were a total of 783,129 Trinity Warrants issued in conjunction with the Loan Agreement in 2021. The Trinity Warrants were classified as a liability under ASC 480, “Distinguishing Liabilities from Equity”. The Company utilized a Black-Scholes model to determine the grant date fair value of the Trinity Warrants of approximately $ 2.7 million which was recorded as a debt issuance cost. The outstanding Trinity Warrants were subsequently re-measured at each reporting period using the Black-Scholes model with changes recorded as a component of other income in the consolidated statement of operations. The liability related to the Trinity Warrants was $ 6.4 million as of June 2, 2022, at which time all 783,129 Trinity Warrants were exercised and the fair value of the warrant liability was reclassified to equity. The change in the fair value of the Trinity Warrants included in the consolidated statements of operations during the year ended December 31, 2022 was a loss of $ 2.0 million. No loss was recognized in 2023. Significant inputs into the Black-Scholes model used to value the Trinity Warrant liabilities at June 2, 2022, the exercise date, are as follows: ​ ​ ​ ​ ​ Valuation Assumptions June 2, 2022 ​ Stock Price ​ $ 8.23 ​ Strike Price ​ $ 0.27 ​ Volatility (annual) (%) ​ ​ 105.10 % ​ Risk-free rate (%) ​ ​ 2.94 % ​ Estimated time to expiration (years) ​ ​ 9.00 ​ Dividend yield (%) ​ ​ — ​ ​ 122 Table of Contents Equity Classified Warrants Series C Preferred Stock Financing Warrants Between February 2020 and May 2020, a subsidiary of Legacy Rigetti issued and sold an aggregate of 54,478,260 shares of its Series C Preferred Stock at a purchase price of $ 1.15 per share, for an aggregate purchase price of $ 56.2 million (the “Series C Preferred Stock Financing”). In conjunction with the Series C Preferred Stock Financing, the Company issued a total of 5,248,183 Warrants to purchase Class A Common Stock to the Series C investors (the “Series C Warrants”). The Series C Warrants have a $ 0.01 exercise price per share and have a 10 -year term to expiration. The Series C Warrants can be exercised for cash or on a cashless basis. The Company determined that the Series C Warrants met the requirements for equity classification under ASC 480 and ASC 815. The Company estimated the fair value of the Series C Warrants using the Black-Scholes model and allocated approximately $ 1.2 million in proceeds from the Series C Preferred Stock to the value of the Series C Warrants on a relative fair value basis, which was recorded to additional paid in capital. Customer Warrant In February 2020, the Company issued a warrant to purchase 2,680,607 shares of Class A Common Stock to a customer in conjunction with a revenue arrangement (the “Customer Warrant”). The Customer Warrant has an exercise price of $ 1.152 per share and has a 10 -year term to expiration. The Customer Warrant vests upon the achievement of certain performance conditions (i.e., sales milestones) defined in the agreement, and upon a change of control, either 50 % or 100 % of the then unvested Customer Warrant will become fully vested, dependent on the acquiring party in the change of control transaction. The Customer Warrant can be exercised for cash or on a cashless basis. The Customer Warrant was assumed by the Company in connection with the Business Combination and converted into a warrant to purchase shares of Common Stock. The Company followed the guidance in ASC 718 and ASC 606 for the accounting of non-cash consideration payable to a customer. The Company determined that the Customer Warrant met the requirements for equity classification under ASC 718 and measured the Customer Warrant based on its grant date fair value, estimated to be $ 0.2 million. The Company recorded this amount as a deferred asset and additional paid in capital as of the issuance date, as the Company believes it is probable that all performance conditions (i.e., sales milestones) in the Customer Warrant will be met. As of December 31, 2023, the deferred asset balance outstanding is approximately $ 0.1 million, which will be recognized as a reduction in revenue in future periods. The vesting status of the Customer Warrant is as follows: ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Vested Customer Warrant shares 1,340,297 1,340,297 Unvested Customer Warrant shares 1,340,310 1,340,310 ​ 2,680,607 2,680,607 ​ ​ (12) Earn-out Liabilities The Sponsor subjected the Sponsor Vesting Shares to forfeiture for a five-year period following the Closing of Business Combination, with vesting occurring only if thresholds related to the weighted average price of the Company’s Common Stock are met as described above in Note 3 - Business Combination (the “Earn-Out Triggering Events”). Any such shares held by the Sponsor that have not vested by the fifth anniversary of the Closing will be forfeited. The aggregate fair value of the Sponsor Vesting Shares on the Closing Date was estimated using a Monte Carlo simulation model and was determined to be $ 20.4 million at the Closing Date. The Earn-out liabilities are adjusted to fair value each reporting period using the Monte Carlo simulation model until such time as the Earn-Out Triggering Events are achieved or the Sponsor Vesting Shares are forfeited. 123 Table of Contents The calculated fair value of the Earn-out liabilities with respect to the Sponsor Vesting Shares as of December 31, 2023 and December 31, 2022 was $ 2.2 million and $ 1.2 million, respectively. The change in the fair value of the Earn-out liabilities included in the consolidated statements of operations for years ended December 31, 2023 and December 31, 2022 was a loss of $ 0.9 million and a gain of $ 19.2 million, respectively. Significant inputs into the Monte Carlo simulation models as of December 31, 2023, December 31, 2022 and March 2, 2022, (the date of initial recognition) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Valuation Assumptions December 31, 2023 December 31, 2022 March 2, 2022 ​ Stock price ​ $ 0.98 ​ $ 0.73 ​ $ 9.43 ​ Simulated trading days ​ ​ 798 ​ ​ 1,050 ​ ​ 1,198 ​ Annual volatility (%) ​ ​ 144.50 % ​ ​ 109.30 % ​ ​ 30.50 % ​ Risk-free rate (%) ​ ​ 4.00 % ​ ​ 4.04 % ​ ​ 1.74 % ​ Estimated time to expiration (in years) ​ ​ 3.17 ​ ​ 4.17 ​ ​ 5.00 ​ ​ ​ ​ (13) Leases The Company leases facilities for its fab, lab and office space, and equipment under various lease agreements with terms extending through 2029. Under the terms of the facility leases the Company bears the costs for certain insurance, property taxes and maintenance, and the lease agreements provide for increasing rental payments at fixed intervals. Components of lease costs are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Operating lease cost ​ $ 2,098 ​ $ 2,513 Short-term lease cost ​ 727 ​ 36 Sub-lease income ​ ( 44 ) ​ ( 194 ) Total lease cost ​ $ 2,781 ​ $ 2,355 ​ Total cash paid for amounts included in the measurement of operating lease liabilities was $ 2.1 million for each of the years ended December 31, 2023 and December 31, 2022, respectively. In the year ended December 31, 2023, there were no new operating leases with a lease term greater than 12 months. In the year ended December 31, 2022, operating lease liabilities arising from obtaining operating lease right-of-use assets were $ 4.9 million. As of December 31, 2023 and December 31, 2022, the weighted-average remaining lease term is approximately 5.07 years and 5.87 years, respectively, and the weighted-average discount rate is 8.01 % and 7.93 %, respectively. Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the net present value of its lease payments, the Company used an estimated incremental borrowing rate that is applicable to the Company based on the information available at the later of the lease commencement date, lease modification date or the date of Adoption of Topic 842. 124 Table of Contents Maturities of operating lease liabilities are as follows (in thousands): ​ ​ ​ ​ Years Ending December 31, ​ ​ 2024 ​ $ 2,288 2025 ​ 2,198 2026 ​ 1,524 2027 ​ 1,566 2028 ​ 1,608 Thereafter ​ 1,233 Total operating lease payments ​ 10,417 Less: Imputed interest ​ ( 1,910 ) Present value of operating lease liabilities ​ $ 8,507 Operating lease liabilities, current ​ $ 2,210 Operating lease liabilities, noncurrent ​ 6,297 ​ ​ $ 8,507 ​ ​ (14) Stockholders’ Equity Redeemable Convertible Preferred Stock ​ Legacy Rigetti was authorized to issue 73,389,000 shares of Series C Preferred Stock and 62,537,577 shares of Series C-1 Preferred Stock with a par value of $ 0.000001 per share for each class of Preferred Stock. Legacy Rigetti’s board of directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, option or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Immediately prior to the effective time of the Business Combination (Note 3), all Legacy Rigetti Preferred Stock outstanding converted into shares of Common Stock of Legacy Rigetti (the shares in this note do not factor in the exchange ratio). ​ Common Stock As discussed in Note 3, on March 2, 2022, the Company consummated a Business Combination which has been accounted for as a reverse recapitalization. Pursuant to the certificate of incorporation as amended on March 2, 2022, the Company is authorized to issue 1,000,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. The holders of shares of Common Stock are entitled to one vote for each share of Common Stock held. The Preferred Stock is non-voting. No shares of Preferred Stock were issued and outstanding as of December 31, 2023 or December 31, 2022. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, and after payment to the holders of shares of Preferred Stock of their liquidation preferences, the holders of the Common Stock are entitled to the entire remaining assets of the Company on a pro rata basis. As a result of the Business Combination, the Company has retroactively adjusted the warrants and stock-based awards outstanding prior to March 2, 2022 to give effect to the Exchange Ratio used to determine the number of shares of Common Stock into which they were converted. 125 Table of Contents As of December 31, 2023, the Company has reserved the following shares of Common Stock for issuance upon the conversion, exercise or vesting of the underlying instruments: ​ ​ ​ Common Stock Warrants 16,763,277 Stock-Based Awards—RSUs Outstanding 11,517,422 Stock-Based Awards—Options Outstanding 7,049,290 Total 35,329,989 ​ Common Stock Purchase Agreement The Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”) on August 11, 2022 pursuant to which the Company was able to issue and sell to B. Riley the lesser of i) $ 75.0 million in aggregate gross purchase price of newly issued shares of the Company’s Common Stock or ii) an amount not to exceed 23,648,889 shares of Common Stock (such number of shares equal to approximately 19.99 % of the aggregate number of shares of Common Stock issued and outstanding immediately prior to the execution of the agreement and inclusive of 171,008 shares of Common Stock issued to B. Riley on August 11, 2022 as consideration for entering into the Purchase Agreement). In consideration of the parties entering into the foregoing agreement, the parties also entered into a Registration Rights Agreement on August 11, 2022, pursuant to which the Company provides B. Riley with registration rights with respect to such Common Stock and pursuant to which the Company filed a registration statement covering the resale of such Common Stock. Upon the initial satisfaction of the conditions to B. Riley’s purchase obligation set forth in the Purchase Agreement, as of September 14, 2022 (the “Commencement Date”) the Company had the right, but not the obligation, from time to time at the Company’s sole discretion over the 24-month period from and after the Commencement Date, to direct B. Riley to purchase a specified amount of shares not to exceed the lesser of (i) 1,000,000 shares of Common Stock and (ii) 20 % of the total aggregate number (or volume) of shares of Common Stock traded on The Nasdaq Capital Market (“Nasdaq”) during the applicable period beginning at the official open (or “commencement”) of the regular trading session on the applicable purchase date for such purchase and ending at such time that the total aggregate volume of shares of common stock traded on Nasdaq reaches the Purchase Share Volume Maximum (as defined below) for such purchase (as applicable) (such period for each purchase, the “Purchase Valuation Period”), provided, that, (i) the closing sale price of the Common Stock on the trading day immediately prior to such Purchase Date (as defined in the Purchase Agreement) is not less than $ 1.00 and (ii) all shares of Common Stock subject to all prior Purchases (as defined in the Purchase Agreement) and all prior Intraday Purchases (as defined in the Purchase Agreement) by B. Riley under the Purchase Agreement have been received by B. Riley prior to the time the Company delivers a purchase notice to B. Riley. “Purchase Share Volume Maximum” means, with respect to a purchase made pursuant to the Purchase Agreement, the number of shares of Common Stock equal to the quotient obtained by dividing the (i) total number of shares of Common Stock to be purchased by B. Riley in the relevant purchase (the “Purchase Share Amount”), by (ii) 0.20 (subject to certain adjustments). For the year ended December 31, 2023, the Company received proceeds of $ 20.5 million, from the issuance and sale of 13,421,082 shares of Common Stock to B. Riley under the Purchase Agreement. From December 31, 2023 through February 15, 2024, the Company received proceeds of $ 12.8 million, from the issuance and sale of 10,056,799 shares of Common Stock to B. Riley under the Purchase Agreement, and there are no remaining shares available for sale under this agreement; the agreement has terminated. The Company’s share price had traded below $ 1.00 per share for an extended period in early 2023. As a result, the Company recognized impairment charges during the year ended December 31, 2023 of $ 0.8 million for previously deferred offering costs primarily related to the Purchase Agreement, which were recorded as selling, general and administrative expense in the accompanying consolidated statement of operations. ​ ​ 126 Table of Contents (15) Stock-Based Compensation 2013 Equity Incentive Plan In 2013, the Company adopted the 2013 Equity Incentive Plan ( the “2013 Plan”) which provided for the grant of qualified incentive stock options (“ISO”) and nonqualified stock options (“NSO”), restricted stock, restricted stock units (“RSU”) or other awards to the Company’s employees, officers, directors, advisors, and outside consultants. After the Closing Date and Business Combination effective March 2, 2022, no additional awards were issued under the 2013 Plan. Awards outstanding under the 2013 Plan will continue to be governed by such plan; however, the Company will not grant any further awards under the 2013 Plan. 2022 Equity Incentive Plan In connection with the Business Combination (Note 3), the shareholders approved the Rigetti Computing, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) in February, 2022, which became effective immediately upon the Closing Date. The 2022 Plan provides for the grant of ISOs, NSOs, stock appreciation rights, restricted stock awards (“RSA”), restricted stock unit awards, performance awards and other forms of awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. As of December 31, 2023, there were 19,900,944 shares of common stock reserved for issuance under the 2022 Plan and 4,558,706 shares remain available for future issuance. The number of shares reserved for issuance under the 2022 Plan will automatically increase on January 1st of each year for a period of nine years commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to 5 % of the common stock of all classes outstanding on December 31 of the preceding year; provided, however, that the board of directors of the Company may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Common Stock. Accordingly, as of January 1, 2024, the number of shares of common stock reserved for issuance under the “2022 Plan” was increased by 9,120,013 shares. Stock Options Activity The following is a summary of stock option activity (intrinsic values in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted- ​ ​ ​ ​ ​ Average ​ Average ​ Aggregate ​ ​ ​ ​ Exercise ​ Contractual ​ Intrinsic ​ ​ Options Outstanding ​ Price Per Share ​ Life (in years) ​ Value Outstanding, December 31, 2022 8,845,903 ​ $ 0.38 7.20 ​ $ 3,103 Granted 2,791,100 ​ ​ 1.21 ​ Exercised ( 4,046,365 ) ​ ​ 0.27 ​ $ 2,044 Forfeited and expired ( 541,348 ) ​ ​ 0.27 ​ Outstanding and expected to vest, December 31, 2023 7,049,290 ​ $ 0.82 8.23 ​ $ 2,017 Exercisable, December 31, 2023 2,766,376 ​ $ 0.44 6.63 ​ $ 1,608 ​ The weighted-average grant date fair value of stock options granted during the years ended December 31, 2023 and December 31, 2022 was $ 1.03 and $ 0.81 per share, respectively. The total intrinsic value of stock options exercised during the years ended December 31, 2023 and December 31, 2022 was $ 2.0 million and $ 9.9 million, respectively. The Company received proceeds from stock option exercises of $ 1.1 million and $ 1.0 million during the years ended December 31, 2023 and December 31, 2022, respectively. Stock-based compensation expense related to stock options granted to employees was $ 1.5 million for each of the years ended December 31, 2023 and December 31, 2022, respectively. As of December 31, 2023, the unrecognized compensation expense related to unvested stock options was $ 3.5 million, which is expected to be recognized over a weighted-average period of 2.67 years. 127 Table of Contents Fair Value of Stock Option Grants The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility for the Company’s Common Stock was determined based on a blended average of the historical volatility of a peer group of similar public companies and the implied volatility from the Company’s traded warrants. The Company has not been public for a sufficient length of time to derive expected volatility from trading in its common stock. The expected term of stock options granted was calculated using the simplified method, which represents the average of the contractual term and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate is based upon the U.S. Treasury yield curve in effect at the time of grant for the period equivalent to the expected term of the stock option. In determining the exercise prices for stock options granted, the Company’s board of directors has utilized the fair value of the Common Stock as of the grant date. Before the Business Combination, the fair value of the Common Stock had been determined by the board of directors at each award grant date based upon a variety of factors, including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the status of technological developments within the Company, the composition and ability of the current engineering and management team, an evaluation or benchmark of the Company’s competition, the current business climate in the marketplace, the illiquid nature of the Company’s common stock, arm’s-length sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event, among others. All of the Company’s outstanding stock options have a time-based vesting condition ranging from 1 - 5 years, except that 500,000 stock options granted in 2022 have a market-based vesting condition. The weighted average valuation assumptions used as inputs to the Black-Scholes option-pricing model to value stock options granted during the year ended December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time-based ​ Time-based ​ Time-based Time-based ​ Stock Option ​ Stock Option ​ Stock Option ​ Stock Option ​ ​ Grants ​ ​ Grants ​ ​ Grants ​ ​ Grants Valuation Assumptions November 22, 2023 ​ November 15, 2023 ​ August 16, 2023 ​ March 30, 2023 Strike price $ 1.05 ​ $ 1.17 ​ $ 2.09 ​ $ 0.60 Annual volatility (%) ​ 122.00 % ​ ​ 114.00 % ​ ​ 99.00 % ​ ​ 119.00 % Risk- free rate (%) ​ 4.45 % ​ ​ 4.54 % ​ ​ 4.39 % ​ ​ 3.63 % Expected term (years) ​ 5.77 ​ ​ 6.00 ​ ​ 6.03 ​ ​ 6.02 ​ RSUs The following is a summary of RSU activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date Fair ​ Shares Value Non-vested at December 31, 2022 11,332,591 ​ $ 4.36 Granted 9,046,029 ​ ​ 1.12 Forfeited ( 4,998,582 ) ​ ​ 4.13 Vested ( 3,862,616 ) ​ ​ 3.53 Non-vested at December 31, 2023 11,517,422 ​ $ 2.20 ​ 128 Table of Contents On March 2, 2022, the performance condition of all then outstanding RSUs was met due to the closing of the Business Combination. As a result, the Company recorded cumulative catch-up compensation expense for the vesting period that was satisfied as of March 2, 2022 and continues amortizing compensation expenses for unvested RSUs over their remaining vesting period. The aggregate fair value of outstanding RSUs based on the closing share price of the Company’s common stock at December 31, 2023 and December 31, 2022 was $ 11.3 million and $ 8.3 million, respectively. The aggregate fair value of RSUs that vested during the years ended December 31, 2023 and December 31, 2022 was $ 5.0 million and $ 24.6 million, respectively. Fair Value of RSUs Awards During the year ended December 31, 2023, the Company issued 5,196,029 time-based RSUs and 3,850,000 market-based RSUs. The time-based RSUs vest over periods ranging from 1 - 4 years and require continuous employment. The market-based RSUs vest only if certain share price thresholds are achieved and require continuous employment. Based upon the terms of such awards, 50 % of the shares vest if the Company’s common stock trades at or above $ 2.00 per share, and the other 50 % of the shares vest if the Company’s common stock trades at above $ 4.00 per share, for 20 out of 30 trading days through the fifth anniversary of the grant date. The fair value of the Company’s time-based RSUs was calculated based on the fair market value of the Company’s common stock on the date of grant. The fair value of the Company’s market-based RSUs was calculated using a Monte Carlo simulation model at the date of grant. The weighted-average grant date fair value for market-based RSUs granted during the year ended December 31, 2023 was $ 0.56 per RSU. Significant inputs into the Monte Carlo simulation model used to value market based RSUs granted during the year ended December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ Market-based Valuation Assumptions RSUs Stock price ​ $ 0.60 Simulated trading days ​ ​ 1,260 Annual volatility (%) ​ ​ 140.50 % Risk- free rate (%) ​ ​ 3.63 % Estimated time to expiration (years) ​ ​ 5.00 ​ Stock-based compensation expense related to RSUs granted to employees was $ 10.9 million and $ 43.3 million for the years ended December 31, 2023 and December 31, 2022, respectively. As of December 31, 2023, the unrecognized compensation expense related to unvested RSUs was $ 19.6 million which is expected to be recognized over a weighted-average period of 1.79 years. Summarized Stock-Based Compensation Expenses The table below summarizes total stock-based compensation expenses for the years ended December 31, 2023 and December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 ​ Research and development ​ $ 9,442 ​ $ 14,092 ​ Selling, general and administrative expenses ​ ​ 2,967 ​ ​ 30,720 ​ Total stock-based compensation expenses ​ $ 12,409 ​ $ 44,812 ​ ​ ​ ​ 129 Table of Contents (16) Net Loss Per Share As a result of the Business Combination (see Note 3), the Company has retroactively adjusted the weighted average shares outstanding prior to March 2, 2022 to give effect to the Exchange Ratio used to determine the number of shares of Common Stock into which they were converted. The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Numerator: ​ ​ ​ Net loss ​ $ ( 75,107 ) ​ $ ( 71,521 ) Denominator: ​ ​ ​ ​ ​ ​ Weighted-average shares outstanding - basic and diluted ​ ​ 131,977 ​ ​ 102,301 Net loss per share - basic and diluted ​ $ ( 0.57 ) ​ $ ( 0.70 ) ​ There are 3,059,273 Sponsor Vesting Shares that were not included in the computations of basic and diluted net loss per share for the years ended December 31, 2023 and 2022, respectively, because the contingencies for the issuance of these shares have not been met. The weighted-average common shares outstanding for the years ended December 31, 2023 and December 31, 2022 include 1,194,069 and 2,541,856 weighted-average shares for warrants having an exercise price of $ 0.01 per share each, respectively. The Company’s potential dilutive securities, which include stock options, restricted stock units, convertible preferred stock and warrants have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential common shares from the computation of diluted net loss per share for the years ended December 31, 2023 and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 2022 ​ Common Stock Warrants (1) 14,450,430 14,444,127 ​ Stock Options 7,049,290 8,845,903 ​ Restricted Stock Units 11,517,422 11,332,591 ​ ​ 33,017,142 34,622,621 ​ (1) The number of outstanding warrants does not include 1,340,310 Unvested Customer Warrants as of December 31, 2023 and December 31, 2022, respectively. ​ 130 Table of Contents (17) Revenue Recognition The following tables depict the disaggregation of revenue according to the type of good or service and timing of transfer of goods or services for the years ended December 31, 2023 and December 31, 2022 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 ​ Collaborative research, other professional services and related materials ​ $ 9,672 ​ $ 9,917 ​ Access to quantum computing systems ​ ​ 2,336 ​ ​ 3,185 ​ ​ ​ $ 12,008 ​ $ 13,102 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Revenue recognized at a point in time ​ $ 748 ​ $ - Revenue recognized over time 11,260 13,102 ​ ​ $ 12,008 ​ $ 13,102 ​ Selected consolidated balance sheet line items that reflect accounts receivable, contract assets and liabilities as of December 31, 2023, December 31, 2022 and December 31, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 December 31, 2021 Trade receivables ​ $ 2,650 ​ $ 6,143 ​ $ 962 Unbilled receivables ​ $ 2,379 ​ $ 92 ​ $ 581 Deferred revenue ​ $ ( 343 ) ​ $ ( 961 ) ​ $ ( 985 ) ​ Changes in deferred revenue from contracts with customers were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Balance at beginning of period ​ $ ( 961 ) ​ $ ( 985 ) Deferral of revenue ​ ​ ( 2,499 ) ​ ​ ( 545 ) Recognition of deferred revenue ​ ​ 3,117 ​ ​ 569 Total deferred revenue at end of period ​ $ ( 343 ) ​ $ ( 961 ) ​ Amounts recognized as revenue from beginning contract liabilities during the years ended December 31. 2023 and December 31, 2022 totaled $ 0.8 million and $ 0.6 million, respectively. Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 3.0 million. The Company expects to recognize estimated revenues related to performance obligations that are unsatisfied (or partially satisfied) during the next twelve months. The Company has not identified any costs that are incremental to the acquisition of customer contracts that would be capitalized as deferred costs on the balance sheet in accordance with ASC 340-40. Accordingly, the Company does not have any capitalized contract fulfillment costs as of December 31, 2023 or December 31, 2022, respectively. 131 Table of Contents ​ (18) Concentrations, Significant Customers and Geographic Areas Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments in the form of U.S government agency bonds and corporate bonds, and trade accounts receivable. The Company’s cash and cash equivalents and short- term investments are placed with high-credit-quality financial institutions, and at times exceed federally insured limits. To date, the Company has not experienced any credit loss relating to its cash and cash equivalents or short-term investments. Significant customers that represent 10% or more of revenue are set forth in the following tables: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Customer A ​ 30 % ​ 33 % Customer B ​ 17 % ​ 18 % Customer C ​ 20 % ​ 15 % Customer D ​ * ​ 14 % Customer E ​ * ​ 11 % Customer F ​ 11 % ​ * * Customer accounted for less than 10 % of revenue in the respective periods. ​ During the years ended December 31, 2023 and December 31, 2022, sales to government entities comprised 80.9 % and 81.3 % of the Company’s total revenue, respectively. ​ Significant customers that represent 10% or more of accounts receivable are set forth in the following tables: ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 ​ Customer A 39 % ​ 65 % Customer B * ​ 13 % Customer C * ​ 10 % Customer D 12 % ​ * * Customer accounted for less than 10 % of accounts receivable at the respective point in time. ​ The following table presents a summary of revenue by geography (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 United States ​ $ 11,095 ​ $ 11,137 Europe ​ ​ 913 ​ 1,965 Total revenue ​ $ 12,008 $ 13,102 ​ Revenues from external customers are attributed to individual countries based on the physical location in which the services are provided or the particular customer location with whom the Company has contracted. ​ (19) Income Taxes Domestic and foreign components of loss before income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 Domestic ​ $ ( 71,331 ) ​ $ ( 67,677 ) Foreign ​ ( 3,776 ) ​ ( 3,844 ) ​ ​ $ ( 75,107 ) ​ $ ( 71,521 ) ​ 132 Table of Contents The Company did not pay any income taxes in the years ended December 31, 2023 or December 31, 2022, respectively. All components of the Company’s current and deferred income tax provisions for the years ended December 31, 2023 and December 31, 2022 were zero . Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred income tax assets and liabilities as of December 31, 2023 and December 31, 2022, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 Deferred tax assets: ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 56,529 ​ $ 61,313 Accruals and reserves ​ 81 ​ 160 Stock-based compensation ​ 1,298 ​ 5,233 Research and development credits ​ 11 ​ 11 Intangible assets ​ 20,155 ​ 11,509 Operating lease liability ​ 2,146 ​ 2,507 Gross deferred assets ​ 80,220 ​ 80,733 Deferred tax liabilities: ​ ​ ROU asset ​ ( 1,926 ) ​ ( 2,289 ) Depreciation and amortization ​ ( 3,156 ) ​ ( 2,063 ) Total deferred tax liabilities ​ ( 5,082 ) ​ ( 4,352 ) Total net deferred tax assets ​ 75,138 ​ 76,381 Valuation allowance ​ ( 75,138 ) ​ ( 76,381 ) Net deferred tax assets ​ $ — ​ $ — ​ The effective tax rate differs from the statutory rate, primarily due to the Company’s history of incurring losses which have not been benefited, write-off of federal and state net operating loss carryforwards and research and development tax credit carryforwards under Internal Revenue Code (IRC) section 382 limitation, stock-based compensation and other permanent differences, during the year ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 ​ 2022 ​ Component ​ Rate Impact ​ Rate Impact Total pre-tax book income ​ 21 % 21 % State and local income taxes ( 5 ) % 11 % Federal IRC section 382 limitation ​ ( 10 ) % — % Stock-based compensation ​ (7) % — % Fair market value adjustments ( 1 ) % 14 % Non-deductible executive compensation — % ( 4 ) % Goodwill impairment — % ( 2 ) % Transaction costs — % 3 % Other — % — % Change in valuation allowance 2 % ( 42 ) % Total: — % — % ​ Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net U.S. federal and state deferred tax assets have been fully offset by a valuation allowance. The net change in the total valuation allowance was a decrease of approximately $ 1.2 million and an increase of $ 30.3 million for the years ended December 31, 2023 and December 31, 2022, respectively. 133 Table of Contents As of December 31, 2023, the Company had net operating loss carryforwards for federal income tax purposes of $ 225.2 million, of which $ 218.9 million does not expire; federal research and development tax credits of $ 2.2 million, which will start to expire in 2044; net operating loss carryforwards for state income tax purposes of $ 105.7 million, which will start to expire in 2033; and state research and development tax credits of $ 3.7 million, which do not expire. Under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s federal net operating loss carryforwards and research and development tax credit carryforwards, and other tax attributes are subject to annual limitation because of prior cumulative changes in the Company’s ownership and may be further limited in the future if additional ownership changes occur. Similar rules apply under state tax laws. These ownership changes limit the amount of net operating loss carryforwards and research and development tax credit carryforwards that can be utilized annually to reduce the Company’s federal and state income tax liability, if any. Such annual limitations could result in the expiration of the net operating loss carryforwards and research and development tax credit carryforwards before their utilization. During the year ended December 31, 2023, the Company assessed whether an ownership change, as defined by Section 382, occurred from its formation through December 31, 2022. Based upon this assessment, the Company reduced the gross deferred tax assets related to its federal and state net operating loss carryforwards and federal research and development tax credit carryforwards. For financial statement purposes, the Company previously included the federal and state net operating loss carryforwards and research and development tax credit carryforwards in the deferred tax assets with a full valuation allowance. Due to the valuation allowance, the reduction in the net operating loss carryforwards and research and development tax credit carryforwards did not have an impact on the Company’s net loss for the year ended December 31, 2023. The Company files U.S. and various state income tax returns as well as foreign income tax returns in Australia, Canada and the United Kingdom with varying statutes of limitations. All tax years from inception in 2013 remain open to examination due to the carryover of unused net operating losses and tax credits. The Company had unrecognized tax benefits of $ 5.9 million as of December 31, 2023, all of which are offset by a full valuation allowance. These unrecognized tax benefits, if recognized, would no t affect the effective tax rate. There were no interest or penalties accrued as of December 31, 2023. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 ​ ​ 2022 Beginning balance $ 4,672 ​ $ 4,672 Current year increase ​ 3,517 ​ ​ - Prior year adjustment - (decrease) ​ ( 2,328 ) ​ ​ - Ending balance ​ $ 5,861 ​ $ 4,672 ​ (20) Restructuring and severance In February 2023, the Company announced an updated business strategy, including revisions to the Company’s technology roadmap. In connection with this updated strategy, the Company implemented a workforce reduction to focus the organization and its resources on nearer-term strategic priorities. The reduction in the workforce impacted approximately 50 employees or approximately 28 % of the Company’s then workforce. Affected employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance. The Company began implementing activities with respect to the revised business plan, updated technology roadmap and reduction in workforce in February 2023 and incurred a restructuring charge of $ 1.0 million which was paid during the year. Work activities regarding the revised business plan and updated technology roadmap are ongoing. In addition to the charge for restructuring, the Company also incurred $ 1.0 million for contractual severance benefits related to executive officers of the Company that were terminated in the year ended December 31, 2023. The remaining balance in the Company’s accrual for contractual severance benefits related to executive officers as of December 31, 2023 of $ 0.2 million will be paid out monthly through February 2024. 134 Table of Contents (21) Contingencies Legal Proceedings From time to time, the Company is party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, the Company is not currently a party to any material legal proceedings that, if determined adversely to the Company, would individually or taken together have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. The Company accrues loss contingencies when it is both probable that a loss will be incurred and when the amount of the loss or range of loss can be reasonably estimated. Indemnification Provisions The Company’s agreements include provisions indemnifying customers against intellectual property and other third-party claims. In addition, the Company has entered into indemnification agreements with its directors, executive officers and certain other officers that require the Company, among other things, to indemnify them against certain liabilities that may arise as a result of their affiliation with the Company. The Company has not incurred any costs as a result of such indemnification obligations and has not recorded any liabilities related to such obligations in the consolidated financial statements. ​ 135 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURE None.