Section 4.02. No reliance on previously issued financial statements or a
Audit Report or Completed Interim Review.
(a)
On November 14, 2022the audit committee of the Board of Directors of the Company (the “Audit Committee”), on the recommendation of and after consultation with the management of the Company, and as discussed with BDO USA, LLP (“BDO”), the Company’s independent registered public accounting firm, has concluded that the Company’s previously issued unaudited condensed interim consolidated financial statements for the quarters ended March 31, 2022 and June 30, 2022 (the “Relevant Financial Statements”), each as previously filed with the SECONDshould no longer be invoked and should be restated due to the items described below.
Upon closing of the business combination of the Company with Supernova Partners Acquisition Company II Ltd. on March 2, 2022 (the “Closing”), (i) 2,479,000 common shares of the Company, par value of $0.0001 per share (the “Common Shares”), held by Supernova Partners II LLC (the “SPAC Limited Partner”) (these shares, the “Promoting Limited Partner Vesting Shares”) have become subject to vesting and are considered unevested and will only vest if, during the five-year period following the closing, the volume-weighted average price of the common stock equal to or greater than $12.50 for twenty trading days within a period of thirty consecutive trading days, and (ii) 580,273 common shares held by Sponsor SPAC (“Sponsor Buyout Shares”) became subject to vesting and considered unvested and will only vest if, during the five-year period following closing, the volume-weighted average price of the common stock equals or exceeds $15.00 for twenty trading days within a period of thirty consecutive trading days (collectively, Promoter Sponsor Acquisition Shares and Sponsor Buyout-Based Acquisition Shares, the “Sponsor Acquisition Shares” ). Any Sponsor Vesting Shares that remain unvested after the fifth anniversary of Closing will be forfeited.
The Sponsor Acquisition Shares are accounted for as instruments classified as liabilities because earn-out trigger events that determine the number of Sponsor Acquisition Shares to be recovered by the SPAC Sponsor include outcomes that are not solely indexed to ordinary shares. As part of the company’s recognition of the earn-out liability related to the sponsor’s acquisition shares as part of the preparation of the third quarter 2022 financial statements, the company has assessed the valuation assumptions used to estimate the fair value of acquisition shares of Sponsor Actions using a Monte Carlo simulation model. During this assessment, it was determined that the volatility assumption used in the valuation of the earn-out liability related to the Sponsor’s acquisition shares, which is based on a weighted average of the common stock price volatilities for a group of comparable public company stocks and common stock and the trading price of the Company’s public warrants in the event, should be revised to include a greater weighting for the volatility of the trading price of the warrants public subscriptions of the Company and should have included this higher weighting in the preparation of the Financials concerned. This revised weighting used for the volatility assumption in estimating the fair value of the sponsor’s acquisition 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 regarding the treatment of additional operating expenses estimated at approximately
$1.6 million in aggregate regarding electric utility charges for a portion of electricity consumption at its Berkeley site since 2019 that were not paid and accrued in prior periods. The Company is evaluating how to account for these additional operating expenses, which are expected to include the recognition of an accrued liability on the estimated additional electric utility charges payable to the utility provider in its
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financial statements for the quarters ended March 31, 2022 and June 30, 2022 and the recording of operating expenses in its financial statements for the quarter ended
September 30, 2022. It is expected that the impact of 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 recognized in the unaudited condensed consolidated statements of earnings in the relevant financial statements.
As part of the restatement of the financial statements for the quarters ended
March 31, 2022 and June 30, 2022the 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, 2022and reverse the prior correction it had previously recorded for this immaterial error in the financial statements for the quarter ended June 30, 2022 in the restated financial statements for this period. In addition, the Company is also reassessing the fair value calculations of its private warrants which are treated as warrant derivative liabilities for the periods ended March 31, 2022 and June 30, 2022. Any revisions resulting from the revaluation would affect the reported amount of the derivative warrant liabilities on the balance sheets and the change in fair value of the derivative warrant liabilities in the statements of earnings. Additional adjustments may be identified as part of the Company’s additional assessment.
The Company’s management is evaluating the effect of the foregoing on the Company’s internal control over financial reporting and disclosure controls and procedures, which could result in a material weakness in its internal control related to the recognition of complex instruments in addition to the important elements communicated previously by the Company. weaknesses 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 communication controls and procedures of information were deemed ineffective in the first quarter of 2022 and the second quarter of 2022, as previously described. It is possible that such an assessment will lead to the identification of other significant weaknesses.
In addition, press releases, shareholder communications, investor presentations or other related communications describing the relevant parts of the relevant Financial Statements should no longer be relied upon. Accordingly, the Company intends to restate the affected financial statements 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 files with the SECOND a Form 12b-25 because he is unable to file, without unreasonable effort or expense, his quarterly report on Form 10-Q for the three and nine months ended September 30, 2022 within the prescribed 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 those periods and the evaluation of its internal controls at financial reporting and disclosure controls and procedures is underway.
The Company’s management and the Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K with BDO.
Caution Regarding Forward-Looking Statements
Certain statements contained in this current report on Form 8-K may be considered forward-looking statements, including statements regarding expected adjustments to and impacts on the company’s financial statements, expected revision of the valuation methodology in with respect to the Sponsor’s acquisition shares, the estimated amount and impact of additional operating expenses related to electricity consumption on the Company’s financial statements, expectations with respect to the Company’s internal control Company with respect to financial reporting and disclosure controls and procedures, expectations regarding the valuation method for accounting for private assets warrants and the impact on financial statements of the Company, the potential for additional adjustments to the financial statements of the Company, expectations regarding the consideration of warrants ription issued to Trinity Capital in the financial statements and scheduled 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 words such as “may”, “should”, “could”, “could”, “plan”, “possible”, “endeavour”, ” budget”, “expect”, “intend”, “will”, “estimate”, “believe”, “predict”, “potential”, “pursue”, “aim”, “goal”, “mission”, “anticipate” or “continue”, ” or the negative form of these terms or their variations or similar terminology. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results will differ materially from those expressed or implied by such forward-looking statements.These forward-looking statements are based on estimates and assumptions which, while believed to be reasonable by the Company and its management, are inherently uncertain. lead to a significant difference Between actual results and 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” of the company’s Form 10-Q. for the quarter ended June 30, 2022and other documents filed by the Company from time to time with the SECOND. 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 place undue reliance on any forward-looking statements, and Rigetti undertakes no obligation and does not intend to update or revise such forward-looking statements other than as required by applicable law. The Company does not guarantee that it will achieve its expectations.
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