RIGETTI COMPUTING, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations section should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included elsewhere in this
Quarterly Report on Form
10-Q
(this "Report"). This discussion and analysis contains forward-looking
statements, such as statements of our plans, objectives, expectations and
intentions. Any statements that are not statements of historical fact are
forward-looking statements. When used, the words "believe," "plan," "intend,"
"anticipate," "target," "estimate," "expect," "will," "continue," "project," and
the like, and/or future tense or conditional constructions ("will," "may,"
"could," "should," etc.), or similar expressions, identify certain of these
forward-looking statements. These forward-looking statements are subject to
risks and uncertainties, including those we describe under "Risk Factors" and
elsewhere in this Report that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements.
Our actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a variety of
factors.

For the purposes of this discussion, “Rigetti”, “the company”, “we”, “us” or “our” means Rigetti Computing, Inc. and that is unless the context requires otherwise.

Insight


On March 2, 2022 (the "Closing Date"), we consummated the transactions
contemplated by that certain Agreement and Plan of Merger dated as of October 6,
2021, as amended on December 23, 2021 and January 10, 2022 (as amended, the
"Merger Agreement"), by and among Supernova Partners Acquisition Company II,
Ltd., a Cayman Islands exempted company ("Supernova"), Supernova Merger Sub,
Inc., a Delaware corporation and a direct wholly owned subsidiary of Supernova
(the "First Merger Sub"), Supernova Romeo Merger Sub, LLC, a Delaware limited
liability company and a direct wholly owned subsidiary of Supernova (the "Second
Merger Sub"), and Rigetti Holdings, Inc., a Delaware corporation ("Legacy
Rigetti"). As contemplated by the Merger Agreement, on March 1, 2022 Supernova
was domesticated as a Delaware corporation and changed its name to "Rigetti
Computing, Inc." (the "Domestication"). On the Closing Date, (i) First Merger
Sub merged with and into Legacy Rigetti, the separate corporate existence of
First Merger Sub ceased and Legacy Rigetti survived as a wholly owned subsidiary
of Rigetti Computing, Inc. (the "Surviving Corporation" and, such merger, the
"First Merger"), and (ii) immediately following the First Merger, the Surviving
Corporation merged with and into the Second Merger Sub, the separate corporate
existence of the Surviving Corporation ceased and Second Merger Sub survived as
a wholly owned subsidiary of Rigetti Computing, Inc. and changed its name to
"Rigetti Intermediate LLC" (such merger transaction, the "Second Merger" and,
together with the First Merger, the "Merger", and, collectively with the
Domestication, the "PIPE Financing" (as defined below) and the other
transactions contemplated by the Merger Agreement, the "Business Combination").
The closing of the Business Combination is herein referred to as "the Closing."

We build quantum computers and the superconducting quantum processors that power
them. We believe our quantum computing represents one of the most transformative
emerging capabilities in the world today. By leveraging quantum mechanics, our
quantum computers process information in fundamentally new, more powerful ways
than classical computers. When scaled, it is anticipated that these systems will
be poised to solve problems of staggering computational complexity at
unprecedented speed.

With the goal of unlocking this opportunity, we have developed the world's first
multi-chip quantum processor for scalable quantum computing systems. We believe
that this patented and patent pending, modular chip architecture is the building
block for new generations of quantum processors that we expect to achieve a
clear advantage over classical computers.

Our long-term business model centers on revenue generated from quantum computing
systems made accessible via the cloud in the form of Quantum Computing as a
Service ("QCaaS") products. However, the substantial majority of our revenues is
derived from development contracts, and we anticipate this to persist over at
least the next several years as we work to ramp up our QCaaS business.
Additionally, we are working to further develop a revenue stream and forging
important customer relationships by entering into technology development
contracts with various partners.

We are a vertically integrated company. We own and operate
Fab-1,
a dedicated and integrated laboratory and manufacturing facility, through which
we own the means of producing our breakthrough multi-chip quantum processor
technology. We leverage its chips through a full-stack product development
approach, from quantum chip design and manufacturing through cloud delivery. We
believe this full-stack development approach offers both the fastest and lowest
risk path to building commercially valuable quantum computers.

We have been generating revenue since 2018 through partnerships with government
agencies and commercial organizations; however, we have not yet generated
profits and have incurred significant operating losses since inception. Our net
losses were $10.5 million and $7.8 million for the three months ended March 31,
2022, and 2021, respectively. As we expect to continue to invest in research and
development infrastructure, we expect to continue to incur additional losses for
the foreseeable future in line with its long-term business strategy. As of
March 31, 2022, we had an accumulated deficit of $217.6 million.

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Business Combination and PIPE Financing


On October 6, 2021, SNII entered into the Merger Agreement by and among
Supernova, First Merger Sub, Second Merger Sub, and Legacy Rigetti. On March 2,
2022, the Business Combination was consummated. While the legal acquirer in the
Merger Agreement was Supernova, for financial accounting and reporting purposes
under United States generally accepted accounting principles ("U.S. GAAP"),
Rigetti was the accounting acquirer and the Merger was accounted for as a
"reverse recapitalization." A reverse recapitalization does not result in a new
basis of accounting, and financial statements of Rigetti represent the
continuation of the financial statements of Legacy Rigetti in many respects.
Under this method of accounting, Supernova was treated as the "acquired" company
for financial reporting purposes. For accounting purposes, Rigetti was deemed to
be the accounting acquirer in the transaction and, consequently, the transaction
was treated as a recapitalization of Rigetti (i.e., a capital transaction
involving the issuance of stock by Supernova for the stock of Rigetti).

As a result of the Business Combination, each share of Legacy Rigetti common
stock (including Legacy Rigetti common stock resulting from the Legacy Rigetti
preferred stock conversion) was converted into the right to receive an aggregate
of 78,959,579 shares of our common stock, par value $0.0001 per share ("Common
Stock"). Additionally, each issued and outstanding shares of Supernova Class A
and Class B common stock held by Supernova automatically converted to 20,209,462
shares of Common Stock (of which 3,059,273 shares are subject to vesting under
certain conditions). Upon consummation of the Business Combination, the most
significant change in our reported financial position and results of operations
was an increase in cash of $208.9 million (as compared to Rigetti's balance
sheet at December 31, 2021), including $225.6 million of proceeds from the
Business Combination and PIPE Financing net against SNII transaction costs of
$38.1 million.

Generally, costs (e.g., SPAC shares) are recorded as a reduction to additional
paid-in
capital. Costs allocated to liability-classified instruments that are
subsequently measured at fair value through earnings (e.g., certain SPAC
warrants) are expensed. Additional direct and incremental transaction costs were
also incurred by Rigetti in connection with the Business Combination. Generally,
costs (e.g., SPAC shares) are recorded as a reduction to additional paid-in
capital. Costs allocated to liability-classified instruments that are
subsequently measured at fair value through earnings (e.g., certain SPAC
warrants) are expensed. Rigetti's transaction costs totaled $20.65 million, of
which $19.75 million was allocated to equity-classified instruments and recorded
as a reduction to additional paid-in capital, and the remaining $0.9 million was
allocated to liability-classified instruments that are subsequently measured at
fair value through earnings and recognized as expense in the condensed
consolidated statements of operations during the three months ended March 31,
2022.

As a result of the Business Combination, we became subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended, and listing
standards of the Nasdaq Capital Market, which will necessitate us to hire
additional personnel and implement procedures and processes to address such
public company requirements. We expect to incur additional ongoing expenses as a
public company for, among other things, directors' and officers' liability
insurance, director fees, and additional internal and external accounting, legal
and administrative resources.

Our future consolidated results of operations and financial condition may not be comparable to historical results following the business combination.

COVID-19 Update

the

COVID-19[feminine]

The pandemic continues to evolve rapidly and we intend to continue to monitor it closely.


The evolution of the virus is unpredictable and any resurgence may slow down our
ability to develop our quantum computing products and related services. The
COVID-19
pandemic could limit the ability of suppliers and business partners to perform,
including third-party suppliers' ability to provide components, services and
materials. We may also experience an increase in the cost of raw materials.

The full impact of the
COVID-19
pandemic continues to evolve. As such, the full magnitude of the pandemic's
effect on our financial condition, liquidity and future results of operations is
uncertain. Management continues to actively monitor our financial condition,
liquidity, operations, suppliers, industry and workforce.

Impacts of the
COVID-19
pandemic, some of which we have already experienced, include those described
throughout the "Risk Factors" included in this Report, including the risk factor
titled "
A pandemic, epidemic or outbreak of an infectious disease in the United States
or worldwide could adversely affect our business
."

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Change of exercise


In October 2021, our board of directors approved a change to our fiscal
year-end
from January 31 to December 31, effective December 31, 2021. We believe the
year-end
change is important and useful to our financial statement users to allow for
increased comparability with our industry peers. As a result of this change, our
fiscal year now begins on January 1 and ends on December 31 of each year,
starting on January 1, 2022. Year-over-year quarterly financial data has been
and will continue to be recast to be comparative with the new fiscal quarter
ends in the new fiscal year.

Key elements of operating results

Revenue


We generate revenue through our development contracts, as well as from our QCaaS
offerings and other services including training and provision of quantum
computing components. Development contracts are generally multi-year,
non-recurring
arrangements pursuant to which we provide professional services regarding
collaborative research in practical applications of quantum computing to
technology and business problems within the customer's industry or organization
and assists the customer in developing quantum algorithms and applications to
assist customer in areas of business interest. QCaaS revenue is recognized on a
ratable basis over the contract term or on a usage basis, which generally ranges
from three months to two years. Revenue related to development contracts and
other services is recognized as the related milestones are completed or over
time, as the work required to complete these milestones is completed. Revenue
related to the sale of custom quantum computing components is recognized at a
point in time upon acceptance by the customer.

Revenue cost


Cost of revenue consists primarily of all direct and indirect cost associated
with providing QCaaS offerings and development contracts and other services,
including employee salaries and employee related costs, including compensation,
bonuses, employee taxes and benefit costs of program management and personnel
associated with the delivery of goods and services to customers. Cost of revenue
also includes an allocation of facility costs, depreciation and amortization
directly related to providing the QCaaS offerings and development contracts and
other services. We expect cost of revenue to increase as we continue to expand
on our operations, enhance our service offerings and expand our customer base.

Functionnary costs

Our operating expenses include selling and marketing expenses, general and administrative expenses, and research and development expenses.

Research and development


Research and development costs are expensed as incurred. Research and
development expenses include compensation, employee benefits, stock-based
compensation, outside consultant fees, allocation of facility costs,
depreciation and amortization, materials and components purchased for research
and development. We expect research and development expenses to increase as we
invest in the enhancement of our product offerings. We do not currently
capitalize any research and development expenditures.

Sales and Marketing


Sales and marketing expenses consist primarily of compensation including
stock-based compensation, employee benefits of sales and marketing employees,
outside consultants' fees, travel and marketing and promotion costs. We expect
selling and marketing expenses to increase as we continue to expand on our
operations, enhance our service offerings, expand our customer base, and
implement new marketing strategies.

General and administrative


General and administrative expenses include compensation, employee benefits,
stock-based compensation, legal, insurance, finance administration and human
resources, an allocation of facility costs (including leases), bad debt costs,
professional service fees, and an allocation of other general overhead costs
including depreciation and amortization to support our operations, which consist
of operations other than associated with providing QCaaS offerings and
development contracts and other services. We expect our general and
administrative expenses to increase as we continue to grow our business. We also
expect to incur additional expenses as a result of operating as a public
company.

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Provision for income taxes


Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. A
valuation allowance is recorded for deferred tax assets if it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. We have recorded a full valuation allowance against our deferred tax
assets.

Results of Operations

Three months completed March 31, 2022 compared to the three months ended March 31, 2021


The following tables set forth our results of operations for the periods
indicated:

                                                   Three Months Ended
                                                       March 31,
                                                  2022            2021         $ Change         % Change
                                                     (In thousands)
Revenue:                                        $   2,104       $  2,360       $    (256 )            -11 %
Cost of revenue                                       414            273             141               52 %

Total gross profit                                  1,690          2,087            (397 )            -19 %
Operating expenses:
Research and development                           12,449          6,934           5,515               80 %
Sales and marketing                                 1,475            312           1,163              373 %
General and administrative                         11,560          2,521           9,039              359 %

Total operating expenses                           25,484          9,767          15,717              161 %

Loss from operations                              (23,794 )       (7,680 )       (16,114 )            210 %

Other (expense) income, net:
Interest (expense)                                 (1,205 )          (77 )        (1,128 )             nm
Change in fair value of warrant liabilities         5,822             -            5,822               nm
Change in fair value of
earn-out
liability                                           9,634             -            9,634               nm
Transaction cost                                     (927 )           -             (927 )             nm
Other income                                           -             (30 )            30             -100 %

Total other (expense) income, net                  13,324           (107 )  

14,559

Net loss before provision for income taxes (10,470 ) (7,787 )

      (2,683 )
Provision for income taxes                             -              -               -

Net loss                                        $ (10,470 )     $ (7,787 )     $  (2,683 )



Revenue

Revenue decreased $0.3 million, or 11%, to $2.1 million for the three months
ended March 31, 2022, from $2.4 million for the three months ended March 31,
2021. The period over period change is primarily attributable to the completion
of the first phase of a large government agency project of $1.3 million in the
three months ended March 31, 2021, partially offset by the expansion in scope of
U.S. and U.K. government agency projects of $1.0 million for the three months
ended March 31, 2022. These development contracts are fixed price milestone or
cost share-based contracts and the timing and amounts of revenue recognized in
each quarter will therefore vary based on the delivery of the associated
milestones and/ or the work performed. We expect to continue to generate the
majority of our revenue from development contracts over at least the next
several years and that revenue will be variable in timing and size, as we work
to ramp up our QCaaS business for the longer term.

Revenue cost


Cost of revenue increased $0.1 million, or 52%, to $0.4 million for the three
months ended March 31, 2022, as compared to $0.3 million for the three months
ended March 31, 2021. The increase was mainly attributable to an increase in
employee-related costs of $0.1 million in the three months ended March 31, 2022.
We expect the costs to increase as we seek to expand headcount and increase
subcontract costs related to our collaborative development contract services
work with government agencies. In addition, we expect to incur increased costs
associated with equipment, system components and labor global economic
conditions, including inflation, labor shortages and supply conditions.

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Functionnary costs

Research and development costs


Research and development expenses increased by $5.5 million, or 80%, to
$12.4 million for the three months ended March 31, 2022, from $6.9 million for
the three months ended March 31, 2021. The increase was primarily attributable
to:

• a $3.6 million increase in personnel costs during the three months

finished March 31, 2022 due to an increase in staff and resulting salaries

costs $1.5 milliona $0.5 million increase due to increase in

stock-based compensation expense, and

Once

cumulative recognition of previously deferred stock-based compensation expense

of $1.6 million linked to satisfaction of the liquidity condition

          with respect to outstanding stock units recognized as a result of the
          close of the Business Combination; and


• a $1.9 million increased hardware and software subscription costs due to

continued and increased investment in research and development efforts.



We expect research and development expenses to increase as we continue to invest
in the enhancement of our product offerings, including with respect to cost of
building QPU fridges, quantum chip fabrication costs and general salaries and
wages. In addition, we expect to incur increased research and development
expenses due to increasing costs of labor, equipment and components as a result
of inflation, labor shortages and supply conditions. As a result of these
factors, combined with lower than anticipated proceeds raised in the Business
Combination, we expect the timelines for the development of our 1,000 and 4,000
qubit systems to increase.

Sales and Marketing Expenses

Sales and marketing expenses increased by $1.2 million, or 373%, to $1.5 million
for the three months ended March 31, 2022 from $0.3 million for the three months
ended March 31, 2021. The increase was primarily driven by a $1.1 million
increase in employee related costs of $0.7 million due to increase in headcount
and resulting wages and $0.4 million due to a
one-time
cumulative recognition of previously deferred stock compensation expense of
$1.6 million related to the vested restricted stock units recognized as a result
of the close of the Business Combination.

We expect sales and marketing expenses to increase as we seek to expand our business, improve our service offerings, expand our customer base and implement new marketing strategies, including with respect to customer acquisition efforts and general marketing campaigns.

General and administrative expenses

General and administrative expenses increased by $9.0 millioni.e. 359%, at
$11.6 million for the three months ended March 31, 2022from $2.5 million for the three months ended March 31, 2021. The increase is mainly due to:

• a

Once

cumulative recognition of previously deferred stock-based compensation expense

of $6.9 million linked to satisfaction of the liquidity condition

          with respect to outstanding stock units recognized as a result of the
          close of the Business Combination;



     •    one-time

transaction bonuses allocated to employees as part of the closing

          of the Business Combination and associated taxes of $2.1 million;



  •   $1.7 million increase in stock compensation expense;


$0.5 million due to increased legal and accounting costs related to the improvement

          public reporting requirements and other software acquisition costs;



  •   $0.2 million due to executive incentive plan related bonuses; and


$0.4 million due to the increase in labor costs related to the workforce to build and

          upgrade the resources to operate as a public company and to build out our
          information security team.

This increase was partially offset by the gain on the change in fair value of the forward $2.9 million which was concluded with Ampere within the framework of a strategic collaboration agreement. We expect general and administrative expenses to increase as we operate as a public company.

Other Income (Expense), net

Interest Expense

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Interest expense was $1.2 million for the three months ended March 31, 2022,
increased from $77 thousand for the three months ended March 31, 2021. The
increase in expense was a result of the Loan Agreement we entered into with
Trinity Capital Inc. ("Trinity") in March 2021 (as amended from time to time,
the "Loan Agreement"). The period over period increase was primarily because for
the three months ended March 31, 2022, interest expense was calculated based on
the overall borrowings under the Loan Agreement of $32.0 million for a
three-month interest period, while for the same period in 2021, interest expense
was based on borrowings under the Loan Agreement of $12.0 million for a shorter
interest period of only 10 days.

Change in fair value of warrant liabilities


A discussion of change in fair value of warranty liabilities is included in Note
10 to our unaudited condensed consolidated financial statements for the three
months period ended March 31, 2022, included elsewhere to this Report.

Change in Fair Value of
Earn-out
Liability

A discussion of change in fair value of
earn-out
liability is included in Note 2,
Sponsor Earn-Out Liability,
to our unaudited condensed consolidated financial statements for the three
months period ended March 31, 2022, included elsewhere to this Report.

Transaction costs


Transaction costs arose from the Business Combination allocated to
liability-classified instruments that are subsequently measured at fair value
through earnings must be expensed as incurred. We incurred a total transaction
cost of $0.9 million allocated to liability-classified instruments for the three
month period ended March 31, 2022. We did not incur any transaction costs for
the comparable three months ended March 31, 2021.

Cash and capital resources


We have incurred net losses since inception, and experienced negative cash flows
from operations. Prior to the Business Combination, we financed our operations
primarily through the issuance of preferred stock, warrants, convertible notes
and revenue. During the three months ended March 31, 2022, we incurred net
losses of $10.5 million. As of March 31, 2022, we had an accumulated deficit of
$217.6 million, and we expect to incur additional losses and higher operating
expenses for the foreseeable future in line with our long-term business and
investment strategy. In connection with the closing of the Business Combination
on March 2, 2022, we received a total of $225.6 million from the Business
Combination and PIPE Investment, net against SNII transaction costs. We believe
that our existing cash and cash equivalents, including net proceeds from the
Business Combination, should be sufficient to meet our anticipated operating
cash needs for at least the next 12 months based on our current business plan
and expectations and assumptions in light of current macroeconomic conditions.
We have based these estimates on assumptions that may prove to be wrong, and
could use our available capital resources sooner than we currently expect, and
future capital requirements and the adequacy of available funds will depend on
many factors, including those described in the section titled "Risk Factors" in
this Report.

Our primary uses of cash are to fund our operations as we continue to grow our
business. We will require a significant amount of cash for expenditures as we
invest in ongoing research and development and business operations. Until such
time as we can generate significant revenue from sales of our development
contracts and other services, we expect to finance our cash needs through
borrowings under the Loan Agreement and equity or debt financings or other
capital sources, including development contract revenue with government agencies
and strategic partnerships. 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 common 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 are
unable to raise additional funds through equity or debt financings when needed,
we may be required to delay, limit, or substantially reduce our quantum
computing 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" included in this Report.

Loan and guarantee agreement


On March 10, 2021, we entered into the Loan Agreement with Trinity for term
loans with a principal amount of $12.0 million, bearing an interest rate of the
greater of 7.5% plus the prime rate published by the Wall Street Journal or
11.0%. In addition, we are required to pay a final payment fee equal to 2.75% of
the aggregate amount of all term loan advances. The term loans under the Loan
Agreement are secured by all of our assets. The Loan Agreement contains
customary representations, warranties and covenants, but does not include any
financial covenants. The negative covenants include restrictions on the ability
to incur indebtedness, pay dividends, execute fundamental change transactions,
and other specified actions. In connection with entry into the Loan Agreement,
we issued a warrant to purchase our shares of common stock to Trinity. The
Guarantor of the loan is Rigetti Holdings, Inc. and the loan is secured by
substantially all of our assets.

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On May 18, 2021, we entered into a first amendment to the Loan Agreement, which
modified certain financial covenants, including an additional good faith deposit
of $20,000 and adding a tranche B to the Loan Agreement in an aggregate amount
of $15.0 million, consisting of two advances of $8.0 million and $7.0 million
each. In connection with such amendment, the maturity date was modified to be
the date equal to 48 months from the first payment date of each specific cash
advance. In connection with such amendment, we cancelled the initial warrants
and issued a warrant to purchase 995,099 shares of our common stock.

On October 21, 2021, we entered into a second amendment to the Loan Agreement,
which modified the date requiring us to deliver evidence of completion of the
PIPE transaction and execution of a definitive merger agreement with a special
purpose acquisition company to October 31, 2021.

Pursuant to the second amendment, the maturity date was modified to be the date
equal to 48 months from the first payment date of each specific cash advance.
Subject to an interest only period of 18 months following each specific cash
advance date, the term loan incurs interest at the greater of a variable
interest rate based on prime rate or 11% per annum, payable monthly.
Interest-only payments are due monthly immediately following an advance for a
period of 18 months and, beginning on the 19th month, principal and interest
payments are due monthly.

In January 2022, we entered into the third amendment to the Loan Agreement to
increase the debt commitment by $5.0 million to $32.0 million. The amendment
allows us to draw an additional $5.0 million immediately with an additional
$8.0 million to be drawn at the sole discretion of the lender. We drew the
additional $5.0 million upon signing the amendment. Other modifications per the
amendment included an extension of the requirement to raise an additional
$75 million of equity and a defined exit fee for the additional $5.0 million to
be at 20% of the advanced funds under the amendment. In conjunction with the
amendment, we also guaranteed payment of all monetary amounts owed and
performance of all covenants, obligations and liabilities. As of March 31, 2022,
the total principal amount outstanding under Loan Agreement was approximately
$32.0 million. We use borrowings under the Loan Agreement for working capital
purposes.

The loan agreement is secured by a first ranking charge on substantially all of our assets. As of the date of this report, we are in compliance with all the covenants of the loan agreement.


Our cash commitments as of March 31, 2022 were primarily as follows (in
thousands):

                               Total        Short-Term       Long-Term
Financing obligations         $ 30,043     $      2,365     $    27,678
Operating lease obligations      4,180            1,314           2,866

Total                         $ 34,223     $      3,679     $    30,544



Financing obligations consist of principal and unamortized financing costs
related to the Loan and Security Agreement. Operating lease obligations consist
of obligations under
non-cancelable
operating leases for our offices and facilities. The cash requirements in the
table above are associated with contracts that are enforceable and legally
binding and that specify all significant terms, including fixed or minimum
services to be used, fixed, minimum or variable price provisions, and the
approximate timing of the actions under the contracts. The table does not
include obligations under agreements that we can cancel without a significant
penalty.

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