D-Wave Quantum (QBTS) - 2023 Q3 - Quarterly Report

Part I. Financial Information This part presents D-Wave's unaudited condensed consolidated financial statements, notes, and management's analysis Item 1. Financial Statements This section presents D-Wave's unaudited condensed consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of D-Wave's financial position, detailing assets, liabilities, and equity at specific points in time | Metric (in thousands of U.S. dollars) | September 30, 2023 | December 31, 2022 | Change | % Change | | :------------------------------------ | :------------------ | :----------------- | :----- | :------- | | Cash | $53,317 | $7,065 | $46,252 | 654.6% | | Total current assets | $58,194 | $13,925 | $44,269 | 317.9% | | Total assets | $70,179 | $26,947 | $43,232 | 160.4% | | Total current liabilities | $43,328 | $15,848 | $27,480 | 173.4% | | Total liabilities | $61,383 | $32,861 | $28,522 | 86.8% | | Total stockholders' (deficit) equity | $8,796 | $(5,914) | $14,710 | -248.7% | Condensed Consolidated Statements of Operations and Comprehensive Loss This section outlines D-Wave's financial performance over periods, reporting revenue, expenses, and net loss | Metric (in thousands of U.S. dollars) | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Change | % Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :----- | :------- | | Revenue | $2,562 | $1,695 | $867 | 51.1% | | Total gross profit | $1,529 | $1,041 | $488 | 46.9% | | Total operating expenses | $19,936 | $16,205 | $3,731 | 23.0% | | Loss from operations | $(18,407) | $(15,164) | $(3,243)| 21.4% | | Net loss | $(15,829) | $(13,311) | $(2,518)| 18.9% | | Net loss per share, basic and diluted | $(0.12) | $(0.11) | $(0.01)| 9.1% | | Metric (in thousands of U.S. dollars) | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :----- | :------- | | Revenue | $5,852 | $4,778 | $1,074 | 22.5% | | Total gross profit | $2,655 | $2,920 | $(265) | -9.1% | | Total operating expenses | $66,659 | $41,347 | $25,312| 61.2% | | Loss from operations | $(64,004) | $(38,427) | $(25,577)| 66.6% | | Net loss | $(66,335) | $(38,740) | $(27,595)| 71.2% | | Net loss per share, basic and diluted | $(0.50) | $(0.32) | $(0.18)| 56.3% | Condensed Consolidated Statements of Stockholders' (Deficit) Equity This section details changes in D-Wave's equity, including additional paid-in capital and accumulated deficit | Metric (in thousands of U.S. dollars) | September 30, 2023 | December 31, 2022 | Change | | :------------------------------------ | :------------------ | :----------------- | :----- | | Additional paid-in capital | $462,385 | $381,274 | $81,111| | Accumulated deficit | $(443,132) | $(376,797) | $(66,335)| | Total stockholders' (deficit) equity | $8,796 | $(5,914) | $14,710| - For the nine months ended September 30, 2023, the company issued 39,487,104 common shares under the Purchase Agreement, generating $61.3 million in proceeds, and 226,453 shares under the ESPP for $0.3 million. Stock-based compensation added $17.4 million to additional paid-in capital[32] Condensed Consolidated Statements of Cash Flows This section reports D-Wave's cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands of U.S. dollars) | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Change | | :------------------------------------------------ | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(45,910) | $(34,339) | $(11,571)| | Net cash used in investing activities | $(176) | $(316) | $140 |\ | Net cash provided by financing activities | $92,408 | $38,967 | $53,441|\ | Net increase in cash and cash equivalents | $46,252 | $4,281 | $41,971| - Operating cash outflows increased by $11.6 million YoY, primarily due to a higher net loss. Financing activities significantly increased cash, driven by $61.3 million from the Lincoln Park Purchase Agreement and $29.0 million from the Term Loan in 2023, compared to $40.0 million from PIPE investment and $19.9 million from Venture Loan in 2022[40][177][180][181] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of D-Wave's accounting policies and specific financial statement line items 1. Description of business This note describes D-Wave Quantum Inc.'s core business as a commercial quantum computing company - D-Wave Quantum Inc. is a commercial quantum computing company providing professional services and web-based access to its superconducting quantum computer systems (Advantage system) and integrated software environment via its cloud service, Leap™[44] 2. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the financial statement basis, significant accounting policies, and going concern considerations - The Company has incurred significant net losses and negative cash flows from operations since inception, with an accumulated deficit of $443.1 million as of September 30, 2023. Management has determined that the Company's liquidity condition raises substantial doubt about its ability to continue as a going concern for the next year[51][56] - The Term Loan with PSPIB provides $50.0 million in three tranches, with the first two tranches ($15.0 million each) already advanced. The third tranche of $20.0 million is subject to conditions, including a $25.0 million non-dilutive financing and a satisfactory operating budget by December 31, 2023. PSPIB waived minimum revenue covenants for Q2 and Q3 2023[52][101][102] - The Purchase Agreement with Lincoln Park allows D-Wave to sell up to $150 million of common stock through November 1, 2025. For the nine months ended September 30, 2023, $61.3 million was raised. However, sales are subject to a $1.00 floor price, which the stock has fallen below since October 11, 2023, potentially limiting future liquidity from this source[53][172] Fair Value of Financial Instruments (September 30, 2023) | Description | Level | Amount (in thousands) | | :-------------------------------- | :---- | :-------------------- | | Warrant Liabilities – Public W