qbts-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

(Mark One)


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

For the quarterly period ended June 30, 2022


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

For the transition period from ___________ and ____________

Commission file number 001-41468

________________________

D-WAVE QUANTUM INC.

(Exact name of registrant as specified in its charter)

________________________


Delaware			88-1068854
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3033 Beta Avenue, Burnaby, British Columbia, Canada			V5G 4M9
(Address of Principal Executive Offices)			(Zip Code)

(604) 630-1428

Registrant's telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

________________________

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	QBTS	New York Stock Exchange
Warrants, each whole warrant exercisable for 1.4541326 shares of Common Stock at an exercise price of $11.50	QBTS.WS	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 x No o

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 x No o

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.

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of August 23, 2022, the registrant had 61,598,331 shares of common stock at par value $0.0001 outstanding. In addition, there were 48,409,641 exchangeable shares outstanding as of August 23, 2022, which are convertible into shares of common stock on a one for one basis at any time for no consideration.

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		Page

Part I. Financial Information
Item 1.	D-Wave Quantum Inc. Financial Statements (Unaudited)	5
	D-Wave Systems Inc. Financial Statements (Unaudited)	10
	Unaudited Condensed Consolidated Balance Sheets	10
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	11
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity	12
	Unaudited Condensed Consolidated Statements of Cash Flows	13
	Notes to Condensed Consolidated Financial Statements	14
Item 2.	D-Wave Quantum Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
	D-Wave Systems Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40

Part II. Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
Signatures		46

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q (this “Report”) and in documents incorporated herein by reference may constitute “forward-looking statements” for purposes of the federal securities laws. Unless otherwise indicated or the context otherwise requires, all references in this Report to the terms “D-Wave” and the “Company” refer to D-Wave Quantum Inc., together with its subsidiaries. Our forward-looking statements include, but are not limited to, statements regarding D-Wave”) and D-Wave’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “believe,” “may,” “will,” “could,” “would,” “should,” “would,” “expect,” “intend,” “plan,” “anticipate,” “trend,” “believe,” “estimate,” “predict,” “project,” “potential,” “seem,” “seek,” “future,” “outlook,” “forecast,” “projection,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. We caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, which are subject to a number of risks. Forward-looking statements in this Report may include, for example, statements about:

•D-Wave's future growth and innovations;

•the increased adoption of quantum computing solutions and expansion of related market opportunities and use cases;

•the estimated total addressable market (“TAM”) for quantum computing and expectations regarding product development and functionality;

•D-Wave’s financial and business performance, including financial projections and business metrics;

•changes in D-Wave’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

•the ability of D-Wave’s products and services to meet customers’ compliance and regulatory needs;

•D-Wave’s ability to attract and retain qualified employees and management;

•D-Wave’s ability to develop and maintain its brand and reputation;

•developments and projections relating to D-Wave’s competitors and industry;

•the impact of health epidemics, including the COVID-19 pandemic, on D-Wave’s business and the actions D-Wave may take in response thereto;

•D-Wave’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

•expectations regarding the time during which we will be an emerging growth company under the JOBS Act;

•D-Wave’s future capital requirements and sources and uses of cash;

•D-Wave’s ability to obtain funding for its operations and future growth; and

•D-Wave’s business, expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this Report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties and are not predictions of actual performance. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

These forward-looking statements are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability regarding future performance, events or circumstances. Many of the factors affecting actual performance, events and circumstances are beyond the control of D-Wave. 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.

Some factors that could cause actual results to differ include:

•anticipated trends, growth rates, and challenges in companies, such as D-Wave, that are engaged in the business of quantum computing and in the markets in which they operate;

•the risk that D-Wave’s securities will not maintain a listing on the New York Stock Exchange (“NYSE”);

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•D-Wave’s ability to recognize the anticipated benefits of the Transaction, which may be affected by, among other things, competition and the ability of D-Wave to grow and achieve and maintain profitability following the Business Combination (as defined below);

•risks related to the uncertainty of the unaudited prospective forecasted financial information;

•risks related to the performance of D-Wave’s business and the timing of expected business or financial milestones;

•unanticipated technological or project development challenges, including with respect to the cost and or timing thereof;

•the performance of D-Wave’s products and services;

•the effects of competition on D-Wave’s business;

•changes in the business of D-Wave, D-Wave’s market, financial, political and legal conditions;

•the risk that D-Wave will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all;

•the risk that D-Wave may never achieve or sustain profitability;

•the risk that D-Wave is unable to secure or protect its intellectual property;

•changes in applicable laws or regulations;

•the effect of the COVID-19 pandemic, geopolitical events, natural disasters, wars, terrorist acts or a combination of these factors on D-Wave’s business and the economy in general;

•the ability of D-Wave to execute its business model, including market acceptance of its planned products and services;

•D-Wave’s ability to raise capital;

•the possibility that D-Wave may be negatively impacted by other economic, business, and/or competitive factors;

•risks stemming from inflation;

•any changes to U.S. tax laws; and

•other risks and uncertainties described in Report, including those referenced under the section titled “Risk Factors.”

In addition, statements that “D-Wave believes” and similar statements reflect D-Wave’s beliefs and opinions on the relevant subject. These statements are based upon information available to D-Wave as of the date of this Report, and while D-Wave believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that such party has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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Part I - Financial Information

Item 1. Financial Statements

D-Wave Quantum Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30,
	2022
Assets
Current assets:
Cash and cash equivalents	$	1
Total current assets	$	1
Total assets	$	1
Liabilities and stockholders' equity
Stockholders' equity:
Common stock, no par value; unlimited number of shares authorized; 100 and nil shares issued and outstanding as of June 30, 2022 and January 24, 2022, respectively.	1
Total stockholders' equity	1
Total liabilities and stockholders’ equity	$	1

See accompanying notes to the condensed consolidated financial statements.

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D-Wave Quantum Inc.

Condensed Consolidated Statements of Stockholders' Equity


	Common stock			Total stockholders' equity
(In thousands, except share data)	Shares	Amount
Balances at January 24, 2022	—	$	—	$	—
Issuance of common stock	100	1		1
Stock-based compensation				—
Net loss				—
Balances at June 30, 2022	100	$	1	$	1

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D-Wave Quantum Inc.

Condensed Consolidated Statements of Cash Flows


	For the period from January 24, 2022 to June 30, 2022

Cash flows from operating activities:
Net loss	$	—
Cash flows from financing activities:
Proceeds from issuance of common stock	1
Debt payments	—
Net cash provided by financing activities	1
Effect of exchange rate changes on cash and cash equivalents	—
Net (decrease) increase in cash and cash equivalents	1
Cash and cash equivalents at beginning of period	$	—
Cash and cash equivalents at end of period	$	1

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D-Wave Quantum Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.Background and Nature of Operations

D-Wave Quantum Inc. ("D-Wave" or the “Company”) was incorporated as a corporation organized and existing under the General Corporation Law of the State of the Delaware on January 24, 2022. The Company was formed for the purpose of effecting a merger between DPCM Capital, Inc. (“DPCM”), D-Wave Systems Inc. (“D-Wave Systems”), and certain other affiliated entities through a series of transactions (the “Business Combination”) pursuant to the definitive agreement entered into on February 7, 2022 (the “Transaction Agreement”). On August 5, 2022, in conjunction with the Business Combination, DPCM and D-Wave Systems became wholly owned subsidiaries of and are operated by the Company. Upon the completion of the Business Combination, the Company succeeded to substantially all of the operations of its predecessor, D-Wave Systems.

In conjunction with the Business Combination, D-Wave Systems and the Company entered into an agreement with Lincoln Park Capital Fund LLC (the "Investor") on June 16, 2022 which provides D-Wave the sole right, but not the obligation, to direct the Investor to buy specified dollar amounts up to $150.0 million of D-Wave's par value $0.0001 per share common stock through an Equity Line of Credit ("ELOC"). The ELOC will provide D-Wave Systems and the Company with additional liquidity to fund the business, subject to the conditions set forth in the agreement.

2.Basis of Presentation and Accounting

The unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America. Separate balance sheets, statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows have not been presented because there have only been nominal activities in this entity as of June 30, 2022. For the period ended June 30, 2022, the Company's only activity was the issuance of 100 shares of common stock, each having a par value of $0.0001 per share.

The condensed consolidated balance sheet includes the accounts of the Company and its wholly owned subsidiary during the relevant periods. The Company did not have any operations for the period ended June 30, 2022.

3.Summary of Significant Accounting Policies – Use of Estimates

The preparation of the financial statements in conformity with the accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.

4.Subsequent Event

The Company evaluated subsequent events and transactions that occurred after the balance sheet data up to the date that the condensed consolidated financial statements were issued. Except as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Business Combination

On August 5, 2022, in accordance with the Transaction Agreement, the Company acquired 100% of the outstanding equity interests of DPCM and D-Wave Systems. As set forth in the Transaction Agreement, D-Wave Systems became an indirect subsidiary of D-Wave Quantum. For accounting purposes, the Business Combination will be accounted for as a reverse recapitalization whereby D-Wave Systems will be treated as the accounting acquirer and DPCM will be treated as the acquired company. Cash received by the Company from the Business Combination, including the PIPE Investment (as defined below) and DPCM cash on hand, totaled $37.6 million, net of related transaction costs.

On August 8, 2022, in connection with the close of the Business Combination, the Company Shares, as defined below, and the warrants to purchase Company Shares (the "Company Warrants") were listed and began trading on the New York Stock Exchange under the symbols "QBTS" and "QBTS.WS", respectively. The Company Warrants arose from the Business Combination and reflect the Warrants from D-Wave Systems as discussed in Note 9 of D-Wave Systems' condensed consolidated financial statements.

2022 Equity Incentive Plan

On August 5, 2022, the DPCM stockholders considered and approved the D-Wave Quantum 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan became effective immediately upon the Closing. The 2022 Plan initially makes

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available a maximum number of 16,965,849 common shares in the stock of D-Wave ("Company Shares"). Additionally, the number of shares reserved for issuance under the 2022 Plan will increase on January 1st of each year for a period of ten years commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (a) 5% of the fully-diluted number of Company Shares outstanding on December 31st of the immediately preceding calendar year (inclusive of the Share Pool (as defined in the 2022 Plan) and the share reserve under the 2022 Plan (or any successor to either of the foregoing)) and (b) such smaller number of shares as is determined by the D-Wave board of directors.

Employee Stock Purchase Plan

On August 5, 2022, the DPCM stockholders considered and approved the D-Wave Quantum Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective immediately upon the Closing. The ESPP initially makes available for sale a maximum number of 8,036,455 Company Shares. Additionally, the number of shares reserved for issuance under the ESPP will increase on January 1st of each year for a period of ten years commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (a) 1% of the fully diluted number of Company Shares outstanding on December 31st of the immediately preceding calendar year (inclusive of the share reserve under the ESPP and the 2022 Plan (or any successor to either of the foregoing)), (b) 1,607,291 shares and (c) such smaller number of shares as is determined by the D-Wave board of directors.

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D-Wave Systems Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30,	December 31,
(In thousands of U.S. dollars, except share and per share data)	2022	2021
Assets
Current assets:
Cash and cash equivalents	$

SEC Form 10-Q filed by D-Wave Quantum Inc.