イオンQの四半期報告

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_______to_______

Commission File No. 001-39694

IONQ, INC.

(Exact name of registrant as specified in its charter)

      Delaware

      85-2992192

      (State or other jurisdiction of
incorporation or organization)

      (I.R.S. Employer
Identification No.)

4505 Campus Drive

College Park, MD 20740

(301) 298-7997

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	IONQ	The New York Stock Exchange
Warrants, each exercisable for one share of common stock for $11.50 per share	IONQ WS	The New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of April 30, 2025, there were 247,783,086 shares of common stock, par value $0.0001 per share, issued and outstanding.

IONQ, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


PART 1-FINANCIAL INFORMATION		1
Item 1.	Unaudited Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024	2
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2025 and 2024	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II—OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	68
SIGNATURES

CERTAIN TERMS USED IN THIS REPORT

In this report, unless otherwise stated or the context otherwise indicates, the terms “IonQ, Inc.,” “the Company,” “we,” “us,” “our” and similar references refer to “IonQ” and our other registered and common law trade names, trademarks and service marks are property of IonQ, Inc. All other trademarks, trade names and service marks appearing in this report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.

WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our investor relations website at investors.ionq.com, press releases, filings with the U.S. Securities and Exchange Commission (“SEC”) and public conference calls and webcasts. We also use IonQ’s blog and the following social media channels as a means of disclosing information about the Company, our products and services, our planned financials and other announcements and attendance at upcoming investor and industry conferences, and other matters. This is in compliance with our disclosure obligations under Regulation FD:

•

IonQ Company Blog (https://ionq.com/blog)

•

IonQ LinkedIn Page (https://www.linkedin.com/company/ionq.co)

•

IonQ X (Twitter) Account (https://x.com/ionq_inc)

•

IonQ YouTube Account (https://www.youtube.com/@ionq_inc)

Information posted through these social media channels may be deemed material. Accordingly, in addition to reviewing our press releases, SEC filings, public conference calls and webcasts, investors should monitor IonQ’s blog and our other social media channels. The information we post through these channels is not part of this Quarterly Report on Form 10-Q. The channel list on how to connect with us may be updated from time to time and is available on our investor relations website.

GLOSSARY OF SELECTED TERMINOLOGY

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to the following terms have the respective meanings as defined below:

Algorithmic Qubit: A metric describing the number of “useful” qubits in a system, considering noise, connectivity limitations, and other sources of error.

Barium: A silvery rare-earth metal, atomic number 56, that can be used as a qubit for quantum computing. IonQ is exploring barium as an alternative qubit species because its slightly more complex structure offers higher fundamental gate and readout fidelities when controlled correctly, and because it primarily interacts with light in the visible spectrum, allowing additional opportunities for standard fiber optic technologies in parts of the system.

Classical Computer: A computer that stores and calculates information using classical mechanics: information is stored as a 0 or a 1, in a transistor.

Coherence Time: A measurement of the “lifetime” of a qubit, coherence time measures how long a qubit can maintain coherent phase, which allows it to successfully retain quantum information and behave in the ways necessary for it to be part of a useful computation.

Entanglement: A property of quantum mechanics where two particles, even when physically separated, behave in ways conditionally dependent on each other.

Error-Corrected Qubit: Groups of physical qubits that are logically combined using techniques called error correction encoding with the goal of having them act together as one much higher-quality qubit for computational purposes.

Fault Tolerance: A system’s ability to accommodate errors in its operation without losing the information it is processing and/or storing.

Gate Fidelity/Error Rate: A measure of how much noise (or error) is introduced in each operation during a quantum algorithm.

Ion Trap: An apparatus that holds ions in place, ready for computation, in a trapped-ion quantum computer.

Measurement: The process at the end of a quantum computation where the exponentially large computational space available during computation collapses down to a binary string in order to produce readable results.

Multi-Core QPU: A single quantum processor that has multiple quantum compute zones that can compute in parallel and be entangled via moving and recombining ion chains.

Noise: For quantum computers to compute correctly, they must be isolated from the environment around them. Any interaction with the environment, or imperfection in the control systems that perform gates, introduces noise. As noise accumulates, the overall likelihood that an algorithm will produce a successful answer goes down. With too much noise, a quantum computer is no longer useful at all.

Photonic Interconnect: A connection between two qubits using photons, typically via a fiber optic cable. A photonic interconnect is used to remotely connect two qubits.

Physical Qubit: The hardware implementation of a qubit in a quantum computer.

Quantum Algorithm: A series of quantum logic gates that together solve a specific problem.

Quantum Bit (Qubit): The quantum equivalent of bits in classical computing, able to exist in a superposition of states and be entangled with other qubits.

Quantum Circuit: A collection of quantum logic gates to be run in a specific order on a given set of qubits.

Quantum Logic Gate(s): Gates used to manipulate the state of qubits, including putting them in superposition states and creating entanglement.

Quantum Networking: Interconnecting multiple quantum processing units to enable communication or computation using photonic interconnects or entanglement to facilitate the distribution of information or computation.

Quantum Processing Unit (QPU): A complete system made up of physical qubits and the apparatus for controlling them.

Superconducting Qubit: A qubit implementation that uses specialized silicon-fabricated chips at ultracold temperatures.

Synthetic (Fabricated) Qubit: A qubit that uses an engineered or “manufactured” quantum system, rather than a naturally occurring one. Examples of synthetic (fabricated) qubits include superconducting transmon qubits and semiconductor quantum dot qubits.

Trapped Ion Qubit: A qubit implementation using charged atomic particles (ions) suspended in vacuum and manipulated with lasers.

PART 1-FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

IonQ, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)


	March 31,			December 31,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	159,681		$	54,393
Short-term investments		428,605			285,896
Accounts receivable		9,471			10,188
Prepaid expenses and other current assets		39,227			28,325
Total current assets		636,984			378,802
Long-term investments		108,861			23,545
Property and equipment, net		51,644			52,761
Operating lease right-of-use assets		9,232			9,470
Intangible assets, net		28,216			29,469
Goodwill		10,669			9,904
Other noncurrent assets		4,468			4,437
Total Assets	$	850,074		$	508,388
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,752		$	5,230
Accrued expenses and other current liabilities		23,595			16,424
Current portion of operating lease liabilities		3,621			3,366
Unearned revenue		12,061			10,678
Current portion of stock option early exercise liabilities		350			387
Total current liabilities		48,379			36,085
Operating lease liabilities, net of current portion		13,739			14,359
Warrant liabilities		21,241			70,688
Other noncurrent liabilities		1,667			3,394
Total liabilities	$	85,026		$	124,526
Commitments and contingencies (see Note 8)
Stockholders’ Equity:
Common stock $0.0001 par value; 1,000,000,000 shares authorized; 243,068,917 and 221,919,191 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	$	24		$	22
Additional paid-in capital		1,481,007			1,067,403
Accumulated deficit		(715,972	)		(683,720	)
Accumulated other comprehensive income (loss)		(11	)		157
Total stockholders’ equity	$	765,048		$	383,862
Total Liabilities and Stockholders’ Equity	$	850,074		$	508,388

The accompanying notes are an integral part of these condensed consolidated financial statements.

IonQ, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)


	Three Months Ended March 31,
	2025			2024
Revenue	$	7,566		$	7,582
Costs and expenses:
Cost of revenue (excluding depreciation and amortization)		4,315			3,414
Research and development		39,953			32,368
Sales and marketing		8,610			6,701
General and administrative		23,806			14,020
Depreciation and amortization		6,561			3,955
Total operating costs and expenses		83,245			60,458
Loss from operations		(75,679	)		(52,876	)
Gain (loss) on change in fair value of warrant liabilities		38,494			8,627
Interest income, net		4,894			4,799
Other income (expense), net		51			(134	)
Loss before income tax expense		(32,240	)		(39,584	)
Income tax benefit (expense)		(12	)		(8	)
Net loss	$	(32,252	)	$	(39,592	)
Net loss per share attributable to common stockholders— basic and diluted	$	(0.14	)	$	(0.19	)
Weighted average shares used in computing net loss per share attributable to common stockholders—basic and diluted		228,759,209			208,159,439

The accompanying notes are an integral part of these condensed consolidated financial statements.

IonQ, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2025			2024
Net loss	$	(32,252	)	$	(39,592	)
Other comprehensive income (loss), net of reclassification adjustments:
Change in unrealized gain (loss) on available-for-sale securities, net		(167	)		222
Currency translation adjustments		(1	)		25
Total other comprehensive income (loss)		(168	)		247
Total comprehensive loss	$	(32,420	)	$	(39,345	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

IonQ, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

(in thousands, except share data)


	Stockholders’ Equity
										Accumulated
					Additional					Other			Total
	Common Stock				Paid-in		Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance, December 31, 2024		221,919,191	$	22	$	1,067,403	$	(683,720	)	$	157		$	383,862
Net loss		—		—		—		(32,252	)		—			(32,252	)
Other comprehensive income (loss)		—		—		—		—			(168	)		(168	)
Issuance of common stock in connection with at-the-market offering, net of issuance costs		16,038,460		2		358,253		—			—			358,255
Issuance of common stock from equity incentive plans		4,654,283		—		8,181		—			—			8,181
Vesting of restricted common stock		48,145		—		98		—			—			98
Stock-based compensation		—		—		31,417		—			—			31,417
Warrants exercised		408,838		—		15,655		—			—			15,655
Balance, March 31, 2025		243,068,917	$	24	$	1,481,007	$	(715,972	)	$	(11	)	$	765,048


	Stockholders’ Equity
										Accumulated
					Additional					Other			Total
	Common Stock				Paid-in		Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital		Deficit			Income (Loss)			Equity
Balance, December 31, 2023		206,611,704	$	20	$	839,014	$	(352,073	)	$	(1,967	)	$	484,994
Net loss		—		—		—		(39,592	)		—			(39,592	)
Other comprehensive income (loss)		—		—		—		—			247			247
Issuance of common stock from equity incentive plans		4,184,593		1		11,928		—			—			11,929
Vesting of restricted common stock		48,145		—		98		—			—			98
Stock-based compensation		—		—		22,093		—			—			22,093
Balance, March 31, 2024		210,844,442	$	21	$	873,133	$	(391,665	)	$	(1,720	)	$	479,769

The accompanying notes are an integral part of these condensed consolidated financial statements.

IonQ, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net loss	$	(32,252	)	$	(39,592	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,561			3,955
Stock-based compensation		33,253			22,061
(Gain) loss on change in fair value of warrant liabilities		(38,494	)		(8,627	)
Amortization of premiums and accretion of discounts on available-for-sale securities		(1,409	)		(2,302	)
Other, net		825			939
Changes in operating assets and liabilities:
Accounts receivable		748			1,897
Prepaid expenses and other current assets		(12,471	)		(4,656	)
Accounts payable		3,272			(521	)
Accrued expenses and other current liabilities		6,123			(554	)
Unearned revenue		1,299			4,389
Other assets and liabilities		(480	)		2,546
Net cash provided by (used in) operating activities	$	(33,025	)	$	(20,465	)
Cash flows from investing activities:
Purchases of property and equipment		(2,308	)		(3,140	)
Capitalized software development costs		(882	)		(1,400	)
Intangible asset acquisition costs		(220	)		(357	)
Purchases of available-for-sale securities		(320,571	)		(66,619	)
Maturities of available-for-sale securities		93,805			115,045
Net cash provided by (used in) investing activities	$	(230,176	)	$	43,529
Cash flows from financing activities:
Proceeds from at-the-market offering, net of issuance costs		362,303			—
Proceeds from stock options exercised		1,213			486
Proceeds from public warrants exercised		4,702			—
Tax withholding receipts (payments) related to vested and released RSUs, net		516			873
Net cash provided by (used in) financing activities	$	368,734		$	1,359
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(13	)		4
Net change in cash, cash equivalents and restricted cash		105,520			24,427
Cash, cash equivalents and restricted cash at the beginning of the period		56,840			38,081
Cash, cash equivalents and restricted cash at the end of the period	$	162,360		$	62,508
Supplemental disclosures of non-cash investing and financing transactions
Property and equipment purchases in accounts payable and accrued expenses	$	152		$	3,043
Intangible asset purchases in accounts payable and accrued expenses		257			391
Operating lease right-of-use assets subject to lease liability		—			5,021
Noncash reclassification of warrant liabilities to equity upon exercise		10,953			—
Bonus settled in restricted stock units		6,969			11,443
Net share settled stock option exercises		—			1,016
At-the-market offering issuance costs in accounts payable and accured expenses		4,049			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

IonQ, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. DESCRIPTION OF BUSINESS

IonQ, Inc. (“IonQ” or the “Company”), formerly known as dMY Technology Group, Inc. III (“dMY”), was incorporated in the state of Delaware in September 2020 and formed as a special purpose acquisition company for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. IonQ Quantum, Inc. (formerly known as IonQ, Inc., and referred to as “Legacy IonQ” herein), was incorporated in the state of Delaware in September 2015 and is headquartered in College Park, Maryland.

On March 7, 2021, Legacy IonQ entered into an Agreement and Plan of Merger (the “Merger Agreement”) with dMY and Ion Trap Acquisition Inc. (“Merger Sub”), a direct, wholly owned subsidiary of dMY. Pursuant to the Merger Agreement, on September 30, 2021 (“the Closing Date”), the Merger Sub was merged with and into Legacy IonQ with Legacy IonQ continuing as the surviving corporation following the merger, becoming a wholly owned subsidiary of dMY and the separate corporate existence of the Merger Sub ceased (the “Business Combination”). Contemporaneously with the Business Combination, dMY changed its name to IonQ, Inc. and Legacy IonQ changed its name to IonQ Quantum, Inc.

IonQ develops quantum computers and networks designed to solve some of the world’s most complex problems, and transform business, society, and the planet for the better. To operate the quantum computers and networks, the Company has developed custom hardware, custom firmware, and an operating system to orchestrate the quantum computers.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The Company’s significant accounting policies, which are disclosed in the audited financial statements for the year ended December 31, 2024, and the notes thereto are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) that was filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025. Since the date of that filing, there have been no material changes to the Company’s significant accounting policies except as noted below.

Basis of Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") as determined by the Financial Accounting Standards Board (“FASB”). Such condensed consolidated financial statements include the accounts of IonQ and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Unaudited Interim Financial Information

The interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by the Company and are unaudited, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this Quarterly Report on Form 10-Q comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for a quarterly report and are adequate to make the information presented not misleading. The interim condensed consolidated financial statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2024, included in the Annual Report. The condensed consolidated statements of operations and the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2025, are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2025, or thereafter. All references to March 31, 2025 and 2024, in the notes to the condensed consolidated financial statements are unaudited.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP and the rules and regulations of the SEC require management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes.

Significant estimates and assumptions are inherent in the analysis and measurement of items including, but not limited to: total expected costs for revenue arrangements recognized over time, capitalization of quantum computing system costs, useful lives for quantum computing systems, estimates of the fair value of intangible assets acquired in business combinations, and stock-based compensation for awards with performance and market conditions. Management bases its estimates and assumptions on historical experience, expectations, forecasts, and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may differ and be affected by changes in those estimates.

Foreign Currency

The reporting currency of the Company is the U.S. dollar. Financial statements of subsidiaries whose functional currency is not the U.S. dollar are translated at exchange rates in effect at the balance sheet date for assets and liabilities and at average exchange rates for revenues and expenses for the respective periods. Translation adjustments are recorded in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets.

The Company is exposed to foreign currency risk to the extent that it enters into transactions denominated in currencies other than its subsidiaries’ respective functional currencies. Transactions denominated in currencies other than subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the Company’s condensed consolidated balance sheets related to these items will result in unrealized foreign currency transaction gains and losses based upon period-end exchange rates. The Company also records realized foreign currency transaction gains and losses upon settlement of the transactions. Foreign currency transaction gains and losses resulting from the conversion of the transaction currency to functional currency are included in other income (expense), net in the condensed consolidated statements of operations.

Fair Value Measurements

The Company evaluates the fair value of certain assets and liabilities using the fair value hierarchy. Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

•

Level 1—Observable inputs, which include quoted prices in active markets;

•

Level 2—Observable inputs other than the quoted prices in active markets that are observable either directly or indirectly, such as quoted prices in markets that are not active, or other inputs such as broker quotes, benchmark yield curves, credit spreads and market interest rates for similar securities that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

•

Level 3—Unobservable inputs that are supported by little or no market activity and that are based on management’s assumptions, including fair value measurements determined using pricing models, discounted cash flow methodologies or similar techniques.

The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

For assets that are measured using quoted prices in active markets, the total fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability.

Assets and liabilities that are measured at fair value on a non-recurring basis include property and equipment, intangible assets, and goodwill. The Company recognizes these items at fair value upon initial recognition when acquired through a business combination or an asset acquisition or when they are considered to be impaired. The fair value of these assets and liabilities are determined with valuation techniques using the best information available and may include quoted market prices, market comparables and discounted cash flow models.

Due to their short-term nature, the carrying amounts reported in the Company’s condensed consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash and checking deposits, money market funds, and U.S. government and agency securities. The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.

Restricted cash for collateralizing letters of credit and corporate credit cards is included in other noncurrent assets in the condensed consolidated balance sheets. The Company issues letters of credit in the ordinary course of business, including for lease arrangements. Letters of credit totaling $2.3 million and $2.1 million were outstanding as of March 31, 2025 and December 31, 2024, respectively.

The following table provides a reconciliation of cash, cash equivalents and restricted cash included in the condensed consolidated balance sheets to the amounts included in the condensed consolidated statements of cash flows (in thousands):


	March 31,		December 31,
	2025		2024
Cash and cash equivalents	$	159,681	$	54,393
Restricted cash		2,679		2,447
Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows	$	162,360	$	56,840

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are non-interest bearing and represent amounts billed and currently due from customers at the gross invoiced amount as well as unbilled amounts related to unconditional rights for consideration to be received for services performed but not yet invoiced. A receivable is recorded when the Company has an unconditional right to receive payment. Accounts receivable consists of the following (in thousands):


	March 31,		December 31,
	2025		2024
Billed accounts receivable	$	6,909	$	6,516
Unbilled accounts receivable		2,562		3,672
Total accounts receivable	$	9,471	$	10,188

On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance for credit losses. This assessment is based on management’s evaluation of relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the receivable.

The Company did not have any allowance for credit losses as of either March 31, 2025 or December 31, 2024.

Materials and Supplies, Net

Materials and supplies, including spare parts, are carried at average cost and recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets. Materials and supplies used in the production of quantum computing systems to be made commercially available are capitalized to property and equipment when installed. Materials and supplies used to support customer contracts, for maintenance, or for research and development efforts are expensed when consumed. The Company capitalized $2.1 million and $1.0 million of materials and supplies to property and equipment for the three months ended March 31, 2025 and 2024, respectively.

Materials and supplies are evaluated regularly for excess quantities and obsolescence. This evaluation includes analysis of the Company's current and future strategic plans, risk of technological obsolescence, and general market conditions. During each of the three months ended March 31, 2025 and 2024, excess and obsolescence charges were less than $0.1 million.

Investments

Management determines the appropriate classification of investments at the time of purchase based upon management’s intent with regard to such investments. The Company primarily invests in debt securities and classifies its investments as available-for-sale at the time of purchase if they are available to support either current or future operations. This classification is re-evaluated at each balance sheet date. Investments not considered cash equivalents, with remaining contractual maturities of one year or less from the balance sheet date are classified as short-term investments, and those with remaining contractual maturities greater than one year from the balance sheet date are classified as long-term investments. All investments are recorded at their estimated fair value, and any unrealized gains and losses are recorded in the condensed consolidated balance sheets in accumulated other comprehensive loss. Realized gains and losses on sales and maturities of investments are determined based on the specific identification method and are recognized in the condensed consolidated statements of operations in other income (expense), net. Accrued interest receivable on available-for-sale investments is recorded in the condensed consolidated balance sheets in prepaid expenses and other current assets.

The Company performs periodic evaluations to determine whether any declines in the fair value of investments below amortized cost are credit losses or impairments. The evaluation consists of qualitative and quantitative factors regarding the severity of the unrealized loss, as well as the Company’s ability and intent to hold the investments until a forecasted recovery occurs. Declines in fair value are considered to be credit losses if they are related to deterioration in credit risk or are considered impairments if it is likely that the underlying securities will be sold prior to a full recovery of their cost basis. Credit losses and impairments are determined based on the specific identification method and are reported in other income (expense), net in the condensed consolidated statements of operations.

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation. Historical cost of fixed assets is the cost as of the date acquired. Hardware and labor costs associated with the building of quantum computing systems and supporting equipment are capitalized in the period the costs are incurred when it is probable that such costs will provide future economic benefit. The costs of quantum computing systems and supporting equipment that are used in research and development activities and have alternative future uses are capitalized. Costs to maintain quantum computing systems are expensed as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are as follows:


Computer equipment and acquired computer software		3 – 5 years
Machinery, equipment, furniture and fixtures		4 – 7 years
Quantum computing systems		3 years
Leasehold improvements		Shorter of the lease term or the estimated useful life of the related asset

The Company evaluates the useful life of its assets periodically and whenever events or changes in circumstances indicate that the useful life may have changed. In assessing useful lives, the Company considers, among other factors, the use of the asset, changes in technology, and the competitive environment.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and current operating lease liabilities and operating lease liabilities, net of current portion on the Company’s condensed consolidated balance sheets. As of March 31, 2025, the Company has no financing lease arrangements. The Company recognizes lease expense for its operating leases on a straight-line basis over the term of the lease.

The Company records a ROU asset and lease liability in connection with its operating leases. The Company’s lease portfolio is comprised primarily of real estate leases, which are accounted for as operating leases. The Company elected the practical expedient to not separate lease and non-lease components for all leases.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments, including the impact of any lease incentives, as applicable, over the lease term. An amendment to a lease is assessed to determine if it represents a lease modification or a separate contract. Lease modifications are reassessed as of the effective date of the modification using an incremental borrowing rate based on the information available at the commencement date. For modified leases the Company also reassesses the lease classification as of the effective date of the modification.

The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, because the interest rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

The Company’s lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company considers contractual-based factors such as the nature and terms of the renewal or termination, asset-based factors such as physical location of the asset and entity-based factors such as the importance of the leased asset to the Company’s operations to determine the lease term. The Company generally uses the base non-cancelable lease term when determining the ROU assets and lease liabilities.

Software Development Costs

The Company incurs software development costs for internal-use software, which the Company primarily uses to provide services to its customers, as well as for external-use software that will be part of a product to be sold, leased, or marketed.

Internal-Use Software

The costs to purchase and develop internal-use software are capitalized from the time that the preliminary project stage is completed, and it is considered probable that the software will be used to perform the function intended, until the time the software is placed in service for its intended use. Any costs incurred during subsequent efforts to upgrade and enhance the functionality of the software are also capitalized. Once this software is ready for its intended use, these costs are amortized on a straight-line basis over the estimated useful life of the software, which is typically assessed to be three years. Capitalized internal-use software is recorded within intangible assets, net, in the condensed consolidated balance sheets. During the three months ended March 31, 2025 and 2024, the Company capitalized $1.5 million and $2.6 million, respectively. The Company amortized $1.5 million and $1.1 million of capitalized internal-use software costs during the three months ended March 31, 2025 and 2024, respectively.

External-Use Software

Costs incurred in researching and developing external-use software are expensed as incurred until technological feasibility is established. Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. Generally, this occurs shortly before the products are released to production. No external-use software costs were capitalized during any of the three months ended March 31, 2025 and 2024.

Business Combinations

The Company recognizes and measures the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. Goodwill as of the acquisition date represents the excess of the purchase consideration of an acquired business over the fair value of the underlying net tangible and intangible assets acquired net of liabilities assumed. The purchase consideration is determined based on the fair value of the assets transferred and liabilities assumed after considering any transactions that are separate from the business combination. Any adjustments to provisional amounts that are identified during the measurement period, not to exceed one year from the date of acquisition, are recorded in the reporting period in which the adjustment amounts are determined. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the Company’s condensed consolidated statements of operations.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment and other long-term assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying amount of the underlying asset exceeds its fair value. Impairment losses were not material for the three months ended March 31, 2025 and 2024.

Warrant Liabilities

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued upon exercise or at each reporting date for the unexercised warrants, with changes in the fair value reported in the condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. The warrants of dMY assumed in the Business Combination are classified as liabilities and remeasured at each reporting period. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

Revenue Recognition

The Company derives revenue from the design, development, construction and sale of specialized quantum computing hardware together with related maintenance and support, from providing access to its quantum-computing-as-a-service (“QCaaS” or “Platform” services), and from consulting services related to co-developing algorithms on the quantum computing systems. The Company applies the provisions of the FASB Accounting Standards Update (“ASU”), Revenue from Contracts with Customers (“ASC 606”), and all related applicable guidance. The core principle of ASC 606 is that an entity shall recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To support this core principle, the Company applies the following five step approach:

Identify the contract with the customer

Identify the performance obligations

Determine the transaction price

Allocate the transaction price to the performance obligations

Recognize revenue when (or as) the entity satisfies a performance obligation

Certain of the Company’s contracts contain multiple performance obligations, most commonly in contracts for the sale of specialized quantum computing hardware together with related maintenance and support. Such contracts may also include access to the Company’s QCaaS. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. When there are multiple performance obligations in a contract, the Company allocates the transaction price to each performance obligation based on its standalone selling price when available. The Company determines standalone selling price based on the observable price of a product or service when it sells the products or services separately in similar circumstances and to similar customers. Certain products and services have limited or no history of being sold on a standalone basis, requiring the Company to estimate the standalone selling price. The Company estimates the standalone selling price based on other contracts for similar products and services adjusted for differing terms than the contract being evaluated, as well as internal pricing guidelines and market factors. In addition, the Company takes into consideration the estimated costs to be incurred to satisfy the performance obligation plus an appropriate profit margin.

Performance obligations are satisfied over time if the customer receives the benefits as the Company performs the work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for performance to date. For performance obligations related to specialized quantum computing hardware and consulting services, revenue is recognized over time based on the efforts incurred to date relative to the total expected effort, primarily based on a cost-to-cost input measure. The Company applies judgment to determine a reasonable method to measure progress and to estimate total expected effort. Factors considered in these estimates include the Company's historical performance, the availability, productivity and cost of labor, the nature and complexity of work to be performed, the effect of change orders, availability and cost of materials, and the effect of any delays in performance.

The Company has determined that its QCaaS contracts represent a combined, stand-ready performance obligation to provide access to its quantum computing systems together with related maintenance and support. The transaction price generally consists of a fixed fee for a minimum volume of usage to be made available over a defined period of access. Fixed fee arrangements may also include a variable component whereby customers pay an amount for usage over contractual minimums contained in the contracts. For performance obligations related to providing QCaaS access, fixed fees are recognized on a straight-line basis over the access period. Variable usage fees are recognized in the period they occur. The Company has determined that contracts that contain consulting services related to co-developing quantum computing algorithms and the ability to use its quantum computing systems to run such algorithms represent a combined performance obligation that is satisfied over-time.

For the three months ended March 31, 2025 and 2024, substantially all revenue was recognized based on transfer of service over time. Revenues recognized at a point in time were not material. In arrangements with cloud service providers, the cloud service provider is considered the customer and IonQ does not have any contractual relationships with the cloud service providers’ end users. For these arrangements, revenue is recognized at the amount charged to the cloud service provider and does not reflect any mark-up to the end user.

The Company may enter into multiple contracts with a single counterparty at or near the same time. The Company will combine contracts and account for them as a single contract when one or more of the following criteria are met: (i) the contracts are negotiated as a package with a single commercial objective; (ii) consideration to be paid in one contract depends on the price or performance of the other contract; and (iii) goods or services promised are a single performance obligation. Consideration payable to a customer includes cash amounts that an entity pays, or expects to pay, to the customer. For arrangements that contain consideration payable to a customer, the Company uses judgment in determining whether such payments are a reduction of the transaction price or a payment to the customer for a distinct good or service.

The variable fees associated with the QCaaS are generally billed a month in arrears. Customers also have the ability to make advance payments. Advance payments are recorded as a contract liability until services are delivered or obligations are met and revenue is earned. Contract liabilities to be recognized in the succeeding 12-month period are classified as current and the remaining amounts are classified as non-current liabilities in the Company’s condensed consolidated balance sheets.

Assets Recognized from Costs to Obtain a Contract

Sales commissions paid to employees and third parties are considered incremental costs to obtain a contract with a customer. These costs are capitalized in the period a customer contract is executed and are amortized as an expense consistent with the transfer of the goods or services to the customer.

Capitalized costs are recorded in prepaid expenses and other current assets and other noncurrent assets in the condensed consolidated balance sheets. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less. As of March 31, 2025 and December 31, 2024, total capitalized costs were $2.2 million and $2.4 million, respectively. Amortization expense was $0.3 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively, and is included in sales and marketing in the condensed consolidated statements of operations.

Research and Development

Research and development expenses consist of personnel-related costs, including salaries, benefits and stock-based compensation, and allocated overhead costs for the Company’s research and development function. Unlike a standard computer, design and development efforts continue throughout the useful life of the Company’s quantum computing systems to ensure proper calibration and optimal functionality. Research and development expenses also include purchased hardware and software costs related to quantum computing systems constructed for research purposes that are not probable of providing future economic benefit and have no alternate future use, as well as costs associated with third-party research and development arrangements.

Under an agreement with Duke University (“Duke”), the Company issued common shares to Duke in consideration for research and development services through July 15, 2026. The agreement is considered a research and development service arrangement and is recorded as a prepayment based on the fair value of the common stock issued and is amortized over the term of the arrangement as services are received and is recognized in research and development in the condensed consolidated statements of operations. Following the departure of the Company's Chief Technology Officer, Duke is no longer considered a related party as of July 1, 2024. Transactions with Duke under the agreement are not material to the Company's condensed consolidated financial position and results of operations.

Stock-Based Compensation

The Company measures and records the expense related to stock-based awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the estimated fair value for stock options. The Black-Scholes option-pricing model requires the use of subjective assumptions, which determine the fair value of stock option awards, including the option’s expected term, the price volatility of the underlying common stock, risk-free interest rates, and the expected dividend yield of the common stock. The assumptions used to determine the fair value of the stock options represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. The Company records forfeitures as they occur.

Stock-based compensation cost for restricted stock units and performance-based restricted stock units is measured based on the fair value of the Company’s common stock on the grant date. The fair value of performance-based restricted stock units with a market condition is estimated on the date of grant using the Monte Carlo simulation model. The Monte Carlo simulation model requires the use of subjective assumptions, which determine the fair value of these awards, including price volatility, contractual term, discount rate, risk-free interest rates, and the expected dividend yield of the common stock. The assumptions used to determine the fair value of the performance-based restricted stock awards represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. For awards with a performance-based vesting condition, including those with a market condition, the Company records stock-based compensation cost if it is probable that the performance conditions will be achieved. Stock-based compensation cost will be recognized if the performance condition is satisfied, even if the market condition is not met and the award does not vest. At each reporting period, the Company reassesses the probability of the achievement of the performance conditions and any change in expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of the adjustment.

The Company records stock-based compensation expense for incentive compensation liabilities based on estimated payments to employees for which the Company expects to settle the liability by granting restricted stock units. For these awards, stock-based compensation expense is accrued commencing at the service inception date, which generally precedes the grant date, through the end of the requisite service period.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, investments, and trade accounts receivable. The Company maintains the majority of its cash, cash equivalents, restricted cash and investments with three financial institutions. The Company’s deposits routinely exceed amounts guaranteed by the Federal Deposit Insurance Corporation.

The Company’s accounts receivable are derived from customers primarily located in the U.S., including the U.S. government. The Company performs periodic evaluations of its customers’ financial condition and generally does not require its customers to provide collateral or other security to support accounts receivable and maintains an allowance for credit losses. Credit losses historically have not been material.

Significant customers are those that represent more than 10% of the Company’s total revenue. For the three months ended March 31, 2025, the Company had two significant customers that accounted for 70% of total revenue. For the three months ended March 31, 2024, the Company had two significant customers that accounted for 69% of total revenue.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock during the period, plus common stock equivalents, outstanding during the period. If the Company reports a net loss, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, as their effect would be antidilutive.

The following table sets forth the computation of basic and diluted loss per share attributable to common stockholders (in thousands, except share and per share data):


	Three Months Ended March 31,
Numerator:	2025			2024
Net loss attributable to common stockholders	$	(32,252	)	$	(39,592	)
Denominator:
Weighted average shares used in computing net loss per share attributable to common stockholders— basic and diluted		228,759,209			208,159,439
Net loss per share attributable to common stockholders—basic and diluted	$	(0.14	)	$	(0.19	)

In periods with a reported net loss, the effect of stock options, warrants, unvested restricted stock units, unvested performance-based restricted stock units, and unvested common stock (including unvested restricted common stock) are excluded and diluted loss per share is equal to basic loss per share. The following is a summary of the weighted average common stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share:


	Three Months Ended March 31,
	2025		2024
Common stock options outstanding		15,390,920		20,753,133
Warrants to purchase common stock		543,152		8,301,202
Public warrants		1,985,157		5,228,253
Unvested restricted stock units		14,873,452		16,221,026
Unvested performance-based restricted stock units		1,939,821		2,030,526
Unvested common stock		187,110		379,691
Total		34,919,612		52,913,831

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement -- Reporting Comprehensive Income -- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional expense disclosures by public business entities in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard update on its financial statement disclosures.

3. BUSINESS COMBINATIONS

Qubitekk Federal, LLC

On December 27, 2024, the Company acquired Qubitekk Federal, LLC (“Qubitekk”) for total consideration of approximately $22.1 million of cash consideration, of which $15.5 million was paid at closing, with the remainder to be paid over the eighteen months following the acquisition date, subject to reductions for indemnities, working capital adjustments, and certain other conditions that existed at the acquisition date. The holdback liabilities are recorded in accrued expenses and other current liabilities and other noncurrent liabilities on the condensed consolidated balance sheets. The acquisition supports the Company’s quantum networking capabilities by expanding its quantum networking expertise and technology portfolio. The Company incurred approximately $1.5 million in acquisition costs, which were primarily related to fees associated with financial and legal advisors and were recorded in general and administrative expenses in the condensed consolidated statements of operations for the year ended December 31, 2024.

The purchase price allocation is preliminary and subject to change. Upon completion of the final purchase price allocation, the final fair values of assets acquired and liabilities assumed and resulting goodwill may differ materially from the preliminary assessment. The Company has estimated the preliminary fair values of Qubitekk assets acquired and liabilities assumed based on information currently available and will continue to adjust those estimates as additional information pertaining to events or circumstances present at the acquisition date becomes available during the measurement period. The current period adjustments were $0.8 million, primarily related intangible assets, with an offset to goodwill. The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, including measurement period adjustments, as of the acquisition date (in thousands):


	Preliminary Fair Value		Measurement Period Adjustments			Updated Preliminary Fair Value
Accounts receivable	$	400	$	32		$	432
Prepaid expenses and other current assets		531		279			810
Intangible assets		11,900		(1,050	)		10,850
Goodwill		9,220		764			9,984
Other noncurrent assets		3		—			3
Unearned revenue		—		(25	)		(25	)
Total fair value of net assets acquired	$	22,054	$	—		$	22,054

The goodwill of $10.0 million is primarily attributable to Qubitekk's specialized assembled workforce and expected future synergies from combining operations. We expect the goodwill from this acquisition will be deductible for income tax purposes. Identifiable intangibles recognized consists of $5.9 million in customer relationships, $4.0 million in developed technology, $0.8 million in trademarks, each with estimated useful lives of 5 years, and $0.2 million in backlog with an estimated useful life of 1 year. Fair values of intangible assets were determined using income approaches, include the relief from royalty and multi-period excess earnings methods.

The Company has included the revenue and expenses of Qubitekk in its condensed consolidated financial statements from the date of acquisition. No summarized unaudited pro forma results are provided for the Qubitekk acquisition due to the immateriality of this acquisition relative to the Company's condensed consolidated financial position and results of operations.

4. CASH, CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS

The following table summarizes the Company’s unrealized gains and losses and estimated fair value of cash, cash equivalents, restricted cash and investments in available-for-sale securities recorded in the condensed consolidated balance sheets (in thousands):


	As of March 31, 2025									As of December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Cash and money market funds	$	24,871	$	—	$	—		$	24,871	$	33,204	$	—	$	—		$	33,204
Corporate notes and bonds		13,923		14		(5	)		13,932		45,823		22		(53	)		45,792
US government and agency		661,029		210		(216	)		661,023		287,084		319		(118	)		287,285
Total cash, cash equivalents, restricted cash and investments	$	699,823	$	224	$	(221	)	$	699,826	$	366,111	$	341	$	(171	)	$	366,281

Unrealized losses related to investments were primarily a result of interest rate fluctuations. The following tables present information about the Company’s investments in available-for-sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position (in thousands):


	As of March 31, 2025
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Loses
Corporate notes and bonds	$	—	$	—		$	3,985	$	(5	)	$	3,985	$	(5	)
US government and agency		425,697		(211	)		1,995		(5	)		427,692		(216	)
Total	$	425,697	$	(211	)	$	5,980	$	(10	)	$	431,677	$	(221	)


	As of December 31, 2024
	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Loses
Corporate notes and bonds	$	—	$	—		$	24,396	$	(53	)	$	24,396	$	(53	)
US government and agency		67,600		(111	)		3,987		(7	)		71,587		(118	)
Total	$	67,600	$	(111	)	$	28,383	$	(60	)	$	95,983	$	(171	)

The Company did not have any allowance for credit losses as of either March 31, 2025 or December 31, 2024. The Company neither intends to nor believes that it is more likely than not that it will be required to sell the investments in an unrealized loss position before the recovery of the associated amortized cost basis.

The estimated fair value of the Company’s cash, cash equivalents, restricted cash and investments in available-for-sale securities as of March 31, 2025, aggregated by investment category and classified by contractual maturity date, is as follows (in thousands):


	1 Year or Less		Greater than 1 Year		Total
Cash and money market funds	$	22,262	$	2,609	$	24,871
Corporate notes and bonds		13,932		—		13,932
US government and agency		552,162		108,861		661,023
Total	$	588,356	$	111,470	$	699,826

5. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):


	Fair Value Measured as of
	March 31, 2025
	Level 1		Level 2		Level 3		Total
Assets
Cash, cash equivalents and restricted cash:
Cash and money market funds(1)	$	24,871	$	—	$	—	$	24,871
US government and agency		—		137,489		—		137,489
Total cash, cash equivalents and restricted cash	$	24,871	$	137,489	$	—	$	162,360
Short-term investments:
Corporate notes and bonds		—		13,932		—		13,932
US government and agency		—		414,673		—		414,673
Total short-term investments	$	—	$	428,605	$	—	$	428,605
Long-term investments:
US government and agency		—		108,861		—		108,861
Total long-term investments	$	—	$	108,861	$	—	$	108,861
Total assets	$	24,871	$	674,955	$	—	$	699,826
Liabilities
Public warrants	$	21,241	$	—	$	—	$	21,241


	Fair Value Measured as of
	December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Cash, cash equivalents and restricted cash:
Cash and money market funds(1)	$	33,204	$	—	$	—	$	33,204
US government and agency		—		23,636		—		23,636
Total cash, cash equivalents and restricted cash	$	33,204	$	23,636	$	—	$	56,840
Short-term investments:
Corporate notes and bonds		—		43,868		—		43,868
US government and agency		—		242,028		—		242,028
Total short-term investments	$	—	$	285,896	$	—	$	285,896
Long-term investments:
Corporate notes and bonds		—		1,924		—		1,924
US government and agency		—		21,621		—		21,621
Total long-term investments	$	—	$	23,545	$	—	$	23,545
Total assets	$	33,204	$	333,077	$	—	$	366,281
Liabilities
Public warrants	$	70,688	$	—	$	—	$	70,688

(1)

Includes money market funds associated with the Company’s overnight investment sweep account and cash collateralizing the Company's letters of credit and corporate credit cards.

Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers between levels during the current period. On March 31, 2025, the closing trading price of the public warrants was $11.11 per warrant.

6. PROPERTY AND EQUIPMENT, NET

Property and equipment, net is composed of the following (in thousands):


	March 31,			December 31,
	2025			2024
Quantum computing systems	$	39,153		$	38,374
Leasehold improvements		18,003			17,921
Machinery, equipment, furniture and fixtures		19,420			16,683
Computer equipment and acquired computer software		7,096			7,395
Gross property and equipment		83,672			80,373
Less: accumulated depreciation		(32,028	)		(27,612	)
Total property and equipment, net	$	51,644		$	52,761

Depreciation expense for the three months ended March 31, 2025 and 2024, was $4.4 million and $2.7 million, respectively.

7. OTHER BALANCE SHEET ACCOUNTS

Prepaid expenses and other current assets are composed of the following (in thousands):


	March 31,		December 31,
	2025		2024
Materials and supplies	$	23,967	$	18,658
Prepaid expenses		4,452		4,890
Accrued interest receivable		4,151		2,221
Other current assets		6,657		2,556
Total prepaid expenses and other current assets	$	39,227	$	28,325

Accrued expenses and other current liabilities are composed of the following (in thousands):


	March 31,		December 31,
	2025		2024
Accrued salaries and other payroll liabilities	$	8,741	$	10,368
Accrued professional services		6,638		936
Acquisition holdback liabilities		4,950		3,300
Accrued equipment and services liabilities for research and development		785		534
Accrued expenses—other		2,481		1,286
Total accrued expenses and other current liabilities	$	23,595	$	16,424

8. COMMITMENTS AND CONTINGENCIES

Warranties and Indemnification

The Company’s commercial services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company’s documentation under normal use and circumstances.

The Company’s arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe third-party intellectual property rights. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.

Stockholder Lawsuit

As part of the consolidated amended complaint, certain members of the Company’s board of directors as well as other dMY-related defendants (“Additional Defendants”) have been added as defendants to the case. On February 7, 2023, the IonQ Defendants and the Additional Defendants each filed a motion to dismiss the consolidated amended complaint. On March 23, 2023, lead plaintiffs filed their omnibus opposition to the motions to dismiss. On April 26, 2023, the IonQ Defendants and the Additional Defendants each filed a reply in support of the motions to dismiss. On September 28, 2023, the District Court of Maryland issued an order dismissing plaintiffs' claims against the IonQ Defendants and the Additional Defendants with prejudice and directed the clerk to close the case. On October 26, 2023, the plaintiffs filed a motion for post-judgment relief, seeking to amend their consolidated amended complaint. The IonQ Defendants and Additional Defendants filed oppositions to plaintiffs’ motion on December 1, 2023, and plaintiffs filed their reply on January 8, 2024. On July 10, 2024, the plaintiffs' motion for post-judgment relief was denied and the District Court of Maryland directed the clerk to close the case. On July 26, 2024, the plaintiffs filed a Notice of Appeal with the Fourth Circuit Court of Appeals seeking to review the trial court's decision. Plaintiffs filed their Opening Brief in the Fourth Circuit on September 9, 2024. A response brief by IonQ Defendants was filed on October 8, 2024 and plaintiffs’ reply brief was filed on October 29, 2024. Oral argument in the Fourth Circuit occurred on January 31, 2025. On April 8, 2025, the Fourth Circuit held for the IonQ Defendants in a published opinion. Given the uncertainty of litigation and the legal standards that must be met for, among other things, success on the case merits, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from the associated suit.

9. WARRANTS

In November 2019, contemporaneously with a revenue arrangement, the Company entered into a contract, pursuant to which the Company agreed to issue warrants to acquire shares of Legacy IonQ Series B-1 preferred stock (the “Warrant Shares”) to a customer, subject to certain vesting events. Upon closing of the Business Combination, these warrants exercisable for Legacy IonQ Series B-1 preferred stock were assumed by the Company and converted into a warrant to purchase shares of common stock. In August 2020, 543,152 of the Warrant Shares vested and became immediately exercisable. The exercise price for the vested Warrant Shares is $1.38 per share and the warrant is exercisable through November 2029. Effective November 2024, no additional Warrant Shares can vest pursuant to the terms of the warrant agreement.

As part of the Business Combination, the Company assumed 7,500,000 public warrants on September 30, 2021. As of March 31, 2025, there were 1,911,858 public warrants to purchase common stock outstanding. Each warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share. The public warrants are classified as liabilities and remeasured at each reporting period. No public warrants have been redeemed by the Company as of March 31, 2025.

10. AT-THE-MARKET OFFERING

In February 2025, in connection with the commencement of an "at the market" offering program, the Company entered into an Equity Distribution Agreement (the "Equity Distribution Agreement") with Morgan Stanley & Co. LLC and Needham & Company, LLC, as sales agents ("the Sales Agents"), pursuant to which the Company could offer and sell, from time to time, through or to the Sales Agents, shares of the Company's common stock, par value $0.0001 per share (the "Shares"), having an aggregate gross offering price of up to $500 million ("2025 ATM Offering Program"). The Sales Agents were entitled to a commission of up to 3.25% of the gross proceeds of all shares sold under the Equity Distribution Agreement. On March 10, 2025, the Company terminated the Equity Distribution Agreement, after which no further Shares could be sold through the 2025 ATM Offering Program.

During the three months ended March 31, 2025, the Company sold a total of 16,038,460 shares of common stock through the 2025 ATM Offering Program for an aggregate purchase prices of $358.3 million, net of issuance costs of $14.3 million.

11. REVENUE

Disaggregated Revenue

The Company's revenues disaggregated by revenue source is as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Specialized quantum computing hardware	$	3,063	$	3,619
Platform, consulting and support services		4,503		3,963
Total revenue	$	7,566	$	7,582

The Company's revenues disaggregated by customer location is as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
United States	$	5,289	$	7,062
International		2,277		520
Total revenue	$	7,566	$	7,582

Remaining Performance Obligations

As of March 31, 2025, approximately $71.9 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied), including both funded (firm orders for which funding has been both authorized and appropriated by the customer) and unfunded (firm orders for which funding has not been appropriated) orders. Unexercised contract options are not included in remaining performance obligations until the time the option is exercised. The Company expects approximately 40% of the remaining performance obligations to be recognized as revenue within the next twelve months.

Unearned Revenue

The following table summarizes the changes in unearned revenue for the three months ended March 31, 2025 (in thousands):


	Total
Balance as of December 31, 2024	$	10,678
Revenue recognized		(4,047	)
New deferrals, net		5,430
Balance as of March 31, 2025	$	12,061

12. STOCK-BASED COMPENSATION

Equity Incentive Plans

The Company has a 2015 Equity Incentive Plan (the “2015 Plan”), which provided for the grant of share-based compensation to certain officers, directors, employees, consultants, and advisors. Upon the closing of the Business Combination, no further awards were made pursuant to the 2015 Plan and all outstanding Legacy IonQ stock options under the 2015 Plan were assumed by the Company. Such stock options granted under the 2015 Plan will continue to be governed by the terms of the 2015 Plan and the stock option agreements thereunder, until such outstanding options are exercised or until they terminate or expire by their terms. For awards granted under the 2015 Plan, vesting generally occurs over four to five years from the date of grant.

In August 2021, the Company’s board of directors adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which was subsequently approved by the Company’s stockholders in September 2021, and became effective upon the closing of the Business Combination. The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSU”), performance awards and other forms of awards to employees, directors, and consultants. The number of shares of the Company’s common stock reserved for issuance under the 2021 Plan automatically increases on January 1 of each year, through and including January 1, 2031, by 5% of the Fully Diluted Common Stock (as defined in the 2021 Plan) outstanding on December 31 of the preceding year, or a lesser number of shares determined by the Company’s board of directors prior to such increase. As of January 1, 2025, the number of shares reserved for issuance under the 2021 Plan increased by 14,532,010. For awards granted under the 2021 Plan, vesting terms range from one to four years from the date of grant. As of March 31, 2025, the Company had 33,470,867 shares available for grant under the 2021 Plan.

Under both equity incentive plans, all options granted have a contractual term of 10 years.

Stock Options

The stock option activity is summarized in the following table:


	Number of Option Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2024		16,687,129		$	2.40
Exercised		(2,822,394	)		0.43
Cancelled/ Forfeited		(410,638	)		2.58
Outstanding as of March 31, 2025		13,454,097		$	2.81		5.35	$	259.16
Exercisable as of March 31, 2025		11,380,024		$	2.31		5.08	$	224.83
Exercisable and expected to vest as of March 31, 2025		13,454,097		$	2.81		5.35	$	259.16

Early Exercised Stock Options

As of March 31, 2025 and December 31, 2024, there were 163,039 and 211,184 shares, respectively, subject to repurchase related to stock options early exercised and unvested. As of both March 31, 2025 and December 31, 2024, the Company recorded a liability related to these shares subject to repurchase in the amount of $0.4 million in its condensed consolidated balance sheets.

Restricted Stock Units

The RSU activity is summarized in the following table:


	Number of RSUs			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)
Outstanding as of December 31, 2024		14,509,717		$	9.54
Granted		2,447,244			32.01
Vested		(1,771,714	)		12.68
Forfeited		(420,752	)		9.62
Outstanding as of March 31, 2025		14,764,495		$	12.87		2.51
Expected to vest after March 31, 2025		14,743,995		$	12.87		2.51

During the three months ended March 31, 2025 and 2024, the Company released 206,316 and 1,064,518 RSUs, respectively, related to the settlement of an accrued bonus liability.

Performance-Based Restricted Stock Units

The Company grants performance-based restricted stock unit awards (“PSU”) to certain officers, employees, and consultants, which vest over approximately two to four years. The number of shares that can be earned will range from 0% to 300% of the target number of shares, based on the Company's achievement of certain financial and technical goals, as well as a stock price hurdle requirement for a portion of the awards. In the event that the stock price hurdle is not met at the time the PSUs vest, the maximum PSU opportunity shall be limited to target (100%) performance.

In February 2025, the Company granted a PSU award to its President and Chief Executive Officer, which vests over three years. The number of shares that can be earned will range from 0% to 200% of the target number of shares based on the Company's achievement of certain performance goals.

The number of PSUs expected to vest and for which compensation cost has been recognized is based on the number of awards that the Company believes are probable of vesting as of March 31, 2025.

For the portion of the PSUs subject to the stock price hurdle, the fair value was determined using a Monte Carlo simulation model. The Monte Carlo simulation model requires estimates of subjective assumptions, which affect the fair value of each PSU. For PSUs granted during the three months ended March 31, 2025 and 2024, the assumptions for the Monte Carlo simulation model were developed as follows:

Expected Volatility—The expected volatility was determined based on the Company's historical and implied stock price volatility.

Contractual Term—The Company utilizes the remaining performance period on the date of grant as the contractual term, which represents the period that the PSUs are expected to be outstanding.

Risk-Free Interest Rate—The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term.

Dividend Yield—The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.

Fair Value of Underlying Common Stock—The Company utilizes the closing stock price on the date of grant as the fair value of the common stock underlying such PSUs in the Monte Carlo simulation model.

The assumptions used to estimate the fair value of PSUs subject to the stock price hurdle are as follows:


	Three Months Ended March 31,
	2025			2024
Risk-free interest rate		4.28	%		—	%
Contractual term (in years)		1.94			—
Expected volatility		112.50	%		—	%
Dividend yield		—	%		—	%

The PSU activity is summarized in the following table, based on awards at target:


	Number of PSUs			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)
Outstanding as of December 31, 2024		3,972,257		$	16.17
Granted		965,630			30.73
Vested		(60,175	)		18.03
Forfeited		(73,548	)		18.03
Outstanding as of March 31, 2025		4,804,164		$	19.05		2.11
Expected to vest after March 31, 2025(1)		10,544,490		$	16.39		2.11

(1)

Represents the number of PSUs expected to vest, which may exceed the target number of shares, based on the Company's probability assessment of expected performance during the performance period.

Stock-Based Compensation Expense

Total stock-based compensation expense for stock option awards, RSUs and PSUs, which are included in the condensed consolidated financial statements, is as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Cost of revenue	$	1,063	$	1,005
Research and development		17,392		12,366
Sales and marketing		4,356		2,775
General and administrative		10,442		5,915
Stock-based compensation, net of amounts capitalized		33,253		22,061
Capitalized stock-based compensation—Property and equipment, net and Intangible assets, net		913		1,598
Total stock-based compensation	$	34,166	$	23,659

Unrecognized Stock-Based Compensation

A summary of the Company's remaining unrecognized compensation expense and the weighted-average remaining amortization period as of March 31, 2025, related to its non-vested RSUs, PSUs, and stock option awards is presented below (in millions, except time period amounts):


	Unrecognized Expense		Weighted- Average Amortization Period (Years)
Restricted stock units	$	179.8		2.8
Performance-based restricted stock units		112.8		2.1
Stock options		10.5		1.1

13. INCOME TAXES

Income tax expense was less than $0.1 million for each of the three months ended March 31, 2025 and 2024, due to the Company's international operations. The effective tax rate for each period differs from the statutory rate primarily as a result of not recognizing a deferred tax asset for losses due to having a full valuation allowance against deferred tax assets.

The realization of tax benefits of deferred tax assets is dependent upon future levels of taxable income, of an appropriate character, in the periods the items are expected to be deductible or taxable. Based on the available objective evidence, the Company does not believe it is more likely than not that the net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against the net deferred tax assets as of March 31, 2025, and December 31, 2024. The Company intends to maintain the remaining valuation allowance until sufficient positive evidence exists to support a reversal of, or decrease in, the valuation allowance.

14. LEASES

The Company has operating leases for its various facilities, including its primary locations in College Park, Maryland; Bothell, Washington; and Arlesheim, Switzerland. The College Park, Maryland facility is used for research and development, servicing customers and corporate functions and is leased from the University of Maryland ("UMD"). The Bothell, Washington facility is used for manufacturing, research and development, servicing customers, and general office space. The Arlesheim, Switzerland facility is used for servicing customers and general office space. Both the College Park, Maryland, and Bothell, Washington, leases expire in 2030 and the Arlesheim, Switzerland lease expires in 2029. As of March 31, 2025 and December 31, 2024, the Company's weighted-average remaining lease term was 5.0 years and 5.2 years, respectively. As of both March 31, 2025 and December 31, 2024, the weighted-average discount rate was 8.2%.

The Bothell, Washington facility lease includes a landlord-provided tenant improvement allowance to offset a portion of the costs of the construction of leasehold improvements. The Company determined that the leasehold improvements will be Company-owned, and as such, reflected the lease incentive as a reduction of lease payments used to measure the operating lease liability and ROU asset as of the lease commencement date.

The components of lease cost were as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Operating lease cost(1)
Fixed lease cost	$	670	$	554
Short-term cost		84		45
Total operating lease cost	$	754	$	599

(1)

The lease costs are reflected in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Cost of revenue	$	89	$	63
Research and development		493		334
Sales and marketing		88		21
General and administrative		84		181
Total operating lease cost	$	754	$	599

Supplemental cash flow and other information related to operating leases was as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Cash payments (receipts) included in the measurement of operating lease liabilities, net	$	801	$	(2,323	)

As of March 31, 2025, maturities of operating lease liabilities are as follows (in thousands):


	Amount
Year Ending December 31,
2025	$	2,881
2026		4,217
2027		4,281
2028		4,381
2029		3,943
Thereafter		1,510
Total lease payments	$	21,213
Less: imputed interest		(3,853	)
Present value of operating lease liabilities	$	17,360

15. RELATED PARTY TRANSACTIONS

The Company has contracts with UMD, including contracts to provide certain quantum computing services and facility access, to provide customized quantum computing hardware, and an operating lease. Following the departure of the Company's Chief Scientist, UMD is no longer considered a related party as of January 1, 2024.

Revenue recognized from contracts entered into while UMD was a related party was zero and $1.2 million for the three months ended March 31, 2025 and 2024, respectively.

The Company had the following balances related to contracts entered into while UMD was a related party, as reflected in the condensed consolidated balance sheets (in thousands):


	March 31,		December 31,
	2025		2024
Assets
Operating lease right-of-use asset	$	3,031	$	3,120
Liabilities
Current portion of operating lease liabilities	$	686	$	681
Operating lease liabilities, net of current portion		2,747		2,843

16. SEGMENT INFORMATION

The Company operates as one operating segment as its Chief Executive Officer, who is the chief operating decision maker, reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Consolidated net loss as reported on the condensed consolidated statements of operations is used to evaluate performance and allocate resources. The following table presents revenue, significant expenses, and segment profit and loss (in thousands):


	Three Months Ended March 31,
	2025			2024
Revenue	$	7,566		$	7,582
Less:
Operating costs and expenses excluding stock-based compensation:
Cost of revenue (excluding depreciation and amortization)		3,252			2,409
Research and development		22,561			20,002
Sales and marketing		4,254			3,926
General and administrative		13,364			8,105
Stock-based compensation		33,253			22,061
Depreciation and amortization		6,561			3,955
Other segment items:
(Gain) loss on change in fair value of warrant liabilities		(38,494	)		(8,627	)
Interest income, net		(4,894	)		(4,799	)
Other (income) expense, net		(51	)		134
Income tax (benefit) expense		12			8
Net loss	$	(32,252	)	$	(39,592	)

17. SUBSEQUENT EVENTS

On April 30, 2025, the Company completed the acquisition of a controlling stake of ID Quantique SA, a global leader in quantum-safe networking and quantum detection systems, headquartered in Geneva, Switzerland, in an all-stock transaction for 4,215,740 shares of common stock, subject to customary post-closing adjustments. Due to the limited time between the acquisition date and the Company's filing of this Quarterly Report on Form 10-Q, the initial accounting for the business combination is incomplete and the Company is not yet able to disclose the preliminary amounts to be recognized as of the acquisition date for assets acquired and liabilities assumed.

On May 6, 2025, the Company entered into a definitive agreement to acquire Lightsynq Technologies Inc., a Boston-based startup, to bolster the Company’s quantum networking and quantum computing roadmaps and teams. Also, on May 7, 2025, the Company entered into a definitive agreement to acquire Capella Space Corporation, a Colorado-based signals company, to serve as a platform for the future development of global quantum networking infrastructure. These are all-stock transactions which are expected to close in the next twelve months, subject to customary closing conditions. In connection with these transactions, the Company expects to issue an aggregate 24.2 million shares of common stock and stock options.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “may,” “should,” or similar language are intended to identify forward-looking statements.

It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report on Form 10-Q are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under “Risk Factors” in Part II, Item 1A herein and in our other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements included herein are made only as of the date hereof. Unless otherwise required by law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date of such statement.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, and our audited consolidated financial statements and related notes for the year ended December 31, 2024, filed with the SEC on February 26, 2025.

Overview

We are developing quantum computers and networks designed to solve some of the world’s most complex problems, and transform business, society and the planet for the better. We believe that our proprietary technology, our architecture, and the technology exclusively available to us through license agreements will offer us advantages both in terms of research and development, as well as the commercial value of our intended product offerings.

Today, we sell specialized quantum computing and networking hardware together with related maintenance and support. We also sell access to several quantum computers of various qubit capacities and are in the process of researching and developing technologies for quantum computers with increasing computational capabilities. We currently make access to our quantum computers available via three major cloud platforms, Amazon Web Services’ (“AWS”) Amazon Braket, Microsoft’s Azure Quantum and Google’s Cloud Marketplace, and also to select customers via our own cloud service. This cloud-based approach enables the broad availability of quantum-computing-as-a-service (“QCaaS”).

We supplement our offerings with professional services focused on assisting our customers in applying quantum computing and networking to their businesses. We also expect to sell full quantum computing systems to customers, either over the cloud or for local access. We also offer quantum networking products which offer customers secure communication networks and enable networked quantum computing.

We are still in the early stages of commercial growth. Since our inception we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend heavily on the successful development and further commercialization of our quantum computing systems. Our net losses were $32.3 million and $39.6 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $716.0 million. We expect to continue to incur significant losses for the foreseeable future as we prioritize reaching the technical milestones necessary to achieve an increasingly higher number of stable qubits and higher levels of fidelity than presently exists—prerequisites for quantum computing to reach broad quantum advantage.

Business and Technical Highlights

•

We announced the acceleration of our quantum networking and quantum computing roadmap via the intended acquisition of LightsynqTechnologies, Inc. Lightsynq's founders built the first-ever quantum repeater capable of extending the range of quantum networks, a key technology for enabling quantum devices to connect together in a future quantum internet. Lightsynq’s core mission is to use this same technology to build the world’s best photonic interconnects that link quantum processors at high speed.

•

We announced the expansion of our quantum networking business, naming Jordan Shapiro our first President and General Manager, Quantum Networking. To facilitate development of this network, we have announced the proposed acquisition of Capella, a Colorado-based signals platform leader for top-secret government and commercial applications.

•

We announced the joint development of a new quantum computing innovation center with EPB in Chattanooga, TN, housing the first quantum computing and networking hub. This deal includes the system sale of a Forte Enterprise system for $22 million for the two companies to jointly develop algorithms designed for energy grid optimization.

•

We announced that we have been selected by DARPA for the first stage of its Quantum Benchmarking Initiative (QBI). This program is designed to assess and validate the feasibility of developing industrially useful quantum computers ahead of conventional projections.

•

Additionally, working with the State of Maryland under its Capital of Quantum Initiative, we are progressing on our expected new headquarters on UMD's College Park campus, and are pleased to see that DARPA's Quantum Benchmarking Initiative has announced they will be a next door neighbor.

•

We announced that we have closed our acquisition of a majority stake of Geneva-based ID Quantique, a global leader in quantum-safe networking and quantum detection systems with offices in Seoul and Boston.

•

We announced the global availability of our Europe-based Forte Enterprise system, which can be accessed by customers through Amazon Braket, a managed quantum computing service from Amazon Web Services (AWS), as well as the IonQ Quantum Cloud.

•

We announced a flagship distributor partnership with Toyota Tsusho Corporation to accelerate quantum computing in Japan. This milestone marks our entrance into the Japanese market – reinforcing our commitment to advancing quantum computing opportunities globally.

•

We announced the signing of a Memorandum of Understanding with the Global Research and Development Center for Business by Quantum-AI Technology (G-QuAT), a division of one of the largest public research organizations in Japan, the National Institute of Advanced Industrial Science and Technology (AIST). This memorandum facilitates cooperation between us and G-QuAT intended to advance quantum computing technologies in Japan.

•

We announced a Memorandum of Understanding with Intellian Technologies, Inc., a leading global provider of satellite communication antennas and ground gateway solutions, to explore how secure quantum networking can transform satellite communications.

•

We participated in NVIDIA’s first-ever Quantum Day, taking place at GTC, where we shared details of several recent real-world demonstrations of quantum-accelerated computation for commercially-relevant applications. This included a ground-breaking milestone with Ansys, simulating the performance of a blood pump using quantum-processed data and achieving results up to 12% faster than classical computing alone.

•

We announced new research advancements in applying quantum computing to artificial intelligence (AI) and Machine Learning, marking significant progress in hybrid quantum-classical approaches that enhance both large language models (LLMs) and generative AI.

•

We announced the commissioning of a ground-breaking quantum system optimized for research and development to the U.S. Air Force Research Laboratory (AFRL) in Rome, New York.

•

We announced the completion of our next-generation ion trap vacuum package prototype intended to realize smaller, more compact, room temperature quantum systems. We have completed a state-of-the-art assembly chamber capable of manufacturing miniaturized ion trap vacuum packages that can sustain Extreme High Vacuum (XHV) – levels that are comparable to the vacuum levels found on the surface of the Moon.

•

We announced strong momentum toward our technological roadmap with a portfolio of more than 950 owned and controlled patents and patents pending with the inclusion of ID Quantique and the pending acquisition of Lightsynq.

•

We announced a significant milestone in the development of high-speed, mixed-species quantum logic gates for trapped-ion quantum computing and networking. The findings further our momentum in driving scalable, high-fidelity quantum networking and distributed quantum computing. The research shows a novel approach to achieving an orders-of-magnitude increase in physical gate speed of two-qubit gates between different atomic species.

•

We published new ground breaking Quantum Error Correction (QEC) research, releasing new QEC codes optimized for our trapped-ion long-chain architecture and showed they outperform the state-of-the-art.

The Merger Agreement

On March 7, 2021, Legacy IonQ, dMY and Ion Trap Acquisition Inc. (the “Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, at the closing, the Merger Sub was merged with and into Legacy IonQ, with Legacy IonQ continuing as the surviving corporation following the merger, being a wholly owned subsidiary of dMY and the separate corporate existence of the Merger Sub ceased (the “Business Combination”). Contemporaneously with the Business Combination, dMY changed its name to IonQ, Inc. and Legacy IonQ changed its name to IonQ Quantum, Inc. IonQ became the successor registrant with the SEC, meaning that Legacy IonQ’s financial statements for previous periods have been disclosed in the registrant’s periodic reports filed with the SEC.

Impact of the Macroeconomic Climate on Our Business

Inflationary factors, interest rates and overhead costs may adversely affect our operating results. High interest and inflation rates also present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future. These inflationary effects may be exacerbated by recent increases in U.S. tariffs. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the future on our operating costs, including due to supply chain constraints, consequences associated with bank failures, trade wars and the effect of recently heightened, scheduled, and threatened tariffs by the U.S. or its trading partners, geopolitical tensions in and around Ukraine, Israel and other areas of the world, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Key Components of Results of Operations

Revenue

We derive revenue from contracts associated with the design, development, construction and sale of specialized quantum computing hardware together with related maintenance and support, from contracts providing access to QCaaS, and from consulting services related to co-developing algorithms on quantum computing systems. In arrangements with the cloud service providers, the cloud service provider is considered the customer and we do not have any contractual relationships with the cloud service providers’ end users.

Certain of our contracts contain multiple performance obligations, most commonly in contracts for the sale of specialized quantum computing hardware together with related maintenance and support. Such contracts may also include access to our QCaaS. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. When there are multiple performance obligations in a contract, we allocate the transaction price to each performance obligation based on its standalone selling price when available. We determine standalone selling price based on the observable price of a product or service when we sell the products or services separately in similar circumstances and to similar customers. Certain products and services have limited or no history of being sold on a standalone basis, requiring us to estimate the standalone selling price. We estimate the standalone selling price based on other contracts for similar products and services adjusted for differing terms than the contract being evaluated, as well as internal pricing guidelines and market factors. In addition, we take into consideration the estimated costs to be incurred to satisfy the performance obligation plus an appropriate profit margin.

Performance obligations are satisfied over time if the customer receives the benefits as we perform the work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and we have a contractual right to payment for performance to date. For performance obligations related to specialized quantum computing hardware and consulting services, revenue is recognized over time based on the efforts incurred to date relative to the total expected effort, primarily based on a cost-to-cost input measure. We apply judgment to determine a reasonable method to measure progress and to estimate total expected effort. Factors considered in these estimates include our historical performance, the availability, productivity and cost of labor, the nature and complexity of work to be performed, the effect of change orders, availability and cost of materials, and the effect of any delays in performance.

We have determined that our QCaaS contracts represent a combined, stand-ready performance obligation to provide access to our quantum computing systems together with related maintenance and support. The transaction price generally consists of a fixed fee for a minimum volume of usage to be made available over a defined period of access. Fixed fee arrangements may also include a variable component whereby customers pay an amount for usage over contractual minimums contained in the contracts. For performance obligations related to providing QCaaS access, fixed fees are recognized on a straight-line basis over the access period. Variable usage fees are recognized in the period they occur. We have determined that contracts that contain consulting services related to co-developing quantum computing algorithms and the ability to use our quantum computing systems to run such algorithms represent a combined performance obligation that is satisfied over-time.

Operating Costs and Expenses

Cost of revenue

Cost of revenue primarily consists of expenses related to construction of specialized quantum computing hardware and delivery of our services, including personnel-related expenses, hardware costs, allocated overhead costs for customer facing functions, and costs associated with maintaining our in-service quantum computing systems to ensure proper calibration as well as costs incurred for maintaining the cloud on which the QCaaS resides. Personnel-related expenses include salaries, benefits, and stock-based compensation. Cost of revenue excludes depreciation and amortization related to our quantum computing systems and related software.

Research and development

Research and development expenses consist of personnel-related expenses, including salaries, benefits and stock-based compensation, and allocated overhead costs for our research and development functions. Unlike a standard computer, design and development efforts continue throughout the useful life of our quantum computing systems to ensure proper calibration and optimal functionality. Research and development expenses also include purchased hardware and software costs related to quantum computing systems constructed for research purposes that are not probable of providing a future economic benefit and have no alternate future use as well as costs associated with third-party research and development arrangements.

Sales and marketing

Sales and marketing expenses consist of personnel-related expenses, including salaries, commissions, benefits and stock-based compensation, costs for direct advertising, marketing and promotional expenditures and allocated overhead costs for our sales and marketing functions. We expect to continue to make the necessary sales and marketing investments to enable us to increase our market penetration and expand our customer base.

General and administrative

General and administrative expenses consist of personnel-related expenses, including salaries, benefits and stock-based compensation, and allocated overhead costs for our corporate, executive, finance, and other administrative functions. General and administrative expenses also include expenses for outside professional services, including legal, auditing and accounting services, recruitment expenses, information technology, travel expenses, certain non-income taxes, insurance, and other administrative expenses. We expect our general and administrative expenses to increase for the foreseeable future as we scale our support functions with the growth of our business.

Depreciation and amortization

Depreciation and amortization expense results from depreciation and amortization of our property and equipment, including our quantum computing systems, and intangible assets that are recognized over their estimated lives.

Nonoperating Costs and Expenses

Gain (loss) on change in fair value of warrant liabilities

The gain (loss) on change in fair value of warrant liabilities consists of mark-to-market fair value adjustments recorded associated with the public warrants assumed as part of the Business Combination.

Interest income, net

Interest income, net consists of income earned on our money market funds and other available-for-sale investments.

Other income (expense), net

Other income (expense), net consists of gains and losses that arise from fluctuations in foreign currency exchange rates and certain other nonoperating expenses.

Income tax benefit (expense)

Income tax expense consists of income taxes related to foreign jurisdictions in which we conduct business.

Results of Operations

The following table sets forth our condensed consolidated statements of operations for the periods indicated:


	Three Months Ended March 31,
	2025			2024
	(in thousands)
Revenue	$	7,566		$	7,582
Costs and expenses:
Cost of revenue (excluding depreciation and amortization)(1)		4,315			3,414
Research and development(1)		39,953			32,368
Sales and marketing(1)		8,610			6,701
General and administrative(1)		23,806			14,020
Depreciation and amortization		6,561			3,955
Total operating costs and expenses		83,245			60,458
Loss from operations		(75,679	)		(52,876	)
Gain (loss) on change in fair value of warrant liabilities		38,494			8,627
Interest income, net		4,894			4,799
Other income (expense), net		51			(134	)
Loss before income tax expense		(32,240	)		(39,584	)
Income tax benefit (expense)		(12	)		(8	)
Net loss	$	(32,252	)	$	(39,592	)

(1)

Cost of revenue, research and development, sales and marketing, and general and administrative expenses for the periods include stock-based compensation expense as follows:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Cost of revenue	$	1,063	$	1,005
Research and development		17,392		12,366
Sales and marketing		4,356		2,775
General and administrative		10,442		5,915

Comparison of the Three Months Ended March 31, 2025 and 2024

Revenue


	Three Months Ended March 31,				$			%
	2025		2024		Change			Change
	(in thousands)
Revenue	$	7,566	$	7,582	$	(16	)		—	%

Revenue was relatively flat for the three months ended March 31, 2025, from the three months ended March 31, 2024. Increases in revenue from services on new and existing platform, consulting and support services arrangements were offset by decreases in revenue from arrangements to build specialized quantum computing hardware.

Cost of revenue


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Cost of revenue (excluding depreciation and amortization)	$	4,315	$	3,414	$	901		26	%

Cost of revenue increased by $0.9 million, or 26%, to $4.3 million for the three months ended March 31, 2025, from $3.4 million for the three months ended March 31, 2024. The increase was driven primarily by an increase in labor costs to service contracts for the three months ended March 31, 2025.

Research and development


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Research and development	$	39,953	$	32,368	$	7,585		23	%

Research and development expense increased by $7.6 million, or 23%, to $40.0 million for the three months ended March 31, 2025, from $32.4 million for the three months ended March 31, 2024. The increase was primarily driven by an increase of $10.1 million in payroll-related expenses, including an increase in stock-based compensation of $5.0 million, as a result of increased headcount and new equity grants, offset by a decrease of $3.0 million in materials, supplies and equipment costs.

Sales and marketing


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Sales and marketing	$	8,610	$	6,701	$	1,909		28	%

Sales and marketing expense increased by $1.9 million, or 28%, to $8.6 million for the three months ended March 31, 2025, from $6.7 million for the three months ended March 31, 2024. The increase was primarily driven by an increase of $2.2 million of payroll-related expenses, including an increase in stock-based compensation of $1.6 million, as a result of increased headcount and new equity grants, offset by a decrease of $0.3 million in professional service fees.

General and administrative


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
General and administrative	$	23,806	$	14,020	$	9,786		70	%

General and administrative expenses increased by $9.8 million, or 70%, to $23.8 million for the three months ended March 31, 2025, from $14.0 million for the three months ended March 31, 2024. The increase was primarily driven by an increase of $7.2 million of payroll-related expenses, including an increase in stock-based compensation of $4.5 million, as well as an increase of $2.5 million in professional service fees and allocated overhead costs.

Depreciation and amortization


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Depreciation and amortization	$	6,561	$	3,955	$	2,606		66	%

Depreciation and amortization expenses increased by $2.6 million, or 66%, to $6.6 million for the three months ended March 31, 2025, from $4.0 million for the three months ended March 31, 2024. The increase was primarily driven by an increase of $1.0 million and $0.7 million in depreciation expense associated with capitalized quantum computing system costs and other property and equipment, respectively, and an increase of $0.9 million due to amortization of capitalized internal-use software and acquired intangible assets.

Gain (loss) on change in fair value of warrant liabilities


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Gain (loss) on change in fair value of warrant liabilities	$	38,494	$	8,627	$	29,867		346	%

The change in fair value of warrant liabilities increased by $29.9 million, or 346%, to a gain of $38.5 million for the three months ended March 31, 2025, from a gain of $8.6 million for the three months ended March 31, 2024. The increase was due to mark-to-market adjustments based on changes in the trading price for our public warrants.

Interest income, net


	Three Months Ended March 31,				$		%
	2025		2024		Change		Change
	(in thousands)
Interest income, net	$	4,894	$	4,799	$	95		2	%

Interest income, net increased by $0.1 million, or 2%, to $4.9 million for the three months ended March 31, 2025, from $4.8 million for the three months ended March 31, 2024. The increase was primarily driven by an increase in the available-for-sale investments balance.

Liquidity and Capital Resources

As of March 31, 2025, we had cash, cash equivalents and available-for-sale securities of $697.1 million. Excluded from our available liquidity is $2.7 million of restricted cash, which is primarily recorded in other noncurrent assets in our condensed consolidated balance sheets. We believe that our cash, cash equivalents and investments as of March 31, 2025, will be sufficient to meet our working capital and capital expenditure needs for the next 12 months. We believe we will meet longer term expected future cash requirements and obligations through a combination of cash flows from operating activities and available funds from our cash, cash equivalents and investment balances. However, this determination is based upon internal projections and is subject to changes in market and business conditions. We have incurred significant losses since our inception and as of March 31, 2025, we had an accumulated deficit of $716.0 million. During the three months ended March 31, 2025, we incurred net losses of $32.3 million. We expect to incur significant losses and higher operating expenses for the foreseeable future.

Future Funding Requirements

We expect our principal sources of liquidity will continue to be our cash, cash equivalents and investments and any additional capital we may obtain through additional equity or debt financings. Our future capital requirements will depend on many factors, including investments in growth and technology. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, services, and technologies, which may require us to seek additional equity or debt financing.

Our primary uses of cash and investments are to fund our operations as we continue to grow our business and our investing activities, including capital expenditures and potential acquisitions. We require a significant amount of cash for expenditures as we invest in ongoing research and development and commercialization of our products. Until such time as we can generate significant revenue from commercializing our quantum computing technology, if ever, we expect to finance our liquidity needs through our cash, cash equivalents and investments, as well as equity or debt financings or other capital sources, including potential collaborations and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our quantum computing and networking technology on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our quantum computing and networking development efforts. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors.”

Our material contractual commitments as of March 31, 2025, primarily relate to operating lease commitments. As of March 31, 2025, we have total operating lease obligations of $21.2 million, with $3.9 million payable within 12 months. Other than operating lease commitments, cash requirements for the next 12 months are expected to consist primarily of operating expenses and continued investment in our quantum computers.

Cash flows

The following table summarizes our cash flows for the period indicated:


	Three Months Ended March 31,
	2025			2024
	(in thousands)
Net cash provided by (used in) operating activities	$	(33,025	)	$	(20,465	)
Net cash provided by (used in) investing activities		(230,176	)		43,529
Net cash provided by (used in) financing activities		368,734			1,359

Cash flows from operating activities

Our cash flows from operating activities are significantly affected by the growth of our business, primarily related to research and development, sales and marketing, and general and administrative activities. Our operating cash flows are also affected by our working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable and other current assets and liabilities.

Net cash used in operating activities during the three months ended March 31, 2025, was $33.0 million, resulting primarily from a net loss of $32.3 million, adjusted for non-cash activity, primarily related to stock-based compensation, the gain recorded as a result of mark-to-market activity for our public warrants, depreciation and amortization, and other working capital activities. The increase in net cash used in operations from the prior year period was primarily related to increased compensation costs and costs for materials and supplies to support the production of quantum computing systems, customer contracts, and other research and development activities.

Net cash used in operating activities during the three months ended March 31, 2024, was $20.5 million, resulting primarily from a net loss of $39.6 million, adjusted for non-cash activity, primarily related to the gain recorded as a result of mark-to-market activity for our public warrants, stock-based compensation and other working capital activities.

Cash flows from investing activities

Net cash used in investing activities during the three months ended March 31, 2025, was $230.2 million, primarily resulting from purchases of available-for-sale securities of $320.6 million and additions of $2.3 million to property and equipment primarily related to the development of our quantum computing systems and other supporting equipment, offset by cash received from maturities of available-for-sale securities of $93.8 million.

Net cash provided by investing activities during the three months ended March 31, 2024, was $43.5 million, primarily resulting from cash received from maturities of available-for-sale securities of $115.0 million, offset by purchases of available-for-sale securities of $66.6 million, additions of $3.1 million to property and equipment primarily related to leasehold improvements and the development of our quantum computing systems, and additions of $1.4 million related to capitalized software development costs.

Cash flows from financing activities

Net cash provided by financing activities during the three months ended March 31, 2025, was $368.7 million, primarily resulting from proceeds from the 2025 ATM Offering Program and warrants exercised.

Net cash provided by financing activities during the three months ended March 31, 2024, was $1.4 million, primarily resulting from tax withholding receipts related to restricted stock units and proceeds from stock options exercised.

Critical Accounting Estimates

This discussion and analysis of financial condition and results of operations is based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions on revenue generated and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

There have been no material changes to our critical accounting estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K.

Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. Within our Annual Report on Form 10-K, we have disclosed our critical accounting estimates that we believe to have the greatest potential impact on our consolidated financial statements. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

Recently Issued and Adopted Accounting Standards

See Note 2, Summary of Significant Accounting Policies, in the notes to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk related to changes in interest rates and concentration of credit. For a discussion of quantitative and qualitative disclosures about market risk, see Item 7A of Part II of our Annual Report on Form 10-K. No material changes related to our market risks have occurred since December 31, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Future litigation may be necessary to defend ourselves. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

In May 2022, a securities class action complaint captioned Leacock v. IonQ, Inc. et al., Case No. 8:22-cv-01306, was filed by a stockholder of the Company in the United States District Court for the District of Maryland (the “Leacock Litigation”) against the Company and certain of the Company’s current officers. In June 2022, a securities class action complaint captioned Fisher v. IonQ, Inc., Case No. 8:22-cv-01306-DLB (the “Fisher Litigation”) was filed by a stockholder against the Company and certain of the Company’s current officers (“IonQ Defendants”). Both the Leacock Litigation and Fisher Litigation, which have been consolidated into a single action, allege violations of Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act and seek damages. In September 2022, the Court appointed lead plaintiffs and counsel for lead plaintiffs, and ordered lead plaintiffs to file a consolidated amended complaint. The consolidated amended complaint was filed on November 22, 2022. As part of the consolidated amended complaint, certain members of the Company’s board of directors as well as other dMY-related defendants (“Additional Defendants”) have been added as defendants to the case. On February 7, 2023, the IonQ Defendants and the Additional Defendants each filed a motion to dismiss the consolidated amended complaint. On March 23, 2023, lead plaintiffs filed their omnibus opposition to the motions to dismiss. On April 26, 2023, the IonQ Defendants and the Additional Defendants each filed a reply in support of the motions to dismiss. On September 28, 2023, the District Court of Maryland issued an order dismissing plaintiffs' claims against the IonQ Defendants and the Additional Defendants with prejudice and directed the clerk to close the case. On October 26, 2023, the plaintiffs filed a motion for post-judgment relief, seeking to amend their consolidated amended complaint. The IonQ Defendants and Additional Defendants filed oppositions to plaintiffs’ motion on December 1, 2023, and plaintiffs filed their reply on January 8, 2024. On July 10, 2024, the plaintiffs' motion for post-judgment relief was denied and the District Court of Maryland directed the clerk to close the case. On July 26, 2024, the plaintiffs filed a Notice of Appeal with the Fourth Circuit Court of Appeals seeking to review the trial court's decision. Plaintiffs filed their Opening Brief in the Fourth Circuit on September 9, 2024. A response brief by IonQ Defendants was filed on October 8, 2024 and plaintiffs’ reply brief was filed on October 29, 2024. Oral argument in the Fourth Circuit occurred on January 31, 2025. On April 8, 2025, the Fourth Circuit held for the IonQ Defendants in a published opinion. Given the uncertainty of litigation and the legal standards that must be met for, among other things, success on the case merits, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from the associated suit.

Please refer to Note 8, Commitments and Contingencies, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further details on current legal proceedings.

Item 1A. Risk Factors.

RISK FACTORS

Investing in our securities involves a high degree of risk. Before you make a decision to buy our securities, in addition to the risks and uncertainties described above under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Cautionary Note Regarding Forward-Looking Statements," you should carefully consider the risks and uncertainties described below together with all of the other information contained in this Quarterly Report on Form 10-Q. If any of the events or developments described below were to occur, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline, and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Summary Risk Factors

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our securities. These risks include, among others, the following:

•

We are an early-stage company and have a limited operating history, which makes it difficult to forecast our future results of operations.

•

We have a history of operating losses and expect to incur significant expenses and continuing losses for the near future.

•

We may not be able to scale our business quickly enough to meet customer and market demand, which could adversely affect our financial condition and results of operations or cause us to fail to execute on our business strategies.

•

We may not manage our growth effectively.

•

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.

•

Our operating and financial results forecast relies in large part upon assumptions and analyses we have developed. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.

•

We have not produced a scalable quantum computer and face significant barriers in our attempts to produce quantum computers. If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail.

•

We have experienced in the past, and could also suffer future disruptions, outages, defects and other performance and quality problems with our quantum computing systems, our private cloud, or other information systems, our research and development activities, our facilities, our other fixed assets, or with the public cloud, internet, and other infrastructure on which they rely.

•

Even if we are successful in developing quantum computing systems and executing our strategy, competitors in the industry may achieve technological breakthroughs that render our quantum computing systems obsolete or inferior to other products.

•

We may be negatively impacted by any early obsolescence of our quantum computing technology.

•

If our computers fail to achieve a broad quantum advantage, our business, financial condition and future prospects may be harmed.

•

The quantum computing and networking industry is competitive on a global scale and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers.

•

The quantum computing and networking industry is in its early stages and volatile, and if it does not develop, if it develops slower than we expect, if it develops in a manner that does not require use of our quantum computing solutions, if it encounters negative publicity or if our solution does not drive commercial engagement, the growth of our business will be harmed.

•

We may not be able to accurately estimate the future supply and demand for our quantum computers, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

•

Our systems depend on the use of a particular isotope of an atomic element that provides qubits for our ion trap technology. If we are unable to procure these isotopically enriched atomic samples, or are unable to do so on a timely and cost-effective basis, and in sufficient quantities, we may incur significant costs or delays, which could negatively affect our operations and business.

•

If we cannot successfully execute on our strategy, including in response to changing customer needs and new technologies and other market requirements, or achieve our objectives in a timely manner, our business, financial condition and results of operations could be harmed.

•

Our business depends on our customers’ abilities to implement useful quantum algorithms and sufficient quantum resources for their business. If they are unable to do so, including due to their algorithmic challenge or other technical or personnel dilemmas, our growth may be negatively impacted.

•

Much of our revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations, acquisitions, or other means, our revenue may decrease substantially.

•

Our future growth and success depends in part on our ability to sell effectively to government entities and large enterprises.

•

Contracts with domestic and international government and state agencies are subject to a number of challenges and risks.

•

If our information technology systems, data, or physical facilities, or those of third parties upon which we rely, are or were compromised, we could experience adverse business consequences resulting from such compromise.

•

Because our success depends, in part, on our ability to expand sales internationally, our business will be susceptible to risks associated with international operations.

•

Contracts with government entities subject us to risks, including early termination, audits, investigations, sanctions and penalties.

•

If we are unable to obtain and maintain patent protection for our products and technology, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our products and technology may be adversely affected. Moreover, our trade secrets could be compromised, which could cause us to lose the competitive advantage resulting from these trade secrets.

•

We may face patent infringement and other intellectual property claims that could be costly to defend, result in injunctions and significant damage awards or other costs (including indemnification of third parties or costly licensing arrangements (if licenses are available at all)) and limit our ability to use certain key technologies in the future or require development of non-infringing products, services, or technologies, which could result in a significant expenditure and otherwise harm our business.

•

Some of our in-licensed intellectual property, including the intellectual property licensed from the University of Maryland and Duke University, has been conceived or developed through government-funded research and thus may be subject to federal regulations providing for certain rights for the U.S. government or imposing certain obligations on us, such as a license to the U.S. government covered by such intellectual property, “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights and our ability to contract with non-U.S. manufacturers.

•

If our operating and financial performance in any given period does not meet the guidance provided to the public or the expectations of investment analysts, the market price of our common stock may decline.

•

Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to several factors, some of which are beyond our control, resulting in a decline in our stock price.

Risks Related to Our Financial Condition and Status as an Early-Stage Company

We are an early-stage company and have a limited operating history, which makes it difficult to forecast our future results of operations.

As a result of our limited operating history, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. Our ability to generate revenues will largely be dependent on our ability to develop and produce quantum computers with increasing numbers of algorithmic qubits and to connect those quantum computers via quantum networks. As a result, our scalable business model has not been formed and it is possible that neither our December 2020 forward-looking technical roadmap nor our latest technical roadmap will be realized as quickly as expected, or even at all. The development of our scalable business model will likely require the incurrence of a substantially higher level of costs than incurred to date, while our revenues will not substantially increase until more powerful, scalable computers are produced, which requires a number of technological advancements that may not occur on the currently anticipated timetable or at all. As a result, our historical results should not be considered indicative of our future performance. Further, in future periods, our growth could slow or decline for a number of reasons, including but not limited to slowing demand for our service offerings, increased competition, changes to technology, inability to scale up our technology, a decrease in the growth of the overall market, or our failure, for any reason, to continue to take advantage of growth opportunities.

We have also encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If our assumptions regarding these risks and uncertainties and our future growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer. Our success as a business ultimately relies upon fundamental research and development breakthroughs in the coming years and decade. There is no certainty these research and development milestones will be achieved as quickly as expected, or even at all.

We have a history of operating losses and expect to incur significant expenses and continuing losses for the near future.

We have historically experienced net losses from operations. For the three months ended March 31, 2025, we incurred a loss from operations of $75.7 million. As of March 31, 2025, we had an accumulated deficit of $716.0 million. We believe that we will continue to incur losses each year until at least the time we begin significant production and delivery of our quantum computers. Even with significant production, such production may never become profitable.

We expect to continue to incur operating losses for the near future as we, among other things, continue to incur significant expenses in connection with the design, development and construction of our quantum computers, and as we expand our research and development activities, invest in manufacturing capabilities, build up inventories of components for our quantum computers, increase our sales and marketing activities, develop our distribution infrastructure, and increase our general and administrative functions to support our growing operations and costs of being a public company. We may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses. If we are unable to achieve and/or sustain profitability, or if we are unable to achieve the growth that we expect from these investments, it could have a material adverse effect on our business, financial condition or results of operations. Our business model is unproven and may never allow us to cover our costs.

In order to grow our business, we will need to continually evolve and scale our business and operations to meet customer and market demand. Quantum computing technology has never been sold at large-scale commercial levels. Evolving and scaling our business and operations places increased demands on our management as well as our financial and operational resources to:

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effectively manage organizational change;

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design scalable processes;

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accelerate and/or refocus research and development activities;

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expand manufacturing, supply chain and distribution capacity;

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increase sales and marketing efforts;

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broaden customer-support and services capabilities;

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maintain or increase operational efficiencies;

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scale support operations in a cost-effective manner;

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implement appropriate operational and financial systems; and

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maintain effective financial disclosure controls and procedures.

Commercial production of quantum computers or networks may never occur. We have no experience in producing large quantities of our products and are currently constructing advanced generations of our products. As noted above, there are significant technological and logistical challenges associated with developing, producing, marketing, selling and distributing products in the advanced technology industry, including our products, and we may not be able to resolve all of the difficulties that may arise in a timely or cost-effective manner, or at all. We may not be able to cost-effectively manage production at a scale or quality consistent with customer demand in a timely or economical manner.

Our ability to scale is dependent also upon components we must source from the optical, mechanical, electronics and semiconductor industries. Shortages or supply interruptions in any of these components will adversely impact our ability to deliver revenues.

The stability of ion traps may prove poorer than hoped, or more difficult to manufacture. It may also prove more difficult or even impossible to reliably entangle/connect ion traps together. Both of these factors would adversely impact scalability and costs of the ion trap system.

If commercial production of our quantum computers and networks commences, our products may contain defects in design and manufacture that may cause them to not perform as expected or that may require repair, recalls and design changes. Our quantum computers are inherently complex and incorporate technology and components that have not been used for other applications and that may contain defects and errors, particularly when first introduced. We have a limited frame of reference from which to evaluate the long-term performance of our products. There can be no assurance that we will be able to detect and fix any defects in our quantum computers or networks prior to the sale to potential customers. If our products fail to perform as expected, customers may delay deliveries, terminate further orders or initiate product recalls, each of which could adversely affect our sales and brand and could adversely affect our business, prospects and results of operations.

If we cannot evolve and scale our business and operations effectively, we may not be able to execute our business strategies in a cost-effective manner and our business, financial condition and results of operations could be adversely affected.

We may not manage our growth effectively.

If we fail to manage growth effectively, our business, results of operations and financial condition could be harmed. We anticipate that a period of significant expansion will be required to address potential growth. This expansion will place a significant strain on our management, operational and financial resources. Expansion will require significant cash investments and management resources and there is no guarantee that they will generate additional sales of our products or services, or that we will be able to avoid cost overruns or be able to hire additional personnel to support them. In addition, we will also need to ensure our compliance with regulatory requirements in various jurisdictions applicable to the sale, installation and servicing of our products. To manage the growth of our operations and personnel, we must establish appropriate and scalable operational and financial systems, procedures and controls and establish and maintain a qualified finance, administrative and operations staff. We may be unable to acquire the necessary capabilities and personnel required to manage growth or to identify, manage and exploit potential strategic relationships and market opportunities.

Our management has limited experience in operating a public company.

Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to our management and growth. We have and we may be required to continue to expand our employee base and hire additional employees to support our operations as a public company, which will continue to increase our operating costs in future periods.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate.

Market opportunity estimates and growth forecasts, including those we have generated, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. In addition, alternatives to quantum computing may present themselves, which could substantially reduce the market for quantum computing services. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with quantum computing solutions.

The methodology and assumptions used to estimate market opportunities may differ materially from the methodologies and assumptions previously used to estimate the total addressable market. To estimate the size of our market opportunities and our growth rates, we have relied on market reports by leading research and consulting firms. These estimates of the total addressable market and growth forecasts are subject to significant uncertainty, are based on assumptions and estimates that may not prove to be accurate and are based on data published by third parties that we have not independently verified. Advances in classical computing may prove more robust for longer than currently anticipated. This could adversely affect the timing of any quantum advantage being achieved, if at all.

Even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Our success will depend upon our ability to expand, scale our operations, and increase our sales capability. Even if the market in which we compete meets the size estimates and growth forecasted, our business could fail to grow at similar rates, if at all.

Our growth is dependent upon our ability to successfully scale up manufacturing of our products in sufficient quantity and quality, in a timely or cost-effective manner. Our growth is also dependent upon our ability to successfully market and sell quantum computing and networking technology. We do not have experience with the mass distribution and sale of quantum computing and networking technology. Our growth and long-term success will depend upon the development of our sales and delivery capabilities.

Unforeseen issues associated with scaling up and constructing quantum computing and networking technology at commercially viable levels, and selling our technology, could negatively impact our business, financial condition and results of operations.

Moreover, because of our unique technology, our customers will require particular support and service functions, some of which are not currently available. If we experience delays in adding such support capacity or servicing our customers efficiently, or experience unforeseen issues with the reliability of our technology, it could overburden our servicing and support capabilities. Similarly, increasing the number of our customers, products or services, for example by entering into government contracts and expanding to new geographies, has required and may continue to require us to rapidly increase the availability of these services. Failure to adequately support and service our customers may inhibit our growth and ability to expand computing targets globally. There can be no assurance that our projections on which such targets are based will prove accurate or that the pace of growth or coverage of our customer infrastructure network will meet customer expectations. Failure to grow at rates similar to that of the quantum computing and networking industry may adversely affect our operating results and ability to effectively compete within the industry.

Our projected financial and operating information reflect current estimates of future performance, which may never occur. Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecasts depends on a number of factors, many of which are outside our control, including, but not limited to:

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success and timing of development activity;

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customer acceptance of our quantum computing and networking systems;

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breakthroughs in classical computing or other computing technologies that could eliminate the advantages of quantum computing and networking systems rendering them less practical to customers;

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competition, including from established and future competitors;

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whether we can obtain sufficient capital to sustain and grow our business;

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our ability to manage our growth;

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our ability to expand our sales into international markets; our ability to retain existing key management, integrate recent hires and attract, retain and motivate qualified personnel; and

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the overall strength and stability of domestic and international economies.

Unfavorable changes in any of these or other factors, many of which are beyond our control, could materially and adversely affect our business, financial condition and results of operations.

We may need additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, and we cannot be sure that additional financing will be available.

Our business and our future plans for expansion are capital-intensive and the specific timing of cash inflows and outflows may fluctuate substantially from period to period. Our operating plan may change because of factors currently unknown, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financings may result in dilution to our stockholders, issuance of securities with priority as to liquidation and dividend and other rights more favorable than common stock, imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe that we have sufficient funds for current or future operating plans. Weakness and volatility in capital markets and the economy, in general or as a result of bank failures or macroeconomic conditions such as high inflation and interest rates, could limit our access to capital markets and increase our costs of borrowing. There can be no assurance that financing will be available to us on favorable terms, or at all. The inability to obtain financing when needed may make it more difficult for us to operate our business or implement our growth plans.

Our ability to use net operating loss carryforwards and other tax attributes may be limited.

We have incurred losses during our history, do not expect to become profitable in the near future and may never achieve profitability. To the extent that we continue to generate losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire, if at all. As of December 31, 2024, we had U.S. federal and state net operating loss carryforwards of approximately $224.2 million and $148.1 million, respectively.

Our net operating loss carryforwards and other tax attributes are subject to review and possible adjustment by the Internal Revenue Service, and state tax authorities. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), our U.S. federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of our stock. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Our ability to utilize our net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including changes in connection with our Business Combination with dMY or other transactions. Similar rules may apply under state tax laws. We have not yet determined the amount of the cumulative change in our ownership resulting from our Business Combination with dMY or other transactions, or any resulting limitations on our ability to utilize our net operating loss carryforwards and other tax attributes. If we earn taxable income, such limitations could result in increased future income tax liability and our future cash flows could be adversely affected. We have recorded a full valuation allowance related to our net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

Risks Related to Our Business and Industry

Producing quantum computers is a difficult undertaking. There are significant research, development, and manufacturing challenges that we must overcome to build our quantum computers. We are still in the development stage and face significant challenges in developing quantum computers with sufficient performance and scale to meet the requirements of commercial use-cases and in producing quantum computers in commercial volumes. Some of the development challenges that could prevent the introduction of our quantum computers include, but are not limited to, failure to find scalable ways to flexibly manipulate qubits, failure to increase their number, failure to transition quantum systems to leverage low-cost, commodity optical technology, and failure to realize multicore and multiple QPU quantum computer technology.

Additional development challenges we face include:

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gate fidelity, error correction and miniaturization may not commercialize from the lab and scale as hoped or at all;

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it could prove more challenging and take materially longer than expected to operate gates within a single ion trap with higher throughput while maintaining gate fidelity; it could take longer to tune the qubits in a single ion trap, as well as preserve the stability of the qubits within a trap as we seek to optimize the total number of qubits within one trap;

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the gate speed in our technology could prove more difficult to improve than expected;

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the Reconfigurable Multi-Core Quantum Architecture (RMQA) could prove to be more challenging to develop than expected. This would limit our ability to scale ion traps beyond single-core operation;

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the photonic interconnect technology used to connect ion traps could prove more challenging and take longer to perfect than currently expected. This would limit our ability to scale to a sufficiently large number of qubits in a single system or network systems together;

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it could take longer to incorporate modular architectures for additional cross-processor computational strength than currently expected, limiting our ability to realize the benefits of multicore technology; and

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the scaling of fidelity with qubit number could prove poorer than expected, limiting our ability to successfully run larger circuits or achieve commercial advantage.

In addition, we will need to develop the manufacturing process necessary to make these quantum computers in high volume. We have not yet validated a manufacturing process nor acquired the tools, processes, or support functions necessary to produce high volumes of our quantum computers that meet all commercial requirements. If we are not able to overcome these manufacturing hurdles in building our quantum computers, our business is likely to fail.

Even if we complete development and achieve volume production of our quantum computers, if the cost, performance characteristics or other specifications of the quantum computer fall short of our projections, our business, financial condition and results of operations would be adversely affected.

Our business depends on our quantum computing systems to be available. We have experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with our systems. We have also experienced, and may in the future further experience, disruptions, outages, defects and other performance and quality problems with the public cloud, internet, private data center providers, facilities in which we build and deploy our systems and technology, and other infrastructure like utility power, water supply, air conditioning, air compression, and other inputs on which our systems and their supporting services rely. For example, in February 2025, an overheating incident in one of our manufacturing rooms affected laboratory cleanliness and system components, necessitating cleaning and repair, as well as movement of components and systems, causing some disruptions and delays in availability of our systems. These problems can be caused by a variety of factors, including software or firmware updates, vulnerabilities and defects in proprietary software and open-source software, hardware components, human error or misconduct, capacity constraints, design limitations, denial of service attacks or other security-related incidents, foreign objects or debris, weather, construction, supply chain events, or accidents and other force majeure. We do not have a contractual right with our public cloud providers that compensates us for any losses due to availability interruptions in the public cloud.

Any disruptions, outages, defects and other performance and quality problems with our quantum computing systems or with the public cloud, internet, and other information systems and infrastructure on which they rely, could result in reduced use of our systems, increased expenses, delayed delivery under our contractual commitments, required provision of service credits, and harm to our brand and reputation, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our continued growth and success depend on our ability to innovate and develop quantum computing and networking technology in a timely manner and effectively market these products. Without timely innovation and development, our quantum computing solutions could be rendered obsolete or less competitive by changing customer preferences or because of the introduction of a competitor’s newer technologies. We believe that many competing technologies will require a technological breakthrough in one or more problems related to science, fundamental physics or manufacturing. While it is uncertain whether such technological breakthroughs will occur in the next several years, that does not preclude the possibility that such technological breakthroughs could eventually occur. Any technological breakthroughs that render our technology obsolete or inferior to other products could have a material effect on our business, financial condition or results of operations.

We may be negatively impacted by any early obsolescence of our quantum computing technology.

We depreciate the cost of our quantum computing systems over their expected useful lives. However, product cycles or quantum computing systems may change periodically due to changes in innovation in the industry, and we may decide to update our products or production processes more quickly than expected, resulting in obsolescence of all or part of our quantum computing systems prior to the end of the previously expected useful life. Moreover, we may need to alter the way in which we deliver our products due to changes in engineering and production expertise and efficiency.

If our quantum computing systems are not compatible with some or all industry-standard software and hardware in the future, our business could be harmed.

Programming for quantum computing requires unique tools, software, hardware, and development environments. We have focused our efforts on creating quantum computing hardware, the system control platform for such hardware and a suite of low-level software programs that optimize execution of quantum algorithms on our hardware. Further up the stack, we rely on third parties to create and advance software, standards, specifications, applications, hardware and services that enable these systems to integrate into various environments and be utilized towards various customer use cases. Full utilization of our quantum computing solutions may depend on these third-party software, standards, specifications, applications, hardware and services, which may not be compatible with our quantum computing solutions and their development, or may not be available to us or our customers on commercially reasonable terms, or at all, which could harm our business.

If our customers are unable to achieve compatibility between other software and hardware and our hardware, it could impact our relationships with such customers or with customers, generally, if the incompatibility is more widespread. In addition, the mere announcement of an incompatibility problem relating to our products with higher level software tools could cause us to suffer reputational harm and/or lead to a loss of customers. Any adverse impacts from the incompatibility of our quantum computing solutions could adversely affect our business, operating results and financial condition.

We may be unable to reduce the cost per qubit sufficiently, which may prevent us from pricing our quantum systems competitively.

Our projections are dependent on the cost per qubit decreasing over the next several years as our quantum computers advance. These cost projections are based on economies of scale due to demand for our computer systems, technological innovation and negotiations with third-party parts suppliers. If these cost savings do not materialize, the cost per qubit may be higher than projected, making our quantum computing solution less competitive than those produced by our competitors, which could have a material adverse effect on our business, financial condition or results of operations.

If our computers fail to achieve a broad quantum advantage, our business, financial condition and future prospects may be harmed.

Quantum advantage refers to the moment when a quantum computer can compute faster than traditional computers, while quantum supremacy is achieved once quantum computers are powerful enough to complete calculations that traditional supercomputers cannot perform at all. Broad quantum advantage is when quantum advantage is seen in many applications and developers prefer quantum computers to a traditional computer. No current quantum computers, including our quantum hardware, have reached a broad quantum advantage, and they may never reach such advantage. Achieving a broad quantum advantage will be critical to the success of any quantum computing company, including us. However, achieving quantum advantage would not necessarily lead to commercial viability of the technology that accomplished such advantage, nor would it mean that such system could outperform classical computers in tasks other than the one used to determine a quantum advantage.

Quantum computing technology, including broad quantum advantage, may take decades to be realized, if ever. If we cannot develop quantum computers that have quantum advantage, customers may not continue to purchase our products and services. If other companies’ quantum computers reach a broad quantum advantage prior to the time ours reaches such capabilities, it could lead to a loss of customers. If any of these events occur, it could have a material adverse effect on our business, financial condition or results of operations.

An element of our business is currently dependent upon our relationship with our cloud providers. There are no assurances that we will be able to commercialize quantum computers from our relationships with cloud providers.

We currently offer our QCaaS on public clouds provided by AWS’s Amazon Braket, Microsoft’s Azure Quantum, and the Google Cloud Marketplace. The companies that own these public clouds have internal quantum computing efforts that are competitive to our technology. There is risk that one or more of these public cloud providers could use their respective control of their public clouds to embed innovations or privileged interoperating capabilities in competing products, bundle competing products, provide us with unfavorable pricing, leverage their public cloud customer relationships to exclude us from opportunities, and treat us and our end users differently with respect to terms and conditions or regulatory requirements than they would treat their similarly situated customers. Further, they have the resources to acquire or partner with existing and emerging providers of competing technology and thereby accelerate adoption of those competing technologies. All of the foregoing could make it difficult or impossible for us to provide products and services that compete favorably with those of the public cloud providers.

Any material change in our contractual and other business relationships with our public cloud providers could result in harm to our brand and reputation and reduced use of our systems, which could have a material adverse effect on our business, financial condition and results of operations.

The markets in which we operate are rapidly evolving and highly competitive. As these markets continue to mature and new technologies and competitors enter such markets, we expect competition to intensify. Our current competitors include (among others):

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large, well-established tech companies that generally compete in all of our markets, including Amazon, Google, IBM, Intel, and Microsoft;

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countries such as China, Russia, Australia, Canada, the United Kingdom, and certain countries in the European Union;

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less-established public and private companies with competing technology, including companies located outside the United States; and

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new or emerging entrants seeking to develop competing technologies.

We compete based on various factors, including technology, price, performance, multi-cloud availability, brand recognition and reputation, customer support and differentiated capabilities, including ease of administration and use, scalability and reliability, data governance and security. Many of our competitors have substantially greater brand recognition, customer relationships, and financial, technical and other resources, including an experienced sales force and sophisticated supply chain management. They may be able to respond more effectively than us to new or changing opportunities, technologies, standards, customer requirements and buying practices or to cross-subsidize their quantum offerings from their other higher margin operations. In addition, many countries are focused on developing quantum solutions either in the private or public sector and may subsidize quantum computers or quantum networks, which may make it difficult for us to compete. Many of these competitors do not face the same challenges we do in growing our business. In addition, other competitors might be able to compete with us by bundling their other products in a way that does not allow us to offer a competitive solution.

Additionally, we must be able to achieve our objectives in a timely manner or quantum computing and networking may lose ground to competitors, including competing technologies. Because there are a large number of market participants, including certain sovereign nations, focused on developing quantum computing and networking technology, we must dedicate significant resources to achieving any technical objectives on the timelines established by our management team. Any failure to achieve objectives in a timely manner could adversely affect our business, operating results and financial condition.

For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our platform or put downward pressure on our prices and gross margins, any of which could materially harm our reputation, business, results of operations, and financial condition.

The nascent market for quantum computers and networks is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and competitive factors, evolving government regulation and industry standards, and changing customer demands and behaviors. If the market for quantum computers and networks in general does not develop as expected, or develops more slowly than expected, our business, prospects, financial condition and operating results could be harmed.

In addition, our growth and future demand for our products is highly dependent upon the adoption of quantum computers and networks and commercially useful quantum algorithms to run on quantum computers by developers and customers, as well as on our ability to demonstrate the value of quantum computing to our customers. Delays in future generations of our quantum computers or technical failures at other quantum computing and networking companies could limit market acceptance of our solution. Negative publicity concerning our solution or the quantum computing and networking industry as a whole could limit market acceptance of our solution. We believe quantum computing will solve many large-scale problems. However, such problems may never be solvable by quantum computing technology, or may only be solvable by systems that are more technologically mature than we currently expect. If our clients and partners do not perceive the benefits of our solution, or if our solution does not drive customer engagement, then our market may not develop at all, or it may develop slower than we expect. If any of these events occur, it could have a material adverse effect on our business, financial condition or results of operations.

If progress towards quantum advantage ever slows relative to expectations, it could adversely impact revenues and customer confidence to continue to pay for testing, access and “quantum readiness.” This would adversely affect revenues in the period before quantum advantage.

We have and may continue to face supply chain issues that could delay the introduction of our product and negatively impact our business and operating results.

We are reliant on third-party suppliers, including sole source suppliers, for components necessary to develop and manufacture our quantum computing and networking solutions. As our business grows, we must continue to scale and adapt our supply chain or it could have an adverse impact on our business. Any of the following factors (and others) could have an adverse impact on the price or availability of these components necessary to our business:

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our inability to enter into agreements with suppliers on commercially reasonable terms, or at all;

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inability of suppliers to mature their operations in line with our growth and to meet our evolving requirements;

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a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers;

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any reductions or interruption in supply, including disruptions on our global supply chain as a result of the global chip shortage, geopolitical tensions in and around Ukraine, Israel and other areas of the world and any indirect effects thereof;

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financial problems of either manufacturers or component suppliers;

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intentional sabotage by a malicious actor or actors;

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significantly increased raw material costs and other expenses associated with our business;

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difficulty obtaining raw materials that meet our quality standards;

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significantly increased freight charges, disruptions in shipping or reduced availability of freight transportation;

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the imposition of, or a sustained or temporary increase in, tariffs, trade protection measures, or import and export controls by the United States or other countries;

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actions taken by suppliers or other parties in response to expected or threatened increases in tariffs, trade protection measures, or import or export controls by the United States or other countries;

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reduced access to raw materials due to suppliers entering into exclusivity arrangements with our competitors;

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other factors beyond our control or that we do not presently anticipate, could also affect our suppliers’ ability to deliver components to us on a timely basis;

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a failure to develop our supply chain management capabilities and recruit and retain qualified professionals;

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a failure to adequately authorize procurement of inventory by our contract manufacturers; or

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a failure to appropriately cancel, reschedule, or adjust our requirements based on our business needs.

We have experienced supply chain issues in the past. If any of the aforementioned factors were to materialize, it could cause us to delay or halt production of our quantum computing and networking solutions and/or entail higher manufacturing costs, any of which could materially adversely affect our business, operating results, and financial condition and could materially damage customer relationships.

It is difficult to predict our future revenues and appropriately budget for our expenses, and we may have limited insight into trends that may emerge and affect our business. From time to time we have been required to provide, and we anticipate being required to provide more consistently in the future, forecasts of our demand to our current and future suppliers prior to the scheduled delivery of products to potential customers. Currently, there is very little historical basis for making judgments on the demand for our quantum computers or our ability to design, develop, manufacture, and deliver quantum computers, or our profitability, if any, in the future. If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time.

If we fail to order sufficient quantities of product components in a timely manner, the delivery of quantum computers and related compute time to our potential customers could be delayed. We have previously failed, and may in the future fail, to accurately forecast customer demand, which resulted in, and may in the future result in, an excess or obsolescence of materials and supplies. Excess or obsolete materials and supplies may result in write-downs or write-offs. If we fail to effectively manage our forecasted supply and demand and on hand materials and supplies, our results of operations and financial condition could be adversely impacted, and it could result in loss of revenue, increased costs, or delays that could adversely impact customer success.

There are limited suppliers to sources of isotopically enriched materials that may be necessary for the production of our ion trap technology. We currently purchase such materials through the National Isotope Development Center managed by the U.S. Department of Energy Isotope Program. We do not have any supplier agreements with the U.S. Department of Energy, and purchase the materials through a standard ordering process. While we are currently looking to engage additional suppliers, there is no guarantee we will be able to establish or maintain relationships with such additional suppliers on terms satisfactory to us. Reliance on any single supplier increases the risks associated with being unable to obtain the necessary atomic samples because the supplier may have laboratory constraints, can be subject to unanticipated shutdowns and/or may be affected by natural disasters and other catastrophic events. Some of these factors may be completely out of our and our suppliers’ control. Failure to acquire sufficient quantities of the necessary isotopically enriched atomic samples in a timely or cost-effective manner could materially harm our business.

Our products may not achieve market success, but will still require significant costs to develop.

We believe that we must continue to dedicate significant resources to our research and development efforts before knowing whether there will be market acceptance of our quantum computing and networking technologies. Furthermore, the technology for our products is new, and the performance of these products is uncertain. Our quantum computing and networking technologies could fail to attain sufficient market acceptance, if at all, for many reasons, including:

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pricing and the perceived value of our systems relative to its cost;

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delays in releasing quantum computers with sufficient performance and scale to the market;

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failure to produce products of consistent quality that offer functionality comparable or superior to existing or new products;

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ability to produce products fit for their intended purpose;

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failures to accurately predict market or customer demands;

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defects, errors or failures in the design or performance of our quantum computing systems;

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negative publicity about the performance or effectiveness of our systems;

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strategic reaction of companies that market competitive products; and

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the introduction or anticipated introduction of competing technology.

To the extent we are unable to effectively develop and market a quantum computing system to address these challenges and attain market acceptance, our business, operating results and financial condition may be adversely affected.

The quantum computing and networking market is characterized by rapid technological change, changing user requirements, uncertain product lifecycles and evolving industry standards. We believe that the pace of innovation will continue to accelerate as technology changes and different approaches to quantum computing mature on a broad range of factors, including system architecture, error correction, performance and scale, integration with classical computing resources, ease of programming, user experience, markets addressed, types of data processed, and data governance and regulatory compliance. Our future success depends on our ability to continue to innovate and increase customer adoption of our quantum computers and networks. If we are unable to enhance our quantum computing system to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, with better functionality, more conveniently, or more securely than our platform, our business, financial condition and results of operations could be adversely affected.

If we are unable to maintain our current strategic partnerships or we are unable to develop future collaborative partnerships, our future growth and development could be negatively impacted.

We have entered into, and may enter into, strategic partnerships to develop and commercialize our current and future research and development programs with other companies to accomplish one or more of the following:

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obtain expertise in relevant markets;

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obtain sales and marketing services or support;

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obtain equipment and facilities;

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develop relationships with potential future customers; and

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generate revenue.

We may not be successful in establishing or maintaining suitable partnerships, and we may not be able to negotiate collaboration agreements having terms satisfactory to us, or at all. Failure to make or maintain these arrangements or a delay or failure in a collaborative partner’s performance under any such arrangements could harm our business and financial condition.

We have entered into, and may enter into, contracts, partnerships and other arrangements with customers to develop, test and run quantum algorithms specific to their business. The success of these contracts and partnerships is dependent on our customer’s ability to identify, implement, and realize useful and scalable algorithms for their portfolio at a speed commensurate with the pace of hardware, software, and technological development. These arrangements are also dependent on the availability of time and resources to develop and optimize these algorithms. The development and optimization of these algorithms is reliant on employing sufficient talent familiar with quantum computing and quantum networking, unique skills that require special training and education. If the market fails to train a sufficient number of engineers, researchers and other key quantum personnel, our customers may not find sufficient talent to partner with us to solve these problems. To the extent our customers are unable to effectively develop or utilize resources to advance algorithmic-use cases, our business, operating results and financial condition may be adversely impacted.

We are highly dependent on our key employees who have specialized knowledge, and our ability to attract and retain senior management and other key employees is critical to our success.

Our future success is highly dependent on our ability to attract and retain our executive officers, key employees and other qualified personnel, including our employees who have specialized knowledge and our employees from acquired businesses. We have experienced in the past, and as we build our brand and become more well known, there is increased risk that we may further experience in the future, competitors or other companies hiring our personnel. The loss of the services provided by these individuals could adversely impact the achievement of our business strategy. These individuals could leave our employment at any time, as they are “at will” employees. A loss of one of our key employees, particularly to a competitor, could also place us at a competitive disadvantage. Effective succession planning is important to our long-term success, and failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution.

Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees. The market for highly skilled workers and leaders in the quantum computing industry is extremely competitive. In particular, hiring qualified personnel specializing in engineering, software development and sales, as well as other technical staff and research and development personnel is critical to our business and the development of our quantum computing and networking systems. Some of these professionals are hard to find and we may encounter significant competition in our efforts to hire them. Many of the other companies with which we compete for qualified personnel have greater financial and other resources than we do. The effective operation of our supply chain, including the acquisition of critical components and materials, the development of our quantum computing and networking technologies, the commercialization of our quantum computing and networking technologies and the effective operation of our managerial and operating systems all depend upon our ability to attract, train and retain qualified personnel in the aforementioned specialties. Additionally, changes in immigration and work permit laws and regulations or the administration or interpretation of such laws or regulations, including changes following the U.S. federal elections, could impair our ability to attract and retain highly qualified employees. If we cannot attract, train and retain qualified personnel, in this competitive environment, we may experience delays in the development of our quantum computing and networking technologies and be otherwise unable to develop and grow our business as projected, or even at all.

Much of our revenue is concentrated in a few customers, and if we lose any of these customers through contract terminations, acquisitions, or other means, our revenue may decrease substantially.

We have a high degree of revenue concentration, and we expect to continue to experience significant revenue concentration for the foreseeable future, including increasing revenue concentration among our major customers in the near term. Our customers’ demand for our products may fluctuate due to factors beyond our control. A disruption in our relationship with any of our customers could adversely affect our business. Our inability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue. The loss of, or restrictions on our ability to sell to, one or more of our major customers, or any significant reduction in orders from customers could have a material adverse effect on our operating results and financial condition.

Our future growth and success depends in part on our ability to sell effectively to government entities and large enterprises.

Our customers and potential customers include domestic and international government agencies and large enterprises. Therefore, our future success will depend on our ability to effectively sell our products to such customers. Sales to these end-customers involve risks that may not be present (or that are present to a lesser extent) with sales to non-governmental agencies or smaller customers. These risks include, but are not limited to, (i) increased purchasing power and leverage held by such customers in negotiating contractual arrangements with us and (ii) longer sales cycles and the associated risk that substantial time and resources may be spent on a potential end-customer that elects not to purchase our solutions. Sales to government agencies can be priced as fixed fee development contracts, which involve additional risks. Cost-plus and time-and-materials contracts can adversely affect our results of operations and financial condition if our costs do not qualify as allowable costs under applicable regulations. In addition, government contracts generally include the ability of government agencies to terminate early which, if exercised, would result in a lower contract value and lower than anticipated revenues generated by such arrangement. Additionally, such government contracts may limit our ability to do business with foreign governments or prevent us from selling our products in certain countries.

Government agencies and large organizations often undertake a significant evaluation process that results in a lengthy sales cycle. Our contracts with government agencies are typically structured in phases, with each phase subject to satisfaction of certain conditions. As a result, the actual scope of work performed pursuant to any such contracts, in addition to related contract revenue, could be less than total contract value. In addition, product purchases by such organizations are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. Finally, these organizations typically have longer implementation cycles, require greater product functionality and scalability, require a broader range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead to a delay in revenue recognition and expect greater payment flexibility. All of these factors can add further risk to business conducted with these potential customers and could lead to lower revenue results than originally anticipated.

Additionally, changes in government spending could have adverse consequences on our financial position, results of operations and business. Our anticipated future revenues from the U.S. government result from contracts awarded under various U.S. government programs. Cost cutting, including through consolidation and elimination of duplicative organizations, has become a major initiative for certain departments within the U.S. government. The funding of our programs is subject to the overall U.S. government budget and appropriation decisions and processes, which are driven by numerous factors, including geo-political events and macroeconomic conditions.

Significant reduction in U.S. government spending could have long-term consequences for our size and structure. In addition, changes in government priorities and requirements could impact the funding, or the timing of funding, of our programs, which could negatively impact our results of operations and financial condition.

Contracts with domestic and international government and state agencies are subject to a number of challenges and risks.

Contracts with domestic and international government and state agencies are subject to a number of challenges and risks. The bidding process for government contracts can be highly competitive, expensive and time-consuming, often requiring significant up front time and expense without any assurance that these efforts will generate revenue.

We also must comply with both local and international laws and regulations relating to the formation, administration, and performance of contracts, which provide public sector customers rights, many of which are not typically found in commercial contracts. Any changes to the government regulations applicable to government contracts could affect our ability to enter into, or the profitability of, contracts with government entities.

In addition, other parties’ perceptions of our relationship with the U.S. government could adversely affect our business prospects in certain non-U.S. geographies or with certain non-U.S. governments. Conversely, other parties’ perceptions of our relationship with non-U.S. governments or government entities could adversely affect our business prospects with the U.S. government.

Accordingly, our business, financial condition, results of operations, and growth prospects may be adversely affected by certain events or activities, including, but not limited to:

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changes in government fiscal or procurement policies, or decreases in government funding available for procurement of goods and services generally, or for our federal government contracts specifically;

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changes in government programs or applicable requirements;

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restrictions in the grant of personnel security clearances to our employees;

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ability to maintain facility clearances required to perform on classified contracts for U.S. government and foreign government agencies, as applicable;

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changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding;

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changes in the government’s attitude towards us as a company or our technology;

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appeals, disputes, or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government;

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the adoption of new laws or regulations or changes to existing laws or regulations;

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budgetary constraints, including automatic reductions as a result of “sequestration,” operating under continuing resolutions, disruptions from government shutdowns, or similar measures and constraints imposed by any lapses in appropriations for the federal government or certain of its departments and agencies;

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influence by, or competition from, third parties with respect to pending, new, or existing contracts with government customers;

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changes in legal obligations or political or social attitudes with respect to security or privacy issues;

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potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns; and

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increased or unexpected costs or unanticipated delays caused by other factors outside of our control.

Any such event or activity, among others, could cause governments and governmental agencies to delay or refrain from entering into contracts with us and/or purchasing our computers in the future, reduce the size or timing of payment with respect to our services to or purchases from existing or new government customers, or otherwise have an adverse effect on our business, results of operations, financial condition, and growth prospects.

In the ordinary course of business, we access, collect, receive, store, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, share, and otherwise process personal data and other sensitive information, including intellectual property, proprietary and confidential business data, trade secrets, sensitive third-party data, business plans, transactions, and financial information of our own, our partners, our vendors and their own supply chains, our customers, or other third parties (collectively, “Sensitive Data”).

We and the third parties upon which we rely process Sensitive Data, and, as a result, we and the third parties upon which we rely face a variety of evolving threats to our information technology systems, data, and physical facilities (such as those where our quantum computers are stored), including but not limited to ransomware attacks, advanced persistent threats, and other causes of security incidents. Additionally, Sensitive Data could be leaked, disclosed or revealed as a result of or in connection with our employees', contractors', consultants', affiliates', or vendors' use of generative artificial intelligence (“AI”) technologies. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our Sensitive Data and information technology systems, and those of the third parties upon which we rely. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors. U.S. law enforcement agencies have indicated to us that quantum computing technology is of particular interest to certain threat actors, including nation state and other malicious actors, who may steal our Sensitive Data, including our intellectual property or other proprietary or confidential information, including our trade secrets. Our employees, contractors, affiliates, and/or related parties may have already been directly targeted by nation state actors and may be so targeted in the future.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state and nation-state-supported actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other geopolitical tensions or conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to distribute our services.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss or unavailability of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.

In particular, severe ransomware attacks are becoming increasingly prevalent and could lead to significant interruptions in our operations, loss or unavailability of Sensitive Data and loss of income, reputational harm, and diversion of funds.

Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.

Additionally, we are incorporated into the supply chains of companies worldwide and, as a result, if our services are compromised, a significant number or, in some instances, all of our customers and their data could be simultaneously affected. The potential liability and associated consequences we could suffer as a result of such a large-scale event could be catastrophic and result in irreparable harm.

Remote work has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations. Our platform is built to be accessed through third-party cloud providers, such as AWS’s Amazon Braket, Microsoft’s Azure Quantum, and Google’s Cloud Marketplace, and we rely on these and other third-party service providers and technologies to operate critical business systems to process Sensitive Data in a variety of contexts, including, without limitation, other cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions. We also rely on third-party service providers to provide other products, services or parts, or otherwise to operate our business. There can be no assurance that our third-party service providers’ security measures have been or will be effective to protect against various cybersecurity risks and vulnerabilities. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award. In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental access to, or acquisition, modification, destruction, loss, alteration, encryption, disclosure, use, or other processing of our Sensitive Data (including proprietary information and intellectual property) or our information technology systems, or those of the third parties upon whom we rely. A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.

We may expend significant resources or modify our business activities to try to protect against security incidents. Additionally, certain privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and Sensitive Data.

While we have implemented security measures designed to protect against security incidents and other interruptions, there can be no assurance that these measures will be effective. We take steps to detect and remediate vulnerabilities in our information technology systems (including in our services), but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit vulnerabilities change frequently and are often sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred; and, we may not be able to anticipate or detect attacks or vulnerabilities. These vulnerabilities pose material risks to our business.

Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities. As a result, we may be unable to implement adequate preventative and responsive measures to stop or mitigate security incidents before or while they are occurring. Finally, incidents that may appear to be minor when assessed individually, may become material, at a later date, when considered in the aggregate.

Applicable privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.

If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences. These consequences may include: exposure, loss, unavailability, acquisition, or other unauthorized processing of Sensitive Data (including intellectual property or confidential or proprietary information); government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing Sensitive Data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business. Our efforts to prevent and overcome these challenges could increase our expenses and may not be successful.

Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security obligations, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

Unfavorable conditions in our industry, the global economy, or other catastrophic events may disrupt our business, could limit our ability to grow, and negatively affect our results of operations.

Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers and potential customers. The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in customer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, higher interest rates and uncertainty about economic stability. For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets and any future public health crises could result in similar impacts on the global economy. Similarly, geopolitical tensions in and around Ukraine, Israel and other areas of the world have created extreme volatility in the global capital markets and are expected to have further global economic consequences, including disruptions of the global supply chain and energy markets, and further acts of war, terror, or responses to each could result in similar or increased impacts on the global economy. Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs. Employee salaries and benefits expenses have increased as a result of economic growth, increased demand for business services, increased competition for trained and talented employees, among other wage-inflationary pressures and we cannot assure that they will not continue to rise. In addition, higher inflation also could increase our customers’ operating costs, which could result in reduced budgets for our customers and potentially less demand for our platform and the development of quantum technologies. Any significant increases in inflation and related increase in interest rates could have a material adverse effect on our business, results of operations and financial condition.

In addition, in challenging economic times, our current or potential future customers may experience cash flow problems and as a result may modify, delay or cancel plans to purchase our products and services. Additionally, if our customers are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable due to us. Moreover, our key suppliers may reduce their output or become insolvent, thereby adversely impacting our ability to manufacture our products. Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities. We cannot predict the timing, location, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry.

Furthermore, a disruption or failure of our systems or operations because of an earthquake, weather event, cyberattack, terrorist attack, pandemic, or other catastrophic event could cause delays in providing services or performing other critical functions, which could also delay commercial deals and the associated revenue recognition for those deals. Our quantum computing manufacturing facility and a significant portion of our research and development activities, and certain other essential business operations are located in the Seattle, Washington area, which is a seismically active region.

A catastrophic event that results in the destruction or disruption of any of our critical business or IT systems, or the infrastructure or systems they rely on could harm our ability to conduct normal business operations.

Government actions and regulations, such as tariffs and trade protection measures, especially in China and the United States, may adversely impact our business, including our ability to obtain products from our suppliers.

Political challenges between the United States and countries in our supply chain, including China, and changes to trade policies, including tariff rates and customs duties, trade relations between the United States and China and other macroeconomic issues could adversely impact our business. Specifically, United States-China trade relations remain uncertain. Since February 2025, the United States has imposed new and increased tariffs on many products imported into the United States from its various trading partners, with the highest of these tariffs affecting goods from China. China and other affected countries have taken measures in response, including increased tariffs on U.S. products and the imposition of new export controls on rare earth metals, critical minerals, and other items. Though certain items have been exempted from some of these recent U.S. tariff actions, including computers, semiconductors, and other consumer electronics, the risk of additional U.S. tariffs has materially increased in light of recent comments and new Section 232 investigations opened by the U.S. presidential administration

In addition, the U.S. government continues to add additional entities, in China and elsewhere, to restricted party lists impacting the ability of U.S. companies to provide products and technology, and, in certain cases, services, to these entities and, in some cases, to receive products, technology or services from these entities. The U.S. government also continues to increase end-use restrictions on the provision of products, technology and services to China and other countries including end-uses related to advanced computing. The U.S. presidential administration has used, and has signaled its intention to continue to use U.S. trade policy, including tariffs and other trade restrictions, as an important foreign policy tool presenting uncertainty regarding the impact of future trade policies on our business.

There is also a possibility of future tariffs, trade protection measures or other restrictions by the United States, China, or other countries that may affect our products or our customers and which could have a material adverse effect on our business. Such policies may affect our business directly, including through effects on the cost or availability of components, and indirectly, through broader macroeconomic implications of such policies, including inflationary pressures and depressed economic sentiment. In addition, the Chinese government exercises significant control over China’s economy through the allocation of resources, control of the incurrence and payment of foreign currency-denominated obligations, setting of monetary policy and provision of preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations could adversely affect the overall economy in China or our Chinese suppliers, which could harm our business through higher supply costs, reduced availability or both.

Also, due to concerns with the security of products and services from certain telecommunications equipment and services companies based in China, U.S. Congress has enacted bans on the use of certain Chinese-origin components or systems either in items sold to the U.S. government or in the internal networks of government contractors and subcontractors (even if those networks are not used for government-related projects). Further, the Chinese government has responded to these U.S. actions by developing an unreliable entity list, which may limit the ability of companies on the list to engage in business with Chinese counterparties.

In June 2022, the import restrictions contained in the Uyghur Forced Labor Prevention Act (“UFLPA”) became effective. The UFLPA creates a rebuttable presumption that any goods mined, produced or manufactured, wholly or in part, in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or produced by a listed entity, were made with forced labor and would therefore not be entitled to entry at any U.S. port. Importers may be required to present clear and convincing evidence that such goods are not made with forced labor. While we do not source items from the XUAR or from listed parties, and we have increased our supply chain diligence, there is risk that our ability to import components and products may be adversely affected by the UFLPA.

Given the relatively fluid regulatory environment in China and the United States and uncertainty regarding how the U.S. government or Chinese and other foreign governments will act with respect to tariffs and international trade agreements and policies, a trade war, further governmental action related to tariffs or international trade policies, or additional tax or other regulatory changes in the future could directly and adversely impact our financial results and results of operations. We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, what products may be subject to such actions or what actions may be taken by the other countries in retaliation. If we are unable to obtain or use components for inclusion in our products, if component prices increase significantly or if we are unable to export or sell our products to any of our customers, our business, liquidity, financial condition and/or results of operations would be materially and adversely affected.

We are subject to governmental export and import controls and trade and economic sanctions that could impair our ability to compete in global markets and subject us to liability if we are not in full compliance with applicable laws and other controls.

Our products, technology, and services are subject to various restrictions under U.S. export controls, import laws and regulations, and economic sanctions, including the U.S. Export Administration Regulations administered by the U.S. Department of Commerce, U.S.

Customs regulations, and trade and economic sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control. U.S. export controls and trade and economic sanctions include restrictions or prohibitions on the sale or supply of certain products, technologies, and services to U.S. embargoed or sanctioned countries and governments of these countries, as well as other persons and entities. Additionally, under these current and future laws and regulations, exports of our products, technology, and services as well as the underlying technology may require export authorizations, including by license, a license exception, or other appropriate government authorizations, and the filing of a classification request or self-classification report to use a license exception, as applicable. Customers may defer or decline their purchases of our products due to uncertainty about export controls, and as a result, our business could be materially adversely affected.

Should we violate existing or similar future export controls or sanctions, we may be subject to substantial monetary fines or suffer reputational damage and other penalties that could negatively impact our business. If we need to obtain any necessary export licenses or other authorizations for a particular sale, the process may be time-consuming and may result in the delay or loss of opportunities to sell our products.

We take precautions to prevent our products and services and the underlying technology from being provided, deployed or used in violation of export controls and sanctions. However, we cannot provide assurance that our policies and procedures relating to export control and sanctions compliance will prevent violations in the future by us or our partners or agents. Any violation of U.S. sanctions or export controls, including failure to obtain appropriate import, export, or re-export licenses or authorization, could result in significant penalties and government investigations, delays in approving or denials of export licenses, and reputational harm and loss of business. As noted above, the U.S. government continues to add additional entities, in China and elsewhere, to restricted party lists impacting the ability of U.S. companies to provide products and technology, and, in certain cases, services, to these entities and, in some cases, to receive products, technology or services from these entities.

In addition to the United States, various other countries regulate the import and export of certain encryption and other technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our products, technologies, and services or could limit our clients’ ability to implement our products, technologies, and services in those countries. The United States, United Kingdom, France, Spain, Germany, Denmark, Finland, Norway, Slovenia, Japan, Canada, and the Netherlands have enacted export controls on quantum computing hardware and related software and technology at specified levels of technological advancement. We will continue to review our existing compliance measures to ensure compliance with any applicable regulatory changes. Changes in our products, or future changes in export and import regulations, may create delays in the introduction of our products and the underlying technology in international markets, prevent our clients with global operations from deploying our products globally, adversely affect our ability to hire personnel from certain countries to work on our products, or, in some cases, prevent the export or import of our products to certain countries, governments, or persons altogether.

Any change in export or import controls, economic sanctions or related legislation, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers. Any decreased use of our products or limitation on our ability to export or sell our products in major international markets could adversely affect our business, financial condition, and results of operations.

We expect to incur significant costs in complying with these regulations. Regulations related to quantum computing are currently evolving and we may face additional risks associated with changes to these regulations as well as increased licensing requirements and other restrictions.

Acquisitions, divestitures, strategic investments and strategic partnerships could disrupt our business and harm our financial condition and operating results.

We have pursued and we may continue to pursue growth opportunities by acquiring businesses, solutions or technologies through strategic transactions, investments or partnerships that complement or expand our current business. The identification of suitable acquisition, strategic investment or strategic partnership candidates can be costly and time consuming. If such strategic transactions require us to seek additional debt or equity financing, we may not be able to obtain such financing on terms favorable to us or at all, and such transactions may adversely affect our liquidity and capital structure. To the extent we issue equity and/or convertible securities as consideration in such strategic transactions, our stockholders may experience substantial dilution. Any strategic transaction might not strengthen our competitive position, may increase some of our risks, may raise new compliance-related obligations and challenges, may distract our management team from our current operations, may be viewed negatively by our customers, partners or investors, or we may have to delay or not proceed with announced strategic transactions. Even if we successfully complete a strategic transaction, we may not be able to effectively integrate the acquired business, technology, systems, control environment, solutions, or operations into our business, and we may have difficulty integrating and retaining new employees. We may experience unexpected changes in how we are required to account for strategic transactions pursuant to U.S. GAAP and may not achieve the anticipated benefits of any strategic transaction. We may incur unexpected costs, claims or liabilities that we incur during the strategic transaction or that we assume from the acquired company, or we may discover adverse conditions subsequent to the strategic transaction that were not identified during our due diligence review for which we have limited or no recourse.

Risks Related to Our International Expansion and Future Operations

Because our success depends, in part, on our ability to expand sales internationally, our business will be susceptible to risks associated with international operations.

We currently maintain offices and/or have personnel in the United States and other international locations. We expect to continue to expand our international operations by developing our sales and operations presence internationally, which may include opening offices in new jurisdictions. Any additional international expansion efforts that we are undertaking and may undertake may not be successful. In addition, conducting international operations subjects us to new risks, some of which we have not generally faced in the United States or other countries where we currently operate. These risks include, among other things:

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lack of familiarity and burdens of complying with foreign laws, legal standards, privacy and cybersecurity standards, regulatory requirements, tariffs and other barriers, and the risk of penalties to our customers and individual members of management or employees if our practices are deemed to not be in compliance;

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practical difficulties of enforcing intellectual property rights in countries with varying laws and standards and reduced or varied protection for intellectual property rights in some countries;

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an evolving legal framework and additional legal or regulatory requirements for privacy and cybersecurity, which may necessitate the establishment of systems to maintain data in local markets, requiring us to invest in additional data centers and network infrastructure, and the implementation of additional employee privacy documentation (including locally compliant privacy notices and policies), all of which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business;

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unexpected changes in regulatory requirements, taxes, foreign investment rules, trade laws, tariffs, export quotas, custom duties or other trade restrictions;

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difficulties in managing systems integrators and partners;

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increased or unexpected supply chain challenges or delays;

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differing technology standards;

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different pricing environments, longer sales cycles, longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

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increased financial accounting and reporting burdens and complexities;

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difficulties in managing and staffing international operations including the proper classification of independent contractors and other contingent workers, differing employer/employee relationships and local employment laws;

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increased costs involved with recruiting and retaining an expanded employee population, including highly skilled workers and leaders in the quantum computing industry, outside the United States through cash and equity-based incentive programs, and legal costs and regulatory restrictions in issuing our shares to employees outside the United States;

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global political and regulatory changes that may lead to restrictions on immigration and travel for our employees;

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fluctuations in exchange rates that may decrease the value of our foreign-based revenue or increase the cost of our foreign operations;

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global public health threats or geopolitical events such as tensions in and around Ukraine, Israel and other areas of the world;

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degradation in U.S. relationships with targeted countries that could result in those countries disfavoring doing business with U.S. companies;

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potentially adverse tax consequences, including the complexities of foreign value added tax (or other tax) systems, restrictions on the repatriation of earnings, and transfer pricing requirements; and

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permanent establishment risks and complexities in connection with international payroll, tax and social security requirements for international employees.

Additionally, operating in international markets also requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required in establishing operations in other countries will produce desired levels of revenue or profitability.

Compliance with laws and regulations applicable to our global operations also substantially increases our cost of doing business in foreign jurisdictions. We have limited experience in marketing, selling and supporting our platform outside of the United States. Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful.

If we invest substantial time and resources to expand our international operations and are unable to do so successfully, in a timely manner, our business, financial condition, revenues, results of operations or cash flows will suffer. We may be unable to keep current with changes in government requirements as they change from time to time. Failure to comply with these regulations could harm our business. In many countries, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or other regulations applicable to us. Although we have implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that all of our employees, contractors, partners and agents will comply with these laws and policies. Violations of laws or key control policies by our employees, contractors, partners or agents could result in delays in revenue recognition, financial reporting misstatements, enforcement actions, reputational harm, disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences or the prohibition of the importation or exportation of our solutions and could harm our business, financial condition, revenues, results of operations or cash flows.

Our international sales and operations subject us to additional risks and costs exposure to foreign currency exchange rate fluctuations, that can adversely affect our business, financial condition, revenues, results of operations or cash flows.

We are continuing to expand our international operations as part of our growth strategy. However, there are a variety of risks and costs associated with our international sales and operations, which include making investments prior to the sales or use of quantum computers, the cost of conducting our business internationally and hiring and training international employees and the costs associated with complying with local law. Furthermore, we cannot predict the rate at which our quantum computers will be accepted in international markets by potential customers.

Our sales, support and engineering organization outside the United States is substantially smaller than our U.S. sales organization. We believe our ability to attract new customers to subscribe to our platform or to attract existing customers to renew or expand their use of our platform is directly correlated to the level of engagement we obtain with the customer. To the extent we are unable to effectively engage with non-U.S. customers due to our limited sales force capacity, we may be unable to effectively grow in international markets.

As our international operations expand, our exposure to the effects of fluctuations in currency exchange rates grows. While we have primarily transacted with customers in U.S. dollars historically, we expect to continue to expand the number of transactions with our customers that are denominated in foreign currencies in the future. Additionally, fluctuations in the value of the U.S. dollar and foreign currencies may make our products and services more expensive for international customers, which could harm our business. Additionally, we incur expenses for employee compensation and other operating expenses for our non-U.S. employees in the local currency for such locations. Fluctuations in the exchange rates between the U.S. dollar and other currencies could result in an increase to the U.S. dollar equivalent of such expenses. These fluctuations could cause our results of operations to differ from our expectations or the expectations of our investors. Additionally, such foreign currency exchange rate fluctuations could make it more difficult to detect underlying trends in our business and results of operations. We may attempt to mitigate a portion of these risks through foreign currency hedging based on our judgment of the appropriate trade-offs among risk, opportunity, and exposure. Any future hedging activities may not offset the full, or in some cases any, adverse financial impact resulting from unfavorable movement in foreign currency exchange rates, which could adversely affect our financial condition and results of operations.

Our international operations may subject us to greater than anticipated tax liabilities.

The amount of taxes we may pay in different jurisdictions depends on the application of the tax laws of various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to any future intercompany arrangement or disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations. Our condensed consolidated financial statements could fail to reflect adequate reserves to cover such a contingency. Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.

Risks Related to Litigation and Government Regulation

Our business is exposed to risks associated with litigation, investigations and regulatory proceedings.

We may face legal, administrative and regulatory proceedings, claims, demands and/or investigations involving stockholders, customers, competition and/or other issues relating to our business. Litigation and regulatory proceedings are inherently uncertain, and adverse rulings could occur, including monetary damages, or an injunction stopping us from engaging in certain business practices, or requiring other remedies, such as compulsory licensing of patents.

These proceedings and any additional investigations, inquiries or litigation by various regulators may harm our reputation regardless of the outcome of any such action. The outcome of any litigation, regardless of its merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims. Negative perceptions of our business may result in additional regulation, enforcement actions by the government and increased litigation, or harm to our ability to attract or retain customers or strategic partners, any of which may affect our business. Any damage to our reputation, including from publicity related to legal proceedings against us or companies that work within our industry, governmental proceedings, unfavorable media coverage or class action could adversely affect our business, financial condition and results of operations.

An unfavorable outcome or settlement or any other legal, administrative and regulatory proceeding may result in a material adverse impact on our business, results of operations, financial position and overall trends. In addition, regardless of the outcome, litigation can be costly, time-consuming, and disruptive to our operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future. In addition, the laws and regulations our business is subject to are complex and change frequently. We may be required to incur significant expense to comply with changes in, or remedy violations of, these laws and regulations.

Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery.

We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

We may become subject to product liability claims, even those without merit, which could harm our business prospects, operating results, and financial condition. We may face inherent risk of exposure to claims in the event our quantum computers do not perform as expected or malfunction. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our quantum computers and business and inhibit or prevent commercialization of other future quantum computers, which would have material adverse effects on our brand, business, prospects and operating results. Any insurance coverage might not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our reputation, business and financial condition. We may not be able to secure additional product liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced to make a claim under our policy.

Contracts with government entities subject us to risks, including early termination, audits, investigations, sanctions and penalties.

As part of our business strategy, we have entered into and may enter into additional contracts with state and federal government entities, which subjects our business to statutes and regulations applicable to companies doing business with the government, including the Federal Acquisition Regulation. These government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors. For instance, most U.S. government agencies include provisions that allow the government to unilaterally terminate or modify contracts for convenience, and in that event, the counterparty to the contract may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source.

In addition, government contracts normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements could include, for example:

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specialized disclosure and accounting requirements unique to government contracts;

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financial and compliance audits of our cost structure, accounting controls and procedures and adequacy of our policies and systems to meet Federal Acquisition Regulation requirements. These audits may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;

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granting the U.S. government certain rights to inventions, data, software codes and related material that we develop under government-funded contracts and subcontracts, which may permit the U.S. government to disclose or license this information to third parties, including, in some instances, our competitors;

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requirements to fulfill government contracts assigned ratings under the Defense Priorities and Allocations System Program ahead of our commercial contracts, which could prevent us from meeting our commercial customer contracts’ requirements or schedules;

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public disclosures of certain contract and company information; and

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mandatory security and privacy framework compliance requirements, including the handling of controlled unclassified information.

Government contracts are also generally subject to greater scrutiny by the government than commercial contracts are by commercial customers. For example, government agencies can initiate reviews, audits and investigations regarding our compliance with government contract requirements. In addition, if we fail to comply with government contracting laws, regulations and contract requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under our contracts, the Federal Civil False Claims Act (including treble damages and other penalties), or criminal law. In particular, the False Claims Act’s “whistleblower” provisions also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results. Responding to any investigation or action relating to government contracts could result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Our customers also include non-U.S. governments. Similar procurement, budgetary, contract, and audit risks that apply in the context of U.S. government contracting may also apply to our doing business with these entities. In addition, compliance with complex regulations and contracting provisions in a variety of jurisdictions can be expensive and consume significant management resources.

Certain of our activities are subject to regulations relating to use of radioactive material, compliance with which may be costly, and a failure to comply with these regulations may materially and adversely affect our business.

Various atomic species are used in trapped-ion systems in academic and commercial settings, including isotopes of elemental ions. Some of these atomic isotopes are radioactive. We use certain radioactive materials in our research, development, and production activities. As a result of our utilization of radioactive material, we and some of our suppliers, distributors, and customers are subject to regulation by United States governmental authorities, such as the Food and Drug Administration (“FDA”), the Nuclear Regulatory Commission (“NRC”), and state and local regulatory agencies, which regulate products and activities which emit, produce, or control radiation. These regulations govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale, marketing, and disposal of our products. We are also subject to international laws and regulations that apply to the utilization of radioactive materials. These are often comparable to, if not more stringent than, the equivalent regulations in the United States. Agency reviews of radioactivity-related applications that we are required to make in order to design, develop, test, manufacture, package, distribute, import, export, sell, market or dispose of radioactive materials may be lengthy or unsuccessful, and as a result our ability to sell our products or operate in certain jurisdictions may be impaired. Although we believe that our safety procedures for handling such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials may not be completely eliminated, and as a result we could incur related liabilities or expenses.

We are subject to requirements relating to environmental and safety regulations and environmental remediation matters, which could adversely affect our business, results of operation and reputation.

We are subject to numerous federal, state and local environmental laws and regulations governing, among other things, solid and hazardous waste storage, treatment and disposal, and remediation of releases of hazardous materials. There are significant capital, operating and other costs associated with compliance with these environmental laws and regulations. Environmental laws and regulations may become more stringent in the future, which could increase costs of compliance or require us to manufacture with alternative technologies and materials.

Federal, state and local authorities also regulate a variety of matters, including, but not limited to, health, safety and permitting in addition to the environmental matters discussed above. New legislation and regulations may require us to make material changes to our operations, resulting in significant increases to the cost of production.

Our manufacturing process will have hazards such as, but not limited to, hazardous materials, machines with moving parts, and high voltage and/or high current electrical systems typical of large manufacturing equipment and related safety incidents. There may be safety incidents that damage machinery or product, slow or stop production, or harm employees. Consequences may include litigation, regulation, fines, increased insurance premiums, mandates to temporarily halt production, workers’ compensation claims, or other actions that impact the company brand, finances, or ability to operate.

We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to privacy, data protection and security. Our actual or perceived failure to comply with such obligations could lead to adverse business consequences.

Our data storage and processing activities, including the establishment and operation of future quantum data centers, may subject us to numerous privacy, data protection and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other obligations relating to privacy, data localization and security. Laws and regulations governing privacy, data protection and data sovereignty are rapidly evolving, extensive, complex, and include inconsistencies and uncertainties that may conflict with other rules or our practices. Further, new laws, rules, and regulations could be enacted with which we are not familiar or with which our practices do not comply.

In the United States, federal, state, and local governments have enacted numerous privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (collectively, the “CCPA”) applies to personal information of California consumers and imposes various requirements on businesses, including to provide specific disclosures in privacy notices and honor requests of California consumers to exercise certain privacy rights. The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Numerous other states have enacted, are in the process of enacting, are proposing to enact or are considering state-level privacy laws. Such laws are also being considered at the federal and local levels.

Our employees and personnel use generative AI technologies to perform their work, and the disclosure and use of personal information in generative AI technologies is subject to various evolving laws, regulations, guidance, industry standards, and other obligations. Additionally, several states and localities have enacted measures related to the use of AI and machine learning in products and services. Generally, we understand the use of AI for employee productivity also presents emerging ethical and social issues and may draw public scrutiny or controversy, and may also create or assist in producing output that appear correct but are factually inaccurate, incomplete, misleading, biased, or otherwise flawed, or produce other discriminatory or unexpected results, errors, or inadequacies, any of which may not be easily detectable. These circumstances and developments may further complicate compliance efforts, and may increase legal risk and compliance costs for us, the third parties upon whom we rely, and our customers.

Outside the United States, an increasing number of laws, regulations, industry standards and other obligations may govern privacy, data protection and security. For example, the European Union’s General Data Protection Regulation (“EU GDPR”), the United Kingdom’s General Data Protection Regulation (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for processing personal data.

For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. Additionally, we also target customers in Asia and may be subject to new and emerging data protection and privacy regimes in Asia, including China’s PIPL, Japan’s Act on the Protection of Personal Information, and Singapore’s Personal Data Protection Act.

In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or other countries due to data localization requirements or limitations on cross-border data flows. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) each has significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws. Although various mechanisms may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA’s and UK’s respective standard contractual clauses, the EU-U.S. Data Privacy Framework, the United Kingdom extension to the EU-U.S. Data Privacy Framework, and the Swiss-U.S. Data Privacy Framework, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States. If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our transferring or other processing of personal data necessary to operate our business. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigators, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.

In addition to privacy, data protection and security laws, we are contractually subject to industry standards adopted by industry groups and may become subject to additional obligations in the future. We are also bound by other contractual obligations related to privacy, data protection and security, and our efforts to comply with such obligations may not be successful. For example, certain laws addressing privacy, data protection and security, such as the EU GDPR, Switzerland Federal Act on Data Protection (FADP), UK GDPR and CCPA, require our customers to impose specific contractual restrictions on their service providers. Additionally, some of our customers may require us to host personal data locally.

We publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding privacy, data protection and security. If these policies, materials or statements are or are perceived to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.

Obligations related to privacy, data protection and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.

We may at times fail, or be perceived to have failed, in our efforts to comply with our privacy, data protection or security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail, or be perceived to have failed, to comply with such obligations, which could negatively impact our business operations. If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable privacy, data protection or security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar events); litigation (including class-action claims); additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data. Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; inability to process personal data or to operate in certain jurisdictions; interruptions or stoppages in our business operations or data collection; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.

We are subject to U.S. and foreign anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and other anti-bribery, and anti-corruption laws in countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, promising, offering, providing, soliciting, or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. We may engage with partners and third-party intermediaries to conduct our business abroad, including marketing our services and obtaining necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.

We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, and of our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. We cannot provide any assurance that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.

Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.

Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of our domestic and foreign financial results. Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, in August 2022, as part of the Inflation Reduction Act of 2022, the United States enacted a 1% excise tax on stock buybacks and a 15% alternative minimum tax on adjusted financial statement income. Additionally, beginning in 2022, the Code eliminated the right to deduct research and development expenditures and instead requires taxpayers to capitalize and amortize U.S. and foreign research and development expenditures over five and 15 tax years, respectively. To the extent applicable, we have accounted for these changes in accordance with our understanding of the guidance available as of the date of this filing and as described in more detail in our financial statements.

Many countries, as well as organizations such as the Organization for Economic Cooperation and Development, have implemented or proposed changes to existing tax laws, including a 15% global minimum tax. Any of these developments or changes in U.S. federal, state or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates, tax payments or tax credits and incentives will not be adversely affected by these or other developments or changes in law.

Risks Related to our Intellectual Property

Licensing of intellectual property is of critical importance to our business. For example, we license patents (some of which are foundational patents) and other intellectual property from the University of Maryland and Duke University on an exclusive basis. If the license agreement with these universities terminates, or if any of the other agreements under which we acquired or licensed, or will acquire or license, material intellectual property rights is terminated, we could lose our rights to use key technologies to develop and operate our business.

We are heavily reliant upon licenses to certain patent rights and other intellectual property from third parties that are important or necessary to the development of our products. In particular, our quantum computing technology is dependent on our license agreement with University of Maryland and Duke University, or the Universities. Pursuant to the license agreement with the Universities, we were granted an exclusive, worldwide, royalty-free, sublicensable license for certain patents, know-how (on a non-exclusive basis) and other intellectual property to develop, manufacture and commercialize products for use in certain licensed fields, the scope of which includes the application of the licensed intellectual property in ion trap quantum computing.

Our existing license agreement with the Universities imposes, and we expect that any future license agreements will impose, upon us various commercial and development obligations. If we fail to comply with our obligations under these agreements, or we are subject to an insolvency-related event, the licensor may have the right to terminate these agreements, in which event we would not be able to develop, market or otherwise commercialize products covered by these agreements, including if any of the foregoing were to occur with respect to our license agreement with the Universities. Our business could significantly suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, or if we are unable to enter into necessary licenses on acceptable terms.

Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues, and certain provisions in intellectual property license agreements may be susceptible to multiple interpretations. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:

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the scope of rights granted under the license agreement and other interpretation-related issues;

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whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; our right to sublicense patent and other rights to third parties;

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our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product and technology, and what activities satisfy those diligence obligations;

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the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and the company;

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our right to transfer or assign the license; and

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the effects of termination.

The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could harm our business, financial condition and results of operations. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize our products or technology.

While we would expect to exercise all rights and remedies available to us, including seeking to cure any breach by us, and otherwise seek to preserve our rights under the license agreement, we may not be able to do so in a timely manner, at an acceptable cost or at all.

Our success depends, in significant part, on our ability to obtain, maintain, enforce and defend patents and other intellectual property rights, including trade secrets, with respect to our products and technology and to operate our business without infringing, misappropriating, or otherwise violating the intellectual property rights of others. We may not be able to prevent unauthorized use of our intellectual property. We rely upon a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies. In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants, and through non-disclosure agreements with business partners and other third parties, however, our employees and consultants may not abide by, and not all of them have always abided by, their obligations under their nondisclosure and invention assignment agreements. Our trade secrets may also be compromised, which could cause us to lose the competitive advantage from such trade secrets. Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take to prevent misappropriation may not be sufficient. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm our business, results of operations and financial condition. In addition, existing intellectual property laws and contractual remedies may afford less protection than needed to safeguard our intellectual property portfolio.

Patent, copyright, trademark and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the unauthorized use of our intellectual property rights, technology and other proprietary rights may be more expensive and difficult outside of the United States. Failure to adequately protect our intellectual property rights could result in our competitors using our intellectual property to offer products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, financial condition and operating results.

Our patent applications may not result in issued patents or our patent rights may be contested, circumvented, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from interfering with our commercialization of our products.

Our patent applications may not result in issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours. The status of patents involves complex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot be certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us will afford protection against competitors with similar technology. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. In addition to those who may have patents or patent applications directed to relevant technology with an effective filing date earlier than any of our existing patents or pending patent applications, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

Furthermore, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued.

Even if our patent applications succeed and we are issued patents in accordance with them, it is still uncertain whether these patents – including any of the issued patents exclusively licensed to us – will be contested, circumvented, invalidated, found to be unenforceable or limited in scope in the future. The rights granted under any issued patents may not provide us with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement than in the United States. In addition, the claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from licensing and exploiting any patents that issue from our pending applications. In addition, patents issued to us may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results.

We may become subject to intellectual property disputes. Our success depends, in part, on our ability to develop and commercialize our products, services and technologies without infringing, misappropriating or otherwise violating the intellectual property rights of third parties. However, we may not be aware that our products, services or technologies are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation. For example, there may be issued patents of which we are unaware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our current or future products, services or technologies. There also may be pending patent applications of which we are not aware that may result in issued patents, which could be alleged to be infringed by our current or future products, services or technologies. Because patent applications can take years to issue and are often afforded confidentiality for some period of time there may currently be pending applications, unknown to us, that later result in issued patents that could cover our current or future products, services or technologies. Lawsuits can be time-consuming and expensive to resolve, and they divert management’s time and attention. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. Companies that have developed and are developing technology are often required to defend against litigation claims based on allegations of infringement, misappropriation or other violations of intellectual property rights. Our products, services or technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. In a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both. The strength of our defenses will depend on the patents asserted, the interpretation of these patents, and our ability to invalidate the asserted patents. However, we could be unsuccessful in advancing non-infringement and/or invalidity arguments in our defense. In the United States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. Our patent portfolio may not be large enough to deter patent infringement claims, and our competitors and others may now and in the future have significantly larger and more mature patent portfolios. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant solution revenue, and therefore, our patent portfolio may provide little or no deterrence as we would not be able to assert our patents against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we may be forced to limit or stop sales of our products, services or technologies or cease business activities related to such intellectual property.

Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on our business, financial condition or results of operations. Any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, regardless of the merit of the claim or our defenses, may require us to do one or more of the following:

•

cease selling or using solutions or services that incorporate the intellectual property rights that allegedly infringe, misappropriate or violate the intellectual property of a third party;

•

make substantial payments for legal fees, settlement payments or other costs or damages;

•

obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology;

•

redesign the allegedly infringing solutions to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible; or indemnify organizations using our platform or third-party service providers.

•

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. The occurrence of infringement claims may grow as the market for our products, services and technologies grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources.

Certain intellectual property rights that have been in-licensed pursuant to the license agreement with the Universities have been generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-Dole Act of 1980, or the Patent and Trademark Law Amendment. These U.S. government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right, under certain limited circumstances, to require the licensor to grant exclusive, partially exclusive or non-exclusive licenses to any of these inventions to a third party if it determines that: (1) adequate steps have not been taken to commercialize the invention, (2) government action is necessary to meet public health or safety needs or (3) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”). The U.S. government also has the right to take title to these inventions if the licensor fails to disclose the invention to the government or fails to file an application to register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the U.S. government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the U.S., and the license agreement with the Universities requires that we comply with this requirement. This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture the products substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible. To the extent any of our owned or licensed future intellectual property is also generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply.

Risks Related to an Investment in our Securities and Other General Matters

The market price of shares of our common stock or public warrants may be volatile, which could cause the value of your investment to decline.

If you purchase shares of our common stock or warrants to purchase common stock, you may not be able to resell those shares or warrants at or above the price you paid. The market price of our common stock may be highly volatile and may fluctuate or decline significantly in response to numerous factors, some of which are beyond our control. It is possible that an active trading market will not be sustained. The securities markets have experienced and continue to experience significant volatility. Market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our common stock or warrants to purchase common stock regardless of our operating performance. Our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including:

•

variations in quarterly operating results or dividends, if any, to stockholders;

•

additions or departures of key management personnel;

•

publication of research reports about our industry;

•

rumors and market speculation involving us or other companies in our industry, which may include short seller reports;

•

litigation and government investigations;

•

changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business;

•

adverse market reaction to any indebtedness incurred or securities issued in the future; changes in market valuations of similar companies;

•

announcements by competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, or capital commitments;

•

the impact of any future bank failures, public health crises or geopolitical events such as tensions in and around Ukraine, Israel and other areas of the world; and

•

the impact of any of the foregoing on our management, employees, partners, customers, and operating results.

Following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against such company. Such litigation could result in substantial costs and a diversion of management’s attention and resources. See also “—Risks Related to Litigation and Government Regulation—Our business is exposed to risks associated with litigation, investigations and regulatory proceedings.”

We have historically and may continue to, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will consist of forward-looking statements, subject to the risks and uncertainties described in this filing and in our other public filings and public statements. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty. Further, our lengthy sales cycle may contribute to substantial fluctuations in our quarterly or annual operating results as significant sales can be delayed to subsequent periods. If, in the future, our operating or financial results for a particular period do not meet any guidance provided or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline as well. There can be no assurance that we will continue to issue public guidance in the future.

Our quarterly operating results may fluctuate significantly because of several factors, including:

•

labor availability and costs for hourly and management personnel;

•

profitability of our products, especially in new markets;

•

changes in interest rates;

•

impairment of long-lived assets;

•

macroeconomic conditions, both nationally and locally;

•

size and scope of our revenue arrangements with our customers;

•

negative publicity relating to our products;

•

changes in customer preferences and competitive conditions;

•

the loss of strategic relationships or existing contracts with any customer;

•

lengthy customer sales cycle, leading to difficulty in forecasting the timing of purchasing decisions;

•

expansion to new markets; and

•

fluctuations in commodity prices.

Short sellers may engage in manipulative activity intended to drive down the market price of our common stock, which could also result in related regulatory and governmental scrutiny, among other effects.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third party with the intention of later buying lower priced identical securities to return to the lender. Accordingly, it is in the interest of a short seller of our common stock for the price to decline. At any time, short sellers may publish, or arrange for the publication of, opinions or characterizations that are intended to create negative market momentum. Issuers, like us, whose securities have historically had limited trading history or volumes and/or have been susceptible to relatively high volatility levels can be vulnerable to such short seller attacks. Short selling reports can cause increased volatility in an issuer’s stock price, and result in regulatory and governmental inquiries. From time to time, short seller reports have been published about us, which contain certain allegations against us. Any inquiry or formal investigation from a governmental organization or other regulatory body, including any inquiry from the SEC or the U.S. Department of Justice, could result in a material diversion of our management’s time and could have a material adverse effect on our business and results of operations.

Our ability to timely raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all. The failure to raise capital when needed could harm our business, operating results and financial condition. Debt or equity issued to raise additional capital may reduce the value of our common stock.

We cannot be certain when or if the operations of our business will generate sufficient cash to fund our ongoing operations or the growth of our business. We intend to make investments to support our current business and may require additional funds to respond to business challenges, including the need to develop or enhance our technology, improve our operating infrastructure or acquire complementary businesses and technologies. Additional financing may not be available on favorable terms, if at all. In addition, we may not be able to access a portion of our existing cash, cash equivalents and investments due to market conditions. If banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition. Additionally, weakness and volatility in capital markets and the economy, in general or as a result of bank failures or macroeconomic conditions such as rising inflation, could limit our access to capital markets and increase our costs of borrowing. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results and financial condition. If we incur debt, the debt holders could have rights senior to holders of our common stock to make claims on our assets. The terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.

Because the decision to issue securities in the future offering will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future issuances of debt or equity securities. As a result, stockholders will bear the risk of future issuances of debt or equity securities reducing the value of their common stock and diluting their interest.

There can be no assurance that we will be able to comply with the continued listing standards of the New York Stock Exchange (“NYSE”).

If we fail to satisfy the continued listing requirements of NYSE, such as the corporate governance requirements or the minimum share price requirement, NYSE may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the NYSE minimum share price requirement or prevent future non-compliance with NYSE’s listing requirements. Additionally, if our securities are not listed on, or become delisted from the NYSE, for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on the NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.

If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of financial reports, and the market price of our common stock may decline.

We are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. The process of designing, implementing, and testing the internal control over financial reporting required to comply with this obligation is time-consuming, costly, and complicated. There can be no assurance that the controls put in place will remain effective or that any additional controls needed will be designed and implemented timely to prevent material misstatements in our condensed consolidated financial statements in future periods. If we identify material weaknesses in our internal control over financial reporting in the future, if we are unable to comply with the requirements of Section 404 of Sarbanes-Oxley Act of 2002 in a timely manner, or if we are unable to assert that our internal control over financial reporting is effective, we will be unable to certify that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decline. We could become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources.

We will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations.

We face increased legal, accounting, insurance, administrative and other costs and expenses as a public company. Sarbanes-Oxley, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board (“PCAOB”) and the securities exchanges, impose additional reporting and other obligations on public companies.

Compliance with public company requirements will continue to increase costs and make certain activities more time-consuming.

If any issues in complying with SEC reporting requirements are identified (for example, if we identify a material weakness or significant deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could harm our reputation or investor perceptions of us. Further, the costs to maintain our director and officer liability insurance may rise. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on our Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand our business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

We may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our common stock.

As of March 31, 2025, we had warrants outstanding to purchase an aggregate of 2,455,010 shares of common stock. Pursuant to our employee benefit plans, we may issue an aggregate of up to 38,824,867 shares of common stock, which amount may be subject to increase from time to time. We may also issue additional shares of common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

The issuance of additional shares or other equity securities of equal or senior rank would have the following effects:

•

existing stockholders’ proportionate ownership interest in us will decrease;

•

the amount of cash available per share, including for payment of dividends, if any, may decrease;

•

the relative voting strength of each previously outstanding share of common stock may be diminished; and

•

the market price of our common stock may decline.

There is no guarantee that the public warrants will be in the money at any specific point in time, and they may expire worthless.

The exercise price for our public warrants is $11.50 per share of common stock. There is no guarantee that the public warrants will be in the money at any specific point in time prior to their expiration, and as such, the public warrants may expire worthless. The public warrants expire on September 30, 2026.

We may amend the terms of the public warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then-outstanding public warrants. As a result, the exercise price of your public warrants could be increased, the exercise period could be shortened and the number of shares of our common stock purchasable upon exercise of a public warrant could be decreased, all without your approval.

Our public warrants are issued in registered form under the Warrant Agreement between the warrant agent and us. The Warrant Agreement provides that the terms of the public warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the public warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a public warrant.

We may redeem unexpired public warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making such warrants worthless.

We have the ability to redeem outstanding public warrants prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. While the public warrants are redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of the outstanding public warrants could force you (1) to exercise your public warrants and pay the exercise price at a time when it may be disadvantageous for you to do so, (2) to sell your public warrants at the then-current market price when you might otherwise wish to hold your public warrants or (3) to accept the nominal redemption price which, at the time the outstanding public warrants are called for redemption, is likely to be substantially less than the market value of your public warrants.

In addition, we may redeem the public warrants prior to their expiration, at a price of $0.10 per warrant, provided that the last reported sales price of our common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we give proper notice of such redemption, provided that the warrants can be exercised on a cashless basis prior to redemption for a number of shares of common stock determined based on the redemption date and the fair market value of our common stock, and provided certain other conditions are met. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the public warrants are “out-of-the-money,” in which case, you would lose any potential embedded value from a subsequent increase in the value of our common stock had your public warrants remained outstanding.

We have no current plans to pay cash dividends on our common stock; as a result, stockholders may not receive any return on investment unless they sell their common stock for a price greater than the purchase price.

We have no current plans to pay dividends on our common stock. Any future determination to pay dividends will be made at the discretion of our Board, subject to applicable laws. It will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions, and other factors that the Board may deem relevant. In addition, the ability to pay cash dividends may be restricted by the terms of debt financing arrangements, as any future debt financing arrangement likely will contain terms restricting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, stockholders may not receive any return on an investment in our common stock unless they sell their shares for a price greater than what they paid for them.

Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent an acquisition by a third party that could otherwise be in the interests of stockholders.

Our second amended and restated certificate of incorporation (“Certificate of Incorporation”) and amended and restated bylaws (“Bylaws”) contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of the Board. These provisions, which may delay, prevent or deter a merger, acquisition, tender offer, proxy contest, or other transaction that stockholders may consider favorable, include the following:

•

a classified board;

•

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

•

certain limitations on convening special stockholder meetings;

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limiting the persons who may call special meetings of stockholders;

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limiting the ability of stockholders to act by written consent;

•

restrictions on business combinations with an interested stockholder;

•

in certain cases, the approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal the Bylaws, or amend or repeal certain provisions of the Certificate of Incorporation;

•

no cumulative voting;

•

the required approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and

•

the ability of the Board to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions.

These provisions of our Certificate of Incorporation and Bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our common stock in the future, which could reduce the market price of our common stock.

The provision of our Certificate of Incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against directors and officers.

Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for:

•

any derivative action or proceeding brought on behalf of us;

•

any action asserting a claim of breach of fiduciary duty owed by any director, officer, agent or other employee or stockholder to us or our stockholders;

•

any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”), the Certificate of Incorporation or Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware;

•

any claim or cause of action seeking to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or the Bylaws; or

•

any action asserting a claim governed by the internal affairs doctrine, in each case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. It further provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolutions of any complaint asserting a cause of action arising under the Securities Act. The exclusive forum clauses described above shall not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. Although these provisions are expected to benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation have been challenged in legal proceedings and there is uncertainty as to whether a court would enforce such provisions. In addition, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. It is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Certificate of Incorporation to be inapplicable or unenforceable in such action. If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition or results of operations.

These provisions of our Certificate of Incorporation and Bylaws could discourage lawsuits against directors and officers, which could reduce the market price of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Entry into Agreements to Acquire Capella

On May 7, 2025, the Company, Project Cornet Acquisition Sub, Inc., a Delaware corporation and a direct or indirect wholly-owned subsidiary of the Company (“Merger Sub”), Capella Space Corp., a Delaware corporation (“Capella”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of Capella’s securityholders, entered into an Agreement and Plan of Merger (the “Agreement”) to acquire all of the issued and outstanding shares of Capella pursuant to the merger of Merger Sub with and into Capella, with Capella as the surviving corporation (the “Capella Transaction”).

Pursuant to the terms of the Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Agreement and subject to customary adjustments to the purchase price as set forth in the Agreement, the aggregate consideration payable by the Company to certain securityholders of Capella at the closing of the Capella Transaction shall be 10,677,344 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in exchange for all of the outstanding stock of Capella.

The shares of Common Stock to be issued pursuant to the Agreement will be restricted securities.

The Agreement contains customary representations, warranties, covenants and other obligations and rights of the parties. The Agreement also specifies the treatment of outstanding Company equity awards in connection with the Capella Transaction.

Completion of the Capella Transaction is subject to the satisfaction of customary closing conditions including, among other things, the absence of any governmental law or order that makes the Capella Transaction illegal or otherwise prohibits or prevents its consummation, the obtainment, expiration, or termination (as applicable) of regulatory approvals imposed by governmental entities and the authorization for listing of the Common Stock to be issued pursuant to the Agreement on the New York Stock Exchange.

The Agreement may be terminated under certain circumstances including, but not limited to, by mutual written agreement of the Company and Capella and, subject to certain conditions, if the closing shall not have occurred by February 1, 2026.

The foregoing description of the Capella Transaction and the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is filed as Exhibit 2.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Unregistered Sales of Equity Securities

Pursuant to the terms of the Agreement and subject to the satisfaction or waiver of certain conditions set forth in the Agreement and subject to customary adjustments as set forth in the Agreement, the aggregate consideration payable by the Company to certain securityholders of Capella at the closing of the Capella Transaction shall be 10,677,344 shares of Common Stock, which will be restricted securities, and we intend that the issuance and sale of the shares will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

In addition, on May 6, 2025, the Company entered into a definitive agreement to acquire Lightsynq Technologies Inc., a Boston-based startup founded by former Harvard University quantum member experts, in an all-stock transaction (the “Lightsynq Transaction”) for 13.5 million shares of Common Stock, subject to the terms and conditions of the definitive agreement and customary purchase price adjustments. The Lightsynq Transaction is expected to close in the second quarter, subject to customary closing conditions. The shares of common stock and stock options issued at the closing of the Lightsynq Transaction will be restricted securities, and we intend that the issuance and sale of the shares will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

Securities Trading Plans of Directors and Executive Officers

During the three months ended March 31, 2025, the following directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified the amount, pricing or timing provisions of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(c) of Regulation S-K:

        Name

        Title

        Action Taken

        Effective Date

        Duration(1)

        Aggregate Number of Shares to be Sold

Rima Alameddine

Chief Revenue Officer

Adoption

March 14, 2025

March 14, 2025 - June 26, 2026

200,000

Robert Cardillo

Director

Adoption

March 12, 2025

March 12, 2025 - June 19, 2026

12,723

Peter Chapman

Executive Chair, Director

Adoption

March 14, 2025

March 14, 2025 - June 15, 2026

5,989,244

Kathryn Chou

Director

Adoption

March 12, 2025

March 12, 2025 - April 30, 2026

37,485

Niccolo de Masi(2)

President & Chief Executive Officer, Director

Adoption

March 12, 2025

March 12, 2025 - March 12, 2027

2,597,500

Thomas Kramer

Chief Financial Officer

Adoption

March 14, 2025

March 14, 2025 - February 27, 2026

720,000

Inder Singh

Director

Adoption

March 13, 2025

March 13, 2025 - April 30, 2026

80,481

Wendy Thomas

Director

Adoption

March 13, 2025

March 13, 2025 - June 19, 2026

23,323

Gabrielle Toledano

Director

Adoption

March 12, 2025

March 12, 2025 - June 19, 2026

792

(1)

Sales under the trading arrangement will not commence until completion of the required cooling off period under Rule 10b5-1. Subject to the compliance with Rule 10b5-1, duration could cease earlier than the final date shown above to the extent that the aggregate number of shares to be sold under the trading arrangement have been sold.

(2)

Adopted by Isalea Investments LP (the "Partnership"). The reporting person is the managing member of the Partnership.

Item 6. Exhibits.

(a) Exhibits.

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.


Exhibit	Description Form	Filed Herewith	Incorporated by Reference	Form	Exhibit	Filing Date

2.1^	Agreement and Plan of Merger, dated as of March 7, 2021, by and among dMY Technology Group, Inc. III, IonQ, Inc. and IonQ Trap Acquisition Inc.		X	8-K	2.1	March 8, 2021

2.2^	Agreement and Plan of Merger, dated as of May 7, 2025, by and among IonQ, Inc., Project Cornet Acquisition Sub, Inc., Capella Space Corp. and Shareholder Representative Services LLC as Holder Representative	X

3.1	Amended and Restated Certificate of Incorporation of IonQ, Inc.		X	8-K	3.1	October 4, 2021

3.2	Amended and Restated Bylaws of IonQ, Inc.		X	8-K	3.1	April 22, 2025

4.1	Registration Rights Agreement, dated as of April 30, 2025, by and among IonQ, Inc., the sellers of id Quantique SA shares, and SK Square Co., Ltd.		X	8-K	4.1	May 6, 2025

10.1+	Bonus Agreement between the Company and Peter Chapman, dated December 16, 2024		X	10-K	10.33	February 26, 2025

10.2+^	Offer Letter by and between the Company and Niccolo de Masi, dated February 26, 2025		X	8-K	10.1	February 26, 2025

10.3+^	Performance-Based Award Grant Notice by and between the Company and Niccolo de Masi, dated February 26, 2025		X	8-K	10.2	February 26, 2025

10.4	Equity Distribution Agreement, dated February 26, 2025, by and between the Company, Morgan Stanley & Co. LLC and Needham & Company, LLC		X	8-K	1.1	February 27, 2025

10.5^	Amendment No. 8 to Exclusive License Agreement, dated March 17, 2025, between Duke University and IonQ, Inc.	X

31.1	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a- 14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X

31.2	Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002	X

32.1*	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X

101.INS	Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document.	X

101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.	X

104	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101).	X


^	Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
+	Indicates a management contract or compensatory plan.
*	Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Exchange Act and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act (whether made before or after the date of this Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements 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.


	IonQ, Inc.

Date: May 7, 2025	/s/ Niccolo de Masi
	Name:	Niccolo de Masi
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 7, 2025	/s/ Thomas Kramer
	Name:	Thomas Kramer
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-2.2 2 ionq-ex2_2.htm EX-2.2 EX-2.2

Exhibit 2.2

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS (i) NOT MATERIAL AND (ii) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. REDACTED INFORMATION IS MARKED WITH A [***]. CERTAIN SCHEDULES OR SIMILAR ATTACHMENTS HAVE BEEN OMITTED FROM THIS EXHIBIT IN ACCORDANCE WITH ITEM 601(a)(5) of REGULATION S-K.

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

IONQ, INC.,

PROJECT CORNET ACQUISITION SUB, INC.,

CAPELLA SPACE CORP.

AND

SHAREHOLDER REPRESENTATIVE SERVICES LLC

AS HOLDER REPRESENTATIVE

MAY 7, 2025

TABLE OF CONTENTS

Page


ARTICLE I THE MERGER		2
Section 1.1	The Merger	2
Section 1.2	Effects of the Merger	2
Section 1.3	The Effective Time	3
Section 1.4	Certificate of Incorporation; Bylaws; Directors and Officers	3
Section 1.5	Effect on Company Capital Stock	3
Section 1.6	Closing	6
ARTICLE II MERGER CONSIDERATION		7
Section 2.1	Closing Consideration	7
Section 2.2	Adjustment Escrow Fund; Indemnity Escrow Fund	7
Section 2.3	Payment and Exchange Procedures	8
Section 2.4	Closing Adjustment to Closing Consideration	9
Section 2.5	Withholding Taxes and Other Amounts	13
Section 2.6	Parent Common Stock	14
Section 2.7	Equitable Adjustments	14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		15
Section 3.1	Organization and Good Standing	15
Section 3.2	Authority and Enforceability	16
Section 3.3	Governmental Approvals and Consents	16
Section 3.4	No Conflicts	17
Section 3.5	Company Capital Structure	17
Section 3.6	Company Financial Statements; Internal Financial Controls	20
Section 3.7	No Undisclosed Liabilities	21
Section 3.8	No Changes	21
Section 3.9	Tax Matters	21
Section 3.10	Real Property	25
Section 3.11	Tangible Property	27
Section 3.12	Intellectual Property and Data Privacy	27
Section 3.13	Material Contracts	34


Section 3.14	Customers and Suppliers	36
Section 3.15	Employee Benefit Plans.	37
Section 3.16	Employment Matters	39
Section 3.17	Governmental Authorizations	40
Section 3.18	Litigation	41
Section 3.19	Insurance	41
Section 3.20	Compliance with Laws	41
Section 3.21	Anti-Corruption Laws	41
Section 3.22	Export Control and Economic Sanctions Laws	42
Section 3.23	Outbound Investments	43
Section 3.24	Interested Party Transactions	43
Section 3.25	Third Party Expenses	43
Section 3.26	Bank Accounts; Powers of Attorney	44
Section 3.27	U.S. Security Clearances	44
Section 3.28	Government Contracts	44
Section 3.29	Information Statement	50
Section 3.30	No Other Representations or Warranties	50
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB		51
Section 4.1	Organization and Standing	51
Section 4.2	Parent Capital Structure	51
Section 4.3	Interim Operations of Merger Sub	52
Section 4.4	Authority and Enforceability	52
Section 4.5	Governmental Approvals and Consents	52
Section 4.6	Valid Issuance	53
Section 4.7	Litigation	53
Section 4.8	SEC Reports and Financial Statements	53
Section 4.9	No Conflict	54
Section 4.10	Compliance with Laws	54
Section 4.11	No Changes	54
Section 4.12	Intended Tax Treatment	54
Section 4.13	No Relevant Foreign Ownership	54
Section 4.14	No Other Representations or Warranties	54


ARTICLE V CERTAIN AGREEMENTS OF THE PARTIES		55
Section 5.1	Conduct of Company Business	55
Section 5.2	Notice to the Stockholders	59
Section 5.3	Non-Solicitation	60
Section 5.4	Securityholder Matters	61
Section 5.5	Access to Information	61
Section 5.6	Employee Matters	62
Section 5.7	280G Stockholder Approval	63
Section 5.8	Third Party Contracts	64
Section 5.9	Spreadsheet	64
Section 5.10	Payoff Letters; Invoices	65
Section 5.11	Third Party Expenses	65
Section 5.12	Public Disclosure	66
Section 5.13	Stock Exchange Listing	66
Section 5.14	Confidentiality	67
Section 5.15	Notification of Certain Matters	67
Section 5.16	Reasonable Best Efforts to Close; Regulatory Matters	68
Section 5.17	Preparation and Delivery of Required Financial Statements	71
Section 5.18	Company Director and Officer Indemnification	71
Section 5.19	Tax Matters	72
Section 5.20	Resignations	75
Section 5.21	Conduct of Business by Parent and Merger Sub	76
Section 5.22	No Control of the Other Party’s Business	76
Section 5.23	WAB Agreements	76
ARTICLE VI CLOSING AND CLOSING CONDITIONS		77
Section 6.1	Closing Conditions	77
ARTICLE VII TERMINATION		80
Section 7.1	Termination	80
Section 7.2	Effect of Termination	81
ARTICLE VIII INDEMNIFICATION		81
Section 8.1	Survival of Representations and Warranties	81
Section 8.2	Indemnification	82

iii


Section 8.3	Limitations of Liability	84
Section 8.4	Indemnification Claim Procedures	85
Section 8.5	Distribution of Escrow Fund	87
Section 8.6	Third Party Claims	88
ARTICLE IX HOLDER REPRESENTATIVE		89
Section 9.1	Holder Representative	89
ARTICLE X GENERAL PROVISIONS		91
Section 10.1	Notices	91
Section 10.2	Interpretation	92
Section 10.3	Entire Agreement	93
Section 10.4	Assignment	94
Section 10.5	Amendment	94
Section 10.6	Extension; Waiver	94
Section 10.7	Severability	94
Section 10.8	Specific Performance and Other Remedies	94
Section 10.9	Governing Law	95
Section 10.10	Waiver of Jury Trial	95
Section 10.11	Jurisdiction; Service of Process	95
Section 10.12	Counterparts	96

INDEX OF ANNEXES, EXHIBITS AND SCHEDULES


Annex A	Certain Defined Terms
Schedule A	Accounting Methodology
	Disclosure Schedule
Exhibit A	Form of Written Consent
Exhibit B	Form of Restrictive Covenant and Support Agreements
Exhibit C	Certificate of Incorporation
Exhibit D	Capital Expenditure Budget
Exhibit E	Escrow Agreement
Exhibit F	Form Letter of Transmittal
Exhibit G	Registration Rights Agreement

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of May 7, 2025 (the “Agreement Date”), by and among IonQ, Inc., a Delaware corporation (“Parent”), Project Cornet Acquisition Sub, Inc., a Delaware corporation and a direct or indirect wholly-owned Subsidiary of Parent (“Merger Sub”), Capella Space Corp., a Delaware corporation (the “Company”), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the Securityholders (the “Holder Representative”). All capitalized terms that are used but not defined in the body of this Agreement shall have the meanings ascribed thereto in Annex A.

W I T N E S S E T H:

WHEREAS, Parent desires to acquire all of the issued and outstanding shares of Company Capital Stock pursuant to the merger of Merger Sub with and into the Company, with the Company as the surviving corporation (the “Merger”), in accordance with the Delaware General Corporation Law (the “DGCL”) and upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, the board of directors of the Company (the “Board of Directors of the Company”) has carefully considered the terms of this Agreement and has (1) determined that the terms and conditions of the transactions contemplated by this Agreement and the Related Agreements to which the Company is (or will be) a party, including the Merger (collectively, the “Transactions”) are advisable, fair to, and in the best interests of the Company and the Stockholders, (2) approved this Agreement, such Related Agreements and the Transactions, including the Merger, and (3) recommended the adoption of this Agreement and approval of the Merger by the Stockholders (clauses (1) through (3) collectively, the “Company Board Recommendation”);

WHEREAS, the board of directors of Merger Sub has carefully considered the terms of this Agreement and has unanimously (1) determined that the terms and conditions of the Transactions, including the Merger, are advisable, fair to, and in the best interests of Merger Sub and its Stockholders, and (2) approved this Agreement, the Related Agreements to which Merger Sub is (or will be) a party and the Transactions, including the Merger, and (3) recommended the adoption of this Agreement and approval of the Merger by Parent, as the sole stockholder of Merger Sub (and Parent, as sole stockholder, has executed and delivered a unanimous written consent of the sole stockholder of Merger Sub approving this Agreement and approving the Transactions, including the Merger, such approval to be effective immediately following the execution and delivery of this Agreement);

WHEREAS, as a condition and material inducement to Parent’s willingness to enter into this Agreement, the Company shall deliver to Parent a duly executed written consent in the form attached hereto as Exhibit A (collectively, the “Written Consent”) executed by each of the Approving Stockholders, which Written Consent shall be effective immediately after the execution of this Agreement and shall satisfy the Required Stockholder Vote;

WHEREAS, as a condition and material inducement to Parent’s willingness to enter into this Agreement, prior to or concurrently herewith, certain key employees of the Company (each, a “Key Employee”) are entering into new employment arrangements, by executing and delivering to Parent (i) Parent’s or its Affiliate’s form offer letter, (ii) Parent’s or such Affiliate’s form Confidential Information and Inventions Assignment Agreement, if applicable, and (iii) Parent’s or such Affiliate’s other customary employment-related agreements and documents (collectively, the “Offer Documents”);

WHEREAS, for U.S. federal income tax purposes, it is intended that (i) the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the regulations promulgated thereunder (the “Intended Tax Treatment”) and (ii) the parties intend, by executing this Agreement, to adopt this Agreement as a plan of reorganization within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a);

WHEREAS, prior to or concurrently with the execution and delivery of this Agreement, as a material inducement to Parent to enter into this Agreement, certain Securityholders have signed Restrictive Covenant and Support Agreements in substantially the form attached hereto as Exhibit B (the “Restrictive Covenant and Support Agreements”) to be effective at and as of the Closing; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements, as more fully set forth herein, in connection with the Transactions.

NOW, THEREFORE, in consideration of the agreements, covenants and other premises of each party set forth herein, the benefits to be gained by each party as a result of the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto hereby agree as follows:

ARTICLE I THE MERGER

Section 1.1 The Merger. Upon the terms of and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”) and a wholly owned Subsidiary of Parent.

Section 1.2 Effects of the Merger. The Merger shall have the effects set forth in this Agreement and the DGCL. Without limiting the generality of the foregoing, and subject thereto, by virtue of the Merger and without further act or deed, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all of the debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

Section 1.3 The Effective Time. Subject to the provisions of this Agreement, at the Closing, the Company, Parent and Merger Sub shall cause a certificate of merger (the “Certificate of Merger”) to be filed with the Secretary of State of the State of Delaware in accordance with the provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later date or time as may is specified in the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being hereinafter referred to as the “Effective Time”).

Section 1.4 Certificate of Incorporation; Bylaws; Directors and Officers. At the Effective Time, (a) the certificate of incorporation attached here to as Exhibit C shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation, (b) the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of the DGCL and the bylaws of the Surviving Corporation, (c) the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the DGCL and the certificate of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified and (d) the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the bylaws of the Surviving Corporation until their successors are duly appointed and qualified.

Section 1.5 Effect on Company Capital Stock. Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the Stockholders, the following shall occur:

(a) Company Capital Stock.

(i) Each share of Company Capital Stock issued and outstanding as of immediately prior to the Effective Time (excluding any Cancelled Shares or Dissenting Shares) shall be cancelled and extinguished as of the Effective Time and converted into the right to receive, upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Sections 2.1 and 2.2 of the Company’s certificate of incorporation (A) the applicable Per Share Portion of the Closing Consideration, payable as of the Closing in accordance with ‎Section 2.3(a), plus (B) the applicable Per Share Portion of any Parent Common Stock issued in respect of any Adjustment Surplus, when, as and if and to the extent payable in accordance with ‎Section 2.4(e)(iii), plus (C) the applicable Per Share Portion of any Adjustment Escrow Release Amount, when, as and if and to the extent payable in accordance with ‎‎Section 2.4(e)(iv), plus (D) the applicable Per Share Portion of any Indemnity Escrow Shares released from the Indemnity Escrow Fund when, as and if and to the extent payable in accordance with ‎Section 8.5, in the case of each of clauses (A) through (D), the Per Share Portion shall be as set forth in the applicable Spreadsheet (the sum of clauses (A) through (D), the “Merger Consideration”).

(ii) For the avoidance of doubt, any share of Company Capital Stock issued and outstanding as of immediately prior to the Effective Time (excluding any Cancelled Shares or Dissenting Shares) with a Per Share Portion of zero as set forth on all of the Spreadsheets delivered pursuant to this Agreement shall be cancelled and extinguished effective as of the Effective Time without any consideration being payable in respect thereof, and, from and after the Effective Time and for all purposes, the former holders of any such shares of Company Capital Stock shall have no further rights with respect thereto.

(iii) Notwithstanding anything to the contrary in this Agreement or any investigation or examination conducted, or any knowledge possessed or acquired, by or on behalf of Parent or any of its Affiliates or its or their Representatives, or any disclosure made by or on behalf of the Company, (A) it is expressly acknowledged and agreed that Parent and its respective Affiliates and all Representatives of the foregoing shall be entitled to rely on the Spreadsheets (including, for avoidance of doubt, the calculation of the Pro Rata Portion of each Securityholder) without any obligation to investigate or verify the accuracy or correctness thereof, and to make payments in accordance therewith, and (B) in no event shall Parent or any of its respective Affiliates or any Representative of the foregoing have any liability to any Person for any alleged inaccuracy or miscalculations in, or otherwise relating to, the preparation of the Spreadsheets and the allocation set forth therein (including, for avoidance of doubt, the calculation of the Pro Rata Portion of each Securityholder), or payments made by any Person (including Parent, the Company, and their respective Affiliates or Representatives, including any applicable exchange agent or paying agent) in accordance with the Spreadsheets.

(b) Cancelled Shares. Each share of Company Common Stock that is owned by the Company (as treasury stock or otherwise) or any of the Company Subsidiaries as of immediately prior to the Effective Time (the “Cancelled Shares”) shall automatically be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor.

(c) Effect on Merger Sub Shares. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding as of immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable share of common stock of the Surviving Corporation.

(d) Company Options. No Company Options shall be assumed by Parent in the Merger. Upon the terms and subject to the conditions set forth in this Agreement, prior to the Effective Time, the Company shall take all actions that are necessary so that, as of the Effective Time, each Company Option existing and outstanding as of immediately prior to the Effective Time shall be terminated, cancelled and extinguished without any consideration being payable in respect thereof, and from and after the Effective Time, and for all purposes, the former holders of any Company Options shall have no other right with respect thereto.

(e) Company Common Warrants. No Company Common Warrants shall be assumed by Parent in the Merger. Upon the terms and subject to the conditions set forth in this Agreement, prior to the Effective Time, the Company shall take all actions that are necessary so that, as of the Effective Time, each Company Common Warrant existing and outstanding as of immediately prior to the Effective Time (other than the WAB Warrant) shall be automatically terminated, cancelled and extinguished without any consideration being payable in respect thereof, and from and after the Effective Time, and for all purposes, the former holders of any such Company Common Warrants shall have no other right with respect thereto.

(f) Company Preferred Warrants. No Company Preferred Warrants shall be assumed by Parent in the Merger. Upon the terms and subject to the conditions set forth in this Agreement, prior to the Effective Time, the Company shall take all actions that are necessary so that, as of the Effective Time, each Company Preferred Warrant existing and outstanding as of immediately prior to the Effective Time shall be either (x) exercised or converted for shares of Company Capital Stock in accordance with its terms (with such shares being canceled and converted into the Merger Consideration in accordance with ‎Section 1.5(a)) or (y) automatically terminated, cancelled and extinguished without any consideration being payable in respect thereof, and from and after the Effective Time, and for all purposes, the former holders of any Company Preferred Warrants shall have no other right with respect thereto.

(g) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time that are held or beneficially owned by any holder who is entitled to demand and properly and validly demands appraisal of such shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (“Section 262”) (such shares, collectively, the “Dissenting Shares”) shall not be converted into the right to receive the Merger Consideration as provided in ‎Section 1.5(a), but instead such holder shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the provisions of Section 262. At the Effective Time, all Dissenting Shares shall no longer be outstanding, shall automatically be canceled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 262. Notwithstanding anything in this Agreement to the contrary, if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262, or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares under Section 262 shall cease and such Dissenting Shares shall be deemed to have been converted at the Effective Time into, and shall have become, the right to receive the Merger Consideration as provided in ‎Section

1.5(a), without interest thereon and subject to the provisions of this ‎Article I. The Company shall serve prompt notice to Parent of any written demands or purported demands for appraisal of any shares of Company Capital Stock, and Parent shall have the right to participate in and direct all negotiations and proceedings with respect to such demands.

Section 1.6 Closing.

(a) Unless this Agreement is validly terminated pursuant to ‎‎Section 7.1, the Merger shall be consummated at a closing (the “Closing”) within five (5) Business Days following satisfaction or waiver (if permissible hereunder) of the conditions set forth in ‎‎Section 6.1 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver (if permissible hereunder) of those conditions at the Closing) via the electronic exchange of signatures, unless another time or place is mutually agreed upon in writing by Parent and the Company; provided, that Closing shall not occur until the Business Day after the twentieth (20th) day following the mailing of the Information Statement pursuant to ‎Section 5.2 and in accordance with the DGCL; provided, further, that if such Business Day (the “Initial Closing Date”) would otherwise occur anytime during the final fifteen (15) days of the end of a fiscal quarter of Parent, then Parent may, in its discretion, delay the Closing until the first (1st) Business Day of the next succeeding fiscal quarter of Parent (such election to delay the Closing pursuant to this proviso, the “Parent Closing Election”), in which case, subject to ‎Section 1.6(b), the Closing shall be held on such first (1st) Business Day (the “Deferred Closing Date”). The date upon which the Closing actually occurs shall be referred to herein as the “Closing Date.”

(b) If Parent exercises the Parent Closing Election:

(i) (A) The obligations of the Company to consummate the Closing are subject to the satisfaction or waiver by the Company (if permissible under applicable Law) on or prior to the Closing Date of the conditions in ‎Section 6.1(a) and ‎Section 6.1(c) and (B) the obligations of Parent and Merger Sub to consummate the Closing shall be subject to the satisfaction or waiver by Parent (if permissible under applicable Law) of the conditions in ‎Section 6.1(a) and ‎Section 6.1(b), in each case subject to ‎Section 1.6(b)(ii). If, as a result of the preceding sentence, a party is not obligated to consummate the Closing on the date that is the Deferred Closing Date and therefore the Closing does not occur on the date that is the Deferred Closing Date, then, without limiting the provisions of such sentence, the Closing shall occur promptly when (and in any event no later than three (3) Business Days after) such sentence ceases to provide that a party is not obligated to consummate the Closing.

(ii) For the purposes of testing the satisfaction of conditions pursuant to ‎Section 1.6(b)(i), (A) references to “the Closing Date” and “the Closing” in ‎Section 6.1(b)(i) and ‎Section 6.1(b)(ii) shall be deemed to be replaced with “the Initial Closing Date”, (B) the condition set forth in ‎Section 6.1(b)(iii) shall be tested solely as of the Initial Closing Date and (C) the certificate required to be delivered pursuant to ‎Section 6.1(b)(iv)(C) shall certify as to the satisfaction of the conditions set forth in Section 6.1(b)(i), Section 6.1(b)(ii) and Section 6.1(b)(iii), as modified by this ‎Section 1.6(b)(ii); provided, that, notwithstanding the foregoing, if the Company commits a Willful Breach of a covenant between the Initial Closing Date and the Closing Date, the condition set forth in Section 6.1(b)(ii) shall not be deemed to be satisfied until and unless the Company has cured such Willful Breach.

ARTICLE II MERGER CONSIDERATION

Section 2.1 Closing Consideration. The aggregate consideration payable by Parent at the Closing in respect of the Merger shall be a number of shares of Parent Common Stock equal to (a) 10,677,344, plus (b) the Closing Cash Share Amount, plus (c) the Working Capital Adjustment Share Amount, minus (d) the Closing Indebtedness Share Amount, minus (e) the number of Adjustment Escrow Shares, minus (f) the number of Indemnity Escrow Shares, minus (f) the Third Party Expenses Share Amount (together, the “Closing Consideration”).

Section 2.2 Adjustment Escrow Fund; Indemnity Escrow Fund.

(a) Adjustment Escrow Fund. As contemplated by ‎Section 2.1, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any other Person (including any Securityholder), Parent shall retain and holdback from the shares of Parent Common Stock otherwise issuable as part of the Closing Consideration, 250,250 shares of Parent Common Stock (collectively, the “Adjustment Escrow Shares”). At or promptly following the Closing, Parent shall deposit, or cause to be deposited, with an escrow agent selected by Parent (the “Escrow Agent”) such Adjustment Escrow Shares into an account designated by the Escrow Agent (the Adjustment Escrow Shares in such account, together with any dividends and income earned thereon, as may be reduced from time to time, the “Adjustment Escrow Fund”) and, upon such deposit, Parent shall be deemed to have contributed to the Adjustment Escrow Fund, on behalf of each Securityholder, his, her, or its portion of the Adjustment Escrow Shares, as applicable. The Adjustment Escrow Fund shall be available to compensate Parent pursuant to ‎‎Section 2.4(e) and shall be distributed in accordance with the terms and conditions of this Agreement (including ‎‎Section 2.4(e)). All rights in the Adjustment Escrow Shares shall be vested in the Securityholders, except for the right to possess, pledge, encumber, sell, assign or transfer such Adjustment Escrow Shares or any interest therein; provided, that, until such Adjustment Escrow Shares are released to individual Securityholders hereunder, only the Holder Representative shall have the ability, on behalf of the Securityholders, to exercise such rights. The Holder Representative (on behalf of the Securityholders) shall direct the Escrow Agent in writing as to the exercise of any such voting rights (and if no direction is received, the Escrow Agent shall not vote such Adjustment Escrow Shares). Any dividends, distributions, products or proceeds on such Adjustment Escrow Shares shall be deposited with the Escrow Agent in the Adjustment Escrow Fund.

(b) Indemnity Escrow Fund. As contemplated by ‎Section 2.1, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any other Person (including any Securityholder), Parent shall retain and holdback from the shares of Parent Common Stock otherwise issuable as part of the Closing Consideration, 1,334,668 shares of Parent Common Stock (collectively, the “Indemnity Escrow Shares”). At or promptly following the Closing, Parent shall deposit, or cause to be deposited, with the Escrow Agent such Indemnity Escrow Shares into an account designated by the Escrow Agent (the Indemnity Escrow Shares in such account, together with any dividends and income earned thereon, as may be reduced from time to time, the “Indemnity Escrow Fund”) and, upon such deposit, Parent shall be deemed to have contributed to the Indemnity Escrow Fund, on behalf of each Securityholder, his, her, or its portion of the Indemnity Escrow Shares, as applicable. The Indemnity Escrow Fund shall be available to compensate the Indemnified Parties for any claims by the Indemnified Parties for any Losses suffered or incurred by them and for which they are entitled to recovery on a several and not joint basis under this Agreement (including ‎Article VIII) and shall be distributed in accordance with the terms and conditions of this Agreement. All rights in the Indemnity Escrow Shares shall be vested in the Securityholders, except for the right to possess, pledge, encumber, sell, assign or transfer such Indemnity Escrow Shares or any interest therein; provided, that, until such Indemnity Escrow Shares are released to individual Securityholders hereunder, only the Holder Representative shall have the ability, on behalf of the Securityholders, to exercise such rights. The Holder Representative (on behalf of the Securityholders) shall direct the Escrow Agent in writing as to the exercise of any such voting rights (and if no direction is received, the Escrow Agent shall not vote such Indemnity Escrow Shares). Any dividends, distributions, products or proceeds on such Indemnity Escrow Shares shall be deposited with the Escrow Agent in the Indemnity Escrow Fund.

Section 2.3 Payment and Exchange Procedures.

(a) Issuance of Closing Stock Consideration. At the later of the Closing and the date that is one (1) Business Day after the date upon which a Securityholder has delivered its Exchange Documents (including the Letter of Transmittal which contains a release which is a material inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement), in payment of the Estimated Closing Consideration, Parent shall initiate or cause to be initiated the issuance and delivery to each such Securityholder the aggregate number of shares of Parent Common Stock issuable to such Securityholder at the Closing pursuant to ‎‎Section 1.5(a) as set forth in the Spreadsheet delivered in connection with the Closing Date.

(b) Rounding. Notwithstanding anything to the contrary in this Agreement, the aggregate amount of shares of Parent Common Stock to be issued, issuable, or distributed at any particular time to any Securityholder in accordance with this Agreement shall be rounded up or down to the nearest whole share, and no Securityholder shall receive any consideration in respect of any such rounding down contemplated by the foregoing.

Section 2.4 Closing Adjustment to Closing Consideration.

(a) Pre-Closing Statement. At least five (5) Business Days before the Closing Date, the Company shall prepare and deliver to Parent a preliminary statement (the “Preliminary Pre-Closing Statement”) setting forth the Company’s good faith calculation of the Closing Consideration (including all components thereof), accompanied by reasonably detailed back-up documentation for such calculations and prepared in accordance with the Accounting Methodology and the defined terms of this Agreement. The Company shall consider in good faith any of Parent’s reasonable comments to the Preliminary Pre-Closing Statement and the figures and calculations set forth thereon. At least three (3) Business Days prior to the Closing Date, the Company shall deliver to Parent a final copy of the Preliminary Pre-Closing Statement, incorporating any such comments that have been agreed to by the Company (the “Pre-Closing Statement”), setting forth the Company’s good faith calculation of the Closing Consideration (the “Estimated Closing Consideration”) (including all components thereof), accompanied by reasonably detailed back-up documentation for such calculations and prepared in accordance with the Accounting Methodology and the defined terms of this Agreement.

(b) Nothing in this ‎‎Section 2.4 including the fact that Parent may provide comments on or request changes to the Preliminary Pre-Closing Statement or any of the figures or calculations set forth thereon or that Parent and the Company may agree to changes to the information or amounts on the Pre-Closing Statement, shall in any way limit the right of any Person under this ‎‎Section 2.4 or ‎Article VIII. In no event shall any disagreement regarding the figures and calculations set forth on the Preliminary Pre-Closing Statement or the Pre-Closing Statement delay the Closing Date. If Parent and the Company are unable to resolve any disagreements regarding the figures and calculations set forth on the Preliminary Pre-Closing Statement or the Pre-Closing Statement prior to the Closing, the Company’s Pre-Closing Statement and the components thereof and calculations contained therein shall control for the purposes of the consideration to be paid at Closing.

(c) Post-Closing Statement. Within ninety (90) days of the Closing Date, Parent shall prepare and deliver, or cause to be prepared and delivered, to the Holder Representative a statement (the “Post-Closing Statement”) setting forth Parent’s good faith calculation of the Closing Consideration (including all components thereof), accompanied by reasonably detailed back-up documentation for such calculations and prepared in accordance with the Accounting Methodology and the defined terms of this Agreement.

(d) Review of Post-Closing Statement.

(i) Examination. After receipt of the Post-Closing Statement, the Holder Representative (on behalf of the Securityholders) shall have sixty (60) days (the “Adjustment Review Period”) to review the Post-Closing Statement. During the Adjustment Review Period, Parent shall use reasonable best efforts to make available to the Holder Representative the books and records of the Company and the personnel of, and work papers prepared by, Parent and Parent’s accountants to the extent that they relate to the Post-Closing Statement and to such historical financial information (to the extent in Parent’s or the Company’s possession or control) relating to the Post-Closing Statement as the Holder Representative may reasonably request for the purpose of reviewing the Post-Closing Statement and to prepare a Statement of Objections (defined below); provided, however, that such access shall be in a manner that does not interfere with the normal business operations of Parent or the Company.

(ii) Objection. On or prior to the last day of the Adjustment Review Period, the Holder Representative (on behalf of the Securityholders) may object to the Post-Closing Statement by delivering to Parent a written statement setting forth the Holder Representative’s objections in reasonable detail, the only basis of which may be errors in or disagreements with respect to the calculation of the Closing Consideration (or the components thereof), which objections must indicate each disputed item and the amount and the numerical basis and other rationale for the Holder Representative’s disagreement with such item or amount (the “Statement of Objections”). Any component of the Post-Closing Statement that is not disputed in a Statement of Objections shall be final and binding upon the parties to this Agreement and the Securityholders, and not subject to appeal. If the Holder Representative fails to deliver the Statement of Objections to Parent before the expiration of the Adjustment Review Period or delivers a statement accepting the Post-Closing Statement, the Post-Closing Statement shall be final and binding upon the parties to this Agreement and the Securityholders, and not subject to appeal. If the Holder Representative delivers the Statement of Objections before the expiration of the Adjustment Review Period, Parent and the Holder Representative shall cooperate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”). Any such disputed items that are resolved by Parent and the Holder Representative within the Resolution Period shall be set forth in a memorandum signed by both parties, which shall be final and binding upon the parties to this Agreement and the Securityholders, and not subject to appeal.

(iii) Resolution of Disputes. If the Holder Representative and Parent fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period (any amounts remaining in dispute, the “Disputed Amounts”), then either Parent or the Holder Representative may submit such Disputed Amounts to a regionally or nationally recognized accounting firm upon which Parent and the Holder Representative shall reasonably agree in writing (the “Independent Accountant”) for review and resolution, it being understood and agreed that if Parent and the Holder Representative do not agree upon the designation of an Independent Accountant within ten (10) days after written notice by either party to the other proposing the appointment of such an accounting firm, then either Parent or the Holder Representative may request the American Arbitration Association to appoint as the Independent Accountant a nationally recognized accounting firm that has not had a material relationship within the prior twenty-four (24) months with Parent, on the one hand, or the Company, on the other hand, and such appointment shall be final and binding on the parties. The Independent Accountant shall act as an expert and not an arbitrator. The Independent Accountant shall make all calculations in accordance with the Accounting Methodology and the defined terms of this Agreement, shall determine only the Disputed Amounts and shall only be permitted or authorized to determine an amount with respect to any such Disputed Amount within the range of values assigned to each such item in the Post-Closing Statement and the Statement of Objections.

(iv) Engagement and Fees of the Independent Accountant. Each of Parent and the Holder Representative shall (A) enter into a customary engagement letter with the Independent Accountant at the time such dispute is submitted to the Independent Accountant and otherwise cooperate with the Independent Accountant, which engagement letter shall provide that the Independent Accountant shall make all calculations in accordance with the Accounting Methodology and the defined terms of this Agreement even if there is a discrepancy with GAAP, and (B) have the opportunity to submit a written statement in support of their respective positions with respect to such disputed items, to provide supporting material to the Independent Accountant in defense of their respective positions with respect to such disputed items and to submit a written statement responding to the other party’s position with respect to such disputed items. For the avoidance of doubt, Parent and the Holder Representative will not be required to physically attend any proceedings, conferences or other meetings in connection with the dispute resolution procedures set forth in this ‎‎Section 2.4, and neither Parent nor the Holder Representative nor any of their Representatives shall be entitled to have any ex parte proceedings, conferences or other meetings with the Independent Accountant. The Independent Accountant shall be instructed to deliver to Parent and the Holder Representative a written determination (such determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Independent Accountant by Parent and the Holder Representative) of the Disputed Amounts within thirty (30) days after its engagement, which determination shall be final and binding upon the parties to this Agreement and the Securityholders, and not subject to appeal. The date on which the Independent Accountant delivers its written determination to Parent and the Holder Representative, or the date on which the Post-Closing Statement becomes final and binding pursuant to ‎‎Section 2.4(d)(ii), as the case may be, is referred to in this Agreement as the “Adjustment Determination Date”.

(v) Allocation of Expenses. The costs and fees related to such determination by the Independent Accountant, including the costs relating to any negotiations with the Independent Accountant with respect to the terms and conditions of such Independent Accountant’s engagement, will be paid by the Holder Representative (on behalf of the Securityholders) and Parent on an inversely proportional basis, based upon the relative portions of the Disputed Amounts that have been submitted to the Independent Accountant for resolution that ultimately are awarded in favor of the Holder Representative and Parent, as the case may be (e.g., if $100,000 is in dispute, and of that amount the Independent Accountant awards $75,000 in favor of Parent and $25,000 in favor of the Holder Representative, then Parent will be responsible for 25%, and the Holder Representative for 75%, of the costs and fees of the Independent Accountant).

(e) Post-Closing Payments.

(i) For purposes of this Agreement, “Final Closing Consideration” means the Closing Consideration and each of its components, as finally determined pursuant to this ‎‎Section 2.4.

(ii) If the Final Closing Consideration is less than the Estimated Closing Consideration (the amount of such deficit, the “Adjustment Shortfall”) then (A) first, Parent and the Holder Representative shall execute and deliver a joint written instruction to the Escrow Agent instructing the Escrow Agent to release to Parent from the Adjustment Escrow Fund a number of Adjustment Escrow Shares equal in value to the Adjustment Shortfall (calculated in accordance with ‎Section 2.4(e)(v)) (and the Adjustment Escrow Fund will automatically be reduced by such number of Adjustment Escrow Shares) (or, if such Adjustment Shortfall exceeds the aggregate value of the Adjustment Escrow Shares then remaining in the Adjustment Escrow Fund (calculated in accordance with ‎Section 2.4(e)(v)), the entire remaining Adjustment Escrow Fund) and (B) second, if the Adjustment Shortfall exceeds the aggregate value of the Adjustment Escrow Shares then remaining in the Adjustment Escrow Fund (calculated in accordance with ‎Section 2.4(e)(v)), Parent and the Holder Representative shall execute and deliver a joint written instruction to the Escrow Agent instructing the Escrow Agent to release to Parent a number of Indemnity Escrow Shares equal in value to the amount by which the Adjustment Shortfall exceeds the aggregate value of the Adjustment Escrow Shares released pursuant to clause (A) (calculated in accordance with ‎Section 2.4(e)(v)) (and the Indemnity Escrow Fund will automatically be reduced by such number of Indemnity Escrow Shares).

(iii) If the Final Closing Consideration is greater than the Estimated Closing Consideration (the amount of such surplus, the “Adjustment Surplus”), then, promptly, and in any event within five (5) Business Days after the Adjustment Determination Date, Parent shall cause to be issued to the Securityholders a number of shares of Parent Common Stock equal in value to the Adjustment Surplus (calculated in accordance with ‎Section 2.4(e)(v)), with each Securityholder that has delivered its Exchange Documents receiving, with respect to each share of Company Capital Stock that was held by such Securityholder and converted into the right to receive the Merger Consideration pursuant to ‎Section 1.5(a), the applicable Per Share Portion of such shares as set forth on the Spreadsheet delivered in connection with the Adjustment Determination Date (and, in the event that Parent has made any dividend or other distributions in respect of the Parent Common Stock after the Closing and prior to the date of settlement of the Adjustment Surplus, each Securityholder receiving any Adjustment Surplus shall also be entitled to receive the applicable dividend or distribution that would have been paid in respect of such shares comprising the Adjustment Surplus).

(iv) Promptly, and in any event within five (5) Business Days after the Adjustment Determination Date, to the extent any number of Adjustment Escrow Shares remain in the Adjustment Escrow Fund after giving effect to the reductions thereof contemplated by ‎Section 2.4(e)(ii) (if any) (the “Adjustment Escrow Release Amount”), Parent and Holder Representative shall execute and deliver a joint written instruction to the Escrow Agent instructing the Escrow Agent to release such Adjustment Escrow Release Amount to the Securityholders, with each Securityholder that has delivered its Exchange Documents receiving, with respect to each share of Company Capital Stock that was held by such Securityholder and converted into the right to receive the Merger Consideration pursuant to ‎Section 1.5(a), the applicable Per Share Portion of such Adjustment Escrow Release Amount as set forth on the Spreadsheet delivered in connection with the Adjustment Determination Date.

(v) For all purposes of this ‎‎Section 2.4(e), shares of Parent Common Stock (including the Adjustment Escrow Shares and the Indemnity Escrow Shares) shall be valued at the Per Share Price.

(f) Tax Treatment. Any payment made under this ‎Section 2.4, to the maximum extent permitted by applicable Law, shall be treated for all income and other applicable Tax purposes as an adjustment to the Closing Consideration.

Section 2.5 Withholding Taxes and Other Amounts. The Company, Parent, and their respective Affiliates and representatives, as applicable, and any other applicable paying agent, exchange agent, or withholding agent, shall be entitled to deduct and withhold from any amounts payable or otherwise deliverable pursuant to this Agreement such amounts as are required to be deducted and withheld therefrom under any applicable Laws; provided that Parent shall use reasonable best efforts to notify the Company (if prior to the Closing) or the Holder Representative (if following the Closing), as applicable, in writing at least five (5) Business Days prior to making any such deduction or withholding (other than in the case of (i) any withholding on payments in the nature of compensation for services, or (ii) any withholding required due to any Securityholder’s failure to provide the Exchange Documents required by ‎Section 5.4(a) or the Company’s failure to deliver any document required by ‎Section 6.1(b)(iv)(F). To the extent such amounts are so deducted or withheld and properly remitted to the appropriate Governmental Entity, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

Section 2.6 Parent Common Stock.

(a) The shares of Parent Common Stock issuable pursuant to this Agreement are intended to be issued pursuant to one or more exemptions from registration under the Securities Act, including those under Regulation D of the Securities Act, and the exemption from qualification under applicable United States securities Laws. The Company shall assist Parent as reasonably requested by Parent to comply with applicable United States securities Laws relating to the Transactions.

(b) Each book-entry entitlement representing Parent Common Stock (or any other securities issued in respect of such shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event) issued or issuable to or held by the Securityholders in accordance with the terms hereof shall bear the following legend (in addition to any other legends required by applicable Law or Parent’s organizational documents):

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

(c) Upon any shares of Parent Common Stock issued hereunder becoming eligible to be sold without restriction under Rule 144 under the Securities Act or pursuant to an effective registration statement, then, at such holder’s request, accompanied by such additional representations and other documents as Parent may reasonably request, Parent shall cause Parent’s transfer agent to remove any restrictive legend set forth on the shares held by such holder in connection with any sale of such shares pursuant to Rule 144 or such effective registration statement, as applicable (including, if required by Parent’s transfer agent, by delivering to Parent’s transfer agent a direction letter and opinion of counsel).

Section 2.7 Equitable Adjustments. If at any time during the period between the Agreement Date and the final payment of any Merger Consideration, any change in the issued and outstanding shares of Parent Common Stock (or securities convertible or exchangeable into or exercisable for shares of Parent Common Stock) shall occur by reason of any merger, consolidation, reclassification, reorganization, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during such period, the Merger Consideration shall be equitably adjusted to the extent necessary to provide the same economic benefit to the Securityholders as contemplated by this Agreement prior to such merger, consolidation, reclassification, reorganization, recapitalization, stock split or combination, exchange or readjustment of shares or stock dividend thereon.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to such exceptions as are specifically disclosed in the section, subsection or subclause of the disclosure schedule supplied by the Company to Parent on the Agreement Date (the “Disclosure Schedule”) corresponding to the specifically identified section, subsection or subclause of the representations and warranties contained in this ‎Article III (or any other section, subsection or subclause of this ‎Article III solely if and to the extent that it is reasonably apparent on the face of such disclosure that it applies to such other section, subsection or subclause of this ‎Article III without reference to the documents referenced therein), the Company hereby represents and warrants to Parent as follows:

Section 3.1 Organization and Good Standing.

(a) The Company is a company duly organized and validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power, authority and qualifications to own, lease and operate its assets and properties and to carry on its business as currently conducted. The Company is and has been duly qualified, licensed or registered to do business and is in good standing (or the equivalent) as a foreign company in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualification, license or good standing necessary to the Company’s business as currently conducted, except where the failure to be so qualified, licensed, registered or in good standing has not been, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole. The Company has made available true and correct copies of its certificate of incorporation (the “Certificate of Incorporation”) and bylaws, each as amended as of the Agreement Date, validly adopted and approved and in full force and effect on the Agreement Date (collectively, the “Governing Documents”). The Board of Directors of the Company has not approved any amendment to any of the Governing Documents that is not yet effected. The Company is not in violation of any of the provisions of its Governing Documents.

(b) ‎Section 3.1(b) of the Disclosure Schedule sets forth each Company Subsidiary and its jurisdiction of organization. Each of the Company Subsidiaries is a legal entity duly organized and validly existing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power to own, lease and operate its assets and properties and to carry on its business as currently conducted. Each of the Company Subsidiaries is duly qualified or licensed to do business as a foreign company in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualification or license necessary to its business as currently conducted, except where the failure to be so qualified, licensed, registered or in good standing has not been, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole. The Company owns, of record or beneficially, all of the outstanding voting securities or other equity interests in each of the Company Subsidiaries. Other than the Company Subsidiaries, the Company does not, directly or indirectly, own, of record or beneficially, any outstanding voting securities or other equity interests in, or control, any Person. The Company and the Company Subsidiaries have not agreed and are not obligated to make any future equity investment in or capital contribution to any Person.

(c) ‎‎Section 3.1(c) of the Disclosure Schedule lists the directors and officers of the Company and each Company Subsidiary as of the Agreement Date.

Section 3.2 Authority and Enforceability. The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the Transactions, subject, in the case of the consummation of the Merger, to receipt of the Written Consent. The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate or other action is required on the part of the Company to authorize this Agreement and any Related Agreements to which the Company is a party or to consummate the Transactions, subject, in the case of the consummation of the Merger, to receipt of the Written Consent.

This Agreement and each of the Related Agreements to which the Company is a party have been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms, subject to (x) Laws of general application relating to bankruptcy, insolvency, moratorium, the relief of debtors and enforcement of creditors’ rights in general and (y) rules of law governing specific performance, injunctive relief, other equitable remedies and other general principles of equity (collectively, the “Enforceability Limitations”). Other than obtaining the affirmative vote of (i) the holders of not less than a majority of the then outstanding shares of Company Preferred Stock (voting together as a single class) and (ii) the holders of not less than a majority of the outstanding shares of Company Capital Stock (on an as-converted to Company Common Stock basis) ((i) and (ii) collectively, the “Required Stockholder Vote”), no vote of the Securityholders is required under the Governing Documents or the DGCL, in each case, in connection with the execution or delivery by the Company of this Agreement or the Related Agreements to which it is (or will be) a party, the performance of its obligations hereunder or thereunder or the consummation of the Merger and the other Transactions. The Written Consent shall constitute the Required Stockholder Vote and, when effective, shall fully satisfy any and all requirements for consents, votes or approvals by the holders of any classes or series of Company Capital Stock or any other equity interests of the Company that are necessary for the Company to execute and deliver this Agreement or the other Related Agreements to which it is (or will be) a party, to perform its obligations hereunder and thereunder and to consummate the Merger and the Transactions.

Section 3.3 Governmental Approvals and Consents. No consent, notice, waiver, approval, Order or authorization of, or registration, declaration or filing with any Governmental Entity, is required by, or with respect to, the Company in connection with the execution and delivery of this Agreement and any Related Agreement to which the Company is a party or the consummation of the Transactions, except for (a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of other states in which the Company or any Company Subsidiary is qualified to do business, (b) consents, approvals, orders, authorizations, actions, registrations, declarations or filings in connection with Company Authorizations, which are the subject of ‎Section 3.17, (c) in connection with or in compliance with (i) the Hart-Scott-Rodino Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), (ii) any applicable requirements of Laws in foreign jurisdictions covering antitrust or merger control matters, (iii) the Regulatory Approvals and (iv) filings required after the Closing with the U.S. Department of State in order to maintain the Company’s registration and licenses under export control laws and with the U.S. Department of Defense in order to retain its security clearance and (d) such other consents, approvals, orders, authorizations, actions, registrations, declarations and filings the failure of which to be obtained or made have not been, and would not be reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole, or to prevent or materially impede or delay the consummation of the Merger and the other transactions contemplated by this Agreement and the other Related Agreements to which the Company or any Company Subsidiary is a party.

Section 3.4 No Conflicts. The execution and delivery by the Company of this Agreement and any Related Agreement to which the Company or any Company Subsidiary is a party, and the consummation of the Transactions, will not conflict with or result in any breach, violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any right or obligation or loss of any benefit under, or require any notice, consent, waiver, or approval under (any such event, a “Conflict”) (a) any provision of the Governing Documents or the organizational documents of any Company Subsidiary, (b) any Material Contract, (c) any other Contract to which the Company or any Company Subsidiaries is a party or by which any of its or their respective properties or assets (whether tangible or intangible) are bound or subject, or (d) provided that the Regulatory Approvals have been obtained, any Law or Order applicable to the Company or any Company Subsidiaries or any of its or their respective properties or assets (whether tangible or intangible), other than in the case of (b), (c) and (d), as have not been, and would not be reasonably expected to be, material to the Company and the Company Subsidiaries, taken as a whole.

Section 3.5 Company Capital Structure.

(a) The authorized capital shares of the Company consist of (i) 197,310,000 shares of Company Common Stock and (ii) 132,866,594 shares of Company Preferred Stock, of which the Company has the following authorized designed series: (A) 2,545,763 shares of Series A Preferred Stock, (B) 1,640,672 shares of Series B Preferred Stock, (C) 2,207,574 shares of Series B-1 Preferred Stock, (D) 4,667,332 shares of Series B-2 Preferred Stock, (E) 2,407,974 shares of Series B-3 Preferred Stock, (F) 25,431,156 shares of Series C Preferred Stock, (G) 17,752,316 shares of Series C-1 Preferred Stock, (H) 26,165,909 shares of Series C-2 Preferred Stock, (I) 2,985,693 shares of Series C-3 Preferred Stock, (J) 43,609,846 shares of Series C-4 Preferred Stock, (K) 1,701,918 shares of Series A’ Preferred Stock, (L) 1,288,409 shares of Series B’ Preferred Stock, (M) 86,749 shares of Series B-1’ Preferred Stock, (N) 202,739 shares of Series B-2’ Preferred Stock and (O) 172,544 shares of Series B-3’ Preferred Stock. As of the Agreement Date, there are a total of (x) 17,382,832 shares of Company Common Stock issued and outstanding and (y) shares of 117,153,144 Company Preferred Stock issued and outstanding, of which: (1) 2,545,763 shares of Series A Preferred Stock are issued and outstanding, (2) 1,640,672 shares of Series B Preferred Stock are issued and outstanding, (3) 2,207,574 shares of Series B-1 Preferred Stock are issued and outstanding, (4) 4,667,332 shares of Series B-2 Preferred Stock are issued and outstanding, (5) 2,243,078 shares of Series B-3 Preferred Stock are issued and outstanding, (6) 25,146,052 shares of Series C Preferred Stock are issued and outstanding, (7) 17,752,316 shares of Series C-1 Preferred Stock are issued and outstanding, (8) 26,165,909 shares of Series C-2 Preferred Stock are issued and outstanding, (9) 2,985,693 shares of Series C-3 Preferred Stock are issued and outstanding, (10) 28,346,396 shares of Series C-4 Preferred Stock are issued and outstanding (clauses (1) through (10) collectively referred to as the “Senior Preferred Stock”), (11) 1,701,918 shares of Series A’ Preferred Stock are issued and outstanding, (12) 1,288,409 shares of Series B’ Preferred Stock are issued and outstanding, (13) 86,749 shares of Series B-1’ Preferred Stock are issued and outstanding, (14) 202,739 shares of Series B-2’ Preferred Stock are issued and outstanding and (15) 172,544 shares of Series B-3’ Preferred Stock are issued and outstanding (clauses (11) through (15) the “Junior Preferred Stock”).

As of the Agreement Date, the Company Capital Stock are held by the Persons and in the amounts set forth in ‎Section 3.5(a) of the Disclosure Schedule which further sets forth for each such Person the number of shares held. All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to any preemptive rights created by statute, the Governing Documents or any Contract to which the Company is a party or by which it is bound.

(b) All outstanding Company Securities have been allotted and issued or repurchased in compliance with all applicable Laws, and were issued, transferred and repurchased in accordance with any right of first refusal or similar right or limitation. There are no declared or accrued but unpaid dividends with respect to any Company Capital Stock. Other than the Company Capital Stock set forth in ‎‎Section 3.5(a) of the Disclosure Schedule, the Company has no other capital shares authorized, allotted, issued or outstanding as of the Agreement Date. No holder of Company Capital Stock that is outstanding and unexercised prior to the Closing will be entitled, upon the consummation of the Transactions, to consideration in respect of such Company Common Stock in excess of the amount determined in accordance with this Agreement.

(c) As of the Agreement Date, there are 23,865,946 shares of Company Common Stock reserved for issuance upon exercise of outstanding Company Options granted under the Company Equity Plan, and 3,619,394 shares of Company Common Stock reserved and available for grants under the Company Equity Plan. Other than the Company Equity Plan, the award agreements issued thereunder and any Employee Agreement that provides for grants relating to the foregoing, the Company and the Company Subsidiaries have never adopted, sponsored or maintained any share option plan or any other plan or Contract providing for equity-related compensation to any person (whether payable in shares, cash or otherwise). No consent from Optionholders is required to effect the cancellation of the Company Options as contemplated by ‎Section 1.5(d).

(d) As of the Agreement Date, there are no outstanding loans or Indebtedness to or from, on the one hand, the Company or any Company Subsidiary and on the other hand, any of the Stockholders or any other holders of Company Securities. True and correct copies of all Contracts relating to or issued in connection with the Company Options have been made available and such Contracts have not been amended, modified or supplemented, and there are no agreements or understandings in effect to amend, modify or supplement such Contracts from the forms thereof made available.

(e) As of the Agreement Date, there are 10,499,318 shares of Company Capital Stock that are subject to outstanding Company Warrants. ‎‎Section 3.5(e) of the Disclosure Schedule sets forth, as of the Agreement Date, a true and correct list of the following information with respect to each outstanding Company Warrant: the number (and type or series) of shares of Company Capital Stock subject to such Company Warrant; the class and/or series of such shares of Company Capital Stock subject to such Company Warrant; the date of issuance; the exercise price per share of such and the term of each Company Warrant.

True and correct copies of each Company Warrant (including executed copies of all Contracts relating to each Company Warrant and the Company Capital Stock purchased under such Company Warrant) as of the Agreement Date have been provided to Parent, and such Warrant and Contracts have not, as of the Agreement Date, been amended, modified or supplemented since being provided to Parent, and, as of the Agreement Date, there are no agreements, understandings or commitments to amend, modify or supplement such Warrants or Contracts in any case from those provided to Parent. All Company Warrants granted by the Company were granted in compliance with all applicable Laws and all requirements set forth in the Governing Documents.

(f) Except for the Company Options and the Company Warrants, as of the Agreement Date, there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any Company Capital Stock or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement for Company Capital Stock. There are no outstanding or authorized share appreciation, phantom share, profit participation, or other similar rights with respect to the Company (whether payable in shares, cash or otherwise). Except as contemplated hereby or in the Governing Documents, (i) there are no voting trusts, proxies, or other agreements or understandings with respect to the voting share of the Company to which the Company is a party, and (ii) there are no agreements relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale/“tag-along” rights or “drag-along” rights) of any Company Capital Stock to which the Company is a party.

(g) ‎Section 3.5(g) of the Disclosure Schedule sets forth all Indebtedness of the type set forth in clauses (i) through (iv) of the definition thereof of the Company and the Company Subsidiaries as of the Agreement Date, including the amount of such Indebtedness, and the Person to whom such Indebtedness is owed. The Company has made available a true and correct copy of each Contract or other instrument evidencing such Indebtedness, in each case, as of the Agreement Date. With respect to each such item of Indebtedness, neither the Company nor any Company Subsidiary is in default and no payments are past due.

Section 3.6 Company Financial Statements; Internal Financial Controls.

(a) ‎‎Section 3.6(a) of the Disclosure Schedule sets forth the Company’s (i) (A) consolidated unaudited balance sheet as of December 31, 2024 and the related statements of income, cash flow and stockholders’ equity for the twelve (12) month periods then ended and (B) audited balance sheet as of December 31, 2023 and the related statements of income, cash flow and Stockholders’ equity for the twelve (12) month periods then ended (the “Year-End Financials”) and (ii) consolidated unaudited balance sheet as of February 28, 2025 (the “Balance Sheet Date”), and the related unaudited consolidated statements of

income, cash flow and stockholders’ equity for the two months then ended (the “Current Balance Sheet” and, together with the Year-End Financials, the “Financials”). The Financials have been prepared in accordance with GAAP consistently applied on a consistent basis throughout the periods indicated (except that any unaudited Financials need not contain footnotes and other presentation items that may be required by GAAP) which if presented would not materially alter the financial condition or operating results of the company. The Financials present fairly in all material respects the Company’s and the Company Subsidiaries’ financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in the case of the Current Balance Sheet to normal year-end adjustments, which are not material in amount or significance in any individual case or in the aggregate.

(b) The Company has established and maintains, adheres to and enforces a system of internal accounting controls which are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements (including the Financials), in accordance with GAAP. As of the date of this Agreement, neither the Company nor, to the Knowledge of the Company, any Employee, auditor or accountant engaged by the Company has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company, (ii) any fraud, whether or not material, that involves the Company’s management or other Employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or (iii) any complaint, assertion, claim or allegation regarding any of the foregoing.

(c) The Required Audited Financial Statements and the Unaudited Interim Financial Statements, when prepared and delivered to Parent in accordance with ‎Section 5.17, will fairly present in all material respects the Company’s and the Company Subsidiaries’ financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in the case of the Unaudited Interim Financial Statements to normal year-end adjustments and any other adjustments described therein permitted by GAAP.

(d) The Company has made available an accurate and complete breakdown and aging of all accounts receivable, notes receivable and other receivables of the Company as of the Balance Sheet Date. All accounts receivable of the Company represent valid obligations of customers of the Company arising from bona fide transactions.

Section 3.7 No Undisclosed Liabilities. Neither the Company nor any of the Company Subsidiaries have any Liability, except for those which (a) have been reflected in the Current Balance Sheet, (b) have arisen in the ordinary course of business consistent with past practices since the Balance Sheet Date, and do not result from a breach of Contract (including any representation or warranty therein), breach of warranty, violation of Law, infringement, misappropriation, or other tort, (c) are executory performance obligations arising under Contracts to which the Company or any Company Subsidiary is a party or otherwise bound and that do not result from breach of such Contract (including any representation or warranty therein), (d) are Third Party Expenses or Closing Indebtedness, unpaid Pre-Closing Taxes or included as a liability in Closing Net Working Capital or (e) are not, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole.

Section 3.8 No Changes. Since December 31, 2024 through the Agreement Date, (a) no Company Material Adverse Effect has occurred or arisen, (b) the Company and the Company Subsidiaries have been operated in the ordinary course of business (it being understood that the Company and the Company Subsidiaries have been operating with limited liquidity and such liquidity constraints have placed constraints on the operations of the Company and the Company Subsidiaries) and (c) neither the Company nor any of the Company Subsidiaries have taken any action that would be prohibited by Sections ‎5.1(b)(ii), ‎5.1(b)(xii), ‎5.1(b)(xiii) or ‎5.1(b)(xiv) if proposed to be taken or actually taken after the Agreement Date.

Section 3.9 Tax Matters.

(a) Tax Returns and Payments. Except as set forth in ‎‎Section 3.9(a) of the Disclosure Schedule, each income and other material Tax Return filed or required to be filed by, with respect to, or on behalf of the Company or any of the Company Subsidiaries with any Governmental Entity under any applicable Law (collectively, the “Company Returns”) prior to the Closing Date has been properly completed and filed and is true, correct and complete in all material respects. All material Taxes required to be paid (or collected and paid over) under any applicable Law (whether or not shown, or required to be shown, on any Tax Returns) by the Company or any of the Company Subsidiaries have been timely paid in full (or collected and paid over, as applicable) or sufficiently provisioned for in the Required Financial Statements and no unpaid penalties, fines, surcharges or interest have been incurred except as set forth on the Financial Statements.

(b) Tax Agreements. Neither the Company nor any of the Company Subsidiaries has requested or obtained any ruling from any Governmental Entity with respect to Taxes.

(c) Accounts. Except as set forth in ‎Section 3.9(c) of the Disclosure Schedule, the Company and the Company Subsidiaries have established, in the ordinary course of business and consistent with its past practices, adequate reserves in accordance with applicable Laws and accounting standards for the payment of all material Taxes for the period from the date of the Balance Sheet Date through and including the Closing Date. Neither the Company nor any of the Company Subsidiaries have incurred any material liability for Taxes since the Balance Sheet Date outside of the ordinary course of business.

(d) Enquiries; Claims. Except as set forth in ‎‎Section 3.9(d) of the Disclosure Schedule, no Company Return has, to the Knowledge of the Company, ever been examined or audited by any Governmental Entity and no such examination or audit is currently proposed or ongoing. The Company and the Company Subsidiaries are not a party to any action or proceeding by any Governmental Entity for nonpayment of Taxes nor have they received written notice from such body of any claim for such non-payment of Taxes. Except as set forth in ‎‎Section 3.9(d) of the Disclosure Schedule, neither the Company nor the Company Subsidiaries have received from any Governmental Entity any: (i) written notice indicating an intent to open a Tax audit or other review; (ii) other written request for information related to Tax matters; or (iii) written notice of a Tax deficiency or proposed Tax adjustment. Except as set forth in ‎‎Section 3.9(d) of the Disclosure Schedule, no extension or waiver of the limitation period applicable to any Company Returns has been granted by or requested from the Company or the Company Subsidiaries which extension or waiver remains outstanding (other than any automatic extension obtained in the ordinary course of business for which approval of a Governmental Entity is not required). There are no Liens for Taxes upon any of the assets of the Company or the Company Subsidiaries other than Liens for current Taxes not yet due and payable or for Taxes being contested in good faith through appropriate proceedings.

(e) No Other Jurisdictions for Filing Tax Returns. The Company and each of its Subsidiaries is, and has at all times since the date of its formation been, tax resident solely in its country of incorporation or formation. Neither the Company nor any of the Company Subsidiaries is subject to income, gross receipts or similar Tax in any country other than its country of incorporation or formation. No written claim has ever been made by a Governmental Entity in writing in a jurisdiction where the Company or any of the Company Subsidiaries do not currently file a Tax Return of a certain type or pay Taxes of a certain type that the Company or such Company Subsidiary is or may be subject to Tax of such type by that jurisdiction.

(f) Tax Incentives. The Company and the Company Subsidiaries are in compliance in all material respects with all terms and conditions of any Tax exemption, Tax holiday, Tax ruling or other Tax reduction agreement or order (each, a “Tax Incentive”), and the consummation of the transactions contemplated by this Agreement will not have any material adverse effect on the continued validity and effectiveness of any such Tax Incentive.

(g) Change in Accounting Methods; Closing Agreements; Etc. Neither the Company nor the Company Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing as a result of any: (i) change in method of accounting made, or incorrect method of accounting employed, prior to the Closing; (ii) closing or similar agreement entered into with any Tax authority executed prior to the Closing; (iii) installment sale or open transaction disposition made on or prior to the Closing; (iv) prepaid amount received on or prior to the Closing; (v) any intercompany transactions or excess loss accounts described in U.S. Treasury Regulations under Section 1502 of the Code (or any similar provision of state, territorial, provincial, local or non-U.S. tax Law) or (vi) completed contract method of accounting, long-term contract method of accounting, cash method of accounting or Section 481 of the Code (or any comparable provision of any tax Law).

(h) Secondary Liabilities, Consolidated Groups and Indemnities. Neither the Company nor any of the Company Subsidiaries has ever been a member of an affiliated, combined, consolidated or similar group for Tax purposes (other than a group with respect to which the Company is the common parent). Neither the Company nor the Company Subsidiaries are, nor have they ever been, a party to or bound by any tax indemnity agreement, tax sharing agreement, cost sharing, tax allocation agreement or similar Contract (in each case, other than any commercial Contract entered into in the ordinary course of business the primary purpose of which is not related to Taxes). Neither the Company nor the Company Subsidiaries have any liability for the Taxes of any Person (other than the Company or any of the Company Subsidiaries) under (i) U.S. Treasury Regulation Section 1.1502-6 (or any similar provision of any tax Law), (ii) as a transferee or successor, by Contract (other than any commercial Contract entered into in the ordinary course of business the primary purpose of which is not related to Taxes) or (iii) by operation of Law.

(i) U.S. Tax Classification. The Company and each Company Subsidiary (i) is a domestic entity and (ii) is, and has at all times been since the date of its formation, classified as a C corporation, in each case for U.S. federal income tax purposes.

(j) Spin-Off. In the three (3) years prior to the Agreement Date, neither the Company nor any of the Company Subsidiaries has ever distributed stock of another Person, nor had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or 361 of the Code.

(k) Reportable or Listed Transactions. Neither the Company nor any of the Company Subsidiaries has engaged in a “listed” transaction, as set forth in U.S. Treasury Regulations Section 1.6011-4(b) or any similar transaction requiring disclosure in accordance with a similar provision of applicable Law.

(l) Withholding. The Company and the Company Subsidiaries have complied in all material respects with all applicable Laws relating to the collection, payment and withholding of taxes and has timely collected, withheld from and paid over to the proper Governmental Entities all amounts required to be so collected, withheld and paid under applicable Laws. The Company and the Company Subsidiaries have complied in all material respects with, and its records contain all information and documents necessary to materially comply with, all requirements of applicable Laws relating to information reporting and other similar filing requirements.

(m) U.S. Real Property Holding Corporation. The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(n) Intended Tax Treatment. Neither the Company nor any of the Company Subsidiaries (i) has taken or agreed to take any action not contemplated by this Agreement or (ii) is aware of any fact or circumstance, in each case, that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.

(o) U.S. Golden Parachute Tax. There is no agreement, plan, arrangement or other Contract covering any Employee to which the Company or any Company Subsidiaries is a party that, considered individually or considered collectively with any other such agreements, plans, arrangements or other Contracts, will, or would reasonably be expected to, as a result of the Transactions (whether alone or upon the occurrence of

any additional or subsequent events), give rise directly or indirectly to the payment of any amount that would be characterized as a “parachute payment” within the meaning of Section 280G of the Code.

(p) Section 409A Matters.

(i) ‎Section 3.9(p)(i) of the Disclosure Schedule lists, as of the Agreement Date, each Contract, agreement or arrangement between the Company or any ERISA Affiliate and any Employee that is a “nonqualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code) subject to Section 409A of the Code (or any state Law equivalent) and the regulations and guidance thereunder (“Section 409A”). (A) Each such nonqualified deferred compensation plan has been in documentary and operational compliance with Section 409A, such that no compensation is required by Law to be included in the gross income of any Employee as of any date on or prior to the Closing as a result of the operation of Section 409A of the Code with respect to any Company Employee Plan, (B) to the extent required by Law, the Company has properly reported and/or withheld and remitted on amounts deferred under any Company nonqualified deferred compensation plan subject to Section 409A of the Code, (C) there is no Contract to which the Company or any of its ERISA Affiliates is a party, including the provisions of this Agreement, covering any Employee of the Company, which individually or collectively requires the Company or any of its Affiliates to pay a Tax gross up payment to, or otherwise indemnify or reimburse, any Employee for Tax-related payments under Section 409A, and (D) there is no contract, agreement, plan or arrangement to which the Company is a party, including the provisions of this Agreement, which, individually or collectively, would reasonably be expected to give rise to Parent or Company Tax under Section 409A of the Code or that would reasonably be expected to give rise to an Employee Tax and/or Company reporting obligations under Section 409A of the Code.

(ii) Except as set forth in ‎‎Section 3.9(p)(ii) of the Disclosure Schedule, no Company Option or other stock right of the Company (as defined in U.S. Treasury Regulation 1.409A-1(l)) (A) has an exercise price that is or has been less than the fair market value of the underlying equity as of the date such option or right was granted, (B) has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option or rights, and (C) has been granted with respect to any class of stock of the Company that is not “service recipient stock” (within the meaning of applicable regulations under Section 409A).

Section 3.10 Real Property.

(a) Owned and Leased Property. Neither the Company nor any Company Subsidiaries own or has ever owned any real property or are party to any agreement to purchase or sell any real property. ‎‎Section 3.10(a) of the Disclosure Schedule sets forth, as of the Agreement Date, a true and correct list of: (i) all real property currently leased, subleased or licensed by or from the Company or any Company Subsidiaries or otherwise used or occupied by the Company or any Company Subsidiaries (the “Leased Real Property”), and (ii) all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in the Leased Real Property, and all amendments, terminations, guarantees and modifications thereof, including all notices exercising any extension or expansion rights thereunder (the “Lease Agreements”). The Leased Real Property is in good operating condition and repair sufficient for its current use in all material respects, and, to the Company’s Knowledge, no material repairs or alterations are currently required for the conduct of the Company’s and the Company Subsidiaries’ current business operations. The Leased Real Property constitutes all of the real property used in connection with the business of the Company.

(b) Occupation of Leased Property. The Company or the applicable Company Subsidiary currently occupies each Leased Real Property, and has not otherwise granted to any third party the current right to occupy such Leased Real Property.

(c) Compliance with Leases. The Company and the Company Subsidiaries have neither sent nor received any notice of default or breach of any Lease Agreement that remains outstanding, and there are no material breaches of any of the Lease Agreements by the Company or the Company Subsidiaries or, to the Knowledge of the Company, any other party thereto. Neither the Company nor any of the Company Subsidiaries has in the three (3) years prior to the Agreement Date received any notice that its occupation of or operations on the Leased Real Property violate in any material respect any Law relating to such property or operations thereon. Neither the Company nor any of the Company Subsidiaries has received written notice from the applicable landlord that the Company (or the Company Subsidiary), as tenant under the applicable Lease Agreement, will be required to expend more than $500,000 to remove at the expiration of the applicable Lease Agreement those tenant improvements installed by the Company or Company Subsidiary. Neither the Company nor any Company Subsidiaries has in the three (3) years prior to the Agreement Date received any claim or notice that it has failed to perform in any material respect any of its obligations under any termination agreements pursuant to which it has terminated any leases of real property that are no longer in effect and, to the Company’s Knowledge, no material contingent liability has accrued with respect to such terminated real property leases. Neither the Company nor any Company Subsidiary is party to any agreement to pay, nor has the Company received any written demand or claim that the Company is required to pay, any unpaid real estate brokerage commission. The Company has not received any notice of the exercise of any termination of any Lease Agreements. The Company or its applicable Company Subsidiary (i) has provided any security deposit or letter of credit that it is required to provide by under the applicable Lease Agreement, (ii) have not received notice that the holder or beneficiary thereof has drawn upon or otherwise applied the proceeds thereof (except to the extent that such draw or proceeds have been replaced) and (iii) has not been notified that any letter of credit held by a landlord under any Lease Agreement has expired or otherwise terminated.

(d) Encumbrances. The Company’s or Company Subsidiaries’ interest in the Leased Real Property is not subject to any Liens.

(e) Environmental Laws. No Action is pending or, to the Knowledge of the Company, threatened, that alleges a material breach, violation or Liability under Environmental Laws or that relates to the presence, release or exposure to Hazardous Materials in material violation of Environmental Laws, and, to the Company’s Knowledge, there are no current facts or circumstances that are reasonably expected to give rise to material Liability of the Company or any Company Subsidiary under Environmental Law. In the past three (3) years, the Company has not manufactured, distributed, disposed of, arranged for the disposal of, transported, released, or exposed any Person to, any Hazardous Material in a manner that is reasonably expected to result in a material Liability pursuant to Environmental Law, and neither the Company nor any Company Subsidiary has caused the release of Hazardous Materials at any real property in a manner that would reasonably be expected to result in a material Liability pursuant to Environmental Law. The Company has made available to Parent all environmental reports, studies or audits in its possession or reasonable control identifying material environmental, health or safety liabilities (to the extent pertaining to Hazardous Materials) with respect to the Company or any of the Company Subsidiaries.

(f) Notices. Except as it has not been, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole, neither the Company nor any of the Company Subsidiaries has received any written notice of any (i) outstanding actions, disputes, claims or demands between the Company or any of the Company Subsidiaries and any third party (including any landlord or superior landlord) in relation to any of the Leased Real Property; or (ii) outstanding enforcement notice, breach of condition notice, statutory notice or informal notice issued by a government or statutory authority relating to any of the Leased Real Property.

Section 3.11 Tangible Property. The Company and the Company Subsidiaries have good and valid title to, or, in the case of leased or licensed properties and assets, valid leasehold interests or license rights in, all properties and assets (including Inventory), real, personal and mixed, used or held for use by the Company and the Company Subsidiaries in their businesses, free and clear of any Liens, except as reflected in the Current Balance Sheet or it would not be, and would not be reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole.

Section 3.12 Intellectual Property and Data Privacy.

(a) Disclosures.

(i) ‎Section 3.12(a)(i) of the Disclosure Schedule sets forth, as of the Agreement Date, a true and correct list of: (A) each item of Registered IP owned or purported to be owned by the business of, the Company or any of the Company Subsidiaries (“Registered Company IP”); (B) the record owner, and if different, the legal owner and beneficial owner, of such item of Registered Company IP; (C) the jurisdiction in which such item of Registered Company IP has been registered or filed; (D) the applicable application, registration or serial number; (E) the applicable application or filing dates and issuance or registration dates; (F) the status of such item of Registered Company IP; and (G) for each domain name registration, the applicable domain name registrar, the expiration date for the registration, and name of the registrant.

(ii) ‎Section 3.12(a)(ii) of the Disclosure Schedule sets forth, as of the Agreement Date, a true and correct list of each Inbound License, other than: (A) Contracts entered into on Standard Form IP Contracts without material modification; (B) non-exclusive licenses to generally commercially available software in unmodified, executable code form (including licenses to such software so made available on a SaaS basis) on standard, commercially reasonable terms; (C) licenses to Open Source Software; (D) Contracts where the only licenses granted are (1) ancillary licenses or grants of rights with respect to feedback or suggestions that the counterparty provides to the Company with respect to Company Product or (2) ancillary licenses or grants of rights with respect to trademark(s) of the counterparty for inclusion on the Company’s published customer lists (or the Company’s similar promotional purposes) and (E) non-disclosure agreements that do not contain express license grants, covenants not to sue, or other similar rights with respect to Intellectual Property Rights.

(iii) ‎Section 3.12(a)(iii) of the Disclosure Schedule sets forth, as of the Agreement Date, a true and correct list of each Outbound License, other than: (A) Contracts entered into on Standard Form IP Contracts without material modification; (B) Contracts where the only rights with respect to Intellectual Property Rights granted are non-exclusive licenses to customers of the Company or any of the Company Subsidiaries to use Company Products purchased from the Company or any of the Company Subsidiaries on substantially similar terms to the applicable Standard Form IP Contracts; (C) Contracts where the only licenses granted are (1) grants of rights to feedback or suggestions that the Company or the Company Subsidiary provides to the counterparty with respect to the counterparty’s product or service, (2) ancillary licenses or grants of rights with respect to trademark(s) of the Company for inclusion on the counterparty’s published customer lists (or similar promotional purposes), or (3) non-exclusive licenses or grants of rights to suppliers of the Company or any Company Subsidiary that are incidental to the transaction contemplated in such Contract solely to enable the applicable supplier to perform its obligations under such Contract for the benefit of the Company or a Company Subsidiary; and (D) non-disclosure agreements that do not contain express license grants, covenants not to sue, or other similar rights with respect to Intellectual Property Rights.

(b) Standard Form IP Contracts. The Company has made available a true and correct copy of each Standard Form IP Contract.

(c) Ownership Free and Clear. Except as set forth in ‎‎Section 3.12(c) of the Disclosure Schedule, the Company and the Company Subsidiaries solely and exclusively own all right, title and interest to and in all Company IP, free and clear of all Liens. Without limiting the generality of the foregoing:

(i) each Employee of the Company or any of the Company Subsidiaries that has been involved in the authorship, invention, creation, conception or other development of any material Company Product or material Intellectual Property Rights or material Technology for or on behalf of the Company or any Company Subsidiary has entered into an enforceable written non-disclosure and invention assignment Contract with the Company that effectively and validly assigns to the Company, to the fullest extent permitted by applicable Law, all Intellectual Property Rights and Technology authored, invented, created, conceived, or otherwise developed by such Employee in the scope of his, her or its employment or engagement with or otherwise for or on behalf of the Company (an “Invention Assignment Agreement”) to the extent not automatically owned by the Company or the relevant Company Subsidiary by operation of Law. The Company and the Company Subsidiaries have fulfilled all of their remuneration obligations concerning employee inventions and designs with respect to such Intellectual Property Rights and Technology;

(ii) except as set forth in ‎Section 3.12(c)(ii) of the Disclosure Schedule, no funding, facilities, personnel or resources of any Governmental Entity, university, college, or other educational institution or research organization was used in any development of any Company IP or Company Products. No Governmental Entity, university, college, or other educational institution or research organization has any claim or right in or to, or other encumbrance on, any Company IP or Company Products, other than the same standard commercial rights as are granted by the Company or any of the Company Subsidiaries to commercial end users of Company Products;

(iii) the Company and the Company Subsidiaries have taken commercially reasonable steps designed to maintain the confidentiality of all proprietary information held, or purported to be held, as a trade secret by the Company or the Company Subsidiaries, including any proprietary Source Code of the Company or the Company Subsidiaries that is held as confidential information or trade secrets provided to the Company or the Company Subsidiaries by any Person under an obligation of confidentiality, and no such proprietary information has been authorized to be disclosed or, to the Knowledge of the Company, has actually been disclosed to any Person other than pursuant to a written confidentiality Contract restricting the disclosure and use of such proprietary information. The Company and the Company Subsidiaries have and enforce a policy requiring each Employee that has access to any confidential information of the Company or the Company Subsidiaries to execute, as applicable, the Company’s confidentiality or nondisclosure agreement in the form of a Standard Form IP Contract (copies of which have been made available to Parent), and all such Employees have executed such or substantially similar agreements;

(iv) neither the Company nor any of the Company Subsidiaries has made any written, or to the Knowledge of the Company, oral commitments, promise, submission, suggestions, statements or declarations, including any membership commitments, to any standards-setting bodies, industry groups or other similar organizations (“Standards Organizations”) that require or obligate the Company or any of the Company Subsidiaries to grant or offer to any other Person any license or right to any Company IP, and no patent or patent application included in the Company IP has been identified by the Company or, to the Knowledge of the Company, any other Person as essential to any Standards Organization or any standard promulgated by any Standards Organization; and

(v) all Company Intellectual Property Rights, and, except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole, all Company Technology will be fully transferable and alienable by the Company or any of the Company Subsidiaries at the Closing without consent of, or any payment of any kind to, any Person.

(d) Valid and Enforceable. With respect to each item of Registered Company IP, all necessary registration, maintenance and renewal fees due have been paid, and all necessary documents and certificates have been filed with the relevant Governmental Entity, as the case may be, for the purposes of registering, maintaining and renewing, as applicable, such Registered Company IP. There is no pending and, in the three (3) years prior to the Agreement Date, there has not been, any Action as to which the Company or any of the Company Subsidiaries received notice, challenging the use, ownership, validity, enforceability or registrability of any Company IP, excluding office actions received in the ordinary course of prosecution. All of the Registered Company IP is subsisting, and, to the Knowledge of the Company, not invalid or unenforceable (other than pending applications thereof), and to the Knowledge of the Company, there are no facts, circumstances, or information that would, or would reasonably be expected to, render any of the Registered Company IP invalid or unenforceable, other than as a consequence of the expiration of the statutory protection period.

(e) Effects of the Transactions; Sufficiency. All Intellectual Property Rights used in or necessary for the conduct of the business of the Company and the Company Subsidiaries as currently conducted, and, to the Knowledge of the Company, as currently contemplated to be conducted, are either included in the Company Intellectual Property Rights or are used or held for use by the Company and the Company Subsidiaries pursuant to a valid license Contract or other valid and enforceable right, in each case, except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole. Neither the execution, delivery or performance of this Agreement or any Related Agreement nor the consummation of the Transactions will, with or without notice or the lapse of time, result in or give any other Person the right or option to cause or declare, under any Contract to which the Company or any of the Company Subsidiaries is bound: (i) a loss of, or Lien on, any Company IP; (ii) the release, disclosure or delivery of any Source Code that is Company IP by or to any escrow agent or other Person; (iii) the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in any of the Company IP or any Intellectual Property Rights owned by, or licensed to, Parent or any of Parent’s Affiliates; (iv) payment of any royalties or other license fees with respect to Intellectual Property Rights of any other Person in excess of those payable by the Company or any of the Company Subsidiaries in the absence of this Agreement or the Transactions; or (v) any non-compete or other material restriction or limitation on the operation of the business of the Company, any of the Company Subsidiaries, Parent or any of its Affiliates, in each case, except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole.

(f) No Third Party Infringement of Company IP. To the Knowledge of the Company, no Person has in the three (3) years prior to the Agreement Date infringed, misappropriated, or otherwise violated, and no Person is currently infringing, misappropriating or otherwise violating, any Company IP, in a manner that has been, or would reasonably be expected to be material to the Company and the Subsidiaries, taken as a whole. In the three (3) years prior to the Agreement Date, neither the Company, nor any Company Subsidiaries nor any of their Representatives has sent or received any notices or other communications relating to any actual, alleged or suspected infringement, misappropriation or violation of any Company IP. In the three (3) years prior to the Agreement Date, neither the Company nor any of the Company Subsidiaries have brought any Actions against any Person with respect to any Company IP.

(g) No Infringement of Third Party IP Rights.

(i) The operation of the business of the Company and the Company Subsidiaries (including the design, development, use, import, branding, advertising, promotion, marketing, manufacture, distribution, hosting, provision, delivery, sale and licensing of any Company Product or Company IP, as previously conducted and currently conducted has not in the three (3) years prior to the Agreement Date infringed, misappropriated, or otherwise violated, and does not infringe, misappropriate or otherwise violate any Intellectual Property Right of any other Person, in each case, except as would not be expected to be material to the Company and the Company Subsidiaries, taken as a whole.

(ii) Neither the Company nor any of the Company Subsidiaries have in the three (3) years prior to the Agreement Date received any notice from any Person (A) alleging any infringement, misappropriation, misuse, dilution, violation, or unauthorized use or disclosure of any Intellectual Property Rights or Technology or unfair competition or (B) inviting the Company or any of the Company Subsidiaries to take a license under any Intellectual Property Rights or consider the applicability of any Intellectual Property Rights to any Company IP, Company Products or the conduct of the business of the Company and the Company Subsidiaries.

(h) Compliance with Warranties. All Company Products currently offered for sale, license, lease or distribution by the Company or any of the Company Subsidiaries and all services currently provided by or through the Company or any of the Company Subsidiaries: (i) conform in all material respects to applicable contractual commitments, express and implied warranties, service level commitments, product specifications and product documentation and to any representations made by the Company and the Company Subsidiaries; and (ii) to the Knowledge of the Company, are free from material defects in design, specifications, processing, manufacture, material or workmanship, and suitable for the purpose for which they were sold.

(i) Contaminants; Vulnerabilities; Spyware or Malware. To the Knowledge of the Company, none of the Company Products or IT Systems contains any Contaminants that would reasonably be expected to adversely affect their availability, performance, security, or integrity in any material respect. The Company and the Company Subsidiaries use commercially reasonable measures designed to prevent the introduction of Contaminants into the Company Products or IT Systems. None of the Company Products or IT Systems performs the following functions, without the knowledge (which for purposes of this Section 3.12(i) shall be deemed to include actions necessary for the operation and protection of the Company Product in accordance with its public documentation or other documentation made available to the applicable owner or user of an affected system, network or device) and, to the extent required by applicable Law, consent of the owner or user of an affected system, network, or device: (i) collects data stored on or transmitted by the system, network, or device; (ii) interferes with the owner’s or an authorized user’s control of the system, network, or device; (iii) changes or interferes with settings or preferences of, or commands installed or stored on, the system, network, or device without the knowledge of the owner or an authorized user of the system, network, or device; (iv) changes or interferes with data that is stored on or transmitted by the system, network, or device in a manner that obstructs, interrupts or interferes with lawful access to or use of that data by the owner or an authorized user of the system, network, or device; (v) causes the system or device to communicate with a third-party system or device without the authorization of the owner or an authorized user of the system or device; or (vi) installs a computer program or code that may be activated without the knowledge of the owner or an authorized user of the system, network, or device.

(j) Use of Open Source Software.

(i) Except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole, no Open Source Software is or has been embedded in, linked to, combined with any Company Product or any proprietary Software of the Company, in each case, in a manner that (A) subjects any Company IP to any Copyleft License, (B) creates obligations (other than the requirements pertaining to attribution and copyright notices conditions contained in the licenses governing the Open Source Software) for the Company or any of the Company Subsidiaries with respect to Company IP or grants to any Person any rights or immunities under Company IP or (C) otherwise imposes any limitation, restriction or condition on the right or ability of the Company or any of the Company Subsidiaries to use or distribute any Company Products or Company IP (other than the requirements pertaining to attribution and copyright notices conditions contained in the licenses governing the Open Source Software).

(ii) The Company and the Company Subsidiaries have complied with all of the terms and conditions of each applicable license for Open Source Software, including all requirements pertaining to attribution and copyright notices, in each case, except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole.

(iii) Source Code. Except as set forth in ‎‎Section 3.12(j)(iii) of the Disclosure Schedule, (A) no material Source Code for any Company Product has been delivered, licensed or made available, including under any license for Open Source Software, (B) neither the Company nor any of the Company Subsidiaries has any duty or obligation (whether present, contingent or otherwise) to deliver, license or make available the Source Code for any Company IP and (C) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license or disclosure of any material Source Code for any Company Product, in each case (A) through (C) to any escrow agent or other Person (other than to any Employee bound by written confidentiality obligations to the Company to use for the sole benefit of the Company and the Company Subsidiaries).

(k) Sufficiency of IT Systems. The IT Systems operate and perform in all material respects as is necessary for the operation of the business of the Company and the Company Subsidiaries as currently conducted and as currently contemplated to be conducted. To the Knowledge of the Company, (i) there has been no material failure of IT Systems in the past three (3) years which has not been fully resolved and (ii) no Person has gained unauthorized access to the IT Systems. The material IT Systems will be owned, licensed to, or available for us by the Company and the Company Subsidiaries as of immediately following the Closing on terms and conditions identical to those under which the Company and the Company Subsidiaries owned, licensed or used the IT Systems immediately prior to the Closing and as of the date hereof without the payment of any additional amounts or consideration, in each case, except as would not be reasonably expected to be material to the Company and the Company Subsidiaries, taken as a whole.

(l) Artificial Intelligence. The Company and the Company Subsidiaries do not use in their business or incorporate into the Company Products in any way Technology in the deep learning, machine learning or other artificial intelligence fields, including any Software or systems that consist of neural networks, or statistical learning algorithms (like linear and logistic regression, support vector machines, random forests, k-means clustering, and large language models).

(m) Policies. All Privacy and Data Processing Policies currently in effect have been made available. No Privacy and Data Processing Policy is in material violation of any Privacy and Data Processing Requirement.

(n) Compliance. The Company and the Company Subsidiaries, and to the Knowledge of the Company, all third parties performing services for the Company or any of the Company Subsidiaries (in the case of such third parties, to the extent relating to the Company or any of the Company Subsidiaries), comply, and have at all times complied, with all Privacy and Data Processing Requirements in all material respects. The Company Products, and use of the Company Products for their intended purposes, complies, and at all times has complied in all material respects, with all Privacy and Data Processing Requirements.

(o) No Unsatisfied Requests. As of the Agreement Date, there are no unsatisfied requests to the Company or any of the Company Subsidiaries seeking to exercise any right under any Privacy and Data Processing Requirement.

(p) No Action. As of the Agreement Date, there is no, and has been no, written inquiry or Action from any Governmental Entity or any Person against or to the Company or any of the Company Subsidiaries relating to (i) the Processing of Company Data, privacy, data protection, or security, (ii) the confidentiality, availability, or integrity of any information technology or data processing network, equipment, facility, service, or system owned, controlled, or used by or for the Company or any of the Company Subsidiaries (“Systems”), Company Product, or Company Data, or (iii) any alleged material violation of any Privacy and Data Processing Requirement. Neither the Company nor any of the Company Subsidiaries has entered into or is subject to any Order or settlement relating to the Processing of Company Data, or compliance with Privacy and Data Processing Requirement.

(q) Security. The Company and the Company Subsidiaries have implemented, maintained, and monitored plans, policies, and measures consistent with industry standards for companies with similar types of Systems and Company Products, and that process similar types of Company Data, in the Company’s industry to preserve and protect the confidentiality, availability, security, and integrity of all Systems, Company Products, and, as relevant, Company Data. The Company and the Company Subsidiaries have implemented and maintained industry standard disaster recovery and business continuity plans, procedures, and facilities for the Systems and Company Products. To the Knowledge of the Company, the Systems do not contain any material faults, viruses or hardware components designed to permit unauthorized access to or to disable or otherwise harm the Systems. The Company and the Company Subsidiaries have remediated all material security risks, threats, issues, deficiencies, and vulnerabilities affecting any System, Company Product, or Company Data identified by or to the Company or any of the Company Subsidiaries.

(r) No Security Incidents. Except as set forth in ‎‎Section 3.12(r) of the Disclosure Schedule, there is no, and has been no, material (i) security incident, breach, or ransomware, hacking, intrusion, or similar event affecting any System, Company Product, or Company Data, nor (ii) accidental, unlawful, or unauthorized access to, or Processing of, Company Data (each, in the case of (i) and (ii), a “Security Incident”). Neither the Company nor any of the Company Subsidiaries has notified, nor has been required to notify, any Governmental Entity or other Person of any Security Incident.

Section 3.13 Material Contracts.

(a) ‎Section 3.13(a) of the Disclosure Schedule identifies, as of the Agreement Date, in each subpart that corresponds to the subsection listed below, any Contract (excluding any Company Employee Plan), (x) to which the Company or any of the Company Subsidiaries is a party, (y) by which the Company or any of the Company Subsidiaries or any of its or their assets are legally bound or subject or (z) under which the Company or any of the Company Subsidiaries has any right or interest:

(i) that is a distributor, reseller, VAR (value added reseller), OEM (original equipment manufacturer), sales representative or similar Contract under which any third party is authorized to sell, license, sublicense, lease, distribute, market or take orders for any Company Products, in each case, with associated revenue to the Company in 2024 exceeding $100,000;

(ii) pursuant to which the Company or any of the Company Subsidiaries has granted, or is required to grant, a right of first refusal, right of first negotiation, or other similar term to or for the benefit of another Person;

(iii) relating to the development of any Technology (A) independently or jointly, by the Company or a Company Subsidiary for any other Person, or (B) for the Company or a Company Subsidiary, in each case, by any other Person, other than Contracts with Employees entered into on a Standard Form IP Contract without material deviations;

(iv) that contains most favored customer pricing or similar provisions or restricts the Company or any of the Company Subsidiaries from (1) participating or competing in any line of business, market or geographic area; (2) acquiring any product, property or other asset (tangible or intangible), or any services, from any other Person (including any “take or pay,” “sole source” or “requirements” obligations, any minimum order obligations, minimum order quantities, and similar minimum purchase obligations); (3) selling any product or other asset to, performing any services for any other Person or transacting any business or deal in any other manner with any other Person; or (4) developing or distributing any product or technology;

(v) set forth or required to be set forth in ‎Section 3.12(a)(ii) and ‎Section 3.12(a)(iii) of the Disclosure Schedule;

(vi) that is with any Top Customer;

(vii) that is with any Top Supplier;

(viii) providing for or constituting capital expenditures and requiring future payments to or from the Company or any of the Company Subsidiaries in excess of $150,000;

(ix) providing for, relating to or constituting the settlement of any Action and pursuant to which the Company or any of the Company Subsidiaries has material continuing obligations;

(x) providing for, relating to or constituting (A) the disposition or acquisition of material assets or any material interest in any Person or business enterprise or (B) the acquisition, issuance or transfer of any securities, in each case (x) pursuant to which the Company or any of the Company Subsidiaries has material continuing obligations and (y) excluding contracts with customers in the ordinary course of business; (xi) providing for, relating to or constituting any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts or instruments relating to Indebtedness of the type set forth in clause (i) through (iv) of the definition thereof;

(xii) creating, providing for, relating to or constituting any partnership, joint venture or strategic alliance or any sharing of revenues, profits, losses, costs or liabilities; or

(xiii) that contemplates or provides for, relates to or constitutes: (A) the payment or delivery of cash or other consideration in an amount or having a value in excess of $100,000 in the aggregate; or (B) the performance of services having a value in excess of $100,000 in the aggregate.

(b) Each Contract (x) set forth in ‎Section 3.13(a) of the Disclosure Schedule or (y) required to be set forth in ‎Section 3.13(a) of the Disclosure Schedule (or that would have been required to be set forth in the Disclosure Schedule had such Contract been entered into prior to the Agreement Date) is referred to herein as a “Material Contract.” The Company has made available true and correct copies of all written Material Contracts in existence as of the Agreement Date, including all amendments thereto through the Agreement Date; provided that the Company may redact the contents of such Material Contracts in good faith in order for the Company to comply with applicable Law. Each Material Contract is valid and in full force and effect and is enforceable by the Company or the Company Subsidiaries in accordance with its terms, except as would not be, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole, and subject to the Enforceability Limitations. Except as set forth in ‎‎Section 3.13(b) of the Disclosure Schedule, neither the Company nor any of the Company Subsidiaries has materially violated or breached, or committed any default under, any Material Contract, and, to the Knowledge of the Company, no other Person has materially violated or breached, or committed any default under, any such Contract. Except as would not be, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to: (i) result in a material violation or breach of any of the provisions of any Material Contract; (ii) give any Person the right to declare a default or exercise any remedy under any Material Contract; or (iii) give any Person the right to accelerate the maturity or performance of any Material Contract. As of the Agreement Date, neither the Company nor any of the Company Subsidiaries has received any written or, to the Knowledge of the Company, oral, notice regarding any actual violation or breach of, or default under, any Material Contract. As of the Agreement Date, neither the Company nor any of the Company Subsidiaries has waived any of their material rights under any Material Contract. As of the Agreement Date, no Person has threatened in writing to terminate or refuse to perform its material obligations under any Material Contract.

Section 3.14 Customers and Suppliers.

(a) ‎Section 3.14(a) of the Disclosure Schedule contains a true and correct list, as of the Agreement Date, of the top ten (10) customers, distributors, resellers, or licensees of Company Products, sorted by and listing revenues generated in connection with such Persons for calendar year 2024 (each such Person, a “Top Customer”). As of the Agreement Date, neither the Company nor any of the Company Subsidiaries has received written or, to the Knowledge of the Company, oral, notice, nor does the Company have Knowledge, that any Top Customer (i) intends to or in fact did cancel, terminate, or otherwise materially and adversely modify its relationship with the Company or any of the Company Subsidiaries (whether related to payment, price or otherwise), or (ii) is threatened with bankruptcy or insolvency or is, or is reasonably likely to become, otherwise unable to purchase or pay for Company Products from the Company or the Company Subsidiaries in quantities and manner consistent with past practice.

(b) ‎Section 3.14(b) of the Disclosure Schedule contains a true and correct list, as of the Agreement Date, of the top ten (10) suppliers or vendors of the Company and the Company Subsidiaries, whether of products, services, Intellectual Property Rights or Technology or otherwise, sorted by and listing dollar volume of sales and purchases, respectively, for calendar year 2024 (each such Person, a “Top Supplier”). As of the Agreement Date, neither the Company nor any of the Company Subsidiaries has received written or, to the Knowledge of the Company, oral, notice, nor does the Company have Knowledge, that any Top Supplier (i) intends to or in fact did cancel, terminate or otherwise materially and adversely modify its relationship with the Company or any of the Company Subsidiaries (whether related to payment, price or otherwise), or (ii) is threatened with bankruptcy or insolvency or is, or is reasonably likely to become, otherwise unable to supply or support products or services to or for the Company or the Company Subsidiaries in quantities and manner consistent with past practice.

Section 3.15 Employee Benefit Plans.

(a) Company Employee Plans. ‎Section 3.15(a) of the Disclosure Schedule contains a true and correct list, as of the Agreement Date, of each material Company Employee Plan.

(b) Documents. The Company has made available true and correct copies of all documents embodying each material Company Employee Plan and any insurance policies held under each such Company Employee Plan and each Employee Agreement including all amendments thereto and all related trust documents and all related management and/or monitoring and/or information documents and/or records required by applicable Laws. To the Knowledge of the Company, no promises or commitments have been made to amend any Company Employee Plan or Employee Agreement to provide increased or improved benefits thereunder or accelerate vesting or funding thereunder.

(c) U.S. Company Employee Plan Documents. In the case of each material Company Employee Plan, the Company has made available, if applicable, (i) the most recent annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Employee Plan, (ii) if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee Plan assets, (iii) the most recent summary plan description together with the summary(ies) of all modifications thereto, if any, required under ERISA with respect to each Company Employee Plan, (iv) all written Contracts relating to each such Company Employee Plan, including administrative service agreements and group insurance contracts, (v) all correspondence to or from any Governmental Entity relating to any Company Employee Plan received within the prior three (3) years and (vi) the most recent IRS determination, opinion, notification or advisory letters issued with respect to each Company Employee Plan.

(d) Company Employee Plan Compliance. Except as set forth in ‎‎Section 3.15(d) of the Disclosure Schedule, the Company and the Company Subsidiaries have, in all material respects, performed all obligations required to be performed by them under any Company Employee Plan, and each Company Employee Plan has been established and maintained, in all material respects, in accordance with its terms and in compliance with all applicable Laws. Each Company Employee Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms, without liability to Parent, the Company or any of the Company Subsidiaries (other than de minimis termination fees, ordinary administration expenses or with respect to benefits that were previously earned, vested or accrued under Company Employee Plans prior to the Effective Time or any employment, severance or similar agreement where termination would trigger payments). Neither the Company nor any ERISA Affiliate has made any binding plan or commitment to establish any new Company Employee Plan, to modify any Company Employee Plan (except to the extent required by applicable Laws or to conform any such Company Employee Plan to the requirements of any Law, in each case as previously disclosed to Parent in writing, or as required by this Agreement), or to enter into any Company Employee Plan. No Company Employee Plan has unfunded liabilities, that as of the Closing, will not be substantially offset by insurance or fully accrued. No material suit, administrative proceeding, action, audit, investigation, litigation, or claim is pending or reasonably anticipated, or to the Knowledge of the Company, is threatened, against or with respect to any such Company Employee Plan or against the assets of any Company Employee Plan, including any audit or inquiry by any Governmental Entity. Each Company Employee Plan that is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified and has received a favorable determination letter from the IRS to the effect that the Company Employee Plan satisfies the requirements of Section 401(a) of the Code and that its related trust is exempt from taxation under Section 501(a) of the Code (or such Company Employee Plan is a prototype plan that is entitled to rely on an opinion letter issued by the IRS to the prototype plan sponsor regarding qualification of the form of the prototype plan) and, to the Knowledge of the Company, there are no facts or circumstances that could reasonably be expected to cause the loss of such qualification.

(e) No Pension Plan; Self-Insured Plans. Neither the Company nor any ERISA Affiliate has maintained, established, sponsored, participated in, or contributed to, in the past six (6) years, any Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code. Neither the Company nor any of the Company Subsidiaries has maintained, established, sponsored, participated in or contributed to any self-insured plan that provides benefits to Employees (including any such plan pursuant to which a stop-loss policy or contract applies).

(f) Multiemployer and Multiple-Employer Plan, Funded Welfare Plans and MEWAs. In the past six (6) years, neither the Company nor any ERISA Affiliate has contributed to or been obligated to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA). None of the Company nor any ERISA Affiliate has at any time ever maintained, established, sponsored, participated in or contributed to any multiple employer plan or to any plan described in Section 413 of the Code, a “funded welfare plan” within the meaning of Section 419 of the Code, or a Multiple Employer Welfare Arrangement, as defined under Section 3(40)(A) of ERISA (without regard to Section 514(b)(6)(B) of ERISA).

(g) No Post-Employment Obligations. No Company Employee Plan provides, or reflects or represents any liability to provide, post-termination or retiree or post-employment life insurance, health or other employee welfare benefits to any person for any reason, except as may be required by Laws.

(h) Effect of Transaction. Neither the execution and delivery of this Agreement nor the consummation of the Transactions (alone or in connection with additional or subsequent events) or any termination of employment or service in connection therewith will (i) result in any payment or benefit (including severance, golden parachute, bonus, accelerated vesting, distribution, increase in benefits or otherwise), becoming due to any Employee, (ii) result in any forgiveness of indebtedness to any Employee, (iii) increase any benefits otherwise payable by the Company or any of the Company Subsidiaries to any Employee, or (iv) result in the acceleration of the time of payment or vesting of any such benefits applicable to any Employee, in each case pursuant to any Company Employee Plan.

Section 3.16 Employment Matters.

(a) Compliance with Employment Laws. Except as set forth in ‎Section 3.16(a) of the Disclosure Schedule, the Company and the Company Subsidiaries are and, in the past three (3) years, have been in compliance in all material respects with all Laws respecting employment, worker classification, Tax withholding and reporting, prohibited discrimination, equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work. Each of the Company and each Company Subsidiary has met all material requirements under Laws relating to the employment of non-U.S. citizens and residents, including all requirements of Form I-9.

(b) Labor. Except as set forth in ‎Section 3.16(b) of the Disclosure Schedule, no strike, labor dispute, slowdown, concerted refusal to work overtime, or work stoppage or labor strike against the Company or any Company Subsidiaries is pending or to the Knowledge of the Company, threatened. The Company has no Knowledge of any activities or proceedings of any labor union to organize any Employees. Neither the Company nor any Company Subsidiaries is presently, nor has it been a party to, or bound by, any collective bargaining agreement, works council, union or similar Contract with respect to Employees and no such agreement is being negotiated by the Company or any Company Subsidiaries. Neither the Company nor any Company Subsidiaries has received an application for recognition nor entered into any union membership, security of employment, redundancy, recognition, or other collective agreement with a trade union, works counsel, staff association, or other organization or body of employees.

(c) No Interference or Conflict. To the Knowledge of the Company, no Employee is in violation of, or has been alleged to be in violation of, any material term of any employment contract, non-disclosure, non-competition, non-solicitation or confidentiality agreement with the Company, any Company Subsidiaries or any third party as a result of such person’s employment with the Company or any Company Subsidiaries and activities associated therewith.

(d) No Action. There is no Action pending or, to the Knowledge of the Company, threatened between the Company or any Company Subsidiaries and any Employees relating to applicable labor or employment Laws, including, but not limited to any claims for actual or alleged harassment or discrimination based on race, national origin, age, sex, sexual orientation, religion, disability or any other category protected by applicable Law or any claims related to wages and hours, labor relations, breach of contract or wrongful termination.

(e) WARN Obligations. The Company has not incurred any Liability or obligation under the Worker Adjustment and Retraining Notification Act and the regulations promulgated thereunder or any similar state, local or foreign Law (the “WARN Act”) that remains unsatisfied. Within the last three months, there has not been any plant closing or mass layoff, or term of similar import under any applicable similar Law.

(f) Service Provider Lists. ‎Section 3.16(f)(i) of the Disclosure Schedule sets forth a true and correct list of all Employees as of the Agreement Date, indicating each such Employee’s: (i) name or identification number; (ii) title or position; (iii) full time, part time or temporary status; (iv) hire date; (v) service date used for crediting length of service for purposes of the Company Employee Plans; (vi) work location; (vii) classification as exempt or non-exempt; (viii) hourly rate of pay or base annual salary; (ix) commission, incentive or discretionary bonus amounts for the prior fiscal year and the current year’s target opportunities; and (x) status if on leave and when eligible to return to work under the Company’s policies, specifying the type of leave (such as, family and medical leave, medical leave, military leave or short-term disability or pregnancy leave, approved or unapproved) and the anticipated return date from such leave. ‎‎Section 3.16(f)(ii) of the Disclosure Schedule sets forth a true and correct list of all individual consultants and individual independent contractors who provide services to the Company or any Company Subsidiary as of the Agreement Date, including each individual’s (A) name and job title, (B) work location, (C) current compensation and (D) start date.

Section 3.17 Governmental Authorizations. Each consent, license, permit, grant or other authorization which is required for the operation of the Company’s or any Company Subsidiaries’ businesses as currently conducted (collectively, “Company Authorizations”) has been issued or granted to the Company or its applicable Company Subsidiaries. Except as would not be, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole, the Company Authorizations are in full force and effect and constitute all Company Authorizations required to permit the Company and the Company Subsidiaries to operate or conduct their business as currently conducted or hold any interest in its properties or assets.

The Company and the Company Subsidiaries in the past four (4) years have been and are in compliance with the terms and conditions of the Company Authorizations in all material respects. To the Knowledge of the Company, excluding rulemakings of general applicability, there has been no order, decision, or proposed decision of any Governmental Entity adopted since the effective date of the first Company Authorization that, individually or in combination with other orders, would have or has had a material adverse effect on the Company. To the Knowledge of the Company, there is no pending investigation by a relevant Governmental Entity or other enforcement proceeding concerning the Company Authorizations or the Company’s operations pursuant to the Company Authorizations, except as set forth in ‎Section 3.22(a) of the Disclosure Schedule. The Company has timely paid all fees and assessments relating to the Company Authorizations due on or before the date of this Agreement, and is not subject to any bar under the rules or policies of any regulator that would prevent processing of applications required pursuant to ‎Section 3.3.

Section 3.18 Litigation. There is no Action of any nature pending or, to the Knowledge of the Company, threatened in writing or otherwise, against the Company or any Company Subsidiaries, in each case which would not be, and would not reasonably be expected to be, material to the Company and the Company Subsidiaries, taken as a whole. No Governmental Entity has, during the three (3) years prior to the Agreement Date, challenged the legal right of the Company or any Company Subsidiaries to conduct their operations as presently or previously conducted.

Section 3.19 Insurance. ‎Section 3.19 of the Disclosure Schedule lists, as of the Agreement Date, all insurance policies covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company and any Company Subsidiary, including the type of coverage, the carrier, the amount of coverage, the term and the annual premiums of such policies (such policies, collectively, “Insurance Policies”), each of which is in full force and effect. There is no material claim by the Company or any Company Subsidiaries pending under any of such Insurance Policies. All premiums due and payable under all Insurance Policies have been paid (or if installment payments are due, will be paid if incurred prior to the Closing Date), and the Company and the Company Subsidiaries are otherwise in material compliance with the terms of such Insurance Policies. None of the Company or the Company Subsidiaries has ever maintained, established, sponsored, participated in or contributed to any self-insurance plan.

Section 3.20 Compliance with Laws. The Company and the Company Subsidiaries are and in the past four (4) years have been in material compliance with applicable Law. The Company and the Company Subsidiaries have not, during the four (4) years prior to the Agreement Date, received any written, or to the Knowledge of the Company, other, notices of suspected, potential or actual material violation with respect to, any applicable Law.

Section 3.21 Anti-Corruption Laws. The Company and the Company Subsidiaries and its and their respective officers, directors and employees and, to the Knowledge of the Company, agents or other Persons acting on behalf of the Company or any of the Company Subsidiaries have in the past three (3) years been, and are currently, in compliance in all material respects with all applicable Anti-Corruption Laws. The Company and the Company Subsidiaries and its and their respective officers, directors and employees and, to the Knowledge of the Company, agents or other Persons acting on behalf of the Company or any of the Company Subsidiaries have not in the past three (3) years, directly or indirectly, used any funds for unlawful contributions, gifts, services of value, entertainment or other unlawful expenses; made, offered, authorized, or promised to make any unlawful payment or provided, offered, authorized, or promised to provide anything of value to any Person including any Governmental Official, or made, or promised to make any contribution, bribe, rebate, gift, payoff, influence payment, kickback or other similar unlawful payment or other advantage, or taken any action which would cause them to be in material violation of any Anti-Corruption Laws. The Company and the Company Subsidiaries and its and their respective officers, directors and employees and, to the Knowledge of the Company, agents or other Persons acting on behalf of the Company or any of the Company Subsidiaries have not in the past three (3) years, directly or indirectly, requested or agreed to receive or accepted any unlawful contributions, gifts, services of value, advantage, entertainment or other unlawful expenses, contribution, bribe, rebate, gift, payoff, influence payment, kickback or other similar unlawful payment, or similar incentive which would cause them to be in material violation of any Anti-Corruption Laws. None of the Company and the Company Subsidiaries and its and their respective officers, directors and employees and, to the Knowledge of the Company, agents or other Persons acting on behalf of the Company or any of the Company Subsidiaries have, in the past three (3) years, offered, made, promised to make, or authorized the making of any gift or payment of money or anything of value either directly or indirectly to any Person, or to Governmental Official, or to any Person acting in an official capacity for or on behalf of any such Governmental Entity, for purposes of (i) illegally influencing any act or decision of any Person, or such Governmental Official in his or her official capacity, or (ii) illegally inducing any Person or such Governmental Official to do or omit to do any act in violation of the lawful duty of such Person or Governmental Official, (iii) illegally securing an improper advantage or (iv) illegally inducing such Person or Governmental Official to use his or her influence improperly including with a Governmental Entity to affect or influence any act or decision, including of any such Governmental Entity, in order to obtain, retain or direct or assist in obtaining, retaining or directing business to any Person. No officer, director, employee or, to the Knowledge of the Company, holder of any financial interest in the Company is currently a Governmental Official. None of the Company and the Company Subsidiaries and its and their respective officers, directors and employees and, to the Knowledge of the Company, agents or other Persons acting on behalf of the Company or any of the Company Subsidiaries have, in the past three (3) years, employed or retained as a consultant or advisor in connection with the business of the Company or the Company Subsidiaries, any Governmental Official. There are no pending or, to the Company’s Knowledge, threatened claims, charges, investigations, violations, settlements, civil or criminal enforcement actions, lawsuits, or other court actions against the Company or its Affiliates with respect to any Anti-Corruption Laws.

To the Knowledge of the Company, there are no actions, conditions or circumstances pertaining to the Company’s or the Company Subsidiaries’ activities that would reasonably be expected to give rise to any future claims, charges, investigations, violations, settlements, civil or criminal actions, lawsuits, or other court actions under any Anti-Corruption Law. The Company and its Affiliates have established and maintain compliance programs and reasonable internal controls and procedures that are designed to ensure the Company and the Company Subsidiaries (including any of their officers, directors, employees, agents or other Person associated with or acting on their behalf) do not violate the Anti-Corruption Laws.

Section 3.22 Export Control and Economic Sanctions Laws. Except as set forth in in ‎Section 3.22(a) of the Disclosure Schedule, the Company and the Company Subsidiaries have in the past four (4) years conducted their international business transactions in accordance in all respects with all applicable provisions of export control and economic sanctions Laws, including the U.S. Export Control Reform Act and implementing Export Administration Regulations, the U.S. Export Administration Regulations, the U.S. International Traffic in Arms Regulations, the trade and economic sanctions regulations administered by the U.S. Department of Treasury’s Office of Foreign Assets Controls, export and sanctions Laws of the United Kingdom, and European Union, and similar laws and regulations or other jurisdictions in which the Company does business (collectively, “International Trade Laws”). The Company and the Company Subsidiaries do not engage and have not engaged in the past four (4) years in business activities, directly or indirectly, with persons in Belarus, Cuba, Iran, Russia, Syria, North Korea or the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Kherson, Zaporizhzhia, or the Crimea Region of Ukraine in violation of International Trade Laws. The Company and the Company Subsidiaries do not and have not in the past five (5) years engaged in business with persons covered by any list of sanctioned or restricted persons pursuant to International Trade Laws and issued by a U.S., U.K., or EU governmental agency or the United Nations, in each case in violation of International Trade Laws. There are no pending or, to the Knowledge of the Company, threatened Actions against the Company or any Company Subsidiary with respect to International Trade Laws, and, to the Knowledge of the Company, there are no actions, conditions, or circumstances pertaining to export and related transactions by the Company or the Company Subsidiaries that would reasonably be expected to give rise to any future inquiries, investigations, enforcement actions, voluntary disclosures, or other claims under International Trade Laws. ‎‎Section 3.22(b) of the Disclosure Schedule sets forth the true, complete, and accurate export classifications applicable to the Company’s satellites and other key products and technology that the Company has exported.

Section 3.23 Outbound Investments. The Company (a) either is not (i) a “person of a country of concern” (as defined at 31 C.F.R. Part 850, the “Outbound Investment Rules”); or (ii) engaged in any “covered activities” (as defined in the Outbound Investment Rules); and also (b) is not a person that directly or indirectly holds a board seat on, a voting or equity interest in, or any contractual power to direct or cause the direction of the management of policies of any “covered foreign person” (as defined in the Outbound Investment Rules).

Section 3.24 Interested Party Transactions. No officer, director or, to the Knowledge of the Company, any shareholder of the Company (nor, to the Knowledge of the Company, any immediate family member of any of such Persons) (each, an “Interested Party”), is a party to any Contract to which the Company or any Company Subsidiaries is also a party. All Contracts and transactions between an Interested Party, on the one hand, and the Company or any Company Subsidiaries, on the other hand, are on an arms’-length basis on terms no less favorable in any material respect to the Company and the Company Subsidiaries than would be available from a non-Interested Party.

Section 3.25 Third Party Expenses. Neither the Company nor any Company Subsidiaries has incurred, nor will any of them incur or be responsible for, any liability for brokerage or finders’ fees or agents’ commissions, fees related to investment banking or similar advisory services or any similar charges in connection with this Agreement or the Transactions that will not be reflected as Third Party Expenses.

Section 3.26 Bank Accounts; Powers of Attorney. ‎‎Section 3.26 of the Disclosure Schedule sets forth a true and correct list, as of the Agreement Date, showing: (a) all banks in which the Company or any Company Subsidiaries maintains a bank account or safe deposit box, together with, as to each such bank account, the account number, the names of all signatories thereof and the authorized powers of each such signatory and, with respect to each such safe deposit box, the number thereof and the names of all Persons having access thereto; and (b) the names of all Persons holding powers of attorney from the Company or any Company Subsidiaries, true and correct copies of which have been made available to Parent.

Section 3.27 U.S. Security Clearances. The Company possesses all facility security clearances, and their respective employees possess all personnel security clearances, necessary to conduct its business as presently conducted and required to perform each Active Government Contract. Within the past six (6) years, the Company has complied in all material respects with all applicable national security obligations, including those specified in the National Industrial Security Program Operating Manual, 32 C.F.R. Part 117, as amended (“NISPOM”). To the Knowledge of the Company, there is no proposed or threatened termination or revocation of any facility security clearance or personnel security clearance.

Section 3.28 Government Contracts.

(a) ‎Section 3.28(a) of the Disclosure Schedule contains a true and correct list as of the Agreement Date of (i) each Government Contract that provides for the payment or delivery of cash or other consideration in an amount or having a value in excess of $20,000, for which the period of performance has not expired or been terminated, final payment has not been received, or which remains open to final audit (each an “Active Government Contract”), and (ii) each Government Bid that remains outstanding (each an “Active Government Bid”). The Company has made available to Parent true and correct copies of each Active Government Contract and each Active Government Bid to the extent disclosure is not prohibited by applicable Law. To the Company’s Knowledge, each Active

Government Contract was legally awarded and is currently in full force and effect and binding on the parties thereto.

(b) As of the Agreement Date, (i) to the Company’s Knowledge, no Government Contract or Government Bid is currently the subject of, or is reasonably likely to become the subject of, any dispute, litigation, or bid or award protest proceedings; and (ii) no counterparty to any Active Government Contract has provided written or, to the Knowledge of the Company, oral, notice that it intends to make a material modification, reduce future expenditures, or refrain from exercising any options thereunder. In the four (4) years prior to the Agreement Date, the Company has not received a stop work order with respect to any Active Government Contract, and the Company has not received any show cause notices, cure notices, or notices of default termination with respect to any Government Contract.

(c) The Company is, and within the past six (6) years has been, in compliance with: (i) all Laws applicable to each Government Contract and Government Bid, including the Federal Acquisition Regulation and any agency supplement thereto (collectively, the “FAR”); and (ii) all terms and conditions of each Government Contract whether incorporated expressly, by reference, or by operation of Law.

(d) Within the past six (6) years, the Company has, to the extent applicable and required, included all terms of its Government Contracts in its agreements with third parties, and to the Company’s Knowledge, none of the Company’s subcontractors, joint venture partners, teaming partners, consultants, agents, or Representatives has violated any applicable Law or term or condition in connection with any Government Contract or Government Bid for which the Company would reasonably be expected to have material liability.

(e) Within the past six (6) years, all facts set forth in or acknowledged by any representations, certifications or disclosure statements made or submitted by or on behalf of the Company in connection with each Government Contract and Government Bid were true and accurate in all material respects as of the date of submission and the Company has complied in all material respects with all applicable representations, certifications and disclosure requirements under each Government Contract and Government Bid, including representations related to the Company’s status as a small business or any other preferential status, and representation related to the Company’s eligibility for Small Business Innovation Research Phase I and II Contracts.

(f) Neither the Company nor any of its Principals (as defined in FAR 52.209-5) has been, within the past six (6) years, or is now, debarred or suspended, or proposed for suspension or debarment, from doing business with a Governmental Entity. To the Company’s Knowledge, no reasonable basis exists for a claim for fraud (as such concept is defined under the state or federal Laws of the United States) against the Company in connection with any Government Contract or Government Bid, including claims under the civil or criminal False Claims Act, the Procurement Integrity Act, or other similar applicable Laws.

(g) Neither the Company nor any principal, officer, manager, or employee thereof has been convicted of, had a civil judgment rendered against them for, or, to the Company’s Knowledge, is currently criminally charged or indicted for: (i) the commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a Government Contract, (ii) violation of federal or state antitrust Law relating to submission of a Government Bid; or (iii) commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, Tax evasion, violating federal criminal tax laws, or receiving stolen property; or been notified of any delinquent federal Taxes in an amount that exceeds $3,500 for which the liability remains unsatisfied. In the six (6) years prior to the Agreement Date, there have been no document requests, subpoenas, search warrants, or civil investigative demands addressed to or requesting information from the Company with respect to any Government Contract or Government Bid.

(h) In the four (4) years prior to the Agreement Date, the Company has not received a negative determination of responsibility, as contemplated in Part 9 of the FAR.

(i) In the four (4) years prior to the Agreement Date, (i) there has been no request for equitable adjustment or claim related to any Government Contract that has been asserted by the Company or by any Governmental Entity or third party against the Company, (ii) there have been no disputes between the Company and a Governmental Entity or third party arising under or relating to any Government Contract; (iii) to the Company’s Knowledge, no facts or allegations exist that would reasonably be expected to give rise to such a request for equitable adjustment, claim or dispute in the future; and (iv) the Company has not had any material interest in any pending or potential claims against a Governmental Entity or third party arising under any Government Contract, except for routine demands for payment.

(j) The Company is not, and has not been in the six (6) years prior to the Agreement Date, the subject of (i) to the Company’s Knowledge, any administrative, civil, or criminal investigation, complaint or indictment or (ii) the assessment of any penalties, in each case arising out of or relating to any Government Contract.

(k) In the four (4) years prior to the Agreement Date, the Company has not received any written notice terminating any Government Contract for convenience or indicating an intention to terminate any Active Government Contract.

(l) In the six (6) years prior to the Agreement Date, the Company has not received written notice that (i) any costs incurred by the Company under an Active Government Contract have been questioned or disallowed as a result of a finding or determination by a Governmental Entity, prime contractor, or higher-tier subcontractor, or (ii) cost or pricing data submitted by the Company is alleged by a Governmental Entity, prime contractor, or higher-tier subcontractor to be inaccurate or incomplete, or (iii) a Governmental Entity, prime contractor, or higher-tier subcontractor intends to disallow, withhold or setoff an amount of monies due to the Company.

(m) Except as set forth in ‎‎Section 3.28(m) of the Disclosure Schedule, in the six (6) years prior to the Agreement Date, the Company has not received a contracting officer’s final decision related to any Government Contract.

(n) All of the written past performance evaluations provided or made available to the Company during the four (4) years immediately preceding the Agreement date have been made available to Parent to the extent disclosure is not prohibited by applicable Law. Within such four (4)-year period, no Governmental Entity has assigned the Company a rating below “Satisfactory” in connection with any contractor performance assessment report, past performance questionnaire, or similar written evaluation of past performance provided or made available to the Company.

(o) In the six (6) years prior to the Agreement Date, (i) no Governmental Entity or third party has provided written or, to the Knowledge of the Company, oral, notice of any actual or alleged violation or breach of any Law, representation, certification, disclosure obligation, contract term, condition, clause, provision or specification of or relating to any Government Contract or any violation of Law in connection with a Government Bid; and (ii) the Company has not received any, and to the Company’s Knowledge there are no threatened, show cause notices, letters of concern, assessments of liquidated damages, or cure, deficiency, or default notices relating to any Government Contract. Within the past six (6) years, to the Company’s Knowledge, no events have occurred which, individually or in the aggregate, with the passage of time or the giving of notice or both, have resulted in, or would reasonably be expected to result in, a condition of material default or breach of a Government Contract by the Company.

(p) In the six (6) years prior to the Agreement Date: (i) the Company has not received written or, to the Knowledge of the Company, oral notice from a Governmental Entity Government or a higher tiered contractor that it is currently undergoing, and to the Company’s Knowledge the Company has not undergone, any audit, review, inspection, investigation, other than audits, reviews, and inspections in the ordinary course; (ii) neither the Company nor any of its officers, managers, directors or, to the Company’s Knowledge, employees has been under, nor is there pending or threatened, any administrative, civil or criminal investigation or indictment or any audit involving alleged false statements, false claims or other improprieties relating to any Government Contract or Government Bid; (iii) the Company has not conducted or initiated any audit, review, or inquiry with respect to any suspected, alleged, or possible material violation of any contractual requirement, Law, or inaccuracy in any representation or certification, with respect to any Government Contract or Government Bid; (iv) the Company has not made or been required to make any mandatory disclosure to any Governmental Entity with respect to evidence or existence of any alleged, suspected, or possible breach, violation, irregularity, mischarging, misstatement, or other act or omission in connection with a Government Contract; (v) to the Company’s Knowledge, there have been no facts or circumstances that would require a mandatory disclosure pursuant to FAR 52.203-13 or FAR 9.406-2(b)(1); (vi) the Company has not been and is not now a party to any administrative or civil litigation involving alleged false statements, false claims or other improprieties relating to a Government Contract or Government Bid; and (vii) the Company has not made any payment, directly or indirectly, to any Person in material violation of applicable U.S.

Government procurement Laws, including Laws relating to bribes, gratuities, kickbacks, lobbying expenditures, political contributions, or contingent fee payments.

(q) At all times within the past six (6) years: (i) the Company’s cost accounting and, to the extent applicable and required, “contractor business systems” (as defined in DFARS 252.242-7005) have complied in all material respects with all applicable government procurement Laws and requirements of all Government Contracts; (ii) all invoices and claims for payment, reimbursement, or adjustment, including requests for progress payments and provisional payments, submitted by or on behalf of the Company were current, accurate, and complete in all material respects as of their submission dates and , to the Company’s Knowledge, there is no basis for any demand for a material discount, refund or repayment thereunder; (iii) all costs, fees, profit, and other charges and expenses of any nature that have been charged or invoiced under each Government Contract were properly chargeable or invoiced to such Government Contract, were charged or invoiced in amounts consistent with all contractual requirements and applicable Law (including all requirements relating to allowability, allocability, allocation, and reasonableness), and were charged or invoiced for supplies delivered and services performed in accordance in all material respects with all contractual requirements and applicable Law; (iv) the Company’s practices and procedures for estimating costs and pricing proposals and accumulating, allocating, recording, segregating, reporting, and invoicing costs have been in compliance in all material respects with all applicable Laws, including FAR Part 31 and, to the extent applicable, the Cost Accounting Standards codified at 48 C.F.R. Part 9904; (v) as applicable, the Company has billed all indirect costs consistent with the rates approved by the DCAA or other Governmental Entity with authority, or with provisional rate agreements in all respects; and (vi) all certified cost or pricing data submitted by or on behalf of the Company were current, accurate, and complete as of the certification date. There are no indirect rate variances for open cost accounting periods that, individually or in the aggregate, would reasonably be expected to result in a rate adjustment of $25,000 or more, in the aggregate, in connection with a Government Contract.

(r) The Company has not made any assignments of an Active Government Contract or of any interests in such Active Government Contracts. The Company has not entered into any financing arrangements with respect to the performance of any Active Government Contract.

(s) ‎Section 3.28(s) of the Disclosure Schedule lists all U.S. Government property that has been provided to the Company pursuant to a Government Contract and which, as of the Agreement Date, is in the Company’s possession. The Company has certified to the applicable Governmental Entity in a timely manner that all U.S. Government property provided to the Company is in good working order, reasonable wear and tear excepted, when and as required by the applicable Government Contract. There are no outstanding loss, damage or destruction reports that have been or were required to have been submitted to any Governmental Entity in respect of any U.S. Government property.

(t) ‎Section 3.28(t) of the Disclosure Schedule lists all Government Contracts awarded to the Company within the past four (4) years and all Active Government Bids for

which the Company represented or certified that it qualified as a small business concern, as defined in FAR 2.101 or 13 C.F.R. § 121.702, where such qualification was a mandatory eligibility criteria.

(u) There are no Government Contracts or Government Bids (or mitigation plans under such Government Contracts or Government Bids) that include one or more terms or provisions that restrict the Company’s ability to bid on or perform work on future contracts or programs or for specific periods of time based upon “organizational conflicts of interest,” as defined in FAR Subpart 9.5 or any other applicable Law or contractual term (“OCI”). To the Company’s Knowledge, no OCI is reasonably likely to arise as a consequence of the consummation of the Transactions. Within the past six (6) years, the Company has complied in all material respects with applicable OCI mitigation plans and has not received written notice of any failure to comply with such plans or the existence of any prohibited OCI in connection with any Government Contract or Government Bid. The Company has made available to Parent true and correct copies of all active OCI mitigation plans to the extent disclosure is not prohibited by applicable Law.

(v) The Company is not using Intellectual Property Rights developed under any Government Contract for purposes outside of the scope of such Government Contract without having obtained the necessary and appropriate prior permission of the relevant Governmental Entity or other authorized party to the extent such permission is required. The Company has timely disclosed and elected title to all subject inventions, timely listed all technical data and computer software to be furnished with less than unlimited rights in any required assertions table, and included the proper and required restrictive legends on all copies of any technical data, computer software, computer software documentation, and other Intellectual Property Rights delivered under any Government Contract to the extent required by such Government Contract. All such markings and rights were properly asserted and justified under the relevant Government Contract, and no Governmental Entity, prime contractor, or higher-tier subcontractor has challenged or, to the Company’s Knowledge, has any basis for challenging, the markings and rights asserted by the Company. Except as set forth in ‎Section 3.28(v) of the Disclosure Schedule, the Company has not provided technical data, computer software, computer software documentation, inventions or other Intellectual Property Rights to a Governmental Entity or third party in connection with a Government Contract or Government Bid in any manner that gives such Governmental Entity or third party any rights in or to such technical data, computer software, computer software documentation, inventions and other Intellectual Property Rights greater than or different from “restricted rights” or “limited rights,” as such terms are defined in the FAR or applicable agency FAR supplement, in each case, except it has not been, and as would not be reasonably expected to be, material to the Company and the Company Subsidiaries, taken as a whole.

(w) Except as may be prohibited by applicable Law, ‎Section 3.28(w) of the Disclosure Schedule lists all facility security clearances held by the Company and all personnel security clearances (by category only) held by employees of the Company. All requisite facility security clearances and, to the Company’s Knowledge, personnel security clearances are valid and in full force in effect. The Company is in compliance in all material respects with all applicable facility security clearance requirements, including those set forth in the NISPOM, all applicable directives of a Governmental Entity and any contractual agreements, including the provisions of all applicable DD254s and any requirements relating to the provision of notice of this Agreement or the consummation of the Transactions.

The clearances set forth in ‎‎‎Section 3.28(w) of the Disclosure Schedule are all of the facility security clearances and personnel security clearances required for the conduct of the current business of the Company, except those restricted from disclosure by applicable Law. The Company has not received written, or, to the Knowledge of the Company, oral, notice of and, to the Company’s Knowledge, there is no proposed or threatened, termination, revocation or invalidation of any facility or personnel security clearance. There has been no audit by a Governmental Entity relating to such facility or, to the Company’s Knowledge, personnel security clearances resulting in material and adverse findings against the Company or any director, officer, or employee thereof.

(x) Within the past six (6) years, the Company has complied in all material respects with the data security, cybersecurity, and physical security systems and procedures required by its Government Contracts, including the requirements in FAR 52.204-21, Basic Safeguarding of Covered Contractor Information Systems and DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting. During the past four (4) years, to the Company’s Knowledge, the Company has not had or experienced any breach of data security or cybersecurity, whether physical or electronic, and has not had a cyber incident, and any data security, cybersecurity or physical security breach or cyber incident related to any Government Contract has been reported to the necessary Governmental Entity or higher tier contractor, as required by the terms of the Government Contract or applicable Law.

(y) The Company is, and for the past six (6) years has been, in compliance in all material respects with all applicable Laws and Government Contract terms relating to sourcing and supply chain restrictions, including any restrictions on foreign ownership, control, influence, or affiliation, and domestic preference sourcing and disclosure requirements, including the Buy American Act (41 U.S.C. chapter 83, as implemented in FAR Part 25), Trade Agreements Act (19 U.S.C. § 2501 et seq., as implemented in FAR Part 25), the Berry Amendment and 10 U.S.C § 4863 with respect to specialty metals.

Section 3.29 Information Statement. The Information Statement when delivered to holders of shares of Company Common Stock pursuant to ‎Section 5.2, will not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

Section 3.30 No Other Representations or Warranties.

(a) Except for the representations and warranties made by the Company in ‎Article III (as qualified by the Disclosure Schedule) or in the certificate delivered pursuant to ‎Section 6.1(b)(iv)(C), none of the Company, any of the Company Subsidiaries or any other Person makes any other express or implied representation or warranty with respect to the Company or any of the Company Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, or any estimates, projections, forecasts and other forward-looking information or business and strategic plan information regarding the Company and the Company Subsidiaries, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their respective Representatives of any documentation, forecasts or other information (in any form or through any medium) with respect to any one or more of the foregoing.

In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by the Company in ‎Article III (as qualified by the Disclosure Schedule) or in the certificate delivered pursuant to Section 6.1(b)(iv)(C), none of the Company, the Company Subsidiaries or any other Person makes or has made any express or implied representation or warranty to Parent, Merger Sub or any of their respective Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to the Company, any of the Company Subsidiaries or their respective businesses or (b) any oral, written, video, electronic or other information presented to Parent, Merger Sub or any of their respective Representatives in the course of their due diligence investigation of the Company, the negotiation of this Agreement or the course of the Transactions.

(b) In making its decision to enter into this Agreement and to consummate the Transactions, the Company has not relied on and hereby disclaims, any representation or warranty, whether express or implied, made by any Person, other than the representations and warranties expressly made by Parent and Merger Sub in ‎Article IV or in the certificate delivered pursuant to ‎Section 6.1(c)(v)(C).

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Except as disclosed in any of the Parent SEC Documents filed prior to the Agreement Date; provided that (a) in no event shall any risk factor disclosure under the heading “Risk Factors” or disclosure set forth in any “forward looking statements” disclaimer or other general statements to the extent they are cautionary, predictive or forward looking in nature that are included in any part of any Parent SEC Document (other than historical facts) be deemed to be an exception to, or, as applicable, disclosure for purposes of, any representations and warranties of Parent or Merger Sub contained in this Agreement and (b) matters disclosed in such Parent SEC Documents shall not be deemed disclosed for purposes of ‎Section 4.1, ‎Section 4.2, ‎Section 4.4, ‎Section 4.5, ‎Section 4.6 or ‎Section 4.11, each of Parent and Merger Sub hereby represents and warrants, jointly and severally, to the Company as follows:

Section 4.1 Organization and Standing. Each of Parent and Merger Sub is a corporation duly organized and validly existing under the laws of the State of Delaware. Parent has the requisite corporate power, authority and qualifications to own, lease and operate its assets and properties and to carry on its business as currently conducted. Parent is and has been duly qualified, licensed or registered to do business and is in good standing (or the equivalent) as a foreign company in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualification, license or good standing necessary to Parent’s business as currently conducted, except where the failure to be so qualified, licensed, registered or in good standing has not had and would not reasonably be expected to be material to Parent or its Subsidiaries, taken as a whole.

Section 4.2 Parent Capital Structure.

(a) The authorized capital shares of Parent consist of 1,000,000,000 shares of Parent Common Stock. As of May 5, 2025, there are a total of 247,784,098 shares of Parent Common Stock issued and outstanding. All outstanding Parent Capital Stock is duly authorized, validly issued, fully paid and non-assessable and are not subject to any Liens or any preemptive rights created by statute, the certificate of incorporation and bylaws of Parent or any Contract to which Parent is a party or by which it is bound. As of the Agreement Date, there are no shares of Parent Capital Stock issued and outstanding other than the Parent Common Stock.

(b) As of the Agreement Date, there are 1,911,037 shares of Parent Capital Stock that are subject to outstanding Parent Warrants.

(c) As of the Agreement Date, except for the Parent Warrants, there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which Parent is a party or by which Parent is bound obligating Parent to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any Parent Capital Stock or obligating Parent to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement for Parent Capital Stock. There are no outstanding or authorized share appreciation, phantom share, profit participation, or other similar rights with respect to Parent (whether payable in shares, cash or otherwise).

Section 4.3 Interim Operations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Merger and the other transactions contemplated hereby, has engaged in no other business activities and has conducted its operations only as contemplated hereby.

Section 4.4 Authority and Enforceability. Each of Parent and Merger Sub has all requisite corporate power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the Transactions. The execution and delivery of this Agreement and any Related Agreements to which Parent or Merger Sub is a party and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of Parent and Merger Sub, as applicable, and no further corporate or other action is required on the part of Parent or Merger Sub to authorize this Agreement and any Related Agreements to which Parent or Merger Sub is a party or to consummate the Transactions. This Agreement and any Related Agreements to which Parent or Merger Sub is a party have been duly executed and delivered by Parent and Merger Sub and constitute the valid and binding obligations of each of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with their terms, subject to the Enforceability Limitations.

Section 4.5 Governmental Approvals and Consents. No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to Parent or Merger Sub in connection with the execution and delivery of this Agreement and any Related Agreements to which Parent or Merger Sub is a party or the consummation of the Transactions, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings, which, if not obtained or made, would not impair Parent’s or Merger Sub’s ability to consummate the Merger and perform their respective obligations hereunder or otherwise be material to Parent and its Subsidiaries, taken as a whole. As of the Agreement Date to the knowledge of Parent, each of Parent’s and Merger Sub’s direct or indirect owners that holds a 10 percent or greater equity or voting interest in Parent, as calculated pursuant to the FCC’s ownership attribution rules attribution rules in 47 C.F.R. §§ 1.5000 through 1.5004 (or their successor regulations) and applicable FCC orders, and including entities or natural persons holding such ownership or control through the aggregation of smaller subsidiary interests: (i) if a natural person, is solely a U.S. citizen or (ii) if an entity, was not formed in a country outside of the United States.

Section 4.6 Valid Issuance. The Parent Common Stock, when newly issued and delivered to the Securityholders in accordance with this Agreement, will be duly authorized and validly issued, fully paid and nonassessable, and free of restrictions on transfer other than restrictions on transfer under (a) this Agreement and the Related Agreements and (b) applicable securities Laws. No vote of the holders of any class or series of Parent Capital Stock is necessary to approve the issuance and delivery of Parent Common Stock to the Securityholders in accordance with this Agreement.

Section 4.7 Litigation. There is no Action of any nature pending or, to Parent’s knowledge, threatened in writing or otherwise, against Parent or any of its Subsidiaries, in each case, which would reasonably be expected to be material to Parent and its Subsidiaries, taken as a whole, or impair Parent’s or Merger Sub’s ability to consummate the Merger and perform their respective obligations hereunder. No Governmental Entity has, during the three (3) years prior to the Agreement Date, challenged the legal right of Parent or any of its Subsidiaries to conduct their operations as presently or previously conducted.

Section 4.8 SEC Reports and Financial Statements.

(a) A true and correct copy of each registration statement, report, schedule, form and all other documents filed by Parent with the SEC (the “Parent SEC Documents”) since September 30, 2021 is available on the website maintained by the SEC at http://www.sec.gov, other than portions in respect of which confidential treatment was granted by the SEC. As of their respective filing dates, the Parent SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Documents, and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(b) The financial statements of Parent included in the Parent SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto, except in the case of pro forma statements, or, in the case of unaudited financial statements, except as permitted under the rules and regulations of the SEC) and fairly presented in all material respects the consolidated financial position of Parent and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of Parent’s operations and cash flows for the periods indicated (subject to, in the case of unaudited statements, normal and recurring year-end audit adjustments, and any other adjustments described therein permitted by the rules and regulations of the SEC).

Section 4.9 No Conflict. The execution and delivery by Parent of this Agreement and any Related Agreements to which Parent is a party, and the consummation of the Merger or any other Transactions contemplated hereby and thereby, will not conflict with or result in any Conflict under (a) any provision of the organizational documents of Parent, (b) any material Contract to which Parent is a party or by which any respective properties or assets may be bound, or (c) provided that the Regulatory Approvals have been obtained, any Law or Order applicable to Parent or any of its properties or assets (whether tangible or intangible), except, in the case of clauses (b) and (c), as would not be, and would not reasonably be expected to be, material to Parent and its Subsidiaries, taken as a whole, or impair Parent’s or Merger Sub’s ability to consummate the Merger and perform their respective obligations hereunder.

Section 4.10 Compliance with Laws. Parent and its Subsidiaries are and have been in material compliance with, and has not violated, any applicable Law, other than as would not reasonably be expected to be material to Parent and its Subsidiaries, taken as a whole. Parent and its Subsidiaries have not received written any notices of suspected, potential or actual violation with respect to, any applicable Law, other than as would not be expected to be material to Parent and its Subsidiaries, taken as a whole.

Section 4.11 No Changes. Since December 31, 2024 through the Agreement Date, no Parent Material Adverse Effect has occurred or arisen.

Section 4.12 Intended Tax Treatment. Neither the Parent nor any of its Affiliates (i) has taken or agreed to take any action not contemplated by this Agreement or (ii) is aware of any fact or circumstance, in each case, that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.

Section 4.13 No Relevant Foreign Ownership. As of the Agreement Date:

(a) Parent is not controlled within the meaning of 31 C.F.R. § 800.208 by any foreign person;

(b) no foreign person has an investment in Parent that affords such person the rights specified in 31 C.F.R. § 800.211(b); (c) Parent is not subject to foreign control under 22 C.F.R.

§ 120.65(b); and

(d) Parent is not under Foreign Ownership, Control, or Influence, as defined in 32 C.F.R. § 117.11(a)(1) and the factors set out in 32 C.F.R. § 117.11(b).

Section 4.14 No Other Representations or Warranties.

(a) Except for the representations and warranties made by Parent and Merger Sub in ‎Article IV or in the certificate delivered pursuant to ‎Section 6.1(c)(v)(C), none of Parent and Merger Sub, any of their Subsidiaries or any other Person makes any other express or implied representation or warranty with respect to Parent, Merger Sub, or any of their respective Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, or any estimates, projections, forecasts and other forward-looking information or business and strategic plan information regarding Parent, Merger Sub and their Subsidiaries, notwithstanding the delivery or disclosure to the Company or any of its Representatives of any documentation, forecasts or other information (in any form or through any medium) with respect to any one or more of the foregoing. In particular, and without limiting the generality of the foregoing, except for the representations and warranties made by Parent and Merger Sub in ‎Article IV or in the certificate delivered pursuant to ‎Section 6.1(c)(v)(C), none of Parent and Merger Sub, any of their Subsidiaries or any other Person makes or has made any express or implied representation or warranty to the Company or any of its Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect information relating to Parent, Merger Sub, any of their Subsidiaries or their respective businesses or (b) any oral, written, video, electronic or other information presented to the Company or any of its Representatives in the course of their due diligence investigation of Parent and Merger Sub, the negotiation of this Agreement or the course of the Transactions.

(b) In making its decision to enter into this Agreement and to consummate the Transactions, neither Parent nor Merger Sub has relied on, and each of them hereby disclaims, any representation or warranty, whether express or implied, made by any Person, other than the representations and warranties expressly made by the Company in Article III or in the certificate delivered pursuant to ‎Section 6.1(b)(iv)(C).

ARTICLE V CERTAIN AGREEMENTS OF THE PARTIES

Section 5.1 Conduct of Company Business.

(a) During the period from the Agreement Date and continuing until the earlier of the termination of this Agreement or the Closing (the “Pre-Closing Period”), except to the extent that Parent shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned, or delayed), as expressly contemplated by this Agreement or as provided on ‎‎Section 5.1 of the Disclosure Schedule, or as required by applicable Law, the Company shall, and shall cause the Company Subsidiaries to, use reasonable best efforts to (i) conduct their businesses in the ordinary course, (ii) preserve intact the present business organizations of the Company and the Company Subsidiaries, (iii) keep available the services of the present Employees and (iv) preserve the ongoing relationships of the Company and the Company Subsidiaries with customers, suppliers, distributors, licensors and licensees; provided, however, that Parent acknowledges that the Company and the Company Subsidiaries have liquidity constraints and that it shall not be a breach of this ‎Section 5.1(a) to the extent that the Company or any of the Company Subsidiaries is unable to take any action contemplated by this ‎Section 5.1(a) solely because it does not have the financial resources to do so, or because it is required to prioritize certain actions over others, or to suspend or delay certain activities, in light of liquidity considerations; provided that the Company shall use reasonable best efforts to consult with Parent and consider Parent’s suggestions with respect to such matters in good faith.

(b) During the Pre-Closing Period, except to the extent that Parent shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned, or delayed), as expressly contemplated by this Agreement, as provided on ‎Section 5.1 of the Disclosure Schedule, or as required by applicable Law, the Company shall not, and shall not permit any Company Subsidiaries to:

(i) cause or permit any modifications, amendments or changes to the Governing Documents or the governing documents of any Company Subsidiaries;

(ii) merge or consolidate with any other person or propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiaries;

(iii) declare, set aside, or pay any dividends on or make any other distributions (whether in cash, shares or property) in respect of any Company Capital Stock or other capital shares of the Company, or split, combine or reclassify any Company Capital Stock or other capital shares of the Company or any Company Subsidiary or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for Company Capital Stock, or directly or indirectly repurchase, redeem or otherwise acquire any Company Capital Stock (or options, warrants or other rights convertible into, exercisable or exchangeable for Company Capital Stock or other equity interest of the Company), except in accordance with the Contracts evidencing Company Options or Company Warrants as of the Agreement Date or as otherwise listed on ‎‎Section 3.5(f) of the Disclosure Schedule;

(iv) issue, grant, deliver or sell or authorize or propose the issuance, grant, delivery or sale of, or purchase or propose the purchase of, any Company Capital Stock or other equity interests of the Company or equity-based awards (whether payable in cash, Company Securities or otherwise) or any securities convertible into, exercisable or exchangeable for, or subscriptions, rights, warrants or options to acquire, or other Contracts or commitments of any character obligating any of them to issue or purchase any such shares or other convertible securities, or amend, accelerate the vesting of, adjust or modify any Company Securities, other than the issuance of Company Capital Stock pursuant to the exercise or conversion of Company Options or Company Warrants;

(v) form, or enter into any commitment to form, a subsidiary, or acquire, or enter into any commitment to acquire, an interest in any corporation, association, joint venture, partnership or other business entity or division thereof or any portion of the assets of the foregoing;

(vi) make or agree to make any capital expenditure exceeding $100,000 individually or $200,000 in the aggregate (over a twelve (12) month period), other than as set forth in the Company’s capital expenditure budget attached hereto as Exhibit D;

(vii) acquire or agree to acquire or dispose or agree to dispose of any assets of any Person (including the Company or any of the Company Subsidiaries), other than (A) acquisitions of raw materials, equipment, supplies or similar assets in the ordinary course of business, (B) the disposal of non-material assets of the Company or the Company Subsidiaries in the ordinary course of business and (C) the sale of Company Products in the ordinary course of business;

(viii) (A) sell, divest, license, grant or assign to any Person or otherwise dispose of, or enter into any Contract to sell, divest, license, grant or assign to any Person or otherwise dispose of, any rights to any material Company IP (other than non-exclusive licenses entered into in the ordinary course of business consistent with past practice); (B) buy or license any Technology or Intellectual Property Right of any third party for a cost in excess of $100,000 (other than Open Source Software or generally commercially available software that is licensed in the ordinary course of the Company’s business consistent with past practices); (C) license any Company IP to third parties (other than non-exclusive licenses entered into in the ordinary course of business consistent with past practice); or (D) disclose any Company Source Code or trade secret to, or deposit in escrow any Company Source Code with, any third party other than its Employees who are bound by written confidentiality obligations to the Company with respect thereto (it being understood that nothing in this clause (viii) shall restrict the sale of Company Products in the ordinary course of business);

(ix) allow any material Registered Company IP to lapse or expire, or fail to renew or make any filing or payment or otherwise take any action necessary in connection with the prosecution or maintenance of any material Registered Company IP;

(x) (A) incur any Indebtedness of the type set forth in clause (i) of the definition thereof, including by the issuance or sale of any debt securities, (B) create or permit the creation of any Lien over any intangible or material asset (including any Company IP) of the Company or any Company Subsidiaries, or (C) amend the terms of any outstanding loan agreement or other Contract evidencing Indebtedness of the type set forth in clause (i) of the definition thereof; (xi) make any loan to any Person (except for advances to employees for reasonable business travel and expenses in the ordinary course of business consistent with past practice), purchase debt securities of any Person or guarantee any Indebtedness of any Person (other than intercompany arrangements among the Company and the Company Subsidiaries entered into in the ordinary course of business);

(xii) settle any Action or threat of any Action by or against the Company, the Company Subsidiaries or relating to any of their businesses, properties or assets (whether tangible or intangible);

(xiii) release or waive any material claims, rights or liabilities;

(xiv) adopt or change accounting methods or practices (including any change in depreciation or amortization policies or rates or any change to practices that would impact the methodology for recognizing revenue) other than as required by GAAP;

(xv) make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, enter into any closing agreement or private letter ruling in respect of Taxes, waive any right to a Tax refund or credit, settle any claim or assessment in respect of material Taxes, consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes, make or request any Tax ruling, enter into any Tax sharing or similar Contract (excluding for clarity, any customary provisions of Contracts entered into in the ordinary course of business that are not primarily related to Taxes), amend any material Tax Return, fail to pay any material Tax when due (taking into account any applicable extensions), treat any material Tax items in a manner inconsistent with past practices of the Company for Tax reporting purposes, or enter into any transactions giving rise to deferred gain or loss or engage in any extraordinary transaction outside the ordinary course of business that, in either case, results in a liability for a material amount of Taxes;

(xvi) except as required by any Company Employee Plan in effect as of the Agreement Date, (A) adopt, modify, amend, suspend or terminate any Company Employee Plan, including any indemnification Contract, (B) amend the terms of any outstanding Company Options, (C) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company Employee Plan, Company Options, or (D) grant or forgive any loans to any Employee;

(xvii) except as required by any Company Employee Plan in effect as of the Agreement Date, (A) increase the salary, wage rate, employment status, title, contractual benefit or other compensation (whether payable in cash, Company Securities or other property) payable or to become payable by the Company or any Company Subsidiaries to any Employee, (B) make any offer to, hire or engage any Person for service or employment or engagement, (C) demote, terminate or otherwise materially modify the terms and conditions of the service or employment or engagement of any Employee, or terminate the services of any Employee other than for cause, or (D) waive any right in favor of the Company or any Company Subsidiary in relation to, or connected with, the employment or engagement of any Employee;

(xviii) make any declaration, payment, commitment or obligation of any kind for the payment (whether in cash, Company Securities or otherwise) of any severance payment or other change in control payment, termination payment, bonus, incentive, special remuneration or other additional salary or compensation or benefits (whether contractual, non-contractual or otherwise) to any Employee, except for any payments made pursuant to written agreements existing on the Agreement Date and disclosed in ‎Section 5.1(b)(xviii) of the Disclosure Schedule;

(xix) send any communications (including electronic communications) to Employees regarding any terms of employment with or service to Parent or any of its Affiliates (including the Company and the Company Subsidiaries after the Closing), other than communications that are consistent with employment arrangements that have been provided to Employees by the Company in accordance with this Agreement;

(xx) affirmatively take any action to cancel, amend (other than in connection with the addition of customers, distributors, resellers, licensees, suppliers, or vendors to such insurance policies from time to time in the ordinary course of business consistent with past practices);

(xxi) (A) terminate, amend or modify any Material Contract, or (B) enter into any Contract which would have constituted a Material Contract pursuant to Sections ‎3.13(a)(ii) or ‎3.13(a)(iv) had such Contract been entered into prior to the Agreement Date, in each case, other than immaterial amendments or modifications that are entered into in the ordinary course of business;

(xxii) enter into any new line of business;

(xxiii) (A) enter into any Contract to purchase or sell any interest in real property, grant any security interest in any real property, (B) enter into any lease, sublease, license or other occupancy Contract with respect to any real property or (C) alter, amend, modify, exercise any extension or expansion right under, violate or terminate any of the terms of any Lease Agreements, in each case, other than immaterial amendments or modifications that are entered into in the ordinary course of business;

(xxiv) make any change in its practices or procedures with respect to the payment of accounts payable or the collection or accounts receivable, or otherwise change in any material respect its management of working capital; or

(xxv) take, commit, or agree in writing or otherwise to take or make, any of the actions described clause ‎(i) through (xxiv) of this ‎‎Section 5.1(b).

Section 5.2 Notice to the Stockholders. As soon as practicable (and in any event no later than ten (10) Business Days) following the Agreement Date, the Company shall deliver notice to all holders of shares of Company Common Stock pursuant to and in accordance with the applicable provisions of the DGCL and the Governing Documents, which notice shall include (i) a copy of the notice required pursuant to applicable provisions of the DGCL informing such holder that appraisal rights are available with respect to his, her or its shares of Company Capital Stock pursuant to applicable provisions of the DGCL, (ii) the Company Board Recommendation, (iii) an information statement regarding the Company, Parent, the terms of this Agreement, the Related Agreements and the Transactions and (iv) such other information as required under applicable Law (the “Information Statement”). The Company shall give Parent and its counsel a reasonable opportunity to review and comment on the Information Statement prior to any dissemination thereof to the Company stockholders, and shall consider in good faith any comments on each such document or response that are reasonably proposed by Parent.

Section 5.3 Non-Solicitation.

(a) The Company shall, and shall cause the Company Subsidiaries and its and their respective Representatives to, immediately cease and cause to be terminated any such existing negotiations and discussions with third parties (other than Parent and its Representatives) regarding (i) any acquisition, sale, or transfer of all or any material portion of the business, properties, assets or technologies of the Company or any Company Subsidiaries, or any amount of Company Securities, whether or not outstanding (in each case, other than in connection with the exercise of Company Securities outstanding as of the Agreement Date), in any case whether by merger, consolidation, amalgamation, purchase of assets or stock, tender or exchange offer, license or any other similar or dissimilar transfer (other than the sale of Company Products in the ordinary course of business consistent with past practice or the licensing of Intellectual Property Rights in connection therewith), (ii) any joint venture or other strategic investment in or involving the Company or any Company Subsidiaries (other than an ongoing commercial or strategic relationship in the ordinary course of business consistent with past practice), including any new debt, equity, or other financing or investment, or recapitalization of the Company or any Company Subsidiaries, or (iii) any similar transaction that is not in the ordinary course of business (each of the transactions described in the preceding clauses (i), (ii) and (iii), an “Alternative Transaction”).

(b) During the Pre-Closing Period, the Company shall not, and shall cause the Company Subsidiaries or its or their Representatives not to, directly or indirectly: (i) solicit, initiate, seek, encourage, promote or support, any inquiry, proposal or offer from, furnish any information regarding the Company or any Company Subsidiaries to, or participate in any discussions or negotiations with, any third party regarding, or in a manner intended or reasonably likely to facilitate, any Alternative Transaction; (ii) disclose any information to any person concerning the business, properties, assets or technologies of the Company or any Company Subsidiaries, or afford to any Person access to its properties, assets, technologies, books or records, in connection with an Alternative Transaction; (iii) assist or cooperate with any person to make any inquiry, offer, proposal or indication of interest regarding any Alternative Transaction; or (iv) enter into any Contract with any person providing for an Alternative Transaction.

(c) In the event that the Company or any of its Affiliates or Representatives shall receive, prior to the Closing or the termination of this Agreement in accordance with ‎‎Section 7.1, any inquiry, offer, proposal or indication of interest regarding a potential Alternative Transaction, or any request for disclosure of information or access of the type referenced in ‎Section 5.3(b)(ii), the Company or such Company Subsidiary or Representative shall promptly (and in any event within forty-eight (48) hours) notify Parent thereof, which notice shall include the identity of the party making any such inquiry, offer, proposal, indication of interest or request, and the specific terms of such inquiry, offer, proposal, indication or request, as the case may be (including a copy of any written material and electronic communications received from such third party), and such other information related thereto as Parent may reasonably request.

(d) It is understood that any action or omission in contravention of the covenants and agreements in this ‎‎Section 5.3 concerning any Company Subsidiary or any of its or their Representatives, or the intent thereof, shall be deemed to be a breach of this Agreement by the Company.

Section 5.4 Securityholder Matters.

(a) Exchange Documents. The Company shall reasonably cooperate with Parent in connection with efforts to get all Securityholders receiving any portion of the Closing Consideration to deliver the Exchange Documents.

(b) Investor Questionnaire. Concurrently with the execution and delivery of this Agreement, the Company shall deliver to Parent a duly executed Investor Questionnaire from each Securityholder expected to receive any portion of the Closing Consideration pursuant to ‎Section 1.5(a).

Section 5.5 Access to Information. During the Pre-Closing Period, the Company shall afford Parent and its Representatives reasonable access, during normal business hours and upon reasonable request, to (i) all of the assets, properties, books and records and Contracts of the Company and the Company Subsidiaries, (ii) all other information concerning the business, assets, properties and personnel of the Company and the Company Subsidiaries as Parent may reasonably request and (iii) Employees of the Company and the Company Subsidiaries, in each case of clauses (i), (ii) and (iii), solely for the purpose of coordinating integration activities and transition planning; provided that such access does not unreasonably interfere with the Company’s operations; provided, further, that nothing herein shall require the Company to provide access to, or to disclose any information to, Parent or any of its representatives if such access or disclosure, in the good faith reasonable belief of the Company, on advice of counsel, (x) would waive any legal privilege or similar protection or (y) would be in violation of applicable Law (provided that in the case of clause (x) the Company shall use reasonable efforts to provide such access and to implement such procedures as are necessary to permit such access and information sharing in a manner consistent with applicable law and which does not result in the loss of the applicable legal privilege or similar protection).

During the Pre-Closing Period, upon reasonable request by Parent, the Company shall use reasonable best efforts to facilitate meetings with customers or suppliers of the Company and the Company Subsidiaries and in coordination with the Company; provided that the Company may require that a Representative of the Company be present during any such meetings.

Section 5.6 Employee Matters.

(a) Offer Documents. During the Pre-Closing Period, the Company and Parent shall cooperate in good faith to provide Parent with reasonable access to each of the current Employees during regular business hours and upon mutually agreed terms, and Parent shall be permitted, in its sole discretion, to deliver Offer Documents to any such Employee; provided, however, that Parent shall provide reasonable advance notice to the Company prior to delivering any such Offer Documents. The Company shall use its reasonable best efforts to encourage each Employee to whom Parent or any of its Affiliates delivers Offer Documents to execute and deliver to Parent the Offer Documents. Notwithstanding anything herein to the contrary, but subject to the terms of any applicable Contract to which any Employee is party, neither Parent nor any of its Affiliates (including, after the Closing, the Company and the Company Subsidiaries) shall be obligated to cause the continuation of any employment relationship with any Employee for any specific period of time.

(b) Parent agrees that each Continuing Employee will, for a period of one (1) year following the Closing, be provided with (i) a base salary or wages that are no less favorable than those provided to such employee as of immediately prior to the Effective Time, (ii) target incentive opportunities (excluding retention, change in control and equity-based compensation), if any, that are no less favorable than those provided to such employee immediately prior to the Effective Time and (iii) employee benefits (other than equity incentives) that are in the aggregate, at Parent’s election, no less favorable than the employee benefits provided to such employee immediately prior to the Closing or to employee benefits provided to similarly situated employees of Parent and its Subsidiaries.

(c) Parent shall cause (i) any pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Parent or its Affiliates to be waived with respect to Continuing Employees and their eligible dependents, (ii) give each Continuing Employee credit for the plan year in which the Closing occurs towards applicable deductibles and annual out-of-pocket limits for medical expenses incurred prior to the Effective Time for which payment has been made, and (iii) to the extent that it would not result in a duplication of benefits and to the extent that such service was recognized under a similar Company Employee Plan, give each Continuing Employee service credit for such Continuing Employee’s employment with the Company for purposes of vesting, benefit accrual and eligibility to participate (but not for benefit accrual purposes under any defined benefit pension plan or retirement eligibility) under each applicable Parent benefit plan, as if such service had been performed with Parent.

(d) No Employment Commitment or Plan Amendments. No provision of this Agreement is intended, or shall be interpreted, to provide nor create any third party beneficiary rights or any other rights of any kind or nature whatsoever in any shareholder, Employee or any other Person, including any rights of employment or engagement for any specified period and/or any employee or other benefits, in favor of any Person, other than the parties hereto and their respective successors and permitted assigns, and all provisions hereof will be personal solely among the parties to this Agreement.

(e) Termination of Employee Plans. Effective as of no later than the day immediately preceding the Closing Date, each of the Company and any Company Subsidiary shall terminate any and all Company Employee Plans (or participation in) intended to include a Code Section 401(k) arrangement (each, a “Company 401(k) Plan”), unless Parent provides written notice to the Company that such Company 401(k) Plans shall not be terminated. Unless Parent provides such written notice to the Company, no later than five (5) Business Days prior to the Closing Date, the Company shall provide Parent with evidence that such Company 401(k) Plan(s) have been terminated (effective as of the day immediately preceding the Closing Date) pursuant to resolutions of the Board of Directors of the Company or such ERISA Affiliate, as the case may be. The form and substance of such resolutions shall be subject to the reasonable review of Parent. If the Company 401(k) Plan is terminated, as provided herein, effective not later than the Closing Date, Parent shall have in effect one or more defined contribution plans that include a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code (and a related trust exempt from tax under Section 501(a) of the Code) (as applicable, the “Parent 401(k) Plan”). Each Continuing Employee participating in a Company 401(k) Plan immediately prior to the Closing Date shall become a participant in the corresponding Parent 401(k) Plan as of the Closing Date. Parent agrees to cause the Parent 401(k) Plan to allow each Continuing Employee to make a “direct rollover” to the Parent 401(k) Plan of the account balances of such Continuing Employee (including promissory notes evidencing any outstanding loans) under the Company 401(k) Plan in which such Continuing Employee participated prior to the Closing if such Parent 401(k) Plan permits such a direct rollover and if such direct rollover is elected in accordance with applicable Law by such Continuing Employee. The rollovers described herein shall comply with applicable Law, and each relevant party shall make all filings and take any actions required of such party under applicable Law in connection therewith.

Section 5.7 280G Stockholder Approval. Prior to the Closing, the Company shall use reasonable best efforts to obtain and deliver to Parent a parachute payment waiver, in a form approved by the Parent (the “Parachute Payment Waiver”), executed by each “disqualified individual” (within the meaning of Section 280G of the Code). Parent acknowledges that this ‎‎Section 5.7 shall not be construed to require the Company to compel any Person to waive any existing legally-binding rights under any contract or agreement that such Person has with the Company or any Company Subsidiary and in no event shall the Company be deemed in breach of this ‎‎Section 5.7 if, despite the Company’s reasonable best efforts to obtain a waiver from each such Person, any such Person refuses to waive any such rights.

Promptly following the delivery of the Parachute Payment Waivers to Parent (but in no event less than one (1) Business Day prior to the Closing), the Company shall submit to the Stockholders for approval, by such number of holders of Stockholders as is required by the terms of Section 280G(b)(5)(B) of the Code, any payments and/or benefits that may separately or in the aggregate, constitute “parachute payments” pursuant to Section 280G of the Code (“Section 280G Payments”) (which determination shall be made by the Company and shall be subject to review and comment by Parent with any such comments timely made by Parent to be taken into account in good faith by the Company), and prior to the Closing, the Company shall deliver to Parent notification and documentation (and which documentation shall be subject to Parent’s advanced review and comments, with any such comments timely made by Parent to be taken into account in good faith by the Company) that (i) a vote of the holders of Company Capital Stock was solicited in conformance with Section 280G of the Code and the regulations promulgated thereunder and the requisite approval was obtained with respect to any payments and/or benefits that were subject to the vote (the “280G Stockholder Approval”) or (ii) that the 280G Stockholder Approval was not obtained and as a consequence, that such payments and/or benefits shall not be made or provided to the extent they would cause any amounts to constitute Section 280G Payments, pursuant to the Parachute Payment Waivers that were executed by the affected individuals prior to the solicitation of the vote of the holders of Company Capital Stock pursuant to this ‎‎Section 5.7. The parties acknowledge that this ‎‎Section 5.7 shall not apply to any agreement, contract, arrangement or plan entered into by and between Parent or any of its Affiliates (as of the date hereof) and an employee of the Company or any Company Subsidiaries after the date hereof (collectively, “Parent Arrangements”), unless such Parent Arrangements have been disclosed to the Company at least ten (10) Business Days prior to the Closing. To the extent any Parent Arrangement is not disclosed to the Company at least ten (10) Business Days prior to the Closing, compliance with this ‎‎Section 5.7 shall be determined as if such Parent Arrangement had not been entered into.

Section 5.8 Third Party Contracts. During the Pre-Closing Period, Parent and the Company shall cooperate with each other and use reasonable best efforts to send all notices to and obtain all consents, waivers and approvals of any third-party to any Contract set forth in ‎Section 5.8 of the Disclosure Schedule. Such notices, consents, waivers and approvals shall be in form and substance reasonably acceptable to Parent. Neither Parent nor the Company shall be obligated to make any payment or commercial concession to any third party, or incur any Liability, as a condition to (or in connection with) effecting such consent.

Section 5.9 Spreadsheet.

(a) (x) At least three (3) Business Days prior to the Closing Date and (y) no later than three (3) Business Days following each of the Adjustment Determination Date, the Expiration Date and the date of resolution of any claim for which a portion of the Indemnity Escrow Fund was withheld and retained in accordance with Section 8.5, the Company, in the case of clause (x), or the Holder Representative, in the case of clause (y), shall deliver to Parent a spreadsheet (each, a “Spreadsheet”) setting forth the following information, accompanied by reasonable documentation in support of all calculations and information set forth therein, including:

(i) with respect to each Securityholder that is to receive any portion of Merger Consideration on the next applicable payment date: (A) the name, tax identification number, address and email address of such Securityholder; (B) whether such Securityholder is a current or former employee of the Company; (C)

the number, class and series of shares of Company Capital Stock held by such Securityholder and the respective certificate numbers; (D) the date of acquisition of such shares; (E) the amount of any Taxes to be withheld in accordance with ‎Section 2.5 from the consideration that such holder is entitled to receive pursuant to ‎Section 1.5, ‎Section 2.4(e) or Section 8.5, as applicable, if any; (F) the Pro Rata Portion of such Securityholder; and (G) the number of Parent Common Stock to be issued to such Securityholder on such payment date; and

(ii) with respect to a Spreadsheet delivered in connection with the Closing Date, wire or other payment instructions for all other cash amounts to be paid by Parent in accordance with this Agreement, including any Third Party Expenses and Closing Indebtedness that Parent is to pay, or cause to be paid, following the Closing on the Company’s behalf.

Section 5.10 Payoff Letters; Invoices.

(a) At least three (3) Business Days prior to the Closing Date, the Company shall deliver to Parent, from each holder of the Indebtedness set forth in ‎Section 5.10(a) of the Disclosure Schedule (the “Existing Debt Facilities”), customary payoff letters, together with all documentation relating to the release of all Liens with respect to the Existing Debt Facilities, in each case, in form and substance reasonably satisfactory to Parent, which such payoff letters will (i) set forth the amounts required to pay off in full all such Indebtedness owed to such holder (the “Payoff Amount”) and wire transfer information for such payment and (ii) state that all obligations in respect of the Existing Debt Facilities and all Liens securing such Indebtedness have been terminated and released or that they will be so terminated and released upon receipt of the Payoff Amount on the Closing Date by the holders of such Indebtedness (or the agents or trustees authorized to act on their behalf) (each, a “Payoff Letter”). At the Closing, Parent shall pay, or cause to be paid, the applicable Payoff Amounts to such holders as set forth in the applicable Payoff Letters.

(b) At least three (3) Business Days prior to the Closing Date, the Company shall use reasonable best efforts to deliver to Parent from each advisor, counsel, accountant, or other professional service provider owed Third Party Expenses, a final invoice or other final statement indicating that such amounts reflected thereon are all amounts owed to such Person in respect of Third Party Expenses, setting forth the amounts required to pay off in full the Third Party Expenses owing to such Person and wire transfer information for such payment, and attaching validly completed copies of any necessary Tax forms, including United States IRS Form W-9 or W-8, as applicable.

Section 5.11 Third Party Expenses. Except as otherwise set forth herein, each party shall be responsible for its own expenses and costs that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement and the Related Agreements to which such party is a party; provided, however, that all Third Party Expenses that are incurred by the Company or any Company Subsidiaries prior to or as of the Closing and that are not satisfied in full prior to the Closing shall be deducted from the consideration payable hereunder pursuant to the adjustments contemplated by the definition of Closing Consideration. The Company shall endeavor to use all available cash to pay down Third Party Expenses prior to the Closing (to the extent invoices therefore have been received prior to the Closing).

Section 5.12 Public Disclosure. The initial announcement with respect to the transactions contemplated by this Agreement shall be made by Parent and consented to by the Company (such consent not to be unreasonably withheld, conditioned or delayed). Other than such initial announcement, no party nor any Affiliate or Representative of such party shall issue or cause the publication of any press release or public announcement in respect of this Agreement or the other transactions contemplated by this Agreement without the prior written consent of each of the Company and Parent (which consent shall not be unreasonably withheld, conditioned or delayed), except as may be required by Law or stock exchange rules, in which case the party required to publish such press release or public announcement shall use reasonable efforts to provide the other parties a reasonable opportunity to comment on such press release or public announcement in advance of such publication and shall consider such comments in good faith; provided that (x) the foregoing shall not apply to any press release or public announcement so long as any statements contained therein concerning the transactions contemplated by this Agreement are consistent with previous releases or announcements made in compliance with the provisions of this ‎Section 5.12 and (y) notwithstanding the foregoing provisions of this ‎Section 5.12, Parent shall be entitled, without the written consent of the Company, to discuss the Agreement and the transactions contemplated by this Agreement on earnings or similar investor calls and answer questions from analysts and investors of Parent related to the transactions contemplated under this Agreement. Parent and the Company will consult with each other concerning the means by which the employees, customers, suppliers and partners of the Company and other Persons having dealings with the Company will be informed of the transactions contemplated by this Agreement. Notwithstanding anything herein to the contrary, following Closing and after the public announcement of the Transactions, the Holder Representative shall be permitted to announce that it has been engaged to serve as the Holder Representative in connection herewith as long as such announcement does not disclose any of the other terms hereof.

Section 5.13 Stock Exchange Listing. Parent shall, as promptly as reasonably practicable (a) following the Agreement Date with respect to the shares of Parent Common Stock to be issued as Merger Consideration and (b) following the final determination of the Final Closing Consideration, prepare and submit to The New York Stock Exchange, a listing application covering such shares of Parent Common Stock, and shall use its reasonable best efforts to obtain, prior to the Closing in the case of shares of Parent Common Stock referred to in clause (a) of this sentence, and as promptly as practicable following the final determination of the Final Closing Consideration in the case of shares of Parent Common Stock referred to in clause (b) of this sentence, approval for the listing of such shares of Parent Common Stock on The New York Stock Exchange, subject to official notice of issuance to The New York Stock Exchange, and the Company shall reasonably cooperate with The New York Stock Exchange with respect to the listing referred to in clause (a) of this sentence.

Section 5.14 Confidentiality.

Each of the parties hereto (other than the Holder Representative) hereby agrees that the information obtained in any investigation pursuant to ‎Section 5.5 or any information obtained pursuant to the notice requirements of ‎‎Section 5.15, or otherwise pursuant to the negotiation and execution of this Agreement or the effectuation of the transactions contemplated hereby, shall be governed by the terms of the Mutual Non-Disclosure Agreement, dated March 4, 2025 (the “Non-Disclosure Agreement”), by and between the Company and Parent. Without limiting the generality of the foregoing, the Company agrees that this Agreement and any Related Agreements and the terms and conditions here of and thereof and discussions and negotiations in connection herewith and therewith, including any proceedings pursuant to ‎‎Section 10.11, shall be kept confidential by the Company; provided, however, that the Company may disclose such information or terms (a) if required to do so by applicable Law; provided that the Company promptly notifies Parent (in advance, to the extent reasonably practicable) of disclosing such information and takes reasonable steps to minimize the extent of any such required disclosure; (b) following any public announcement of the Merger and the other Transactions by Parent, the Company may disclose the terms of this Agreement that are disclosed by Parent in such public announcement; (c) to its Securityholders, which such Securityholders shall be permitted to provide ordinary course communications regarding this Agreement and the Transactions to their existing or prospective general and limited partners, equity holders, members, managers and investors, in each case, who are subject to customary confidentiality restrictions; (d) to enforce its rights under this Agreement and (e) to the extent they become generally available to the public other than by virtue of a breach of this provision by the Company or its Affiliates or Representatives. The Holder Representative shall hold in confidence all documents and information furnished to it in connection with the transactions contemplated hereby. Notwithstanding anything herein to the contrary, following Closing, the Holder Representative shall be permitted to disclose information as required by Law or to advisors and Representatives of the Holder Representative and to the Securityholders, in each case who have a need to know such information, provided that such Persons are subject to confidentiality obligations with respect thereto.

Section 5.15 Notification of Certain Matters.

(a) During the Pre-Closing Period, the Company shall give prompt notice to Parent of (i) the occurrence or non-occurrence of any event, the occurrence or nonoccurrence of which is likely to cause any representation or warranty of the Company contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure of the Company to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by them hereunder, in each case of clauses (i) and (ii) in a manner that would reasonably be expected to result in any of the conditions to the Merger set forth in ‎Article VI not being satisfied as of the Effective Time; provided, however, that the delivery of any notice pursuant to this ‎‎Section 5.15(a) shall not (A) limit or otherwise affect any remedies available to the party receiving such notice or (B) constitute an acknowledgment or admission of a breach of this Agreement; provided, further, that the Company’s failure to give notice under this ‎Section 5.15(a) shall not itself be deemed to be a breach of covenant for purposes of Article VI or Article VIII. No disclosure by or on behalf of the Company pursuant to this ‎‎Section 5.15(a) or otherwise of any breach, inaccuracy, failure to be true, or failure to comply (or any waiver thereof) shall affect or be deemed to qualify, limit, waive, modify, amend or supplement any representation, warranty, or covenant contained herein or in the Disclosure Schedule, the conditions to the obligations of the parties to consummate the Closing in accordance with the terms and provisions of this Agreement, or the rights of Parent under this Agreement, except to the extent set forth in the Disclosure Schedule or expressly waived pursuant to the terms of this Agreement.

(b) During the Pre-Closing Period, Parent shall give prompt notice to the Company of (i) the occurrence or non-occurrence of any event, the occurrence or nonoccurrence of which is likely to cause any representation or warranty of Parent contained in this Agreement to be untrue or inaccurate in any material respect, and (ii) any failure of Parent to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder, in each case of clauses (i) and (ii) in a manner that would reasonably be expected to result in any of the conditions to the Merger set forth in ‎Article VI not being satisfied as of the Effective Time; provided, however, that the delivery of any notice pursuant to this ‎‎Section 5.15(b) shall not (A) limit or otherwise affect any remedies available to the party receiving such notice or (B) constitute an acknowledgment or admission of a breach of this Agreement; provided, further, that Parent’s failure to give notice under this ‎Section 5.15(b) shall not itself be deemed to be a breach of covenant for purposes of Article VI or Article VIII. No disclosure by or on behalf of Parent pursuant to this ‎‎Section 5.15(b) or otherwise of any breach, inaccuracy, failure to be true, or failure to comply (or any waiver thereof) shall affect or be deemed to qualify, limit, waive, modify, amend or supplement any representation, warranty, or covenant contained herein or in the Disclosure Schedule, the conditions to the obligations of the parties to consummate the Closing in accordance with the terms and provisions of this Agreement, or the rights of Parent under this Agreement, except to the extent set forth in the Disclosure Schedule or expressly waived pursuant to the terms of this Agreement.

Section 5.16 Reasonable Best Efforts to Close; Regulatory Matters.

(a) Each of the parties hereto agrees to use its reasonable best efforts, and to cooperate with each other party hereto, to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary as they relate to such party’s obligations in this Agreement, to consummate and make effective the Merger, including by using reasonable best efforts (i) to make all filings (if any) and give all notices (if any) required to be made and given by such party in connection with the Transactions and (ii) to obtain each consent, approval, or expiration or termination of any applicable waiting period (if any) required to be obtained (pursuant to any applicable Law, Contract or otherwise) by such party in connection with the Transactions. Each of the parties hereto, at the request of another party hereto, agrees to execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of the Merger. Notwithstanding anything to the contrary herein, neither party shall be required to pay any consent or other similar fee, “profit-sharing” or other similar payment or other consideration (including increased rent or other similar payments) to obtain any consent of any Person (including any Governmental Entity) under any Contract. Notwithstanding anything to the contrary herein, neither party shall be required to take any action or make any agreement required by any Governmental Entity under any Law unless such action or agreement is conditioned on the consummation of the Transactions.

(b) Each of the Company and Parent shall use reasonable best efforts to file (and to request early termination of any applicable waiting period), as soon as practicable, and no later than ten (10) Business Days (but, with respect to filings and submissions required under the HSR Act, twenty (20) Business Days), after the Agreement Date, all filings, submissions, notices, reports and other documents required to be filed by such party with any Governmental Entity, or that Parent may reasonably request, with respect to the Transactions and to submit promptly any additional information requested by any such Governmental Entity.

(c) To the extent permitted by applicable Law, each of the Company and Parent shall promptly inform the other of any material communication between the Company, any Company Subsidiary or Parent (as applicable) and any Governmental Entity regarding the Transactions either (x) before delivering any material communication to a Governmental Entity or (y) promptly after receiving any material communication from a Governmental Entity (and if in writing, furnish the other party with a copy of such communication, excluding, as applicable, any attachments, materials, or information deemed sensitive by the submitting party). If the Company, any Company Subsidiary or Parent or any Affiliate thereof shall receive any formal or informal request for supplemental information or documentary material from any Governmental Entity with respect to the Transactions, then the Company, the Company Subsidiary or Parent (as applicable) shall comply in a timely manner with any request, as soon as reasonably practicable. To the extent permitted by applicable Law and except as may be prohibited by any Governmental Entity, the parties hereto (other than the Holder Representative) shall (i) consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the Regulatory Approvals or any other applicable Law, and (ii) provide advance notice of and permit authorized representatives of the other party to be present at each meeting or conference with any Governmental Entity, to the extent reasonably practicable and permitted by the Governmental Entity; provided, however, that nothing herein will preclude Parent, the Company or any Company Subsidiary from participating in impromptu discussions with a Governmental Entity without participation by the other party where the discussions are initiated by the Governmental Entity or in connection with communications the Company initiates with its government customers and regulators in the ordinary course of Company’s business regarding routine matters, such as licenses or authorizations required under relevant regulations or contract performance and bids, that fall into categories agreed with Parent (such party shall promptly inform the other of any such material communication between the Governmental Entity and the Company, any Company Subsidiary or Parent). Each of Parent and Company may, as they deem necessary, designate any sensitive materials to be exchanged in connection with this ‎‎Section 5.16(c) as “outside counsel only.” Any such materials, as well as the information contained therein, shall be provided only to a receiving party’s outside counsel (and mutually acknowledged outside consultants) and not disclosed by such outside counsel (or consultants) to any Employees, officers, or directors of the receiving party without the advance written consent of the party supplying such materials or information.

After good faith consultation with the Company, Parent shall be entitled to make strategic and tactical decisions as to the manner in which to obtain from any Governmental Entity under any applicable Laws, any actions or non-actions, consents, approvals, authorizations, clearances or Orders required to be obtained by Parent, the Company or any Company Subsidiary or any of their respective subsidiaries in connection with the consummation of the transactions contemplated by this Agreement, including as to any litigation or potential litigation matters, pertaining to the Regulatory Approvals or any other applicable Laws. Neither Parent nor the Company will, nor will they permit any of their respective Representatives to, make any proposals relating to, or enter into, any material understanding, undertaking or agreement (including any timing or similar agreement) with, any Governmental Entity relating to the transactions contemplated by this Agreement without the other’s prior review, provided that the final determination as to the appropriate course of action or proposal shall be made by Parent; provided, further, that Parent shall not enter into any timing or similar agreement or agree to any extension of any waiting period with any Governmental Entity without the Company’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed); and provided further that communications by the Company with its government customers or regulators in the ordinary course of the Company’s business on routine matters, including seeking licenses and authorizations from a relevant Governmental Entity or modifications to such licenses and authorizations, shall not be considered material. Each of the Company, each Company Subsidiary (as applicable) and Parent shall use its reasonable best efforts to take such actions as may be required to cause the expiration of any applicable waiting period (or any extension or early termination thereof) under applicable Laws with respect to the Transactions and to obtain the Regulatory Approvals as promptly as possible after the execution of this Agreement.

(d) In furtherance, and without limitation, of the other provisions of this ‎Section 5.16, to the extent necessary to obtain any consent, clearance, approval, or expiration or termination of any applicable waiting period required to satisfy the conditions set forth in ‎Section 6.1(a)(ii), Parent shall and shall cause its Affiliates to (A) offer and agree to divest or hold separate, or enter into a licensing or similar arrangement with respect to, any assets (whether tangible or intangible) or any portion of any business of the Company or any of the Company Subsidiaries and (B) offer and agree to a prohibition or limitation in any respect on the ownership or operation by the Company, any of the Company Subsidiaries of any asset (whether tangible or intangible) or any portion of any business of the Company, or any of the Company Subsidiaries, in each case as may be required in order to enable the consummation of the Transactions to occur as soon as reasonably practicable (and in any event not later than the End Date); provided, however, that neither Parent nor any of its Affiliates shall be required to (and the Company and the Company Subsidiaries shall not, without the prior written consent of Parent) proffer or agree to any of the actions described in the foregoing clauses (A) or (B) if such actions would, individually or in the aggregate, reasonably be expected to be (i) material and adverse to the business of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially detrimental to the benefits Parent and its Affiliates expect as a result of the Transactions. For the avoidance of doubt, notwithstanding anything in Section 5.16 or any other provision of this Agreement to the contrary, in no event shall Parent and its Affiliates be obligated to litigate, defend, or contest any Action, whether judicial or administrative, challenging or seeking to restrain or prohibit the consummation of the Transactions.

Section 5.17 Preparation and Delivery of Required Financial Statements.

(a) Audited Financial Statements. As promptly as reasonably practicable following the Agreement Date, and in no event later than three (3) Business Days prior to the Closing, the Company shall prepare and deliver to Parent an audited consolidated balance sheet of the Company and the Company Subsidiaries as of December 31, 2024, and the related audited consolidated statements of stockholders’ equity, income, comprehensive income and cash flows of the Company and the Company Subsidiaries for the fiscal year ended December 31, 2024, together with all notes and schedules thereto, in each case, prepared consistent with past practices in accordance with GAAP, applied on a consistent basis throughout the periods indicated (the “Required Audited Financial Statements”).

(b) Unaudited Interim Financial Statements. As promptly as practicable, and in any event within thirty (30) days, following the end of each calendar quarter ending on or after the Agreement Date, but excluding any full calendar quarter ending not more than thirty (30) days prior to the Closing Date the Company shall prepare and deliver to Parent an unaudited consolidated balance sheet of the Company and each Company Subsidiary as of the end date of each such calendar quarter, and an unaudited statement of stockholders’ equity, income and cash flow for such calendar quarter, as well as an unaudited consolidated balance sheet of the Company and each Company Subsidiary and a statement of stockholders’ equity, income and cash flow for the corresponding periods (the “Unaudited Interim Financial Statements”, and together with the Required Audited Financial Statements, the “Required Financial Statements”), which Unaudited Interim Financial Statements shall be prepared consistent with past practices in accordance with GAAP, applied on a consistent basis throughout the periods indicated.

Section 5.18 Company Director and Officer Indemnification.

(a) During the period commencing as of the Closing and ending on the sixth (6th) anniversary of the Closing, to the fullest extent permitted by applicable law, Parent shall cause the Company to fulfill and honor in all respects the obligations of the Company pursuant to (i) each indemnification agreement in effect between the Company and any Company Indemnified Party as of the Agreement Date and set forth on ‎‎Section 5.18(a) of the Disclosure Schedule and (ii) all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions contained in the Governing Documents (as in effect on the Agreement Date).

(b) For a period of six (6) years following the Closing, Parent shall cause the Governing Documents of the Company to contain provisions with respect to exculpation and indemnification and advancement of expenses that are at least as favorable to the Company Indemnified Parties as those contained in the Governing Documents (as in effect on the Agreement Date), which provisions will not be amended, repealed or otherwise modified in any matter that would adversely affect the rights thereunder of Company Indemnified Parties.

(c) Prior to the Closing, the Company shall purchase for the benefit of the Company Indemnified Parties, a directors’ and officers’ liability insurance policy (any such insurance policy, the “D&O Policy”) providing coverage for six (6) years following the Closing with terms and coverage limits no less favorable than those in effect prior to the Closing. Fifty percent (50%) of the premium for such D&O Policy shall be included in Third Party Expenses. In no event shall Parent take any action that would cause such D&O Policy to cease to be effective and shall take all commercially reasonable actions (other than paying additional premiums) to maintain in effect such D&O Policy for the benefit of such Company Indemnified Parties.

(d) For the avoidance of doubt, and notwithstanding anything herein to the contrary, Parent shall be under no obligation to maintain the existence of the Company for any specified period following the Closing; provided that, if the Company or any of its successors or assigns shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger then, and in each such case, proper provisions shall be made so that the successors and assigns of the Company shall assume all of the obligations of the Company set forth in this ‎‎Section 5.18.

(e) This ‎‎Section 5.18 shall survive the Closing, is intended to benefit and may be enforced by the Company Indemnified Parties and their respective heirs, successors and assigns and shall be binding on Parent and its Subsidiaries and their respective successors and assigns.

Section 5.19 Tax Matters.

(a) Tax Returns. Following the Closing Date, Parent shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by the Company or any Company Subsidiaries after the Closing Date with respect to taxable periods ending before or including the Closing Date (each a “Pre-Closing Tax Return”). Each Pre-Closing Tax Return shall be prepared in accordance with past practices (unless otherwise required by applicable Law). Parent shall deliver to the Holder Representative for its review a draft of each such Pre-Closing Tax Return at least twenty (20) Business Days prior to the due date thereof (or, in the case of any non-income Tax Return, as soon as reasonably practicable thereafter) (taking into account any extensions), and shall consider in good faith any reasonable comments of the Holder Representative relating thereto.

(b) Tax Contests. Parent shall, within thirty (30) days of Parent or any of its Affiliates becoming aware thereof, give written notice to the Holder Representative of the assertion of any claim, or the commencement of any proceeding by a Governmental Entity, with respect to any Taxes of the Company or the Company Subsidiary (a “Tax Claim”) that is reasonably expected (as reasonably determined by Parent in good faith) to result in a liability for any of the Indemnifying Parties under Article VIII (such Tax Claim, an “Indemnified Tax Claim”); provided, that failure to give written notice within such thirty (30) day period shall not reduce or eliminate any Indemnified Party’s right to indemnification hereunder except to the extent an Indemnifying Party is actually prejudiced by such failure. Such notice shall specify in reasonable detail the basis for such Indemnified Tax Claim and shall include a copy of the relevant portion of any correspondence received from the relevant Governmental Entity. The Holder Representative shall have the exclusive right to control, at its own cost and expense, the portion of any Indemnified Tax Claim relating to any Pre-Closing Taxes; provided, that the Holder Representative (i) shall keep Parent reasonably informed as to the progress of such portion of any Indemnified Tax Claim, (ii) shall permit Parent to participate, at Parent’s sole cost and expense, in such portion of any Indemnified Tax Claim and (iii) shall not settle such portion of any Indemnified Tax Claim without Parent’s consent (which consent is not to be unreasonably withheld, conditioned or delayed). Parent shall, at its own cost and expense, have the exclusive right to control any other Tax Claim (including, for the avoidance of doubt, the portion of any Indemnified Tax Claim which does not relate to Pre-Closing Taxes).

(c) Certain Tax Matters. Following the Closing, except as required by applicable Law, the Company and Parent shall not (and shall cause their respective Affiliates not to) take any of the following actions without the written consent of the Holder Representative (such consent not to be unreasonably withheld, conditioned or delayed): (i) file any amended Tax Return with respect to the Company or the Company Subsidiary for any Pre-Closing Tax Period or Straddle Period; (ii) make or modify any Tax election or modify any method of accounting with respect to the Company for any Pre-Closing Tax Period or Straddle Period; (iii) voluntarily approach any taxing authority regarding Tax matters pertaining to the Company for any Pre-Closing Tax Period or Straddle Period; (iv) extend or waive, or cause to be extended or waived, any statute of limitations or other period for the assessment of any Tax or deficiency with respect to the Company for any Pre-Closing Tax Period or Straddle Period; (v) take any action outside the ordinary course of business on the Closing Date after the Closing, in the case of clauses (i) through (iv), to the extent such action could reasonably be expected to give rise to any Taxes for which the Securityholders are liable pursuant to this Agreement.

(d) Tax Refunds. The Securityholders shall be entitled to any Tax refunds that are received by the Company or any Company Subsidiary that are in respect of Pre-Closing Taxes. The Company shall or shall procure any Company Subsidiary to pay over to the Securityholders any such refund (less any out-of-pocket expenses (including Taxes) incurred by the Company or any Company Subsidiary in connection with the obtaining or receipt of such refund) within ten (10) Business Days after receipt of such refund. As a condition to any such payment, the Holder Representative shall deliver to the Company a Spreadsheet, modified to include sufficient information for the Company to allocate and pay over any such Tax refund to the applicable Securityholders. To the extent permissible under applicable Law, in the event that Parent determines in its reasonable discretion that a credit against future Taxes is available as a result of Pre-Closing Taxes, Parent shall (or shall cause the Company to) request a refund of Pre-Closing Taxes (rather than a credit against future Taxes) to the extent the Company or its Subsidiary would be obligated to make a payment to the Securityholders pursuant to this ‎‎Section 5.19(d) with respect to such refund. Notwithstanding the foregoing, no Securityholder shall be entitled to receive any Tax refund paid after the Closing to the extent that such amount was already included in the calculation of the Closing Consideration.

(e) Cooperation. Following the Closing, Holder Representative agrees to furnish or cause to be furnished to Parent, upon request, as promptly as practicable, such information in its possession and reasonable assistance relating to Taxes, including access to books and records, as is reasonably necessary for the filing of all Tax Returns by Parent, the making of any election relating to Taxes, the preparation for any audit by any Tax authority and the prosecution or defense of any claim, suit or proceeding relating to any Tax.

(f) Intended Tax Treatment. Each of Parent and the Company will (and will cause their respective Affiliates to) (i) use reasonable best efforts to cause the Merger to constitute as a transaction qualifying for the Intended Tax Treatment and (ii) not take any action not required by this Agreement or fail to take any action required by this Agreement that could reasonably be expected to prevent or impede the Merger from qualifying as a transaction qualifying for the Intended Tax Treatment.

(g) Plan of Reorganization. This Agreement is intended to constitute, and the parties hereto adopt this Agreement as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) and for purposes of Sections 354 and 361 of the Code.

(h) Opinion. Each of Parent and the Company shall reasonably cooperate with the other and with their respective tax advisors, and shall use its reasonable best efforts in connection with the issuance of any opinions by their respective tax advisors regarding the Intended Tax Treatment. In connection therewith, each of Parent and the Company shall deliver to the relevant tax advisor: (A) a duly authorized and executed officer’s certificate, dated as of such date as may be reasonably requested by such tax advisor, containing such representations such party is able to make as shall be reasonably necessary or appropriate to enable such tax advisor to render any such opinion or other written advice, and (B) such other information as reasonably requested by such tax advisor for purposes of rendering any such opinion or other written advice.

(i) No Condition or Contingency. Notwithstanding anything to the contrary, each party acknowledges and agrees that its obligations to effect the transactions contemplated by this Agreement are not subject to any condition with respect to the Merger qualifying for the Intended Tax Treatment.

(j) Straddle Periods. In the case of any Tax with respect to the Company or any Company Subsidiaries that is assessed with respect to a Straddle Period, (i) the amount of such Taxes based on or measured by income, sales, use, receipts or similar items (other than property and ad valorem Taxes) for the portion of the Straddle Period ending on the Closing Date shall be determined based on an interim closing of the books as of the close of business on the Closing Date, (ii) with respect to any such Taxes of a United States shareholder (within the meaning of Section 951(b) of the Code) of a controlled foreign corporation (within the meaning of Section 957 of the Code) attributable to amounts included in the income of such United States shareholder under Sections 951 or 951A of the Code, the determination of liability for any such Taxes shall be made by assuming that the taxable year or period of the controlled foreign corporation consisted of two (2) taxable years or periods, one which ended at the close of the Closing Date and the other of which began at the beginning of the day following the Closing Date and relevant items of income, gain, deduction, loss or credit of the controlled foreign corporation shall be allocated between such two (2) taxable years or periods on a closing of the books basis by assuming that the books of the controlled foreign corporation were closed at the close of the Closing Date; provided, however, that Subpart F income (within the meaning of Section 952 of the Code) of the controlled foreign corporation shall be determined without regard to Section 952(c) of the Code, and (iii) the amount of any other Taxes and any exemptions, allowances or deductions determined for the entire Straddle Period, that in each case relates to the portion of the Straddle Period ending on and including the Closing Date shall equal the amount of such Tax, exemption, allowance, or deduction for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the total number of days in such Straddle Period. Notwithstanding anything to the contrary in the foregoing, the parties hereto agree that for all purposes of this Agreement, all Transaction Tax Deductions will be claimed in and/or allocated to the Pre-Closing Tax Period.

(k) Transfer Taxes. All Transfer Taxes incurred as a result of the transactions contemplated by this Agreement shall be borne 50% by the Securityholders (based on their respective Pro Rata Portion), on the one hand, and 50% by Parent, on the other hand. The party that is legally obligated to do so shall, at its own expense, properly prepare and timely file all Tax Returns with respect to such Taxes, and if required by Applicable Law, the other parties (other than the Holder Representative) shall, and shall cause their respective Affiliates to, join in the execution of any such Tax Returns and other documentation and cooperate in the preparation thereof; provided, that at least three (3) Business Days prior to the due date of any such Tax Return, the non-filing party shall pay to the filing party an amount equal to 50% of such Taxes.

Section 5.20 Resignations. To the extent requested by Parent at least ten (10) Business Days prior to Closing, the Company shall use reasonable best efforts to cause to be delivered to Parent duly executed resignation letters from each director and officer of the Company and the Company Subsidiaries, which shall include customary waiver, release and discharge provisions, in form and substance reasonably acceptable to Parent (the “Resignation Letters”); provided, that, the resigning officers shall only be required to resign in their capacity as a corporate officer of the Company (and not as an employee of the Company) pursuant to such Resignation Letters.

Section 5.21 Conduct of Business by Parent and Merger Sub. During the Pre-Closing Period, except to the extent that the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned, or delayed), as expressly contemplated by this Agreement, or as required by applicable Law, Parent and Merger Sub shall not:

(a) cause or permit any modifications, amendments or changes to the organizational documents of Parent or Merger Sub in a manner that would reasonably be expected to (A) adversely affect recipients of Merger Consideration relative to any other stockholders of Parent or (B) prevent, materially impede or delay Parent from consummating the Transactions in accordance with the terms hereof;

(b) adopt a plan of complete or partial liquidation, dissolution or restructuring, of Parent or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Merger Sub;

(c) declare, set aside, or pay any dividends on or make any other distributions (whether in cash, shares or property) in respect of any its capital shares; or

(d) take, commit, or agree in writing or otherwise to take or make, any of the actions described clause ‎(a) through ‎(c) of this ‎Section 5.21.

Section 5.22 No Control of the Other Party’s Business. The parties acknowledge and agree that the restrictions set forth in this Agreement are not intended to give Parent or Merger Sub, on the one hand, or the Company, on the other hand, directly or indirectly, the right to control or direct the business or operations of the other at any time prior to the Effective Time. Prior to the Effective Time, each of Parent, Merger Sub and the Company shall exercise, consistent with the terms, conditions and restrictions of this Agreement, complete control and supervision over their own business and operations.

Section 5.23 WAB Agreements. As promptly as practicable (and in no event later than 10 Business Days) following the date hereof, the Company shall enter into (i) a Waiver and First Amendment to Loan and Security Agreement with Western Alliance Bank (the “WAB Amendment”), (ii) an Intellectual Property Security Agreement with Western Alliance Bank (the “WAB IPSA”), (iii) an Amended and Restated Warrant to Purchase Stock with Western Alliance Bank (the “WAB Warrant”) and (iv) one or more Purchase Agreements with Western Alliance Bank and certain Securityholders of the Company (each, a “WAB Purchase Agreement” and, together with the WAB Amendment, the WAB IPSA, the WAB Warrant and any other agreement entered into by the Company with Western Alliance Bank, the “WAB Agreements”), in each case in a form reasonably acceptable to Parent. Notwithstanding anything to the contrary herein, the Company shall take all actions that are necessary to cause the WAB Warrant to be acquired by the Company or otherwise terminated, cancelled and extinguished at the Closing, with the holder of such WAB Warrant receiving consideration in accordance with the terms thereof (the amount of such consideration, the “WAB Termination Amount”).

ARTICLE VI CLOSING AND CLOSING CONDITIONS

Section 6.1 Closing Conditions.

(a) Mutual Conditions to Close.

(i) No Legal Restraints. No Law or Order (whether temporary, preliminary or permanent) shall have been enacted or issued after the Agreement Date and remain in effect which has the effect of making the Transactions illegal or otherwise prohibiting or preventing the consummation of the Transactions in accordance with the terms hereof.

(ii) Regulatory Approvals. All consents, clearances or approvals of, or waiting periods (including any extension thereof and any timing agreement entered into with a Governmental Entity to delay or not to consummate the Transactions) imposed by, Governmental Entities that are listed on Section ‎6.1(a)(ii) of the Disclosure Schedule shall have been obtained, expired or been terminated (as applicable) (collectively, the “Regulatory Approvals”).

(b) Additional Conditions to Parent’s Obligation to Close. The obligations of Parent to consummate the Closing are subject to the satisfaction or waiver by Parent of each of the following conditions on or prior to the Closing Date:

(i) Representations and Warranties. (x) Each of the representations and warranties of the Company set forth in this Agreement (other than as set forth in subsections (y) and (z) below) shall have been true and correct (without giving effect to any materiality or Company Material Adverse Effect or similar qualification contained therein) in all respects on the date they were made and shall be true and correct (without giving effect to any materiality or Company Material Adverse Effect or similar qualification contained therein) in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall be true and correct (without giving effect to any materiality or Company Material Adverse Effect or similar qualification contained therein) in all respects as of such date), in each case except to the extent that the failure of such representations and warranties to be true and correct do not have and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (y) each of the Fundamental Representations other than the representations and warranties set forth in ‎Section 3.5(a), the third sentence of Section 3.5(b), the first sentence of Section 3.5(c), the first sentence of Section 3.5(e) and ‎Section 3.5(f) (A) to the extent qualified by materiality or Company Material Adverse Effect or similar qualification, shall have been true and correct in all respects on the date they were made and shall be true and correct in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall be true and correct in all respects as of such date) and (B) to the extent not so qualified, shall have been true and correct in all material respects on the date they were made and shall be true and correct in all material respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall be true and correct in all material respects as of such date) and (z) the representations and warranties of the Company set forth in ‎Section 3.5(a), the third sentence of ‎Section 3.5(b), the first sentence of ‎Section 3.5(c), the first sentence of ‎Section 3.5(e) and ‎Section 3.5(f) shall have been true and correct in all respects (other than de minimis inaccuracies) on the date they were made and shall be true and correct (other than de minimis inaccuracies) on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of the Company made only as of a specified date, which shall be true and correct in all respects (other than de minimis inaccuracies) as of such date).

(ii) Covenants. The Company shall have performed and complied in all material respects with each of their covenants and obligations under this Agreement required to be performed and complied with by the Company prior to the Closing.

(iii) Company Material Adverse Effect. No Company Material Adverse Effect shall have occurred since the Agreement Date that is continuing.

(iv) Company Deliverables. Prior to or concurrently with the Closing, the Company shall have delivered to Parent the following (which remain or will be in full force and effect as of the Closing, as applicable):

(A) the Escrow Agreement, duly executed by the Holder Representative;

(B) a certificate executed by the Chief Executive Officer of the Company for and on behalf of the Company certifying as accurate and complete the information set forth in the Spreadsheet delivered in connection with the Closing Date (the “Financial Certificate”);

(C) a certificate executed by the Chief Executive Officer of the Company for and on behalf of the Company (but not in his personal capacity) certifying that, as of the Closing, the conditions set forth in Sections ‎6.1(b)(i), ‎6.1(b)(ii) and ‎6.1(b)(iii) have been satisfied;

(D) the Payoff Letters;

(E) the Registration Rights Agreement, duly executed by the Holder Representative; and

(F) a properly executed statement in a form reasonably acceptable to Parent for purposes of satisfying Parent’s obligations under Treasury Regulations Section 1.1445-2(c)(3), together with a notice to the IRS, in accordance with the requirements of Treasury Regulations Section 1.897-2(h)(2).

(c) Conditions to the Company’s Obligation to Close. The obligations of the Company to consummate the Closing are subject to the satisfaction or waiver by the Company of each of the following conditions on or prior to the Closing Date:

(i) Parent Representations and Warranties. (x) Each of the representations and warranties of Parent set forth in this Agreement other than the representations and warranties set forth in ‎Section 4.6 shall have been true and correct (without giving effect to any materiality or Parent Material Adverse Effect or similar qualification contained therein) in all respects on the date they were made and shall be true and correct (without giving effect to any materiality or Parent Material Adverse Effect or similar qualification contained therein) in all respects on and as of the Closing Date as though such representations and warranties were made on and as of such date (other than the representations and warranties of Parent made only as of a specified date, which shall be true and correct (without giving effect to any materiality or Parent Material Adverse Effect or similar qualification contained therein) in all respects as of such date), except where any failure of any such representations and warranties to be true and correct would not be a Parent Material Adverse Effect and (y) the representations and warranties of Parent set forth in ‎Section 4.6 shall have been true and correct in all respects on the date they were made and shall be true and correct on and as of the Closing Date as though such representations and warranties were made on and as of such date.

(ii) Covenants. Parent shall have performed and complied in all material respects with each of its covenants and obligations under this Agreement required to be performed and complied with by it prior to the Closing.

(iii) Parent Material Adverse Effect. No Parent Material Adverse Effect shall have occurred since the date of the Agreement that is continuing.

(iv) Approval for Listing. The shares of Parent Common Stock issuable under this Agreement as the Closing Consideration shall have been approved for listing on The New York Stock Exchange, subject to official notice of issuance.

(v) Parent Deliverables. Prior to or concurrently with the Closing, Parent shall have delivered to the Company the following (which remain or will be in full force and effect as of the Closing, as applicable):

(A) the Escrow Agreement, duly executed by Parent and the Escrow Agent;

(B) the Registration Rights Agreement, duly executed by Parent; and

(C) a certificate executed by a duly authorized officer of Parent for and on behalf of the Company (but not in their personal capacity) certifying that, as of the Closing, the conditions set forth in Sections ‎6.1(c)(i), ‎6.1(c)(ii) and ‎6.1(c)(iii) have been satisfied.

ARTICLE VII TERMINATION

Section 7.1 Termination. This Agreement may be terminated and the Transactions abandoned at any time prior to the Closing Date only:

(a) by mutual written agreement of the Company and Parent;

(b) by Parent or the Company, by written notice to the other, if the Closing shall not have occurred on or prior to February 2, 2026, (the “End Date”); provided, however, that the right to terminate this Agreement under this ‎‎Section 7.1(b) shall not be available to any party whose action or failure to act has been a principal cause of or resulted in the failure of the Closing to occur on or before such date;

(c) by Parent or the Company, by written notice to the other, if any Law or final and non-appealable Order shall be in effect which has the effect of making the Transactions illegal or otherwise prohibits the consummation of the Transactions;

(d) by Parent, by written notice to the Company, if Western Alliance Bank or Rocket Lab USA, Inc., during a continuing event of default, accelerates and demands immediate repayment of outstanding obligations, takes action against any collateral or exercises any similar remedies under the WAB Loan Agreement or the Rocket Lab Loan Agreement, respectively (each as defined in Section 3.5(g) of the Disclosure Schedule);

(e) by Parent, by written notice to the Company, if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy in any representation, warranty, covenant or agreement of the Company contained in this Agreement such that the conditions set forth in Sections ‎6.1(b)(i) or ‎‎6.1(b)(ii) would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not been cured within thirty (30) days after written notice thereof to the Company; provided, however, that no cure period shall be required (i) for a breach or inaccuracy which by its nature cannot be cured, or (ii) if any of the conditions to Closing in Sections ‎6.1(b)(i) and ‎‎6.1(b)(ii) for the benefit of Parent are incapable of being satisfied on or before the End Date; or

(f) by the Company, by written notice to Parent, if it is not in material breach of its obligations under this Agreement and there has been a breach of or inaccuracy in any representation, warranty, covenant or agreement of Parent contained in this Agreement such that the conditions set forth in Sections ‎6.1(c)(i) or ‎6.1(c)(ii) would not be satisfied as of the time of such breach or inaccuracy and such breach or inaccuracy has not been cured within thirty (30) days after written notice thereof to Parent; provided, however, that no cure period shall be required (i) for a breach or inaccuracy which by its nature cannot be cured or (ii) if any of the conditions to Closing in Sections ‎6.1(c)(i) and ‎6.1(c)(ii) for the benefit of the Company are incapable of being satisfied on or before the End Date.

Section 7.2 Effect of Termination.

In the event of termination of this Agreement as provided in ‎Section 7.1, this Agreement shall forthwith expire and there shall be no liability or obligation on the part of Parent, the Company or their respective Representatives, if applicable; provided, however, that each party hereto shall remain liable for any Willful Breach of this Agreement, any of the Related Agreements, or in any certificate or other instruments delivered pursuant to this Agreement prior to its termination (and the parties agree that the damages available to the Company hereunder shall include the benefit of the bargain lost by the Company and the Securityholders (taking into consideration relevant matters, including the total amount payable to the Securityholders under this Agreement, opportunity costs and the time value of money)); and provided further, however, that, the provisions of ‎Section 5.11 (Third Party Expenses), ‎‎Section 5.12 (Public Disclosure), ‎Section 5.14‎ (Confidentiality), ‎Article X (General Provisions) and this ‎‎Section 7.2 (in each case including the respective meanings ascribed to the capitalized terms used in such Sections as defined in this Agreement) shall remain in full force and effect and survive any termination of this Agreement pursuant to the terms of this ‎Article VII.

ARTICLE VIII INDEMNIFICATION

Section 8.1 Survival of Representations and Warranties.

(a) The representations and warranties of the Company contained in this Agreement or any certificate or other instrument delivered in connection herewith shall survive until 11:59 p.m. (Eastern Time) on the date that is eighteen (18) months following the Closing Date (the date of expiration of such period, the “Expiration Date”); provided, that the representations and warranties of the Company contained in ‎‎Section 3.1 (Organization and Good Standing), ‎‎Section 3.2 (Authority and Enforceability), Sections ‎3.5(a) through ‎3.5(f) (Company Capital Structure), and ‎‎Section 3.25 (Third Party Expenses) (collectively, the “Fundamental Representations”) shall survive until 11:59 p.m. (Eastern Time) on the date that is six (6) years following the Closing; provided, further, that in the event of a Bad Act with respect to a representation or warranty, such representation or warranty shall survive (with respect to any claim of Bad Act only) until the longer of the date that is six (6) years after the Closing and the date that is sixty (60) days after the expiration of the statute of limitations applicable to such claim of Bad Act; provided, further, if a claim is made pursuant to ‎Section 8.4 prior to the applicable expiration of the survival period for any representation and warranty, such representation and warranty shall survive as to such claim until such claim has been finally resolved.

(b) The representations and warranties of Parent contained in this Agreement, the Related Agreements or in any certificate or other instrument delivered pursuant to this Agreement shall terminate at the Closing.

(c) For the avoidance of doubt and notwithstanding anything to the contrary set forth herein, it is the intention of the parties hereto that the foregoing respective survival periods and termination dates supersede any applicable statutes of limitations that would otherwise apply to such representations, warranties, certifications, covenants and agreements.

Section 8.2 Indemnification.

(a) From and after the Closing and by virtue of the Merger, each of the Securityholders receiving a portion of the Closing Consideration pursuant to ‎‎Section 1.5(a) (each, an “Indemnifying Party” and, collectively, the “Indemnifying Parties”) shall severally, and not jointly, in proportion to each such Indemnifying Party’s Pro Rata Portion (except as to the Indemnity Escrow Amount) indemnify and hold harmless Parent, its Affiliates and its and their respective Representatives, including the Company following the Closing (the “Indemnified Parties”), from and against all Losses paid, incurred, suffered or sustained by the Indemnified Parties, or any of them (regardless of whether or not such Losses relate to any third party claims) resulting from or arising out of any of the following:

(i) any breach of, or inaccuracy in, as of the Agreement Date or as of the Closing (as though made as of such time), a representation or warranty of the Company (other than the Fundamental Representations or the representations or warranties in ‎Section 3.9) set forth in this Agreement or any breach of, or inaccuracy in, any representation or warranty in any certificate delivered by, or on behalf of, the Company pursuant to this Agreement with respect to any such representation or warranty;

(ii) any breach of, or inaccuracy in, as of the Agreement Date or as of the Closing (as though made as of such time), any of the Fundamental Representations or any breach of, or inaccuracy in, any representation or warranty in any certificate delivered by, or on behalf of, the Company pursuant to this Agreement with respect to any of the Fundamental Representations;

(iii) any failure by the Company to perform or comply with any of its covenants or agreements set forth in this Agreement prior to the Closing;

(iv) any appraisal claims made by dissenting Securityholders;

(v) any Equityholder and Indemnity Claim Matter;

(vi) any Bad Act by the Company; and

(vii) any Pre-Closing Taxes.

(b) For purposes of this ‎Article VIII, when determining the amount of Losses suffered by an Indemnified Party, as a result of any, or whether there occurred any, breach or inaccuracy of a representation or warranty that is qualified or limited in scope as to materiality or Company Material Adverse Effect or similar qualification, such representation or warranty shall be deemed to be made without such qualification or limitation.

(c) Any payments made to an Indemnified Party pursuant to any indemnification obligations under this ‎Article VIII or ‎‎Section 5.19 will be treated as adjustments to the Closing Consideration for Tax purposes, unless otherwise required by applicable Law.

(d) Nothing in this Agreement shall limit the right of any Indemnified Party to pursue remedies under the terms of any Related Agreement against the parties thereto.

(e) From and after and by virtue of the Closing, this ‎Article VIII shall be the sole and exclusive remedy of the Indemnified Parties against any Indemnifying Party for any monetary damages under, or for a breach of, this Agreement or resulting from, arising out of or in connection with the Transactions; provided, however, that (i) this ‎Section 8.2(e) shall not be deemed a waiver by any party of, or any limitation on, (x) any right to specific performance or injunctive relief or (y) any right or claim under the terms of any Related Agreement, and (ii) subject to ‎Section 8.3(c), nothing in this Agreement shall limit the liability of any Indemnifying Party (and this ‎Article VIII shall not be the sole and exclusive remedy in respect of such Indemnifying Parties) in connection with any Bad Act committed by the Company.

(f) In the event an Indemnified Party has suffered a Loss which would give rise to a right to be indemnified under more than one of the subclauses of ‎‎Section 8.2(a), such Indemnified Party shall be entitled to make a claim for such Losses under any and all such subclauses; provided that, for the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, in no event shall any Indemnified Party be entitled to any double recovery with respect to any particular Loss or claim. For the avoidance of doubt, nothing in this Agreement shall require any Indemnified Party to make any claim under this ‎Article VIII and, subject to the survival periods set forth in ‎‎Section 8.1, no such claim shall be waived or otherwise prejudiced as a result of any delay in making such claim (other than to the extent the Indemnifying Party is prejudiced by such delay). No Indemnified Party shall be entitled to indemnification under this ‎Article VIII arising from a breach of any representation, warranty or covenant set forth herein (and the amount of any Loss incurred in respect of such breach shall not be included in the calculation of any limitations on indemnification set forth herein) to the extent such Loss was already expressly reflected in the calculation of the Final Closing Consideration.

(g) The rights of the Indemnified Parties to indemnification, compensation, reimbursement, or payment of Losses or any other remedy under this Agreement shall not be affected by any investigation or examination conducted with respect to, or any knowledge possessed or acquired (or capable of being possessed or acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing, by or on behalf of any of the Indemnified Parties or any of their Affiliates or any of their respective Representatives with respect to the accuracy or inaccuracy or breach of, or compliance with, any representation, warranty, certification, covenant, or any other matter. The waiver of any condition in this Agreement based on the accuracy of any such representation or warranty, or on the performance of or compliance with any such covenant or agreement, will not affect the right to indemnification, compensation, reimbursement, or payment of Losses, or any other remedy based on any such representation, warranty, certification, covenant, or agreement. No Indemnified Party shall be required to show reliance on any representation, warranty, certification, or other agreement in order for such Indemnified Party to be entitled to indemnification, compensation, reimbursement, or payment pursuant to ‎Section 8.2(a).

(h) The amount of any Losses recoverable by an Indemnified Party under ‎Article VIII shall be reduced by any insurance proceeds actually received or realized by such Indemnified Party in respect of such Losses, net of all costs of recovery of such proceeds or payments, including deductibles and reasonably anticipated increases in insurance premiums, retroactive or otherwise.

(i) The Indemnified Parties shall mitigate, to the extent required under the Laws of the State of Delaware, Losses for which indemnification may be claimed by them under this Agreement.

(j) Each Indemnifying Party waives, acknowledges and agrees that such Indemnifying Party shall not have and shall not exercise or assert (or attempt to exercise or assert) any right of contribution, right of indemnity, right to reimbursement or advancement of expenses or other right or remedy against Parent or the Company in connection with any Losses claimed by any Indemnified Party under ‎Article VIII.

Section 8.3 Limitations of Liability.

(a) The Indemnified Parties, as a group, may not recover any Losses pursuant to a claim (or series of related claims) under ‎‎Section 8.2(a)(i) unless and until the Indemnified Parties, as a group, shall have paid, incurred, suffered or sustained at least $1,600,000 in Losses in the aggregate (the “Deductible”) in which case, subject to the other applicable limitations herein, the Indemnified Parties shall be entitled to recover all Losses paid, incurred, suffered or sustained by the Indemnified Parties as a group in excess of the Deductible (it being further understood that any individual claim (or series of related claims) under ‎‎Section 8.2(a)(i) in an amount less than $100,000 shall not be recoverable and shall not count towards the Deductible).

(b) The maximum Losses recoverable by the Indemnified Parties from the Indemnifying Parties under ‎‎Section 8.2(a)(i), ‎(ii), ‎(iii), ‎(iv), ‎(v) and ‎(vii) shall not exceed an amount equal to the Indemnity Escrow Amount in the aggregate and Losses recoverable by the Indemnified Parties under ‎Section 8.2(a)(i), ‎(ii), ‎(iii), ‎(iv), and ‎(vii) shall be satisfied solely by the Indemnity Escrow Fund. From and after the Expiration Date, the Indemnified Parties shall not be permitted to bring any new claims for indemnification under this ‎Article VIII for any Losses other than (i) claims for indemnification for Losses pursuant to ‎Section 8.2(a)(v), for which the Indemnified Parties shall be permitted to bring new claims until the date that is thirty-six (36) months following the Closing Date and (ii) claims for indemnification for Losses pursuant to ‎Section 8.2(a)(vi).

(c) The maximum liability of each Indemnifying Party, in the aggregate, shall be limited to a dollar amount equal to the sum of the aggregate value (based on the Per Share Price) of the Parent Common Stock actually issued and cash actually paid to such Indemnifying Party (or his, her, or its designee, assignee, transferee, or successor in interest), plus (ii) any and all amounts deducted or withheld in respect of Taxes with respect to such Indemnifying Party (or his, her, or its designee, assignee, transferee, or successor in interest). For the avoidance of doubt, Losses recovered by the Indemnified Parties out of the Indemnity Escrow Fund shall not be attributed as a liability to any specific Indemnifying Party for purposes of this ‎Section 8.3(c).

(d) Notwithstanding anything herein to the contrary, Losses recoverable pursuant to this ‎Article VIII shall not include punitive, special, consequential, indirect or multiplied damages (unless actually awarded to a third party in connection with a Third Party Claim) or damages based on a multiplier of a financial metric.

(e) The Indemnified Parties shall not be entitled to recover any Losses pursuant to ‎Section 8.2(a)(vii) relating to Taxes for a taxable period (or the portion thereof) beginning after the Closing Date arising from a breach or inaccuracy of a representation or warranty, other than a representation or warranty in ‎Section 3.9(b), ‎Section 3.9(f), Sections ‎3.9(g) or ‎3.9(h).

(f) The Indemnified Parties shall not be entitled to recover any Losses to the extent that such Losses were included in the calculation of the Final Closing Consideration pursuant to ‎Section 2.4(e).

Section 8.4 Indemnification Claim Procedures.

(a) Subject to the limitations set forth in Sections ‎8.1 and ‎8.3, if an Indemnified Party wishes to make an indemnification claim under this ‎Article VIII, such Indemnified Party shall deliver a written notice (an “Indemnification Claim Notice”) to the Holder Representative (i) stating that an Indemnified Party has paid, incurred, suffered or sustained, or reasonably anticipates that it may pay, incur, suffer or sustain Losses, and (ii) to the extent reasonably available, specifying in reasonable detail such Losses, the date each such Losses were paid, incurred, suffered or sustained, or the basis for such anticipated Losses and, if applicable, the nature of the misrepresentation, breach of warranty or covenant to which such item is related. The Indemnified Party may update an Indemnification Claim Notice from time to time to reflect any change in circumstances following the date thereof. A failure to give complete, accurate, or, subject to the survival periods set forth in ‎Section 8.1, timely notice of an Indemnification Claim Notice will not affect the rights or obligations of any Indemnified Party hereunder, except to the extent the rights of the Indemnifying Party are actually prejudiced by such failure or delay. If a claim under this ‎Article VIII may be brought under different or multiple sections, clauses or sub-clauses of ‎‎Section 8.2(a) (or with respect to different or multiple representations, warranties or covenants), then the applicable Indemnified Parties shall have the right to bring such claim under any or each such section, clause, subclauses, representation, warranty or covenant (each a “Subject Provision”) that it chooses and the Indemnified Parties will not be precluded from seeking indemnification under any Subject Provision by virtue of the Indemnified Parties not being entitled to seek indemnification under any other Subject Provision. Notwithstanding anything to the contrary in this ‎Section 8.4, the rights and obligations with respect to any Tax Claim shall be governed exclusively by ‎Section 5.19(b).

(b) If the Holder Representative on behalf of the Indemnifying Parties (or the Indemnifying Party in the event that indemnification is being sought hereunder directly from such Indemnifying Party) shall not object in writing within the thirty (30) day period after receipt of an Indemnification Claim Notice (an “Indemnification Claim Objection Notice”), such failure to so object shall be an irrevocable acknowledgment by the Indemnifying Parties (or the Holder Representative on behalf of the Indemnifying Parties (or the Indemnifying Party in the event that indemnification is being sought hereunder directly from such Indemnifying Party)) that the Indemnified Party is entitled to the full amount of the claim for Losses set forth in such Indemnification Claim Notice. In such event, subject to the limitations set forth in ‎‎Section 8.3, with respect to each Indemnifying Party, the Indemnified Party shall be entitled to prompt recovery of all Losses set forth in and arising out of such Indemnification Claim Notice in accordance with ‎‎Section 8.4(e).

(c) In the event that the Indemnifying Parties (or the Holder Representative, as the case may be) shall deliver an Indemnification Claim Objection Notice in accordance with ‎‎Section 8.4(b) (or in the event that indemnification is being sought hereunder directly from a Indemnifying Party (if permitted hereunder), if such Indemnifying Party shall object to any claim or claims made in any Indemnification Claim Notice to recover claims directly from such Indemnifying Party within thirty (30) days after delivery of such Indemnification Claim Notice), such objecting Indemnifying Party (or the Holder Representative, as the case may be) and the Indemnified Party shall attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims. If such objecting Indemnifying Party (or the Holder Representative, as the case may be) and the Indemnified Party should so agree, a memorandum setting forth such agreement shall be prepared and signed by both parties. In such event, subject to the limitations set forth in ‎Section 8.3, with respect to each Indemnifying Party, the Indemnified Party shall be entitled to prompt recovery of all Losses set forth in such memorandum in accordance with ‎‎Section 8.4(e).

(d) If no such agreement can be reached after good faith negotiation and prior to thirty (30) days after delivery of an Indemnification Claim Objection Notice, either the Indemnified Party or the objecting Indemnifying Party (or the Holder Representative, as the case may be) may bring an action in accordance with ‎‎Section 10.11, unless the amount of the Loss that is at issue is the subject of a pending litigation or dispute with a third party, in which event no action shall be commenced until such amount is ascertained or both parties agree to commence such action.

(e) Should any Indemnified Party become entitled to recovery of any Losses pursuant to this ‎Section 8.4, subject to the limitations set forth in ‎‎Section 8.3, such recovery shall be made as follows:

(i) First, by recovery from the then-remaining portion of the Indemnity Escrow Fund, in which case Parent and the Holder Representative shall as promptly as practicable deliver joint written instructions to the Escrow Agent to release to Parent shares of Parent Common Stock from the Indemnity Escrow Fund in accordance with this ‎‎Section 8.4(e)(i); and

(ii) Second, with respect to a Loss indemnifiable pursuant to ‎Section 8.2(a)(vi) only, should recovery pursuant to ‎‎Section 8.4(e)(i) be insufficient to satisfy the full amount of such Losses, by recovery directly from the Indemnifying Parties, which shall be paid in cash or by delivery of shares of Parent Common Stock (valued at the Per Share Price) at the sole discretion of the applicable Indemnifying Party.

In the event the applicable Indemnifying Party elects to pay such Losses in cash, such Indemnifying Party shall, within ten (10) days following the date such Losses are determined to be payable to the Indemnified Parties in accordance with this ‎‎Section 8.4, pay to such Indemnified Parties such Indemnifying Party’s Pro Rata Portion of such shortfall in cash (or the full amount of such shortfall applicable to such Indemnifying Party, in the case that indemnification is being sought directly from such Indemnifying Party).

(f) For all purposes under this ‎Article VIII, shares of Parent Common Stock (including the Indemnity Escrow Shares) shall be valued at the Per Share Price.

Section 8.5 Distribution of Escrow Fund. On or prior to the date that is five (5) Business Days after the Expiration Date, Parent and the Holder Representative shall deliver to the Escrow Agent a joint written instruction to release from the Indemnity Escrow Fund, and deliver to the Securityholders, that number of shares of Indemnity Escrow Shares having an aggregate value (based on the Per Share Price) equal to (a) the aggregate value of the Indemnity Escrow Shares then-remaining in the Indemnity Escrow Fund, less (b) the aggregate number of shares of Indemnity Escrow Shares that Parent reasonably and in good faith determines is necessary to serve as security for pending claims specified in Indemnification Claim Notices delivered prior to the end of the Expiration Date that have not been resolved prior to the Expiration Date. Upon the resolution of each pending claim for which a portion of the Indemnity Escrow Fund was withheld and retained, and after any distributions from the Indemnity Escrow Fund to the Indemnified Parties in accordance with this ‎Article VIII, Parent and the Holder Representative shall deliver to the Escrow Agent a joint written instruction to release from the Indemnity Escrow Fund, and deliver to the Securityholders, the applicable Indemnity Escrow Shares withheld and retained in respect of such claim. Upon any such release of Indemnity Escrow Shares, each Securityholder that has delivered its Exchange Documents shall receive, with respect to each share of Company Capital Stock that was held by such Securityholder and converted into the right to receive the Merger Consideration pursuant to ‎Section 1.5(a), the applicable Per Share Portion of such released Indemnity Escrow Shares as set forth on the Spreadsheet delivered in connection with the Expiration Date. Notwithstanding anything herein to the contrary, the aggregate number of Indemnity Escrow Shares to be released to a Securityholder from the Indemnity Escrow Fund at any particular time shall be rounded up or down to the nearest whole number of shares and, to the extent there are any Indemnity Escrow Shares remaining upon the final release of the Indemnity Escrow Fund as a result of such rounding, such remaining shares shall be transferred to Parent and the Securityholders shall have no right or interest in or to such shares.

Section 8.6 Third Party Claims.

(a) In the event that an Indemnified Party becomes aware of written third-party claim against such Indemnified Party that constitutes a matter for which either (a) such Indemnified Party is entitled to indemnification, compensation, or reimbursement under ‎‎Section 8.2(a), or (b) if determined adversely to an Indemnified Party, would provide a basis for a claim under any of the matters indemnifiable under ‎‎Section 8.2(a) (each, a “Third Party Claim”), the Indemnified Party shall have the right in its sole and absolute discretion to conduct (and, if necessary assume) the defense and prosecution of and to settle or resolve any such Third Party Claim, and the reasonable costs and expenses incurred by such Indemnified Party in connection with the investigation, defense, prosecution, and settlement of such Third Party Claim (including reasonable and documented attorneys’, consultants’, experts’ and other professionals’ fees and expenses and court or arbitration costs) shall be Losses for which the Indemnified Parties are entitled to indemnification, compensation and reimbursement in accordance with, to the extent provided in, and subject to the limitations of this ‎Article VIII, regardless of the outcome of such Third Party Claim. The Holder Representative shall have the right to receive copies of all pleadings, material written notices, and material written communications with respect to any Third Party Claim to the extent that receipt of such documents does not affect any privilege of or relating to any Indemnified Party, subject to the execution by the Holder Representative of Parent’s (and, if required, such third party’s) standard non-disclosure agreement, and shall be entitled, at the expense of the Holder Representative (on behalf of the Securityholders), to participate in, but not to determine or conduct, any defense or prosecution of the Third Party Claim or settlement negotiations with respect to the Third Party Claim.

(b) An Indemnified Party shall not be entitled to be indemnified or held harmless under ‎Section 8.2 with respect to a Third Party Claim if such Indemnified Party enters into a settlement or resolution of a Third Party Claim without the consent of the Holder Representative, which consent shall not be unreasonably withheld, conditioned or delayed; provided that, the Holder Representative may withhold its consent to any such settlement or resolution in its sole discretion if such settlement or resolution with respect to a Third Party Claim does not include, as an unconditional term thereof, the release of the liabilities in respect such Third Party Claim of which the Indemnified Party is seeking indemnification.

(c) In the event that the Holder Representative has consented to (or shall have been deemed to have consented to) any such settlement or resolution: neither the Holder Representative nor the Securityholders shall have any power or authority to object under any provision of this ‎Article VIII to the amount of any claim by or on behalf of any Indemnified Party against the Indemnity Escrow Fund or directly against such Securityholders for indemnity with respect to such settlement or resolution.

ARTICLE IX HOLDER REPRESENTATIVE

Section 9.1 Holder Representative.

(a) By virtue of the approval of the Merger and this Agreement by the Securityholders, and by receiving the benefits thereof, including any consideration payable hereunder, and without any further action of any of the Securityholders or the Company, with effect as of the Closing, Shareholder Representative Services LLC is hereby appointed as the true, lawful and exclusive representative, agent, proxy, and attorney-in-fact (with full power of substitution) of the Securityholders for all purposes in connection with this Agreement or any Related Agreement, including: (i) to give and receive notices and communications in respect of all Relevant Matters, including in respect of any claim for indemnification pursuant to this Agreement by any Indemnified Party hereunder against any Indemnifying Party or any dispute between any Indemnified Party and any such Indemnifying Party, in each case under or relating to this Agreement or the transactions contemplated hereby; (ii) to authorize or object to any claims hereunder, including those by any Indemnified Party; (iii) to agree to, negotiate, enter into settlements and compromises of, commence actions and demand arbitration and comply with orders of courts and awards of arbitrators with respect to any Relevant Matter, including any claim for indemnification pursuant to this Agreement by any Indemnified Party hereunder against any Indemnifying Party or any dispute between any Indemnified Party and any such Indemnifying Party, in each case under or relating to this Agreement or the transactions contemplated hereby; (iv) to deliver joint written instructions to the Escrow Agent or otherwise agree to releases from the Adjustment Escrow Fund or the Indemnity Escrow Fund; (v) to make any and all determinations with respect to, and acting for the Securityholders with respect to any and all matters pertaining to, any potential post-closing adjustments pursuant to ‎Section 2.4; (vi) to consent or agree to any amendment to this Agreement at any time; (vii) to grant any extension or waiver under or in connection with this Agreement; and (viii) to take all other actions that are either (A) necessary or appropriate in the judgment of the Holder Representative for the accomplishment of the foregoing or in connection with this Agreement, the Escrow Agreement, any other Related Agreement or any engagement agreement with the Holder Representative, or (B) specifically mandated, permitted, or contemplated by the terms of this Agreement, in each case of clauses (i) through (v), without having to seek or obtain the consent of any Person under any circumstance. The Person serving as the Holder Representative may be replaced from time to time by a vote of the Persons then holding a Pro Rata Portion greater than two-thirds (2/3) of the aggregate of all Pro Rata Portions. The Holder Representative may resign at any time in accordance with the terms of the Holder Representative’s engagement agreement.

(b) Upon the Closing, the Company will wire $250,000 (the “Expense Fund”) to the Holder Representative, which shall be used for the purposes of paying directly, or reimbursing the Holder Representative for, any third party expenses pursuant to this Agreement and the Related Agreements. The Securityholders will not receive any interest or earnings on the Expense Fund and irrevocably transfer and assign to the Holder Representative any ownership right that they may otherwise have had in any such interest or earnings. The Holder Representative shall hold the funds in the Expense Fund separate from its corporate funds, shall not use these funds for its operating expenses or any other corporate purposes and shall not voluntarily make these funds available to its creditors in the event of bankruptcy. As soon as practicable following the completion of the Holder Representative’s responsibilities, the Holder Representative shall cause (at the Securityholders’ expense) the disbursement of any remaining balance of the Expense Fund to the Securityholders based on such Securityholder’s Pro Rata Portion thereof, except in the case of payments to employees or former employees of the Company for which employment tax withholding is required, which such amounts shall be delivered to Parent or the Surviving Corporation and paid through Parent’s or Surviving Corporation’s payroll processing service or system. For Tax purposes, the Expense Fund shall be treated as having been paid by Parent to the Securityholders and voluntarily set aside by the Indemnifying Parties at the time of Closing.

The parties hereto agree that the Holder Representative is not acting as a withholding agent or in any similar capacity, and is not responsible for any tax reporting or withholding, in connection with the Expense Fund or the distribution thereof.

(c) The Holder Representative will incur no liability in connection with its services pursuant to this Agreement and any related agreements except to the extent resulting from its gross negligence or willful misconduct. The Holder Representative shall not be liable for any action or omission pursuant to the advice of counsel. The Securityholders shall indemnify the Holder Representative against any reasonable, documented, and out-of-pocket losses, liabilities and expenses (“Representative Losses”) arising out of or in connection with this Agreement and any related agreements, in each case as such Representative Loss is suffered or incurred; provided, that in the event that any such Representative Loss is finally adjudicated to have been caused by the gross negligence or willful misconduct of the Holder Representative, the Holder Representative will reimburse the Securityholders for the amount of such indemnified Representative Loss to the extent attributable to such gross negligence or willful misconduct. Representative Losses may be recovered by the Holder Representative from (i) the funds in the Expense Fund and (ii) any other funds that become payable to the Securityholders under this Agreement at such time as such amounts would otherwise be distributable to the Securityholders; provided, that while the Holder Representative may be paid from the aforementioned sources of funds, this does not relieve the Securityholders from their obligation to promptly pay such Representative Losses as they are suffered or incurred. In no event will the Holder Representative be required to advance its own funds on behalf of the Securityholders or otherwise. Notwithstanding anything in this Agreement to the contrary, any restrictions or limitations on liability or indemnification obligations of, or provisions limiting the recourse against non-parties otherwise applicable to, the Securityholders set forth elsewhere in this Agreement are not intended to be applicable to the indemnities provided to the Holder Representative hereunder. The foregoing indemnities will survive the Closing, the resignation or removal of the Holder Representative or the termination of this Agreement.

ARTICLE X GENERAL PROVISIONS

Section 10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by registered or certified mail (return receipt requested) or sent via email (with acknowledgment of receipt (including automatically generated delivery or read receipts)) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice or, if specifically provided for elsewhere in this Agreement, by email):

(a) if to Parent, to:

IonQ, Inc.

c/o Sandi Enloe

3755 Monte Villa Pkwy

Bothell, WA 98021

Attention: Stacey Giamalis

Email: [***]

with a copy (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
Attention: Rob Kindler; Chelsea N. Darnell
Email: rkindler@paulweiss.com; cdarnell@paulweiss.com

(b) if to the Company prior to the Closing, to:

Capella Space Corp.
438 Shotwell Street
San Francisco, CA 94110
Attention: Frank Backes
Email: [***]

with a copy (which shall not constitute notice) to:

Freshfields US LLP
3 World Trade Center
175 Greenwich Street
New York, NY 10007
Attention: Damien R. Zoubek; Sanjay Murti
Email: Damien.Zoubek@freshfields.com; Sanjay.Murti@freshfields.com

Shareholder Representative Services LLC
950 17th Street, Suite 1400
Denver, CO 80202
Attention: Managing Director
Email: [***]

All such notices and other communications shall be deemed to have been duly given or sent (i) one (1) Business Day following the date mailed if sent by overnight commercial messenger or courier service or five (5) Business Days following the date mailed if sent by other mail service, or (ii) on the date on which they are actually received if delivered personally or by facsimile or email transmission, as the case may be, and addressed as aforesaid. Following the Closing, any notice to be given to any Indemnifying Party shall be given to the Holder Representative.

Section 10.2 Interpretation. When a reference is made in this Agreement to an Appendix, Exhibit or Schedule, such reference shall be to an Appendix, Exhibit or Schedule to this Agreement unless otherwise indicated. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or a Section of this Agreement unless otherwise indicated. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” is used in the inclusive sense of “and/or.” The terms “or,” “any” and “either” are not exclusive. When used herein, the phrase “to the extent” shall be deemed to be followed by the words “but only to the extent.” The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute, rule or regulation shall be deemed to refer to such statute, rule or regulation as amended or supplemented from time to time, including through the promulgation of applicable rules or regulations. References to any Contract are to that Contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any Contract listed on any Schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate Schedule. The phrases “provided to,” “delivered to,” “made available to” and phrases of similar import when used herein, unless the context otherwise requires, shall mean that a complete paper or electronic copy of the information or material referred to has been provided to the party to whom such information or material is to be provided or delivered. Any such information or material uploaded to the virtual data room maintained by Carta shall be deemed to have been made available to Parent if and only if it has been so uploaded at least one (1) Business Days prior to the Agreement Date (and Parent has continued to have access to such information and materials in such virtual dataroom through the Agreement Date). References to any Person include the successors and permitted assignees of that Person. References from or through any date mean, unless otherwise specified, from but not including or to but not including, respectively. References to one gender include all genders. When used herein, references to “$” or “dollar” shall be deemed to be references to dollars of the United States of America. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 10.3 Entire Agreement.

This Agreement, Annex A hereto, the Exhibits and Schedules hereto, the Disclosure Schedule, the Related Agreements, and the documents and instruments and other agreements among the parties hereto referenced herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings both written and oral, among the parties with respect to the subject matter hereof, and are not intended to confer upon any other person any rights or remedies hereunder; provided that ‎Article VIII is intended to benefit the Indemnified Parties, each of whom is an express third party beneficiary thereof; provided, further, that the provisions of ‎Article I, ‎Article II and ‎Article VIII concerning payment of the Merger Consideration (including the premium reflected in the Merger Consideration, which was specifically negotiated by the Company on behalf of the Securityholders) shall, from and after the Effective Time, be for the express benefit of, and enforceable by, each Securityholder as of the Effective Time (each of whom is an express third party beneficiary thereof). Notwithstanding the foregoing, prior to the Effective Time, the rights and remedies conferred on the Securityholders pursuant to ‎Article I, ‎Article II and ‎Article VIII concerning payment of the Merger Consideration (including the premium reflected in the Merger Consideration, which was specifically negotiated by the Company on behalf of the Securityholders) may only be enforced by the Company acting as an agent on the behalf of the Securityholders in its sole and absolute discretion, and the Company may retain any amounts obtained in connection therewith. No consent of the Indemnified Parties or any other person given third party rights under this Agreement shall be required in relation to any permitted rescission, termination or variation of this Agreement.

Section 10.4 Assignment. This Agreement shall not be assigned by operation of law or otherwise, except that Parent may assign their rights and delegate their obligations hereunder to their Affiliates as long as such party remains ultimately liable for all of its obligations hereunder.

Section 10.5 Amendment. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of the party against whom enforcement is sought.

Section 10.6 Extension; Waiver. Parent, on the one hand, and, prior to the Closing, the Company, and following the Closing, the Holder Representative, on the other hand, may, to the extent permitted under any applicable Law, (a) extend the time for the performance of any of the obligations of the other party hereto, (b) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the covenants, agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. For purposes of this ‎‎Section 10.6, the Securityholders agree that any extension or waiver signed by the Company or the Holder Representative shall be binding upon and effective against all Securityholders whether or not they have signed such extension or waiver; provided, however, that no such extension or waiver shall materially and adversely affect any Securityholder’s rights or increase any Securityholder’s obligations without such Securityholder’s prior written consent.

Section 10.7 Severability. In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.

The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

Section 10.8 Specific Performance and Other Remedies.

(a) The parties to this Agreement agree that, in the event of any breach or threatened breach by the other party or parties hereto of any covenant, obligation or other agreement set forth in this Agreement, (i) each party shall be entitled, without any proof of actual damages (and in addition to any other remedy that may be available to it), to a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other agreement and an injunction preventing or restraining such breach or threatened breach, and (ii) no party hereto shall be required to provide or post any bond or other security or collateral in connection with any such decree, order or injunction or in connection with any related action or legal proceeding.

(b) Subject to ‎Section 8.2(e), any and all remedies herein expressly conferred herein upon a party hereto shall be deemed to be cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or in equity upon such party, and the exercise by a party hereto of any one remedy will not preclude the exercise of any other remedy.

(c) The liability of any Person under ‎Article VIII will be in addition to, and not exclusive of, any other liability that such Person may have at law or in equity based in connection with a claim of a Bad Act. Notwithstanding anything to the contrary contained in this Agreement, none of the provisions set forth in this Agreement, including the provisions set forth in ‎Article VIII, shall be deemed a waiver by any Indemnified Party of any right or remedy available at law or in equity in connection with a claim of a Bad Act, nor will any such provisions limit, or be deemed to limit (i) the amounts of recovery sought or awarded in connection with any such claim for Bad Act, (ii) the time period during which a claim for any such Bad Act may be brought, or (iii) the recourse which any such Indemnified Party may seek against in connection with a claim of a Bad Act.

Section 10.9 Governing Law. This Agreement, and all actions, claims, matters, proceedings or counterclaims (whether based on contract, tort, or otherwise) arising out of, relating to, or be in connection with this Agreement or the actions of the parties hereto in the negotiation, administration, performance and enforcement hereof or any Related Agreement (the “Relevant Matters”), shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice or conflict of laws provision, rule, principle (whether of the State of Delaware or any other jurisdiction) that would result in the application of the laws of any other jurisdiction. Notwithstanding the foregoing, and for the avoidance of doubt, this ‎‎Section 10.9 shall not apply to any Relevant Matter to the extent a Related Agreement selects a different governing Law, in which case, such governing Law provision in such Related Agreement shall control.

Section 10.10 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY RELEVANT MATTER.

Section 10.11 Jurisdiction; Service of Process. The parties hereto irrevocably submit to the exclusive jurisdiction of the Delaware Court of Chancery or, in the event (but only in the event) that such court does not have subject matter jurisdiction over such suit, action or proceeding, of the United States District Court for the District of Delaware over any suit, action or proceeding arising out of or relating to this Agreement, the Related Agreements or the Transactions. To the fullest extent that they may effectively do so under applicable Law, the parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction of any such court, any objection that they may now or hereafter have to the laying of the venue of any such legal proceeding brought in any such court and any claim that any such legal proceeding brought in any such court has been brought in an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such legal proceeding by the mailing of copies thereof by registered or certified mail or by overnight courier service, postage prepaid, to its address set forth in ‎‎Section 10.1 such service to become effective ten (10) days after such mailing.

Section 10.12 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in PDF format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.

[Remainder of Page Intentionally Left Blank]

•

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above.

IONQ, INC.

By: /s/ Niccolo de Masi
Name: Niccolo de Masi
Title: Chief Executive Officer

PROJECT CORNET ACQUISITION SUB, INC.

By: /s/ Niccolo de Masi Name: Niccolo de Masi Title: President CAPELLA SPACE CORP.

[Signature Page to Merger Agreement]

By: /s/ Frank Backes Name: Frank Backes Title: Chief Executive Officer SHAREHOLDER REPRESENTATIVE SERVICES LLC, solely in its capacity as the Holder Representative

[Signature Page to Merger Agreement]

By: /s/ Corey Quinlan Name: Corey Quinlan Title: Director “Accounting Methodology” has the meaning given in Part A of Schedule A.

[Signature Page to Merger Agreement]

ANNEX A
DEFINED TERMS

“Action” means any action, suit, claim, complaint, litigation, investigation, audit, proceeding, arbitration or other similar dispute.

“Adjustment Escrow Amount” means the Adjustment Escrow Shares multiplied by the Per Share Price.

“Affiliate” of any Person means another Person that directly or indirectly through one of more intermediaries controls, is controlled by or is under common control with, such first Person.

“Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, as amended, the United Kingdom Bribery Act 2010, applicable laws passed pursuant to the Organization of Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and any similar Laws, including the laws of any other jurisdiction where the Company and its Affiliates operate concerning or relating to public sector or private sector bribery or corruption.

“Approving Stockholders” means the Persons listed on Section 1.1(a) of the Disclosure Schedule.

“Bad Act” means any Willful Breach of a covenant in this Agreement or actual and intentional common law fraud under the laws of the State of Delaware in respect of the representations and warranties expressly contained in this Agreement.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions located in New York, New York, are authorized or obligated by law or executive order to close.

“Closing Cash” means, without duplication, as of the Measurement Time (but determined as-if the Closing occurred at the Measurement Time), (a) the aggregate amount of all cash and cash equivalents held by the Company and each Company Subsidiary, whether on hand or in deposit, checking, brokerage or other accounts of, or in any safety deposit box or other physical storage device provided by, a financial institution, in each case, to the extent constituting “cash and cash equivalents” determined in accordance with the Accounting Methodology, plus (b) to the extent not already reflected in cash and cash equivalents, the aggregate amount of all un-cleared deposits of the Company and each Company Subsidiary, minus (c) the aggregate amount of cash needed to fund checks, drafts, draws and any electronic disbursements written or ordered by the Company and its subsidiaries but not cleared minus (d) all Taxes and other costs and expenses imposed on Parent, the Company and the Company Subsidiaries associated with repatriation of any cash or cash equivalents of the Company or any Company Subsidiary into the United States from sources outside the United States.

“Closing Cash Share Amount” means the Closing Cash divided by the Per Share Price.

“Closing Indebtedness” means, without duplication, the aggregate amount of all outstanding Indebtedness (including principal and accrued and unpaid interest) of the Company and each Company Subsidiary as of the Measurement Time (but determined as-if the Closing occurred at the Measurement Time).

“Closing Indebtedness Share Amount” means the Closing Indebtedness divided by the Per Share Price.

“Closing Net Working Capital” means, as of the Measurement Time (but determined as-if the Closing occurred at the Measurement Time), an amount equal to (i) the sum of all current assets of the Company and its Subsidiaries, minus (ii) the sum of all current liabilities of the Company and its Subsidiaries; provided, however, that “Closing Net Working Capital” shall exclude all (a) cash and cash equivalents or other items referenced in Closing Cash, (b) income Tax assets and income Tax liabilities, (c) deferred Tax assets and deferred Tax liabilities, (d) Indebtedness and (e) Third Party Expenses.

“Code” means the Internal Revenue Code of 1986 of the United States, as amended.

“Company Capital Stock” means all series and classes of capital shares of the Company.

“Company Common Stock” means the shares of common stock, par value $0.0001, of the Company.

“Company Common Warrants” means all issued and outstanding warrants to purchase or otherwise acquire Company Common Stock.

“Company Data” means all data and information, including Personal Data, Processed by or for the Company or any Company Subsidiaries.

“Company Employee Plan” means any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, severance, change of control, termination pay, deferred compensation, performance awards, equity or equity-related awards, welfare benefits, retirement benefits, fringe benefits or other employee benefits or remuneration of any kind (including any Employee Agreement), whether written, unwritten or otherwise, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is or has been maintained, contributed to, or required to be contributed to, by the Company or any Company Subsidiaries for the benefit of any Employee (or any dependent thereof), or with respect to which the Company or any Company Subsidiary has or may have any Liability or obligation.

“Company Equity Plan” means the 2016 Stock Incentive Plan of the Company, as amended and restated from time to time.

“Company Indemnified Parties” means the current officers and directors of the Company or any Company Subsidiary and each other Person who is or was a director or officer of the Company or any Company Subsidiary at or at any time prior to the Closing.

“Company Intellectual Property Rights” means any and all Intellectual Property Rights that are owned by or purported to be owned by, and material to the business of, the Company or any of the Company Subsidiaries.

“Company IP” means Company Intellectual Property Rights and Company Technology.

“Company Material Adverse Effect” means any Effect, individually or when taken together with all other Effects, that is or is would reasonably be expected to be material and adverse to the business, condition (financial or otherwise) or results of operations of the Company and the Company Subsidiaries, taken as a whole, other than any Effect resulting from (i) changes in general economic, financial market, business or geopolitical conditions, (ii) general changes or developments in the industry in which the Company and the Company Subsidiaries operate, (iii) changes following the Agreement Date in any Laws, GAAP or other applicable accounting standards, (iv) any natural disaster, pandemic, epidemic, act of God, any act of terrorism, war or other armed hostilities, any regional, national or international calamity or any other similar event; (v) any change in the credit rating of the Company (it being understood that the underlying factors contributing to any such change may be taken into account in determining whether there has been a Company Material Adverse Effect (except to the extent otherwise provided herein)); (vi) any failure in and of itself by the Company to meet any projections, budgets or estimates of revenue or earnings (it being understood that the facts giving rise to such failure may be taken into account in determining whether there has been a Company Material Adverse Effect (except to the extent otherwise provided herein)); (vii) any public announcement of this Agreement and the transactions contemplated hereby (provided that this exception shall not apply with respect to any representation or warranty set forth herein that specifically relates to the effects of the transactions contemplated hereby); (viii) the negotiation, execution or performance of this Agreement or the consummation or pendency of the Transactions, including the impact thereof on relationships or potential relationships, contractual or otherwise (provided that this exception shall not apply with respect to any representation or warranty set forth herein that specifically relates to the effects of the transactions contemplated hereby); (ix) any action taken by (1) the Company or any of the Company Subsidiaries that is required by this Agreement or at Parent’s written request or (2) Parent or any of its Affiliates; or (x) relating to the identity of, or any facts or circumstances relating to, Parent, Merger Sub or any of their respective Affiliates; provided that, in the case of the Effects referenced in clauses (i) through (iv), such Effects shall be taken into account in determining whether there has been or would reasonably be expected to be a Company Material Adverse Effect only to the extent the Company and the Company Subsidiaries are disproportionately affected as compared to other persons operating in the industries or markets in which the Company and its Subsidiaries operate (in which case only the disproportionate effect shall be taken into account).

“Company Options” means all issued and outstanding options to purchase or otherwise acquire Company Common Stock (whether or not vested) granted pursuant to the Company Equity Plan.

“Company Preferred Stock” means all series and classes of preferred shares of the Company, taken together.

“Company Preferred Warrants” means all issued and outstanding warrants to purchase or otherwise acquire Company Preferred Stock.

“Company Product” means each product or service (including all websites, applications, and other online sources and services) owned, made, marketed, distributed, imported, licensed or sold by or on behalf of the Company or any Company Subsidiaries.

“Company Securities” means the Company Capital Stock and the Company Options.

“Company Subsidiary” means a Subsidiary of the Company.

“Company Technology” means any Technology authored, invented, created, conceived or otherwise developed by or for the Company or Company Subsidiaries, and any Technology that embodies Company Intellectual Property Rights, in each case that the Company or any Company Subsidiary owns or purports to own.

“Company Warrants” means the Company Common Warrants and the Company Preferred Warrants.

“Contaminant” means (a) any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “corruptant,” “worm,” “malware,” “spyware,” “ransomware,” or “trackware” (as such terms are commonly understood in the software industry) or any other code designed, intended to, or that does have any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any material manner the operation of, or providing unauthorized access to, any computer, tablet computer, handheld device or other device, or any Company Product or IT Systems, or (ii) damaging or destroying any data or file without a user’s consent and (b) any bug, vulnerability, defect, or error.

“Continuing Employees” means the employees of the Company and the Company Subsidiaries at the Closing who continue to remain employed with the Company or the Company Subsidiaries.

“Contract” means any contract, mortgage, indenture, lease, license, covenant, plan, insurance policy or other agreement, instrument, arrangement, understanding or commitment, permit, concession, franchise, license or obligation, whether written or oral, in each case that is legally binding.

“Copyleft License” means any license of Technology that provides that, as a condition to the use, modification, distribution or hosting of such licensed Technology, that such licensed Intellectual Property Rights, or any other Intellectual Property Rights that are incorporated into, derived from, based on, linked to, or used or distributed with such licensed Intellectual Property Rights, be licensed, distributed, or otherwise made available: (i) in a form other than binary or object code (e.g., in Source Code form); (ii) under terms that permit redistribution, reverse engineering, or creation of derivative works or other modification; or (iii) without a license fee. Copyleft License includes the following licenses: the GNU General Public License, the GNU Library General Public License, the GNU Lesser General Public License, the Affero General Public License, the Mozilla Public License, the Common Development and Distribution License, and the Eclipse Public License.

“Employee” means any current or former employee, individual consultant, individual independent contractor or director of the Company or any of the Company Subsidiaries.

“Employee Agreement” means each management, employment, service, severance, separation, settlement, consulting, contractor, relocation, change of control, retention, bonus, repatriation, expatriation, loan, visa, work permit or other Contract (including any offer letter or any agreement providing for acceleration of vesting of Company Options or any other agreement providing for compensation or benefits) between the Company or the Company Subsidiary and any Employee.

“Environmental Law” means every applicable Law, regulation, code of practice and other similar control and advice (in each case, having force of Law) made or issued by national or local government or by any other regulatory body, and every applicable regulation and directive made by the legislative organs of the European Union, relating to the protection of the environment (including the prevention of pollution of land, water or air due to the release, escape or other emission of any substance including radioactive substances or the production, transport, storage, treatment, recycling or disposal of waste or the making of noise) and the exposure of any Person to Hazardous Materials.

“Environmental License” means any agreement, permission, permit, license, authorization, consent, exemption or other approval obtained by the Company or any of the Company Subsidiaries under any Environmental Laws.

“Equityholder and Indemnity Claim Matters” means any claim or right asserted or held by any current, former or purported Stockholder or other securityholder of the Company or any Company Subsidiary, or any other Person, asserting, alleging or seeking to assert rights with respect to, or in connection with, any actual or alleged Company Security based upon or related to the Merger or any other Transactions, including any claim by any holder or purported holder of Company Securities that he, she or it is entitled to consideration at the Closing in excess of the amount allocated to such holder on the Spreadsheets or any breaches of fiduciary duties by current or former directors, officers or Securityholders; provided that “Equityholder and Indemnity Claim Matters” shall not include any claim made by an actual Securityholder in respect of (i) any rights pursuant to this Agreement or other Related Agreements to which such Securityholder is (or will be) a party or a third party beneficiary, including any right to receive consideration under and pursuant to the terms of this Agreement or (ii) any rights to indemnification under (A) the Governing Documents, (B) any indemnification agreement to which such Securityholder and the Company are parties that is listed on ‎Section 5.18(a) of the Disclosure Schedule (if any) or (C) any applicable policy of directors’ and officers’ or other insurance maintained by the Company.

“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean any other Person under common control with the Company or that, together with the Company, could be deemed a “single employer” within the meaning of Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code, and the regulations issued thereunder.

“Escrow Agreement” means the Escrow Agreement in substantially the form attached hereto as Exhibit E.

“Exchange Documents” means, with respect to each Securityholder, (a) a duly executed and completed Letter of Transmittal, (b) an IRS Form W-9 or W-8, as the case may be, duly executed and completed by such Securityholder and other applicable tax forms reasonably requested by Parent or its Representatives and (c) an Investor Questionnaire.

“GAAP” means the United States generally accepted accounting principles consistently applied.

“Government Bid” means any bid, offer, proposal, or quote made by the Company or any of the Company Subsidiaries that, if awarded or accepted, would result in a Government Contract.

“Government Contract” shall mean any Contract (including any prime contract, subcontract, teaming agreement, grant, federal assistance award, cooperative agreement, subaward, basic ordering agreement, blanket purchase agreement, other transaction agreement, purchase order, task order, delivery order, or any other instrument, and including all amendments, modifications, and options thereunder) between the Company and (a) a Governmental Entity, (b) any prime contractor or other higher-tier contractor, or (c) any direct subcontractor.

“Governmental Entity” shall mean (a) any supranational, national, federal, state, county, municipal, local, or foreign government or any entity exercising executive, legislative, judicial, regulatory, taxing, or administrative functions of or pertaining to government, (b) any public international governmental organization, (c) any agency, division, bureau, department, or other political subdivision of any government, entity or organization described in the foregoing clauses (a) or (b) of this definition (including patent and trademark offices and self-regulatory organizations), (d) government-owned or controlled entity (including state-owned or state-controlled businesses or quasi-government entities), or (e) public international organization (e.g., the World Bank or Red Cross).

“Governmental Official” means any (a) officer, agent or employee of a Governmental Entity, (b) person acting in an official capacity for or on behalf of a Governmental Entity, (c) a candidate for government or political office, or (d) member of a royal family.

“Hazardous Material” means any chemical, waste, emission, material or substance defined or regulated under any Environmental Law as hazardous, radioactive, explosive, flammable, toxic, a pollutant or contaminant, or otherwise a danger to health, reproduction or the environment, or for which liability or standards of conduct may be imposed under any Environmental Law, including asbestos and petroleum or any derivative or byproduct thereof, radon, urea-formaldehyde, per- and polyfluoroalkyl substances, polychlorinated biphenyls or toxic mold.

“Inbound License” means any Contract pursuant to which the Company or any Company Subsidiary has been granted any rights to access or use any Technology of another Person, or pursuant to which the Company or any Company Subsidiary is granted a license, covenant not to sue, or other rights with respect to any Person’s Intellectual Property Rights.

“Indebtedness” of any Person means, as of a specified date, without duplication: (i) all liabilities of such Person for borrowed money, whether current or funded, secured or unsecured, and all obligations evidenced by bonds, debentures, notes or similar instruments; (ii) all liabilities of such Person for the deferred purchase price of property or services, which are required to be classified and accounted for under GAAP as liabilities; (iii) all liabilities of such Person in respect of any lease of (or other arrangement conveying the right to use) real or personal property or other asset, or a combination thereof, which are, and to the extent, required to be classified and accounted for under GAAP as capital leases; (iv) all liabilities of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction securing obligations of a type described in clauses (i), (ii) or (iii) above to the extent of the obligation secured and such letter of credit, banker’s acceptance or similar credit transactions has been actually drawn upon; (v) all guarantees by such Person of any liabilities of a third party of obligations described in clauses (i), (ii), (iii) or (iv) above, to the extent of the obligation guaranteed; (vi) the Pre-Closing Income Tax Amount; and (vii) all interest, fees, change of control payments, prepayment premiums, cancellation charges, fees, or penalties and other, charges, fees, penalties, or expenses owed with respect to the indebtedness referred to in clauses (i) through (vii) above; provided that Indebtedness shall not include any amounts owing by the Company to any Company Subsidiary or by any Company Subsidiary to the Company or any other Company Subsidiary. For the avoidance of doubt, with respect to the Company, Indebtedness shall also include, to the extent owed and not paid, the WAB Termination Amount and any other amounts payable (whether at or after the Closing Date) and not paid under any WAB Agreement.

“Indemnified Party” means any Person entitled to indemnification pursuant to ‎‎Section 8.2.

“Indemnity Escrow Amount” means $40,000,000.

“Intellectual Property Rights” means all intellectual property and proprietary rights, including all statutory, common law and other rights in, to, or arising out of, Technology (whether recorded or not and regardless of form or method of recording), which exist under the Laws of any jurisdiction in the world, including all rights the following types: (i) rights associated with works of authorship (including rights in Software), including copyrights, rights of attribution and integrity and other moral rights; (ii) rights in or arising out of logos, trademark, trade dress, business name, domain name and trade name rights and similar rights; (iii) rights associated with confidential information, including trade secret rights; (iv) patent and industrial design property rights, and equivalent or similar rights in, or arising out of, inventions (whether or not patentable), invention disclosures, improvements, modifications, methods or processes; (v) rights in, arising out of, or associated with a person’s name, voice, signature, photograph, or likeness, including rights of personality, privacy, and publicity; (vi) rights in, or arising out of, or associated with databases; and (vii) rights in or relating to applications, registrations, renewals, extensions, combinations, divisions, re-examinations, and reissues of, and right to apply for applications or the applications for, any of the rights referred to in clauses (i) through (vii) above.

“Inventory” means all inventory, including raw and packing materials, works-in-progress, finished goods, supplies, parts and similar items related to, used or held for use by the Company or any Company Subsidiaries, their contract manufacturers, or a third party logistics providers with whom the Company or any Company Subsidiaries has a Contract providing for the holding of such Inventory, in connection with the conduct of their business, in each case, as determined in accordance with the Accounting Methodology.

“Investor Questionnaire” means Parent’s customary Investor Suitability Questionnaire.

“IRS” means the U.S. Internal Revenue Service.

“IT Systems” means computers, Software, databases, hardware, servers, workstations, routers, hubs, switches, circuits, networks, data communications lines and all other information technology equipment (including communications equipment, terminals and hook-ups that interface with third party software or systems) owned, licensed, leased or otherwise used by the Company or any Company Subsidiary.

“Knowledge” or “Known” means, with respect to the Company the actual knowledge of Frank Backes, Justin McNaughton, Jessica Hunter, Gordon Farquharson, Brandon Smith and Leslie Kershaw, after due inquiry of their direct reports.

“Law” means any applicable federal, state, local, international or other constitution, law, statute, ordinance, rule, directive, regulation, published administrative position, policy or principle of common law, or any Order, in any case issued, enacted, adopted, promulgated, implemented or otherwise put into legal effect by or under the authority of any Governmental Entity.

“Letter of Transmittal” means a letter of transmittal in the form attached hereto as Exhibit F.

“Liability” means, with respect to any Person, any and all liabilities, obligations, claims, and deficiencies of any kind (whether known or unknown, contingent, accrued, due or to become due, secured or unsecured, matured or otherwise) of such Person or any of the Company Subsidiaries or Affiliates, regardless of whether or not such liabilities, obligations, claims, and deficiencies are required to be reflected on a balance sheet in accordance with GAAP or other applicable generally accepted accounting principle.

“Lien” means any lien, pledge, mortgage, assessment, hypothecation, deed of trust, preemptive right, easement, right of way, servitude, transfer restriction, security interest or other encumbrance of any kind or character whatsoever other than (i) Liens for Taxes, assessments and other government charges not yet delinquent or which are being contested in good faith by appropriate proceedings and for which proper reserves have been established in accordance with GAAP, (ii) landlords’, mechanic’s, materialmen’s, and similar Liens for amounts not delinquent or which are being contested in good faith by appropriate proceedings and for which proper reserves have been established in accordance with GAAP, (iii) Liens arising under worker’s compensation, unemployment insurance, social security, retirement, and similar legislation, (iv) workmen’s, repairmen’s, warehousemen’s, carriers’ or other similar Liens for amounts not delinquent, (v) such customary permitted imperfections or irregularities of title and other Liens that do not secure Indebtedness and would not, individually or in the aggregate, be reasonably expected to materially detract from the value of, or materially interfere with the use of, the affected property, (vi) zoning, planning, building and other similar limitations, restrictions and rights of any Governmental Entity to regulate property which are not violated in any material respects, (vii) Liens on the landlord’s interest in any Leased Real Property, (viii) any Lien to be released on or prior to the Closing, (ix) any Lien arising pursuant to, or as a result of the Transactions, (x) any non-monetary Lien properly recorded or filed in any land register or other public register, (xi) any Lien arising pursuant to or described in the Governing Documents or applicable securities Laws, and (xii) non-exclusive licenses, sublicenses or covenants with respect to Company IP granted by the Company or any Company Subsidiaries in the ordinary course of business.

“Losses” means all claims, losses, liabilities, damages, deficiencies, Taxes, interest, awards, judgments, settlements, penalties, costs, and expenses, including court and arbitration costs and reasonable attorneys’ and consultants’ fees and expenses incurred in connection with investigating, defending against, prosecuting or settling any of the foregoing.

“Measurement Time” means 11:59 p.m. Eastern Time on the day immediately prior to the Closing Date.

“Open Source Software” means any software that is licensed, provided or distributed under any open source license (including any Copyleft License), including any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license.

“Optionholder” means any holder of any Company Options.

“Order” means any order, judgment, injunction, ruling, edict, or other decree, whether temporary, preliminary or permanent enacted, issued, promulgated, enforced or entered by any Governmental Entity.

“Outbound License” means any Contract pursuant to which any Person has been granted any rights to access or use any Company Products, or that contains any assignment or license of, or any covenant not to assert or enforce, any Company Intellectual Property Rights.

“Parent Capital Stock” means all series and classes of capital shares of Parent.

“Parent Common Stock” means Parent’s common stock, par value $0.0001 per share.

“Parent Material Adverse Effect” means any change, event, violation, inaccuracy, circumstance or effect (any such item, an “Effect”), individually or when taken together with all other Effects, that is or is would reasonably be expected to be material and adverse to the business, condition (financial or otherwise) or results of operations of Parent and its Subsidiaries taken as a whole, other than any Effect resulting from (i) changes in general economic, financial market, business or geopolitical conditions, (ii) general changes or developments in the industry in which Parent and its Subsidiaries operate, (iii) changes following the Agreement Date in any Laws, GAAP or other applicable accounting standards, (iv) any natural disaster, pandemic, epidemic, act of God, any act of terrorism, war or other armed hostilities, any regional, national or international calamity or any other similar event; (v) any change in the market price, credit rating or trading volume of the Parent Common Stock or other securities of Parent (it being understood that the underlying factors contributing to any such change may be taken into account in determining whether there has been an Parent Material Adverse Effect (except to the extent otherwise provided herein)); (vi) any failure in and of itself by Parent to meet any projections, budgets or estimates of revenue or earnings (it being understood that the facts giving rise to such failure may be taken into account in determining whether there has been an Parent Material Adverse Effect (except to the extent otherwise provided herein)); (vii) any public announcement of this Agreement and the transactions contemplated hereby (provided that this exception shall not apply with respect to any representation or warranty set forth herein that specifically relates to the effects of the transactions contemplated hereby); (viii) the negotiation, execution or performance of this Agreement or the consummation or pendency of the Transactions, including the impact thereof on relationships or potential relationships, contractual or otherwise (provided that this exception shall not apply with respect to any representation or warranty set forth herein that specifically relates to the effects of the transactions contemplated hereby); (ix) any action taken by (1) Parent or any of its Subsidiaries that is required by this Agreement or at the Company’s written request or (2) the Company or any of its Affiliates; or (x) relating to the identity of, or any facts or circumstances relating to the Company or any of its Affiliates; provided that, in the case of such Effects referenced in clauses (i) through (iv), such Effects shall be taken into account in determining whether there has been or would reasonably be expected to be a Parent Material Adverse Effect only to the extent Parent and its Subsidiaries are disproportionately affected as compared to other persons operating in the industries or markets in which Parent and its Subsidiaries operate (in which case only the disproportionate effect shall be taken into account).

“Parent Warrants” means all issued and outstanding warrants to purchase or otherwise acquire Parent Common Stock.

“Pension Plan” shall mean each Company Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“Per Share Price” shall mean $29.97.

“Per Share Portion” means, with respect to any amount payable hereunder as Merger Consideration and any share of Company Capital Stock, the portion of such amount payable in respect of such share of Company Capital Stock in a “Deemed Liquidation Event” (as defined in, and calculated in accordance with, the Certificate of Incorporation) as if such aggregate amount were to be payable to the holders of Company Capital Stock in such “Deemed Liquidation Event”, taking into account all prior payments of Merger Consideration hereunder, and assuming, for the purpose of such calculation, that the value of any share of Parent Common Stock issued as Merger Consideration is the Per Share Price.

“Person” means an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint share company, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency, or political subdivision thereof).

“Personal Data” means any information that, alone or in combination with other information, is capable of identifying an individual natural person, or that is otherwise defined as “personal data”, “personal information”, “personally identifiable information”, or similar term under the Privacy and Data Processing Requirements.

“Pre-Closing Income Tax Amount” means the sum, on a jurisdiction by jurisdiction basis, of the aggregate liability (which shall not be less than zero for any jurisdiction, any entity or any Tax) for current unpaid income Taxes of the Company and the Company Subsidiaries attributable to any Pre-Closing Tax Period in respect of which (a) a Tax Return has not been filed prior to the Closing Date or (b) a Tax Return has been filed prior to the Closing Date but any income Tax shown as due thereon has not been fully paid as of the Closing Date, in each case determined (i) as though any taxable period that includes but does not end on the Closing Date closes as of the end of the Closing Date (regardless of whether such treatment is prescribed by applicable Law), (ii) treating any deferred revenue, advanced amounts or prepaid amounts received, arising or accrued in any such period as subject to Tax in such period, (iii) including in taxable income all adjustments pursuant to any change in accounting method made prior to the Closing, including pursuant to Section 481 of the Code (or any analogous or similar provision of state, local or non-U.S.

Law), and (iv) taking into account the Transaction Tax Deductions and any applicable income Tax refunds or overpayments, in each case, to the extent such deductions, refunds or overpayments would actually reduce cash Taxes payable in respect of any Pre-Closing Tax Period in the applicable jurisdiction.

“Pre-Closing Tax Period” means any taxable period or portion thereof that ends on or prior to the Closing Date, including the portion of any Straddle Period that ends on the Closing Date.

“Pre-Closing Taxes” means (a) any Tax imposed on the Company or any Company Subsidiaries in respect of any Pre-Closing Tax Period (determined by treating any Taxes imposed with respect to any advance payments, deferred revenues or other prepaid amounts that are received or arise in any Pre-Closing Tax Period as attributable to the Pre-Closing Tax Period, regardless of when such amounts are actually recognized for income Tax purposes), (b) any Tax of any Securityholder, (c) the Securityholders’ allocable share of Transfer Taxes pursuant to Section 5.19(k), and (d) Taxes resulting from a breach or violation of any representation, warranty, covenant or other agreement by the Company relating to Taxes contained herein.

“Privacy and Data Processing Policy” means each external statement, published policy, representation, or notice of the Company or any of the Company Subsidiaries relating to the Processing of Company Data, privacy, data protection, or security that is applicable to the Company or any Company Subsidiary.

“Privacy and Data Processing Requirement” means any (i) Law related to data protection, privacy or security (including, as applicable, the California Consumer Privacy Act, the Data Protection Act 2018, the Privacy and Electronic Communications (EC Directive) Regulations 2003, and the Security of Network & Information Systems Regulations 2018, all as amended and/or replaced, and in force from time to time, as applicable), (ii) Privacy and Data Processing Policy, or (iii) other legally binding requirement of a self-regulatory organization, industry standard (including the Payment Card Industry Data Security Standard, as applicable) or Contract relating to the Processing of Company Data, privacy, data protection, or security, including, in each case, in connection with direct marketing or the initiation, transmission, monitoring, interception, recording, or receipt of communications.

“Pro Rata Portion” means, with respect to each Securityholder, an amount equal to the quotient obtained by dividing (a) the aggregate value of the shares of Parent Common Stock paid or issued to such Securityholder pursuant to Section 1.5(a), by (b) the aggregate value of all shares of Parent Common Stock paid or issued to all Securityholders pursuant to Section 1.5(a), as set forth on the applicable Spreadsheet provided by the Company pursuant to ‎Section 5.9. For purposes of clarity, the sum of all “Pro Rata Portions” of the Securityholders shall at all times equal one-hundred percent (100%) and Securityholders may have a Pro Rata Portion equal to zero percent (0%).

For purposes of this defined term, shares of Parent Common Stock shall be valued at the Per Share Price.

“Process” means, with respect to any data or set of data, any operation or set of operations performed thereon, whether or not by automated means, including adaptation, alignment, alteration, collection, combination, compilation, consultation, creation, destruction, disclosure, disposal, dissemination, erasure, interception, maintenance, making available, organization, recording, restriction, retention, and retrieval, storage, structuring, transmission, and use, and security measures with respect thereto.

“Registered IP” means all Intellectual Property Rights that are registered or filed with or by, or issued under the authority of, any Governmental Entity or Internet domain name registrar, including all patents, registered copyrights, and registered trademarks, business names, social media handles and domain names and all applications for any of the foregoing.

“Registration Rights Agreement” means the Registration Rights Agreement in substantially the form attached hereto as Exhibit G, which shall be entered into at the Closing.

“Related Agreements” means the Restrictive Covenant and Support Agreements, Escrow Agreement, Registration Rights Agreement, the Resignation Letters, the Financial Certificate, the Payoff Letters, the Investor Questionnaires, the Non-Disclosure Agreement and all other Contracts, certificates, and instruments executed or delivered by the Company or any Stockholder in connection with the Transactions.

“Representatives” means, with respect to a Person, such Person’s Subsidiaries and the directors, managers, Stockholders, officers, employees, advisors, counsel, accountants, agents or other representatives of such Person and its Subsidiaries.

“Securities Act” means the Securities Act of 1933 of the United States, as amended.

“Securityholders” means, collectively, the Stockholder, Optionholders and Warrantholders.

“Stockholder” means any holder of any Company Capital Stock.

“Software” means computer software, firmware, programs and databases, whether in object code, Source Code, or executable form, and documentation related thereto.

“Source Code” means computer programming code in human readable form that is not suitable for machine execution without the intervening steps of interpretation or compilation.

“Standard Form IP Contract” means each of the following standard forms of Contract used by the Company: (i) Invention Assignment Agreements; (ii) confidentiality or nondisclosure agreement; and (iii) non-exclusive licenses to Company Products to customers of the Company or any of the Company Subsidiaries.

“Straddle Period” means any taxable period that begins on or before the Closing Date and ends after the Closing Date.

“Subsidiary” means, with respect to any Person, each corporation, limited liability company, partnership, association, joint venture or other business entity of which such Person owns or has owned, directly or indirectly, more than 50% of the shares or other equity interest entitled to vote on the election of the members of the board of directors or similar governing body.

“Tax” means (i) any income, alternative or add-on minimum tax, gross income, estimated, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital shares, tax on capital, inheritance tax, profits, license, registration, withholding, payroll, social security (or equivalent), employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible), environmental or windfall profit tax, custom duty, charge, duty, impost, levy or other tax, governmental fee or other like assessment or charge of any kind in the nature of a tax (including apprenticeship levy), together with any interest, penalty, default surcharge, addition to tax or additional amount (whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (U.S. or non-U.S.), (ii) any liability for the payment of any amounts of the type described in clause (i) of this sentence as a result of being or having been a member of an affiliated, consolidated, combined, unitary, aggregate or similar group for any taxable period, and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) of this sentence as a result of being a transferee of or successor to any Person or as a result of any express or implied obligation to assume such Taxes or to indemnify any other Person, or otherwise by operation of law.

“Tax Return” shall mean any return (including any information return), report, statement, declaration, assessment, claim, disclaimer, registration, estimate, accounts, computations, schedule, notice, notification, form, election, certificate or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Entity in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax, including any amendment thereof or attachment thereto.

“Technology” means algorithms, APIs, diagrams, formulae, inventions (whether or not patentable), invention disclosures, programmer’s notes, improvements, modifications, know-how, logos, marks (including brand names, product names, logos, and slogans), methods, network configurations and architectures, processes, confidential information, proprietary information, protocols, schematics, specifications, product designs, roadmaps, marketing strategies, Software (in any form, including Source Code and executable or object code), subroutines, techniques, user interfaces, domain name registrations, URLs, web sites, social media accounts, social media identifiers, systems, tools, databases, data collections, concepts, data, coding, images, designs, documentation, books (including lab books), records, works of authorship (including written, audio and visual materials) and all other forms of technology.

“Third Party Expenses” means all costs, fees and expenses incurred, due, or payable by the Company or any Company Subsidiary (including those triggered by the Closing) in connection with the Merger and the other Transactions to the extent not paid as of the Closing (whether or not payable prior to, at or after the Closing), including (A) all legal, accounting, financial advisory, consulting, finders’ and all other fees and expenses of third parties incurred by or on behalf of or otherwise required to be paid by the Company or any Company Subsidiary in connection with the Merger and the other Transactions or the negotiation and effectuation thereof; (B) any “single-trigger” change of control or transaction bonus, severance, or similar payment obligations of the Company or any Company Subsidiary arising solely as a result of the Merger (together with the employer portion of any payroll or similar Taxes incurred in connection therewith); (C) fifty percent (50%) of all costs and expenses of the D&O Policy and (D) the Expense Fund. For the avoidance of doubt, no fees and expenses shall be double counted when calculating Third Party Expenses.

“Third Party Expenses Share Amount” means the Third Party Expenses divided by the Per Share Price.

“Transaction Tax Deductions” means to the extent deductible at a “more likely than not” or higher level of comfort in a Pre-Closing Tax Period, any Tax deductions arising in connection with (i) the Third Party Expenses, (ii) any debt repayment costs and the payment of, or reduction for, Indebtedness (including, for this purpose, any interest, premium, prepayment costs and accelerated deferred or capitalized financing costs, including any unamortized deferred financing fees in connection with the Indebtedness), (iii) any portion of the Closing Consideration paid through payroll, and (iv) any social security, employment, payroll or similar Taxes with respect to the amounts set forth in the forgoing; provided that the calculation of “Transaction Tax Deductions” shall be made assuming the Company has made an election under Revenue Procedure 2011-29 to deduct seventy percent (70%) of any Transaction Tax Deductions that are success-based fees as defined in Treasury Regulations Section 1.263(a)-5(f).

“Transfer Taxes” means any and all transfer, documentary, stamp, stamp duty, registration, recording and other similar Taxes (including any penalties, interest and additions thereto) incurred or imposed in respect of the Merger.

“United States” means the United States of America.

“Warrantholder” means any holder of Company Warrants.

“Willful Breach” means with respect to any covenant, any intentional or deliberate action or omission that constitutes a breach of such covenant and that the breaching party actually knows is or would constitute a breach of such covenant.

“Working Capital Adjustment Amount” means (a) if Closing Net Working Capital is greater than $37,500,000, the amount equal to Closing Net Working Capital minus $37,500,000, (b) if Closing Net Working Capital is less than $33,500,000, the amount equal to Closing Net Working Capital minus $33,500,000 (which, for the avoidance of doubt, shall be expressed as a negative number) or (c) if Closing Net Working Capital is equal to or greater than $33,500,000 and less than or equal to $37,500,000, zero; provided, however that the Working Capital Adjustment Amount calculated pursuant to clause (a) or (b) shall not be greater than $7,500,000 (which, for the avoidance of doubt, shall be expressed as a negative number in the case of clause (b)).

“Working Capital Adjustment Share Amount” means the Working Capital Adjustment Amount divided by the Per Share Portion.

TABLE OF OTHER DEFINED TERMS

Term Section

INDEX \e " " \z 1033" 280G Stockholder Approval ‎Section 5.7

Active Government Bid ‎Section 3.28(a)

Active Government Contract ‎Section 3.28(a)

Adjustment Determination Date ‎Section 2.4(d)(iv)

Adjustment Escrow Fund ‎Section 2.2(a)

Adjustment Escrow Release Amount ‎Section 2.4(e)(ii)

Adjustment Escrow Shares ‎Section 2.2(a)

Adjustment Review Period ‎Section 2.4(d)(i)

Adjustment Shortfall ‎Section 2.4(e)(ii)

Adjustment Surplus ‎Section 2.4(e)(iii)

Agreement Preamble

Agreement Date Preamble

Alternative Transaction ‎Section 5.3(a)

Balance Sheet Date ‎Section 3.6(a)

Board of Directors of the Company Recitals

Cancelled Shares ‎Section 1.5(b)

Certificate of Incorporation ‎Section 3.1

Certificate of Merger ‎Section 1.3

Closing ‎Section 1.6(a)

Closing Consideration ‎Section 2.1

Closing Date ‎Section 1.6(a)

Company Preamble

Company 401(k) Plan ‎Section 5.6(e)

Company Authorizations ‎Section 3.17

Company Board Recommendation Recitals

Company Returns ‎Section 3.9

Conflict ‎Section 3.4

Current Balance Sheet ‎Section 3.6(a)

D&O Policy ‎Section 5.18(c)

Deductible ‎Section 8.3(a)

Deferred Closing Date ‎Section 1.6(a)

DGCL Recitals

Disclosure Schedule ‎Article III

Disputed Amounts ‎Section 2.4(d)(iii)

Dissenting Shares ‎Section 1.5(g)

Effective Time ‎Section 1.3

End Date ‎Section 7.1(b)

Enforceability Limitations ‎Section 3.2

Escrow Agent ‎Section 2.2(a)

Estimated Closing Consideration ‎Section 2.4(a)

Existing Debt Facilities ‎Section 5.10(a)

Expense Fund ‎Section 9.1(b)

Expiration Date ‎Section 8.1(a)

FAR ‎Section 3.28(c)

Final Closing Consideration ‎Section 2.4(e)(i)

Financials ‎Section 3.6(a)

Fundamental Representations ‎Section 8.1(a)

Governing Documents ‎Section 3.1

Holder Representative Preamble

HSR Act ‎Section 3.3

Indemnification Claim Notice ‎Section 8.4(a)

Indemnification Claim Objection Notice ‎Section 8.4(b)

Indemnified Parties ‎Section 8.2(a)

Indemnifying Parties ‎Section 8.2(a)

Indemnifying Party ‎Section 8.2(a)

Indemnity Escrow Fund ‎Section 2.2(b)

Indemnity Escrow Shares ‎Section 2.2(b)

Independent Accountant ‎Section 2.4(d)(iii)

Information Statement ‎Section 5.2

Initial Closing Date ‎Section 1.6(a)

Insurance Policies ‎Section 3.19

Intended Tax Treatment Recitals

Interested Party ‎Section 3.24

International Trade Laws ‎Section 3.22

Invention Assignment Agreement ‎Section 3.12(c)(i)

Junior Preferred Stock ‎Section 3.5(a)

Key Employee Recitals

Lease Agreements ‎Section 3.10(a)

Leased Real Property ‎Section 3.10(a)

Material Contract ‎Section 3.13(b)

Merger Recitals

Merger Consideration ‎Section 1.5(a)

Merger Sub Preamble

NISPOM ‎Section 3.27

Non-Disclosure Agreement ‎Section 5.14

OCI ‎Section 3.28(u)

Offer Documents Recitals

Outbound Investment Rules ‎Section 3.23

Parachute Payment Waiver ‎Section 5.7

Parent Preamble

Parent 401(k) Plan ‎Section 5.6(e)

Parent Arrangements ‎Section 5.7

Parent Closing Election ‎Section 1.6(a)

Parent SEC Documents ‎Section 4.8(a)

Payoff Amount ‎‎Section 5.10(a)

Payoff Letter ‎Section 5.10(a)

Post-Closing Statement ‎Section 2.4(c)

Pre-Closing Period ‎Section 5.1(a)

Pre-Closing Statement ‎Section 2.4(a)

Pre-Closing Tax Return ‎Section 5.19(a)

Preliminary Pre-Closing Statement ‎Section 2.4(a)

Registered Company IP ‎Section 3.12(a)(i)

Regulatory Approvals ‎Section 6.1(a)(ii)

Relevant Matters ‎Section 10.9

Representative Losses ‎Section 9.1(c)

Required Audited Financial Statements ‎Section 5.17(a)

Required Financial Statements ‎Section 5.17(b)

Required Stockholder Vote ‎Section 3.2

Resignation Letters ‎Section 5.20

Resolution Period ‎Section 2.4(d)(ii)

Restrictive Covenant and Support Agreements Recitals

Section 262 ‎Section 1.5(g)

Section 280G Payments ‎Section 5.7

Section 409A ‎Section 3.9(p)(i)

Security Incident ‎Section 3.12(r)

Senior Preferred Stock ‎Section 3.5(a)

Spreadsheet ‎Section 5.9

Standards Organizations 3.12(c)‎(iv)

Statement of Objections ‎Section 2.4(d)(ii)

Subject Provision ‎Section 8.4(a)

Surviving Corporation ‎Section 1.1

Systems ‎Section 3.12(p)

Tax Claim ‎Section 5.19(b)

Tax Incentive ‎Section 3.9(f)

Third Party Claim ‎Section 8.6(a)

Top Customer ‎Section 3.14(a)

Top Supplier ‎Section 3.14(b)

Transactions Recitals

Unaudited Interim Financial Statements ‎Section 5.17(b)

WAB Agreements ‎Section 5.23

WAB Amendment ‎Section 5.23

WAB IPSA ‎Section 5.23

WAB Purchase Agreement ‎Section 5.23

WAB Termination Amount ‎Section 5.23

WAB Warrant ‎Section 5.23

WARN Act ‎Section 3.16(e)

Written Consent Recitals

Year-End Financials ‎Section 3.6(a)

EX-10.5 3 ionq-ex10_5.htm EX-10.5 EX-10.5

Exhibit 10.5

Certain identified information marked with [***] has been excluded from the exhibit because it is both

not material and is the type that the registrant treats as private or confidential.

AMENDMENT # 8 TO EXCLUSIVE LICENSE AGREEMENT

BETWEEN IONQ, INC., DUKE UNIVERSITY AND UNIVERSITIY OF MARYLAND

This Amendment #8 to the Exclusive License Agreement entered into by and between Duke University, a nonprofit educational and research institution organized under the laws of North Carolina ("DUKE") and IonQ, Inc. (“Licensee”) is effective as of the date of last signature below.

Background: UMD and Licensee executed an Exclusive License Agreement dated effective July 19, 2016 and amended September 22, 2017, October 4, 2018, April 27, 2021, September 10, 2021, January 23, 2023 and February 2, 2024 (collectively “Exclusive License Agreement”). In connection with the Exclusive License Agreement, DUKE and Licensee executed an Exclusive Option Agreement, effective July 15, 2016, which was amended on December 18, 2020 and on March 19, 2021 (“Option Agreement”). Under the terms and conditions of the Option Agreement, DUKE granted Licensee, and Licensee accepted, an exclusive option during the Option Period (as defined in the Option Agreement) to obtain a worldwide exclusive license, with the right to sublicense, under the Exclusive License Agreement to DUKE’s rights in Option IP (the "Option"). DUKE has disclosed certain Option IP to Licensee and Licensee elects to exercise its Option to license such Option IP by executing this Amendment #8 to the Exclusive License Agreement. To that end, DUKE and Licensee hereby agree that the Exclusive License Agreement is amended as follows:

The definition of Licensed Inventions in Section 1.09 is modified to add at the end of the definition: “and [***] and the related detailed description:

•

[***]

Appendix A to the Exclusive License Agreement shall be replaced with the attached Appendix A.

All other terms and conditions of the Exclusive License Agreement shall apply to the Option Intellectual Property (as that term is defined in the Option Agreement) optioned by Licensee pursuant to the Option Agreement and identified in this Amendment as if such intellectual property had been included in the scope of the Exclusive License Agreement as of its Effective Date.

Except for the amendments set forth herein, all other terms and conditions of the Exclusive License Agreement remain in full force and effect.

ACCEPTED AND AGREED TO

DUKE UNIVERSITY IONQ, INC.

BY /s/ Robin L. Rasor BY /s/ Francisco Castro

NAME: Robin L. Rasor NAME: Francisco Castro, Ph.D.

Title: Associate Vice President Title: Associate General Counsel,

Office for Translation & Commercialization Intellectual Property

DATE: 17 March 2025 DATE: 17 March 2025

APPENDIX A – Duke Patents and IP

[***]

EX-31.1 4 ionq-ex31_1.htm EX-31.1 EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Niccolo de Masi, certify that:

I have reviewed this Quarterly Report on Form 10-Q of IonQ, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2025

      /s/ Niccolo de Masi

     

      Niccolo de Masi

     

      President and Chief Executive Officer

     

      (Principal Executive Officer)

     

EX-31.2 5 ionq-ex31_2.htm EX-31.2 EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Thomas Kramer, certify that:

I have reviewed this Quarterly Report on Form 10-Q of IonQ, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2025

      /s/ Thomas Kramer

     

      Thomas Kramer

     

      Chief Financial Officer

     

      (Principal Financial and Accounting Officer)

     

EX-32.1 6 ionq-ex32_1.htm EX-32.1 EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Niccolo de Masi, Chief Executive Officer of IonQ, Inc. (the “Company”), and Thomas Kramer, Chief Financial Officer of the Company, each hereby certifies that, to the best of their knowledge:

The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2025, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 7th day of May 2025.


/s/ Niccolo de Masi		/s/ Thomas Kramer

Niccolo de Masi		Thomas Kramer
President and Chief Executive Officer		Chief Financial Officer