Infleqtion (INFQ) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Our business involves technology that is not mature, and we face significant barriers in our attempts to produce products that meet desired technical specifications
2. 02We have a history of operating losses and may not achieve or sustain profitability in the future
3. 03If we do not adequately fund our research and development efforts or use research and development teams effectively, we may not be able to achieve our technological goals, build scalable, commercial quantum solutions, or compete effectively, and our business and operating results may be harmed
4. 04If our computers fail to achieve a broad quantum advantage, our business, financial condition and future prospects may be harmed
5. 05Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate
6. 06We 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
7. 07maintain effective financial disclosure controls and procedures
8. 08Our business could be harmed if we fail to manage growth effectively
9. 09Our 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
10. 10We will require substantial 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
11. 11There 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
12. 12develop an optical atomic clock utilizing quantum sensing technology
13. 13Our ability to use net operating loss carryforwards and certain other tax attributes may be limited
14. 14In the future we may be required to record significant charges for impairment of our long-lived assets, other assets or investments
15. 15If our quantum solutions are not compatible with some or all industry-standard software and hardware in the future, our business could be harmed
16. 16The quantum technology 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
17. 17new or emerging entrants seeking to develop competing technologies
18. 18For all of these reasons, competition may negatively impact our ability to maintain and grow consumption of our products and 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
19. 19We 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
20. 20We rely heavily on sales to certain customers, including the U.S. government
21. 21delays in the payment of our invoices by government payment offices
22. 22Our future growth and success depends in part on our ability to sell effectively to government entities and large enterprises
23. 23failing to implement controls and a system of review and approval for entries and changes to the system of record for equity
24. 24we transitioned our system of record for equity to a third party registrar and transfer agent
25. 25Our use of generative AI tools may pose risks to our proprietary software and systems and subject us to legal liability
26. 26Unfavorable conditions in our industry, the global economy or other catastrophic events may disrupt our business, could limit our ability to grow and could negatively affect our results of operations
27. 27The occurrence of adverse events, cancellations of significant projects, delays in project timelines, adjustments in cost structures, and other negative developments announced by competitors could have an impact on our operations, financial performance, and future prospects
28. 28Changes in market dynamics influenced by competitors’ actions, such as inflated cost adjustments or potential cancellations, could have ripple effects on our financial stability and profitability, influencing our financial metrics and potentially impacting investor perceptions
29. 29Government actions and regulations, such as tariffs and trade protection measures may adversely impact our business, including our ability to obtain products from our suppliers
30. 30the impact of future trade policies on our business. There is also a possibility of future tariffs, trade protection measures or other restrictions imposed on our products or on our customers by the United States or other countries that could have a material adverse effect on our business
31. 31Acquisitions, divestitures, strategic investments and strategic partnerships could disrupt our business and harm our financial condition and operating results and our stock price could decline
32. 32in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries
33. 33We 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 post-acquisition for which we have limited or no recourse
34. 34We could suffer future disruptions, outages, defects and other performance and quality problems with our quantum or information systems, and other infrastructure on which it relies
35. 35An 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

Risks Related to Our International Expansion and Future Operations

1. 36Because our success depends, in part, on our ability to expand sales internationally, our business will be susceptible to risks associated with international operations
2. 37Additionally, 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
3. 38Our international sales and operations subject us to additional risks and costs and exposure to foreign currency exchange rate fluctuations, that can adversely affect our business, financial condition, revenues, results of operations or cash flows
4. 39Our international operations may subject us to greater than anticipated tax liabilities

Risks Related to Compliance with Law, Government Regulation and Litigation

1. 40We 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
2. 41We 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
3. 42deficient, lacking in transparency, deceptive, unfair or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences
4. 43We 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
5. 44Contracts with government entities subject us to risks, including early termination, audits, investigations, sanctions and penalties
6. 45mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements
7. 46Certain 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
8. 47We 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
9. 48Changes in tax laws could adversely affect our business prospects and financial results
10. 49of the release of any tax valuation allowances; tax effects of stock-based compensation; or lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates
11. 50In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities. Outcomes from these audits may adversely affect our business, financial condition, and results of operations
12. 51Our operations and business plans could be significantly impacted by changes in federal, state, and local government policies and priorities
13. 52Our business and operations could be negatively affected if we become subject to litigation, including any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price
14. 53Our business is exposed to risks associated with litigation, investigations and regulatory proceedings
15. 54In 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

Risks Related to Our Intellectual Property

1. 55the effects of termination
2. 56We may not be able 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 in a timely manner, at an acceptable cost or at all
3. 57Our 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 competitive position
4. 58Our intellectual property often results from the performance of complex agreements that are subject to interpretation
5. 59indemnify organizations using our platform or third-party service providers
6. 60The market price of our common stock may be volatile, which could cause the value of your investment to decline
7. 61the impact of any of the foregoing on our management, employees, partners, customers, and operating results
8. 62If 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
9. 63Our financial results may vary significantly from quarter to quarter
10. 64fluctuations in commodity prices
11. 65Future resales of common stock may cause the market price of our securities to drop significantly, even if our business is doing well
12. 66Future issuances of debt securities and equity or equity-linked securities may adversely affect the market price of our common stock and may be dilutive to existing stockholders
13. 67Our failure to meet the continued listing requirements of NYSE could result in a delisting of our Company’s securities
14. 68Short 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
15. 69A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis
16. 70If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline
17. 71We have incurred and will continue to incur significant expenses and administrative burdens as a public company, which may adversely affect our business, prospects, financial condition and results of operations
18. 72We do not intend to pay cash dividends for the foreseeable future
19. 73Market values of growth-oriented companies like ours, particularly companies that entered into business combination agreements with SPACs, have at times been affected by adverse economic and market forces which may induce downward pressure on the price and trading volume of our common stock
20. 74Our employees and independent contractors may engage in misconduct or other improper activities, which could have an adverse effect on our business, prospects, financial condition and operating results
21. 75The Certificate of Incorporation and Bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law
22. 76We may redeem the Public Warrants for cash when the price per share of our Common Stock equals or exceeds $18.00
23. 77upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”); and
24. 78The exercise price for our Warrants is $11.50 per share of Common Stock. There is no guarantee that the Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the Warrants may expire worthless
25. 79incorporation or bylaws has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in the Certificate of Incorporation to be inapplicable or unenforceable in such action
26. 80Uncertain global macroeconomic, political conditions and natural or man-made interruptions could materially adversely affect our business prospects, financial condition, results of operations and cash flows