United States securities and exchange commission logo
May 10, 2022
Emil Michael
President
D-Wave Quantum Inc.
3033 Beta Avenue
Burnaby, British Columbia V5G 4M9
Canada
Re: D-Wave Quantum Inc.
Amendment No. 1 to
Registration Statement on Form S-4
Filed April 26,
2022
File No. 333-263573
Dear Mr. Michael:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our April
15, 2022 letter.
Amendment No. 1 to Registration Statement on Form S-4
Q: What interests does the Sponsor and DPCM's officers and directors
have in the Transaction?,
page 9
1. We note your response
to prior comment 3 and your tabular presentation on page 10.
However, the revised
disclosure does not appear to present the dollar amount in the post-
merger company that the
sponsor and affiliates of the sponsor have at risk that depends on
completion of a
business combination as one amount in the aggregate. The aggregate
calculation should
include the current value of securities held, any loans extended, fees
due, and out-of-pocket
expenses for which the sponsor and its affiliates are awaiting
reimbursement. Please
revise or advise.
Emil Michael
FirstName LastNameEmil Michael
D-Wave Quantum Inc.
Comapany
May NameD-Wave Quantum Inc.
10, 2022
May 10,
Page 2 2022 Page 2
FirstName LastName
PIPE Subscription Agreements, page 25
2. We note your response to prior comment 4. Please disclose the price
per share that the
PIPE investors will pay for their shares depending on your No
Redemption Scenario and
Maximum Redemption Scenario according to the respective Exchange
Ratio.
Our Business Model, page 185
3. We note your response to prior comment 8. You include a chart on page
185 that appears
to list four phases, Discovery, PoC, Pilot, and In-Prod. We note on
page 51 you refer to
these phases as initial engagement, proof of concept, pilot deployment
and full
production. On page 187 you refer to "Phase 1" and "Phase 2," but
these terms are not
defined. Given that a substantial majority of D-Wave's revenue is
generated through D-
Wave Launch, please consistently identify and describe these stages so
that an investor
can understand your chart and four-phase engagement model. Clearly
describe why
phases one through three are described as "one-time" and phase four is
described as
"recurring." Further, please clarify whether the "free, unlimited
access" to D-Wave's Leap
quantum cloud service platform includes access to only certain free
resources, but not
"unlimited" time to use the QPU as your subsequent disclosures
suggest. Disclose how
many of the 25,000 users that have signed up for your Leap quantum
cloud service are
paid subscribers.
Competition, page 193
4. We note your response to prior comment 20 and reissue our comment in
part. We note
your disclosure on page 47 that D-Wave s growth is dependent on
scaling up
manufacturing of its products and constructing quantum computing
technology. Disclose
material details about how you are going to expand your manufacturing
capacity or
advise.
D-Wave Management's Discussion and Analysis of Financial Condition and Results
of
Operations, page 196
5. To the extent material, please disclose the nature of your customer
base. For example, we
note that the company noted publicly in a separate filing that Quantum
Computing as a
Service (QCaaS) from commercial customers generated about two-thirds
of D-Wave's
revenue in 2021. As a separate example, we also note news articles
that indicate that D-
Wave customers or developers use its solutions to engage in
crypto-asset mining, develop
cryptography algorithms for crypto asset mining or participate in
other crypto asset-related
activities or applications. Discuss, if material, any risks and/or
uncertainties related to the
use of the solutions for crypto-asset mining.
The Transaction Agreement and PIPE Financing, page 196
6. We note your response to prior comment 8. On page 152, you disclose
that "[c]osts
directly attributable to the Transaction (excluding DPCM underwriter
s fees and PIPE fees
Emil Michael
FirstName LastNameEmil Michael
D-Wave Quantum Inc.
Comapany
May NameD-Wave Quantum Inc.
10, 2022
May 10,
Page 3 2022 Page 3
FirstName LastName
described in (b) and (c), respectively) amount to $34.0 million." You
further disclose the
deferred underwriting fee as $10.5 million and certain PIPE financing
fees of $100,000.
Accordingly, as these amounts equal about $44.6 million, please advise
what costs are
estimated to be "incremental" and in what amount. Further, please
clarify on page
197 whether the transaction costs described in this section will be
recorded as a reduction
to additional paid-in capital.
Results of Operations
Revenue, page 200
7. We note that the increase in the growth of your professional services
revenue was
substantially larger than the growth in your QCaaS revenue over the
same period. Please
revise your MD&A to separately discuss the reasons for these changes.
Please also revise
your MD&A to address any future trends that are expected to affect
your results from
operations, including any trends related to developments in the crypto
asset industry. For
example, based upon your projections on page 278, it appears that you
anticipate
substantial growth in lower margin professional services revenue
offset by a substantial
decline in higher margin QCaaS revenue during 2022 as compared to
2021.
Critical Accounting Policies and Significant Management Estimates
Revenue recognition, page 207
8. We note your response to prior comment 33. It appears you have fully
constrained your
variable consideration for all periods presented. If true, please
revise to more fully
explain how variable consideration arises in your contracts with
customers, what aspects
of these arrangements cause the risk of a significant reversal of
revenue, and how you
determine when uncertainties associated with the variable
consideration are resolved.
Refer to Item 303(b)(3) of Regulation S-K.
Background of the Transaction, page 267
9. We note your response to prior comment 25 indicating that after the
financial projections
of D-Wave were presented to the DPCM board on July 20, 2021, the
assumptions
underlying the financial projections were discussed on July 21, 2021,
and certain
conservative adjustments were made. Please identify the conservative
adjustments in your
disclosure. Further, please confirm that the financial projections
included in your
registration statement are materially the same as the initial
projections presented to the
DPCM board. If the financial projections in your disclosure are
materially different,
please explain these differences (e.g., different assumptions), and
what changes were
made and why.
Financial Projections, page 278
10. We note your response to prior comment 27. Please revise your table on
page 278 to
disclose total operating expenses for each period presented.
Emil Michael
D-Wave Quantum Inc.
May 10, 2022
Page 4
11. We note your response to prior comment 28. We note that QCaaS revenue
represents
83% of 2020 total revenues and 70% of 2021 total revenues while Adjusted
EBITDA is
negative for both periods. Please revise to explain in greater detail how
the shift to QCaaS
revenue is expected to result in higher gross profit. As a related
matter, please also revise
to more fully describe the specific assumptions that you made in
projecting a significant
increase in Adjusted EBITDA margin from 7% in 2025 to 41% in 2026.
The DPCM Board's Reasons for the Approval of the Transaction, page 279
12. We note your response to prior comment 30. Please address how the DPCM
board, in the
course of its deliberations to negotiate and recommend the business
combination,
considered the conflicts you disclose and the fact that DPCM's management
has pre-
existing fiduciary duties and other contractual obligations.
D-Wave Systems, Inc. Consolidated Financial Statements
2. Basis of presentation and summary of significant accounting policies
Revenue recognition, page F-16
13. We note your response to prior comment 32. Please revise to disclose the
types of
products or services that you do not sell separately and therefore, do
not have directly
observable SSP.
You may contact Lisa Etheredge, Senior Staff Accountant, at (202)
551-3424 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Patrick Faller, Staff
Attorney, at (202) 551-4438 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
FirstName LastNameEmil Michael
Division of
Corporation Finance
Comapany NameD-Wave Quantum Inc.
Office of
Technology
May 10, 2022 Page 4
cc: Adam M. Givertz
FirstName LastName