D-Wave Quantum Inc. Form 8-K Summary
Business Context and Reporting Period
Filed August 10, 2022, reporting events occurring primarily on August 5, 2022. D-Wave Quantum Inc. completed its business combination with DPCM Capital, Inc. and D-Wave Systems Inc. DPCM ceased to be a shell company, and D-Wave became a subsidiary of D-Wave Quantum.
- D-Wave Quantum common stock and warrants began trading on the New York Stock Exchange under the symbols QBTS and QBTS.WS on August 8, 2022.
- The transaction was approved by DPCM stockholders on August 2, 2022.
- The filing provides post-closing information and incorporates historical financial statements and management discussion from the merger proxy statement/prospectus. It is not a quarterly or annual earnings filing.
Key Financial and Capitalization Metrics
- DPCM shareholders redeemed 29,097,787 Class A shares for approximately $291.4 million, or approximately $10.01 per share.
- Non-redeeming DPCM Class A shares converted into 1,311,937 D-Wave Quantum common shares.
- D-Wave shareholders received approximately 99.7 million D-Wave Quantum common and exchangeable shares, excluding D-Wave options and warrants.
- The PIPE financing raised $40.0 million and resulted in the issuance of 5,816,528 D-Wave Quantum shares.
- D-Wave Quantum issued 127,180 shares to Lincoln Park in respect of $875,000 of a $2.625 million commitment fee.
- Lincoln Park also committed, at D-Wave Quantum’s option and subject to conditions, to purchase up to $150 million of common shares over 36 months following closing.
- As of closing, 61,598,331 common shares were issued and outstanding, held by approximately 175 holders, including holders of exchangeable shares. The filing separately states that beneficial ownership calculations were based on 110,007,972 common shares, including shares issuable upon specified options, warrants and exchangeable shares.
- Approximately 18 million D-Wave Quantum warrants were outstanding, held by two holders. Each warrant is exercisable for 1.4541326 common shares at an exercise price of $11.50, subject to the warrant terms.
- Public Sector Pension Investment Board was reported as beneficially owning 59,431,311 shares, or 54.0%, on the stated beneficial ownership basis. A side letter limits its voting power to no more than 49.99% during the restricted period.
- The filing does not provide current-period revenue, net income, operating cash flow, free cash flow, margins, cash balance or liquidity totals. Historical D-Wave financial statements and March 31, 2022 financial information are incorporated by reference.
- The filing identifies a March 2022 venture loan and security agreement, but does not provide a clear outstanding debt balance or liquidity impact in the supplied text.
Material Changes Versus the Prior Comparable Period
- The principal change was the transformation from a special purpose acquisition company into the combined operating company D-Wave Quantum.
- D-Wave Quantum replaced DPCM’s prior public securities, with DPCM warrants becoming exercisable for D-Wave Quantum shares.
- D-Wave Quantum obtained approximately $40.0 million of PIPE financing, subject to transaction issuance terms, and gained access to a potential $150 million equity facility with Lincoln Park.
- The sponsor forfeited 4,484,425 DPCM Class B shares; 3,015,575 remaining founder shares were converted into D-Wave Quantum common shares.
- D-Wave Quantum adopted a 2022 Equity Incentive Plan reserving 16,965,849 shares initially and an Employee Stock Purchase Plan reserving 8,036,455 shares initially. Both plans include potential annual share increases through 2032.
- PwC was approved as D-Wave Quantum’s independent registered public accounting firm. DPCM expected to dismiss Marcum after filing its June 30, 2022 Form 10-Q.
Guidance, Outlook, Risks and Unusual Items
- No new quantitative revenue, earnings or cash-flow guidance is provided in the filing.
- Forward-looking matters include expected growth in quantum computing, product development, market adoption, total addressable market, future capital requirements and potential business milestones.
- Key risks include the need for additional capital, possible inability to achieve or sustain profitability, competition, technological and project-development challenges, product acceptance, intellectual-property protection, regulatory changes, employee retention, COVID-19 and other macroeconomic or geopolitical events.
- The filing notes that DPCM previously reported material weaknesses involving warrant accounting, Class A share accounting, and disclosure of material agreements and contingent fees. Certain matters resulted in restatements or revisions of DPCM financial information.
- D-Wave Quantum entered into registration rights and lock-up arrangements, director and officer indemnification agreements, and a new Code of Business Conduct and Ethics.
- No material litigation, arbitration or governmental proceeding was reported as pending against D-Wave Quantum or its management team.
- D-Wave Quantum has not paid dividends; future dividends remain subject to board consideration and financial, contractual and legal restrictions.
Most Important Facts for Investors to Verify
- Review the audited and unaudited D-Wave financial statements and the unaudited pro forma combined financial statements incorporated by reference or filed as exhibits.
- Reconcile the stated 61.6 million issued-and-outstanding shares with the 110.0 million beneficial ownership denominator, including exchangeable shares, options and warrants.
- Assess post-closing cash, burn rate, debt obligations and remaining funding needs; these values are not clearly provided in the supplied 8-K text.
- Review dilution from the PIPE shares, Lincoln Park facility, warrants, exchangeable shares, the 2022 Equity Incentive Plan and the ESPP.
- Evaluate the concentration of voting and economic ownership, particularly PSP’s reported beneficial ownership and the sponsor’s warrant holdings.
- Review the reported historical internal-control weaknesses and the transition from Marcum to PwC.