Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d15(e) under the Exchange Act) as of December 31, 2023. Based on the evaluation of our disclosure controls and procedures, our management concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective due to the material weaknesses described below.
We have implemented additional controls over review of complex financial instrument valuations as described in our remediation plan below. The material weakness related to review of complex financial instrument valuations will not be considered remediated until such time as the additional controls operate for a sufficient period of time and management has concluded, through testing, that the controls are effective.
We have added and continue to add additional controls over our year-end and quarter-end close processes, which are still being implemented. We have hired and intend to hire additional accounting resources. The material weakness related to our year-end and quarter-end close processes will not be considered remediated until such time as management designs and implements effective controls that operate for a sufficient period of time and has concluded, through testing, that these controls are effective.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
After giving full consideration to the material weaknesses and the additional procedures that we performed, management has concluded that the consolidated financial statements contained in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with GAAP; however, the material weaknesses could have resulted in a misstatement of account balances or disclosures that would be considered material to the annual or interim consolidated financial statements and certain of the material weaknesses did result in errors in the financial statements and related disclosures as described below for the quarters ended March 31, 2022 and June 30, 2022, which we restated in 2022.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, for Rigetti Computing, Inc. and its subsidiaries (collectively, the Company). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP).
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this evaluation, our management used the criteria for effective internal control over financial reporting described in the “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the material weaknesses described below.
Material Weaknesses
As previously disclosed, in connection with the preparation of our unaudited condensed consolidated financial statements for the nine months ended October 31, 2021, we identified a material weakness in our internal control over financial reporting related to the lack of effective review controls over the accounting for complex financial instruments. Specifically, the controls failed to identify an error in the accounting for complex warrant instruments. The error related to the Company not properly accounting for the liability associated with the warrants to purchase common stock issued to Trinity Capital Inc. that were subsequently cancelled and reissued as new warrants in connection with an amendment to the Loan Agreement.
In addition, in connection with the preparation of the financial statements for the second quarter of 2022, we identified and corrected an immaterial error related to the revaluation of the liability associated with the same warrants issued to Trinity Capital.
In connection with the preparation of the financial statements for the third quarter of 2022, we discovered that the previously identified material weakness led to additional material errors related to the valuation of the Earn-out liabilities and the Private Warrant liability that affected the previously issued unaudited condensed consolidated financial statements as of and for the periods ended March 31, 2022 and June 30, 2022. These errors were corrected in the unaudited condensed consolidated financial statements as of and for the periods ended March 31, 2022 and June 30, 2022 through a restatement of previously filed financial statements for such periods.
Our management concluded that the previously identified material weakness in our internal control over financial reporting related to complex financial instruments was due to the fact that at the time we initially identified the material weakness, we did not have sufficient accounting resources and did not have the necessary business processes and related internal controls formally designed and implemented to address the accounting and financial reporting requirements related to complex financial instruments. This material weakness continued to exist as of December 31, 2023 because the controls that were implemented as part of our plan to remediate this material weakness have not been operating for a sufficient period of time to allow management to conclude through testing that the controls are effective.
Additionally, as previously disclosed, in connection with the preparation of the financial statements for the year ended December 31, 2022, we identified a material weakness in our internal control over financial reporting related to the design and operation of our overall closing and financial reporting processes, including the timely preparation of account reconciliations, effective segregation of duties, particularly with respect to change management and logical access over IT systems, and a lack of timely review over the financial statement close process. We have concluded that this material weakness is due to the fact that, between the date the Company went public pursuant to the Business Combination and December 31, 2022, the Company had limited resources and did not have the necessary business processes and related internal controls formally designed and implemented coupled with the appropriate resources with the appropriate level of experience and technical expertise to oversee our closing and financial reporting processes. This material weakness continued to exist as of December 31, 2023 due to the reasons described above, including the period of time required to hire and train new employees with the appropriate level of experience and technical expertise, and because the necessary controls to remediate the material weakness have only been partially implemented and have not yet been sufficiently tested.
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Remediation Plan
Our remediation plan related to the material weakness over the accounting for complex financial instruments includes:
● incorporating additional controls and procedures over the review of complex financial instrument valuations as well as technical accounting resources to identify the inventory of complex accounting and financial instruments that require accounting analysis and evaluation;
● enhancing the precision of review controls over complex financial instruments; and
● augmenting the review process relating to the valuation analyses performed by the third-party valuation experts and accounting firms that are utilized by the Company.
Our remediation plan related to the material weakness over our overall closing and financial reporting processes includes:
● hiring sufficient personnel with technical accounting and financial reporting experience to augment our current staff, to achieve appropriate segregation of duties and to improve the effectiveness of our closing and financial reporting processes;
● addressing the lack of segregation of duties for change management and logical access over IT systems; and
● implementing improved accounting and financial reporting procedures and systems to improve the completeness, timeliness and accuracy of our financial reporting and disclosures, including the assessment of more judgmental areas of accounting.
The elements of our remediation plans can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. As management continues to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address the material weaknesses. These material weaknesses will not be considered remediated unless and until such time as management designs and implements effective controls that operate for a sufficient period of time and concludes, through testing, that these controls are effective. Until the controls have been operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively, the material weaknesses described above will continue to exist.
Management is monitoring the progress of the remediation plan and reporting regularly to the audit committee of the board of directors on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies. We can provide no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weakness or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future these controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
Changes in Internal Control over Financial Reporting
Other than the remediation efforts described above, there have been no other changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Attestation Report of the Registered Public Accounting Firm
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption for “emerging growth companies.”
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading plan
During the quarter ended December 31, 2023 , Michael Clifton , a member of our Board of directors , adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10 b5- 1 (c) on November 16, 2023. The plan, which expires on February 13, 2026 , provides for the sale of up to 500,000 shares of our common stock.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS
Not applicable
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item will be set forth in our proxy statement for the 2024 Annual Meeting of Stockholders of the Company, to be filed with the SEC within 120 days of December 31, 2023, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item will be set forth in our proxy statement for the 2024 Annual Meeting of Stockholders of the Company, to be filed with the SEC within 120 days of December 31, 2023, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this Item will be set forth in our proxy statement for the 2024 Annual Meeting of Stockholders of the Company, to be filed with the SEC within 120 days of December 31, 2023, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item will be set forth in our proxy statement for the 2024 Annual Meeting of Stockholders of the Company, to be filed with the SEC within 120 days of December 31, 2023, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item will be set forth in our proxy statement for the 2024 Annual Meeting of Stockholders of the Company, to be filed with the SEC within 120 days of December 31, 2023, and is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS. FINANCIALSTATEMENT SCHEDULES
The Following documents are filed as a part of this Annual Report on Form 10-K:
(a) Financial Statements
The information concerning our financial statements, and Report of Independent Registered Public Accounting Firm required by this Item is incorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, entitled “Consolidated Financial Statements and Supplementary Data.”
(b) Financial Statement Schedules
All schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of the schedules, or because the information required is included in Item 8, entitled the “Consolidated Financial Statements and Supplementary Data.”
(c) Exhibits
The list of exhibits filed with this report is set forth in the Exhibit Index following the signature pages and is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None.
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EXHIBIT INDEX
Incorporated by Reference
Exhibit No.
Description
Schedule/
Form
File No.
Exhibit
Filing Date
2.1+
Agreement and Plan of Merger, dated as of October 6, 2021, by and among Supernova Partners Acquisition Company II, Ltd., Supernova Merger Sub, Inc., Supernova Romeo Merger Sub, LLC and Rigetti Holdings, Inc.
8-K
001-40140
2.1
October 6, 2021
2.2
First Amendment to Agreement and Plan of Merger, dated as of December 23, 2021, by and among Supernova Partners Acquisition Company II, Ltd., Supernova Merger Sub, Inc., Supernova Romeo Merger Sub, LLC and Rigetti Holdings, Inc.
8-K
001-40140
2.1
December 23, 2021
2.3
Second Amendment to Agreement and Plan of Merger, dated as of January 10, 2022, by and among Supernova Partners Acquisition Company II, Ltd., Supernova Merger Sub, Inc., Supernova Romeo Merger Sub, LLC and Rigetti Holdings, Inc.
8-K
001-40140
2.1
January 10, 2022
3.1
Certificate of Incorporation of Rigetti Computing, Inc.
8-K
001-40140
3.1
March 7, 2022
3.2
Amended and Restated Bylaws of Rigetti Computing, Inc.
8-K
001-40140
3.1
November 14, 2022
4.1
Specimen Common Stock Certificate.
8-K
001-40140
4.1
March 7, 2022
4.2
Specimen Warrant Certificate.
8-K
001-40140
4.2
March 7, 2022
4.3
Warrant Agreement between American Stock Transfer & Trust Company, LLC and Supernova Partners Acquisition Company II, Ltd., dated March 1, 2021.
8-K
001-40140
4.1
March 4, 2021
4.4
Description of the Registrant’s Securities
10-K
001-40140
4.4
March 27, 2023
10.1
Amended and Restated Registration Rights Agreement, dated March 2, 2022, by and among New Rigetti, the Sponsor and the other holders party thereto.
8-K
001-40140
10.1
March 7, 2022
10.2
Form of Subscription Agreement for PIPE Financing.
8-K
001-40140
10.2
October 6, 2021
10.3
Sponsor Support Agreement, dated as of October 6, 2021, by and among Supernova Partners Acquisition Company II, Ltd., Rigetti Holdings, Inc., Supernova Partners II LLC and certain other parties thereto.
8-K
001-40140
10.3
October 6, 2021
10.4
Rigetti Holders Support Agreement, dated as of October 6, 2021, by and among Supernova Partners Acquisition Company II, Ltd., Rigetti Holdings, Inc. and certain other parties thereto.
8-K
001-40140
10.4
October 6, 2021
10.5
Letter Agreement, dated as of March 1, 2021, among Supernova, the Sponsor and Supernova’s officers and directors.
8-K
001-40140
10.1
March 4, 2021
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10.6
Loan and Security Agreement dated March 10, 2021, by and between Rigetti and Trinity Capital Inc.
S-4/A
333-260692
10.14
December 20, 2021
10.7
Amendment No. 1 to Trinity Loan and Security Agreement dated May 18, 2021, by and between Rigetti and Trinity Capital Inc .
S-4/A
333-260692
10.15
December 20, 2021
10.8
Amendment No. 2 to Trinity Loan and Security Agreement dated October 21, 2021, by and between Rigetti and Trinity Capital Inc.
S-4/A
333-260692
10.16
December 20, 2021
10.9
Amendment No. 3 to Trinity Loan and Security Agreement dated January 27, 2022, by and between Rigetti & Co. LLC and Trinity Capital Inc.
S-4/A
333-260692
10.17
January 28, 2022
10.10
Guaranty Agreement dated January 27, 2022, by and between Rigetti Holdings, Inc. and Trinity Capital Inc.
S-4/A
333-260692
10.26
January 28, 2022
10.11
Amended and Restated Warrant to Purchase Stock, dated March 9, 2021, issued to Trinity Capital Inc. by Rigetti & Co, Inc .
S-4/A
333-260692
10.19
December 20, 2021
10.12
Manufacturing Agreement dated May 28, 2020, by and between Rigetti and Sparqtron Corporation.
S-4/A
333-260692
10.17
December 20, 2021
10.13#
Rigetti & Co, Inc. 2013 Equity Incentive Plan, as amended.
10-Q
001-40140
10.21
May 16, 2022
10.14#
Form of Stock Option Grant Notice and Form of Stock Option Agreement under Rigetti & Co, Inc. 2013 Equity Incentive Plan.
S-4/A
333-260692
10.20
January 14, 2022
10.15#
Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Agreement under Rigetti & Co, Inc. 2013 Equity Incentive Plan.
S-4/A
333-260692
10.21
January 14, 2022
10.16#
Rigetti Computing, Inc. 2022 Equity Incentive Plan.
8-K
001-40140
10.16
March 7, 2022
10.17#
Form of Stock Option Grant Package under 2022 Equity Incentive Plan.
8-K
001-40140
10.17
March 7, 2022
10.18#
Form of RSU Grant Package under 2022 Equity Incentive Plan.
8-K
001-40140
10.18
March 7, 2022
10.19#
Form of Stock Award Grant Package under 2022 Equity Incentive Plan.
8-K
001-40140
10.19
March 7, 2022
10.20#
Rigetti Computing, Inc. 2022 Employee Stock Purchase Plan.
8-K
001-40140
10.20
March 7, 2022
10.21#
Form of Indemnification Agreement by and between the Company and its directors and officers.
8-K
001-40140
10.21
March 7, 2022
10.22#*
Non-Employee Director Compensation Policy.
10.23
Lease Agreement dated August 9, 2016 by and between Rigetti and Prologis Limited Partnership I, as amended.
S-4/A
333-260692
10.12
December 20, 2021
10.24
Lease Agreement dated April 15, 2015, by and among Rigetti, Temescal, LP and Contra Costa Industrial Park, Ltd., as amended.
S-4/A
333-260692
10.13
December 20, 2021
10.25#
Amended & Restated Employment Agreement, dated February 2, 2022, between Rigetti Holdings, Inc. and Rick Danis.
S-4/A
333-260692
10.29
February 8, 2022
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10.26
Warrant Subscription Agreement, dated as of October 6, 2021, between Rigetti Holdings, Inc. and Ampere Computing LLC.
8-K
001-40140
99.2
July 6, 2022
10.27
Ampere Warrant, dated as of June 30, 2022, issued by Rigetti Computing, Inc.
8-K
001-40140
99.3
July 6, 2022
10.28
Common Stock Purchase Agreement, dated as of August 11, 2022, by and between Rigetti Computing, Inc. and B. Riley Capital II, LLC.
10-Q
001-40140
10.5
August 12, 2022
10.29
Registration Rights Agreement, dated as of August 11, 2022, by and between Rigetti Computing, Inc. and B. Riley Capital II, LLC.
10-Q
001-40140
10.6
August 12, 2022
10.30#
Interim President and Chief Executive Officer Letter Agreement for Rick Danis, dated as of December 1, 2022
8-K/A
001-40140
10.1
December 2, 2022
10.31#
Executive Employment Agreement, dated December 7, 2022, by and between Rigetti Computing, Inc. and Dr. Subodh Kulkarni.
8-K
001-40140
10.1
December 8, 2022
10.32#
Executive Employment Agreement, dated February 9, 2023, by and between Rigetti Computing, Inc. and Jeffrey Bertelsen.
8-K
001-40140
10.1
February 10, 2023
10.33#
Separation Agreement for Chad Rigetti, dated as of February 14, 2023
8-K/A
001-40140
10.1
February 16, 2023
10.34#
Amended and Restated Employment Agreement, dated as of March 2, 2023, between Rigetti Computing, Inc. and David Rivas
POS-AM
333-263798
10.30
April 5, 2023
10.35#
Separation Agreement for Michael Harburn, dated as of February 15, 2023
10-Q
001-40140
10.4
May 11, 2023
10.36#
Separation Agreement for Brian Sereda, dated as of March 28, 2023
10-Q
001-40140
10.5
May 11, 2023
21.1
List of Subsidiaries of Rigetti Computing, Inc.
8-K
001-40140
21.1
March 7, 2022
23.1*
Consent of BDO USA P.C .
24.1*
Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K).
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*
Incentive Compensation Recoupment Policy
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101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Filed herewith.
**
Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.
+
The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
#
Indicates management contract or compensatory plan or arrangement.
The agreements and other documents filed as exhibits to this Annual Report on Form 10-K are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized .
RIGETTI COMPUTING, INC.
Date: March 14, 2024
By:
/s/ Dr. Subodh Kulkarni
Dr. Subodh Kulkarni
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and appoints Dr. Subodh Kulkarni, Jeffrey Bertelsen and Rick Danis, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Subodh Kulkarni
Chief Executive Officer and Director
March 14, 2024
Subodh Kulkarni
(Principal Executive Officer)
/s/ Jeffrey Bertelsen
Chief Financial Officer
March 14, 2024
Jeffrey Bertelsen
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Thomas J. Iannoti
Chair of the Board of Directors
March 14, 2024
Thomas J. Iannoti
/s/ Michael Clifton
Director
March 14, 2024
Michael Clifton
/s/ David Cowan
Director
March 14, 2024
David Cowan
/s/ Alissa Fitzgerald
Director
March 14, 2024
Alissa Fitzgerald
/s/ Ray Johnson
Director
March 14, 2024
Ray Johnson
/s/ Cathy McCarthy
Director
March 14, 2024
Cathy McCarthy
/s/ H. Gail Sandford
Director
March 14, 2024
H. Gail Sandford
147