Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
(a)
On November 14, 2022, the audit committee of the Company's board of directors
(the "Audit Committee"), based on the recommendation of, and after consultation
with, the Company's management, and as discussed with BDO USA, LLP ("BDO"), the
Company's independent registered public accounting firm, concluded that the
Company's previously issued unaudited interim condensed consolidated financial
statements for the quarters ended March 31, 2022 and June 30, 2022 (the
"Affected Financials"), each as previously filed with the SEC, should no longer
be relied upon and should be restated due to the matters described below.
At the closing of the Company's business combination with Supernova Partners
Acquisition Company II Ltd. on March 2, 2022 (the "Closing"), (i) 2,479,000
shares of the Company's common stock, par value of $0.0001 per share (the
"Common Stock"), held by Supernova Partners II LLC (the "SPAC Sponsor") (such
shares, the "Promote Sponsor Vesting Shares") became subject to vesting and are
considered unvested and will only vest if, during the five year period following
the Closing, the volume weighted average price of the Common Stock equals or
exceeds $12.50 for any twenty trading days within a period of thirty consecutive
trading days, and (ii) 580,273 shares of Common Stock held by the SPAC Sponsor
("Sponsor Redemption-Based Vesting Shares") became subject to vesting and
considered unvested and will only vest if, during the five year period following
the Closing, the volume weighted average price of the Common Stock equals or
exceeds $15.00 for any twenty trading days within a period of thirty consecutive
trading days (collectively, the Promote Sponsor Vesting Shares and Sponsor
Redemption-Based Vesting Shares, "Sponsor Vesting Shares"). Any Sponsor Vesting
Shares that remain unvested after the fifth anniversary of the Closing will be
forfeited.
The 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 SPAC Sponsor include outcomes that are
not solely indexed to the Common Stock. As part of the Company's accounting for
the earn-out liability 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 utilized in estimating the fair
value of the Sponsor Vesting Shares using a Monte Carlo simulation model. During
this evaluation, it was determined that the volatility assumption used in the
valuation of the earn-out liability related to the Sponsor Vesting Shares, which
is based on a weighted average of the volatilities of the trading price of
common stock for a group of comparable public companies and the Common Stock and
the trading price of the Company's public warrants in the assumption, should be
revised to include a greater weight for the volatility of the trading price of
the Company's public warrants and should have included such greater weighting in
preparation of the Affected Financials. This revised weighting used for the
volatility assumption in the estimation of the fair value of the Sponsor Vesting
Shares is expected to have the following impact:
• 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 completing its analysis with respect to the
treatment of additional operating expenses estimated to total approximately
$1.6 million in the aggregate relating to electrical utility fees for a portion
of the electrical usage at its Berkeley location since 2019 that were not paid
and recognized in prior periods. The Company is evaluating how to account for
these additional operating expenses, which is expected to include recording an
accrual of the estimated additional electric utility fees to be paid to the
utility provider in its
--------------------------------------------------------------------------------
financial statements for the quarters ended March 31, 2022 and June 30, 2022 and
recording operating expenses in its financial statements for the quarter ended
September 30, 2022. It is expected that the impact of the additional operating
expenses will increase accrued expenses and other current liabilities in the
unaudited condensed consolidated balance sheet and research and development
expenses, operating expenses, operating loss and net loss recorded in the
unaudited condensed consolidated statements of operations in the Affected
Financials.
As part of the restatement of the financial statements for the quarters ended
March 31, 2022 and June 30, 2022, the Company expects to reflect the correction
of an immaterial error related to the valuation of the warrant liability with
respect to the warrants issued to Trinity Capital Inc., in the restated
financial statements for the quarter ended March 31, 2022, and reverse the prior
correction it had previously recorded for such immaterial error in the financial
statements for the quarter ended June 30, 2022 in the restated financial
statements for such period. In addition, the Company is also reassessing the
calculations of fair value for its private warrants that are treated as
derivative warrant liabilities for the periods ended March 31, 2022 and June 30,
2022. Any revisions resulting from the reassessment would impact the reported
amount of derivative warrant liabilities on the balance sheets and change in
fair value of derivative warrant liabilities on the statements of operations. It
is possible that additional adjustments may be identified in connection with the
Company's further assessment.
The Company's management is assessing the effect of the foregoing on the
Company's internal control over financial reporting and disclosure controls and
procedures, which may result in a material weakness in its internal control
related to the accounting for complex instruments in addition to the Company's
previously reported material weakness in its internal control over financial
reporting related to the lack of effective review controls over the accounting
for complex warrant instruments, which resulted in its disclosure controls and
procedures having been determined to be ineffective in the first quarter of 2022
and the second quarter of 2022, as previously disclosed. It is possible that
such assessment may result in the identification of other material weaknesses.
In addition, the related press releases, stockholder communications, investor
presentations or other communications describing relevant portions of the
Affected Financials, should no longer be relied upon. As a result, the Company
intends to restate the Affected Financials by means of a Form 10-Q/A, Amendment
No. 1 for each of the quarters ended March 31, 2022 and June 30, 2022. In
addition, the Company is filing with the SEC a Form 12b-25 as it is unable to
file, without unreasonable effort or expense, its Quarterly Report on Form 10-Q
for the three and nine months ended September 30, 2022 within the prescribed
time period the necessary work, including the determination of all required
adjustments and the corresponding impact on the financial statements to be
included in the Company's financial statements for such periods and evaluation
of its internal controls over financial reporting and disclosure controls and
procedures, is ongoing.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K with BDO.
Cautionary Language Concerning Forward-Looking Statements
Certain statements in this Current Report on Form 8-K may be considered
forward-looking statements, including statements with respect to the expected
adjustments and impacts to the Company's financial statements, the expected
revision to the valuation methodology with respect to the Sponsor Vesting
Shares, the estimated amount and impact of the additional operating expenses
related to electricity usage on the Company's financial statements, expectations
with respect to the Company's internal control over financial reporting and
disclosure controls and procedures, expectations with respect to the valuation
methodology for the accounting of the private warrants and the impact on the
Company's financial statements, the potential for additional adjustments to the
Company's financial statements, expectations regarding reflection of the
warrants issued to Trinity Capital in the financial statements, and the expected
filing of a Form 10-Q/A, Amendment No. 1, for each of the quarters ended
March 31, 2022 and June 30, 2022. Forward-looking statements generally relate to
future events and can be identified by terminology such as "may," "should,"
"could," "might," "plan," "possible," "strive," "budget," "expect," "intend,"
"will," "estimate," "believe," "predict," "potential," "pursue," "aim," "goal,"
"mission," "anticipate" or "continue," or the negatives of these terms or
variations of them or similar terminology. Such forward-looking statements are
subject to risks, uncertainties, and other factors which could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements. These forward-looking statements are based upon
estimates and assumptions that, while considered reasonable by the Company and
its management, are inherently uncertain. Factors that may cause actual results
to differ materially from current expectations include, but are not limited to,
risks and uncertainties set forth in the section entitled "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements" in the Company's Form
10-Q for the quarter ended June 30, 2022, and other documents filed by the
Company from time to time with the SEC. These filings identify and address other
important risks and uncertainties that could cause actual events and results to
differ materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made. Readers are
cautioned not to put undue reliance on forward-looking statements, and Rigetti
assumes no obligation and does not intend to update or revise these
forward-looking statements other than as required by applicable law. The Company
does not give any assurance that it will achieve its expectations.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses