RIGETTI COMPUTING, INC. : Non-Reliance on Previous Financials, Audits or Interim Review (form 8-K)

Point 4.02. Non-reliance on previously issued financial statements or the like

           Audit Report or Completed Interim Review.


(a)

On November 14, 2022audit committee of the company’s board of directors (“audit committee”), based on the recommendation of the company’s management and after consultation with it and after discussion with BDO USA, LLP (“BDO”), the Company’s independent registered public accounting firm, has determined that the previously issued unaudited interim condensed consolidated financial statements of the Company for the quarters then ended March 31, 2022 and June 30, 2022 (“Affected Financial Matters”), each as previously filed with SECit should no longer be relied upon and should be restated due to the matters described below.

Upon completion of the business merger of the company with Supernova Partners Acquisition Company II Ltd. on March 2, 2022 (“closing”), (i) 2,479,000 ordinary shares of the Company, par value $0.0001 per share (“Common Shares”) held by him Supernova Partners II LLC (“Sponsor SPAC”) (such shares, the “Promote Sponsor Vesting Shares”) have become subject to vesting and are deemed non-vested and will vest only if, during the five-year period following closing, the volume-weighted average price of the Common Stock equals or exceeds $12.50 for any twenty trading days during a thirty consecutive trading day period, and (ii) 580,273 shares of common stock owned by the Sponsor SPAC (the “Sponsor Redemption Vesting Shares”) have become vested and are deemed unvested and will vest only if , during the five-year period following closing, the volume-weighted average price of the common stock is equal to or greater than $15.00 for any twenty trading days within a period of thirty consecutive trading days (collectively, the Sponsor Attribution Shares and the Sponsor Redemption Attribution Shares, the “Sponsor Attribution Shares”). Any Sponsor Proposed Shares that remain unvested after the fifth anniversary of Closing will be forfeited.

Sponsoring Shares are accounted for as liability instruments because the events that trigger earnings and determine the number of Sponsoring Shares that the SPAC sponsor must repurchase include outcomes that are not indexed exclusively to common stock. As part of the Company’s accounting of the profit obligation related to the Sponsor Vesting Shares in connection with the preparation of the financial statements for the third quarter of 2022, the Company evaluated the valuation assumptions used in estimating the fair value of the Sponsor Vesting Shares using a Monte Carlo simulation model. During this valuation, it was determined that the volatility assumption used in the valuation of the profit obligation related to the sponsorship interests, which is based on the weighted average volatility of the trading price of common stock for a group of comparable public companies and common stock, and the trading price of the company’s public warrants in assumptions, should be revised to include a greater weight for the volatility of the trading price of the Company’s public warrants, and should include such a greater weight in preparing the Affected Financials. This revised weighting applied to the volatility assumption in estimating the fair value of sponsor equity shares is expected to have the following effect:

     •    a decrease in the Earnout Liabilities recorded on the unaudited condensed
          consolidated balance sheet as of March 31, 2022 and June 30, 2022
          included in the Affected Financials;



     •    a decrease in the Change in the Fair Value of Earn-out Liability recorded
          in the unaudited condensed consolidated statements of operations for the
          periods ended March 31, 2022 and June 30, 2022 included in the Affected
          Financials;



     •    an increase in Net loss and Net loss per share recorded in the unaudited
          condensed consolidated statements of operations for the periods ended
          March 31, 2022 and June 30, 2022 included in the Affected Financials; and



     •    a decrease in the Fair value of earn-out liability recorded in the
          unaudited condensed consolidated statements of cash flows as supplemental
          disclosure of non-cash financing activities for the periods ended
          March 31, 2022 and June 30, 2022 included in the Affected Financials.

In addition, the Company is finalizing its analysis regarding the consideration of additional operating expenses estimated at an approximate amount
1.6 million dollars in the aggregate amount relating to electricity supply charges for the portion of electricity consumption at the Berkeley site beginning in 2019 that was not paid and recognized in prior periods. The Company is evaluating how it would account for these additional operating costs, which are expected to include recording an upfront charge of estimated additional electricity supply fees payable to the utility provider in its

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financial statements for the completed quarters March 31, 2022 and June 30, 2022 and recording operating expenses in its financial statements for the quarter that has ended
September 30, 2022. The impact of additional operating expenses is expected to increase accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheet and research and development expenses, operating expenses, operating losses and net losses shown in the unaudited condensed consolidated statements of operations in the affected financials.

As part of the recalculation of the financial statements for the completed quarters
March 31, 2022 and June 30, 2022the company expects to reflect the correction of an immaterial error in the valuation of the warrant liability related to the warrants issued to Trinity Capital Inc. in the restated financial statements for the quarter then ended March 31, 2022and reverses the prior correction it previously recorded for such immaterial error in the financial statements for the quarter then ended June 30, 2022 in the restated financial statements for such period. In addition, the Company is also reassessing the fair value calculations for its private warrants, which are treated as derivative warrant liabilities for the periods ended. March 31, 2022 and June 30, 2022. Any corrections resulting from the revaluation would affect the reported amount of the purchase instruments liability in the balance sheets and the change in the fair value of the purchase instruments liability in the statements of operations. It is possible that additional adjustments will be identified in connection with the further evaluation of the company.

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The company’s management is evaluating the effect of the above on the company’s internal control over financial reporting and disclosure controls and procedures, which could result in a significant deficiency in internal control related to the accounting of complex instruments in addition to the company’s previously reported material. the weakness of its internal control over financial reporting related to the lack of effective reviews of controls over the accounting of complex guarantee instruments, which resulted in its controls and disclosure procedures being found to be ineffective in the first quarter of 2022 and the second quarter of 2022, as previously disclosed. It is possible that such an assessment will result in the identification of other significant weaknesses.

In addition, you should no longer rely on any related press releases, shareholder releases, investor presentations or other communications describing material portions of the relevant financial data. As a result, the Company intends to recalculate the relevant financial information using Form 10-Q/A, Supplement No. 1 for each of the completed quarters. March 31, 2022 and June 30, 2022. In addition, the company invests in SEC Form 12b-25 because it cannot, without unreasonable effort or expense, file its quarterly report on Form 10-Q for the three and nine months then ended. September 30, 2022 in the prescribed time period, the necessary work, including the determination of any required adjustments and the relevant effects on the financial statements to be included in the Company’s financial statements for those periods, and the assessment of its internal controls over financial reporting and disclosure controls and procedures, is in progress .

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The company’s management and audit committee discussed the matters disclosed in this Current Report on Form 8-K with BDO.

Cautionary Language Regarding Forward-Looking Statements

Certain statements in this Current Report on Form 8-K may be considered forward-looking statements, including statements regarding anticipated adjustments to and effects on the Company’s financial statements, the anticipated revision of the valuation methodology with respect to Sponsor Award Shares, the estimated amount and impact of additional operating costs related to electricity consumption on the company’s financial statements, expectations related to the company’s internal control over financial reporting and disclosure controls and procedures, expectations related to the valuation methodology for accounting for private purchase vouchers and the impact on the company’s financial statements, the possibility of additional adjustments of the company’s financial statements, expectations regarding the reflection of the warrants issued to Trinity Capital in the financial statements and the expected filing of Form 10-Q/A, amendment no. 1, for each quarter that has ended
March 31, 2022 and June 30, 2022. Forward-looking statements generally refer to future events and can be identified by terminology such as “may”, “should”, “could”, “might”, “plan”, “possible”, “endeavor” , “budget,” “expect,” “intend,” “will,” “estimate,” “believe,” “forecast,” “potential,” “pursue,” “aim,” “goal,” “mission,” ” anticipate” or “continue,” or disclaimers of those terms or variations thereof or similar terminology. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. These forward-looking statements are based on estimates and assumptions that are inherently uncertain, even if they are believed to be reasonable by the Company and its management. Factors that could cause actual results to differ materially from current expectations include, but are not limited to, the risks and uncertainties set forth in the section entitled “Risk Factors” and “Caution Regarding Forward-Looking Statements” in the Company’s Form 10-Q. for the completed quarter June 30, 2022and other documents filed by the Company from time to time with SEC. These filings identify and address other significant risks and uncertainties that could cause actual events and results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to place undue reliance on forward-looking statements, and Rigetti undertakes no obligation and does not intend to update or revise these forward-looking statements, except as required by applicable law. The Company makes no assurance that it will achieve its expectations.

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