Rigetti Computing, Inc. current report, 01 March 2022

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Rigetti Computing, Inc. — Form 8-K Summary

Reporting date: March 1, 2022; the Business Combination closed on March 2, 2022, and the report was dated March 7, 2022. The filing documents the domestication of Supernova Partners Acquisition Company II, Ltd. and its merger with Legacy Rigetti. Supernova was a shell company before closing and became Rigetti Computing, Inc., an operating public company.

Business Context and Transaction

  • Supernova domesticated from the Cayman Islands to Delaware and changed its name to Rigetti Computing, Inc.
  • Legacy Rigetti merged into the acquisition subsidiaries. Legacy Rigetti shareholders received 78,959,579 shares of New Rigetti common stock using an exchange ratio of 0.786989052873439.
  • The PIPE financing generated aggregate gross proceeds of $147.51 million: $102.51 million from 10,251,000 shares at $10.00 per share and $45.00 million from 4,390,244 shares at $10.25 per share.
  • New Rigetti common stock and public warrants began trading on Nasdaq on March 2, 2022 under the symbols RGTI and RGTIW. Public warrants have an exercise price of $11.50 per share.

Financial Metrics and Liquidity

The filing incorporates Legacy Rigetti’s audited financial statements for the eleven months ended December 31, 2021 and the year ended January 31, 2021, as well as unaudited pro forma combined financial information for the year ended December 31, 2021. The supplied filing text does not provide clear amounts for revenue, net income or loss, operating cash flow, margins, cash balances, total debt or liquidity. Those figures should be reviewed in Exhibits 99.1 through 99.3.

  • Legacy Rigetti had financing arrangements with Trinity Capital Inc., including a loan and security agreement, amendments, a guaranty and related warrants.
  • Marcum LLP’s prior report included an emphasis regarding substantial doubt about the Company’s ability to continue as a going concern. The filing does not state whether that matter was resolved after the Business Combination.
  • As of closing, 113,810,285 shares of common stock were outstanding and 8,624,972 public warrants were outstanding.
  • The Company had not paid dividends and did not anticipate declaring cash dividends in the foreseeable future.

Material Changes Versus the Prior Period

  • The company transitioned from a shell acquisition vehicle to an operating public company focused on Legacy Rigetti’s business.
  • Supernova shareholders immediately before closing held 17.8% of New Rigetti’s outstanding common stock after the transaction.
  • The board appointed eight directors, including Chad Rigetti, and established audit, compensation, and nominating and corporate governance committees.
  • BDO USA, LLP replaced Marcum LLP as independent registered public accounting firm for the year ending December 31, 2022. The filing reports no disagreements or reportable events with Marcum, other than the previously disclosed going-concern uncertainty.
  • The Company adopted a new certificate of incorporation, bylaws, code of business conduct and ethics, 2022 Equity Incentive Plan and 2022 Employee Stock Purchase Plan.

Guidance, Outlook, Risks and Unusual Items

The filing does not provide a clear numerical revenue, earnings or cash-flow forecast. It contains forward-looking statements regarding business execution, product monetization, innovation, growth, market opportunity, financing needs and the anticipated benefits of the Business Combination.

  • Material risks include the ability to commercialize products, execute strategic initiatives, retain customers and employees, raise additional financing and continue as a going concern.
  • Other risks include competition, regulatory and legal changes, Nasdaq listing and trading liquidity, global supply-chain conditions, COVID-19, geopolitical conflict, economic and credit-market volatility and potential legal proceedings.
  • Under the Sponsor Support Agreement, 2,479,000 shares became subject to vesting only if the stock price reaches $12.50 for 20 of 30 trading days within five years, and 580,273 shares are subject to a comparable $15.00 price condition. Unvested shares remaining after five years will be forfeited.
  • Transaction cash bonuses totaled $1.205 million for named executive officers, in addition to $795,000 paid to other employees. The listed executive bonuses were $400,000 each to Chad Rigetti and Taryn Naidu, $350,000 to Rick Danis, $25,000 to Brian Sereda and $30,000 to David Rivas.
  • Significant equity awards were approved, contingent on effectiveness of a Form S-8, including 4,015,272 alignment RSUs and 935,400 annual RSUs for executive officers, plus additional employee awards. Change-in-control acceleration provisions apply to certain awards.

Important Facts for Investors to Verify

  1. Review Exhibits 99.1–99.3 for actual revenue, losses, cash flow, cash balances, debt, margins, going-concern disclosures and pro forma adjustments.
  2. Confirm the cash proceeds retained from the PIPE financing after transaction expenses and any redemptions.
  3. Review the Trinity Capital loan documents for outstanding principal, interest, maturity dates, covenants, collateral and default provisions.
  4. Assess dilution from the 8.6 million public warrants, private warrants, assumed warrants, options, RSUs, equity plans and contingent sponsor shares.
  5. Evaluate the scale and vesting terms of executive, employee and director equity awards and their potential effect on future stock-based compensation.
  6. Review the new certificate of incorporation, bylaws, registration rights agreement and indemnification agreements for governance and shareholder-rights implications.
  7. Monitor the Company’s ability to maintain Nasdaq listing, secure additional financing and address the prior going-concern uncertainty.