D-Wave Quantum Inc. (QBTS) FY 2024 MD&A

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and related notes included elsewhere in this Form 10-K. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those risk factors applicable to D-Wave and its business referenced under the section titled “Risk Factors” elsewhere in this Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. In this section, unless otherwise specified, the terms “we”, “our”, “us”, D-Wave" or the "Company" refer to D-Wave Quantum Inc. and its subsidiaries following the Closing while "D-Wave Systems" refers to D-Wave Systems Inc. prior to the Closing. All other capitalized terms have the meanings ascribed thereto elsewhere in this Form 10-K. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

Overview

We are a commercial quantum computing company that provides customers with a full suite of professional services and web-based access to our superconducting quantum computer systems and integrated software environment through our LeapTM quantum cloud service. Historically, we have developed our own annealing superconducting quantum computer and associated software, and our current generation quantum system is the D-Wave AdvantageTM system. We are a leader in the development and delivery of quantum computing systems, software and services, and we are the world’s first commercial supplier of quantum computers—and the only company developing both annealing quantum computers and gate-model quantum computers.

Our business model is focused primarily on generating revenue from providing customers access to our quantum computing systems via the cloud in the form of quantum computing as a service ("QCaaS") products, and from providing professional services wherein we assist our customers in identifying and implementing quantum computing applications. We have three operating facilities, which we lease, in North America. These facilities are located in Burnaby, British Columbia, Richmond, British Columbia, and Palo Alto, California.

During the years ended December 31, 2024 and 2023, we generated revenue totaling $8.8 million and $8.8 million, respectively. We have incurred significant operating losses since inception. For the years ended December 31, 2024 and 2023, our net losses were $143.9 million and $82.7 million, respectively. We expect to continue to incur significant losses for the foreseeable future as we continue to invest in a number of research and development programs as well as a variety of go-to-market initiatives. As of December 31, 2024, we had an accumulated deficit of $626.9 million.

Macroeconomic Environment

Unfavorable conditions in the economy in the United States, Canada and abroad, including conditions resulting from changes in inflationary pressure, gross domestic product growth, financial and credit market fluctuations, banking collapses and related uncertainty, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, Europe or elsewhere, including military actions affecting Russia, Ukraine, Israel or elsewhere, could cause a decrease in business investments on our products and negatively affect the growth of our business and our results of operations. However, to date, these unfavorable conditions have not affected our business.

Key Components of Results of Operations

Revenue

We currently generate our revenue primarily through subscription sales to access our QCaaS cloud platform and professional services related to the development and implementation of quantum computing applications and delivery of quantum computing application training. QCaaS revenue is recognized on a ratable basis over the contract term, which generally ranges from one month to two years. Professional services revenue is recognized over time on a percentage of completion basis using the costs incurred input measure of progress.

Revenue from quantum computing system is recognized at a point in time when control transfers to the customer, typically upon delivery or installation, based on the terms of the sales contract.

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We expect that QCaaS revenue, as a percentage of total revenue, will increase due to an increasing number of QCaaS agreements being driven by the completion of professional services engagements yielding production applications that require QCaaS services, as well as by customers that choose to access our LeapTM cloud service without utilizing our professional services organization. However, quantum computing system revenue may have an outsized impact on our revenue and shift our product mix during the period when such revenue is recognized, though this revenue is expected to be irregular and intermittent.

Cost of Revenue

Our cost of revenue consists of all direct and indirect expenses related to providing our QCaaS offering and delivering our professional services, such as personnel-related expenses, including stock-based compensation, costs associated with maintaining the cloud platform on which we provide the QCaaS product and depreciation and amortization related to our quantum computing systems and related software.

Cost of revenue for quantum computing systems includes direct manufacturing costs, such as materials and labor for system production, as well as expenses related to installation, warranty, and support. Additionally, it includes shipping and handling costs associated with delivering the systems. These costs are also expensed as incurred.

We expect our total cost of revenue to trend upward in absolute dollars in future periods, corresponding to our anticipated growth in revenue and the higher costs that are necessary to support our customers, maintain the QCaaS cloud offering, operate our quantum computing systems, and deliver our professional services. We expect our cost of revenue as a percentage of total revenue to trend downward over time due to a higher mix of QCaaS revenue that has a lower cost to deliver compared to professional service revenue.

Operating Expenses

Our operating expenses consist of research and development, general and administrative, and sales and marketing expenses.

Research and Development

Research and development expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel, fabrication costs, lab supplies, and cloud computing resources and allocated facility costs for our research and development functions. Unlike a standard computer, design and development efforts continue throughout the useful life of our quantum computing systems to ensure proper calibration and optimal functionality. Research and development expenses also include purchased hardware components, fabrication and software costs related to quantum computing systems constructed for research purposes that do not have a high probability of providing near-term future economic benefits, and may have no alternate future use. We currently do not capitalize any research and development expenses.

We expect our research and development expenses will trend upward on an absolute dollar basis for the foreseeable future as we continue to invest in research and development efforts to enhance the performance of our annealing quantum computers, to complete the development of our gate model quantum computer, and to broaden the functionality, improve the reliability, availability and scalability of our QCaaS cloud platform. If in the future we receive government grants and research incentives, which have historically offset a portion of research and development costs, these costs could decrease in absolute dollars. Also, non-cash share based compensation expenses may cause downward fluctuations in these costs from time to time.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel and outside professional services expenses including legal, audit and accounting services, insurance, other administrative expenses and allocated facility costs for our administrative functions.

We expect our general and administrative expenses to increase in absolute dollars for the foreseeable future as we continue to invest in more comprehensive compliance and governance functions, increased IT security and compliance, and expanded internal controls over financial reporting in accordance with the Sarbanes-Oxley Act of 2002. However, non-cash stock-based compensation expenses may cause upward and downward fluctuations in these costs from time to time.

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Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation for personnel, direct advertising, marketing and promotional material costs, sales commission expense, consulting fees and allocated facility costs for our sales and marketing functions. We intend to continue to make significant investments in our sales and marketing organization to drive additional revenue, expand our global customer base, and broaden our brand awareness. We expect our sales and marketing expenses to continue to increase in absolute dollars for the foreseeable future. However, non-cash stock-based compensation expenses may cause upward and downward fluctuations in these costs from time to time.

Results of Operations

The following table sets forth our results of operations for the periods indicated (in thousands):

Revenue

Revenue for the year ended December 31, 2024 remained consistent to the prior year. QCaaS revenue increased by $1.9 million, primarily due to an increase in the average revenue per QCaaS customer. This was offset by a decrease of $1.9 million in professional service revenue, as a result of the timing of closing new professional services engagements.

Cost of Revenue

Cost of revenue decreased by $0.9 million, or 21%, to $3.3 million for the year ended December 31, 2024 as compared to $4.1 million for the year ended December 31, 2023. The decrease in cost of revenue was primarily driven by a decrease in non-cash stock-based compensation of $0.6 million and personnel costs of $0.2 million.

Operating Expenses

Research and Development Expenses

Research and development expenses decreased by $2.6 million, or 7%, to $35.3 million for the year ended December 31, 2024 compared to $37.9 million for the year ended December 31, 2023. The decrease was primarily driven by a decrease in stock-based compensation expenses of $3.2 million, partially offset by an increase in personnel costs of $0.4 million and professional fees of $0.4 million.

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General and Administrative Expenses

General and administrative expenses decreased by $4.6 million, or 12%, to $32.4 million for the year ended December 31, 2024 as compared to $37.0 million for the year ended December 31, 2023. The decrease was primarily driven by decreases in professional fees of $3.8 million, stock-based compensation expense of $3.2 million and insurance costs of $1.0 million, partially offset by an increase in personnel expenses of $2.3 million and credit loss expenses of $1.3 million.

Sales and Marketing Expenses

Sales and marketing expenses increased by $4.8 million, or 47%, to $15.1 million for the year ended December 31, 2024 as compared to $10.3 million for the year ended December 31, 2023. The increase was primarily driven by increases in personnel costs of $3.3 million, stock-based compensation expense of $0.8 million, travel expenses of $0.4 million and marketing expenses of $0.3 million.

Other Income (Expense), net

Interest Expense

Interest expense increased by $3.9 million, or 10,432%, to $3.9 million for the year ended December 31, 2024 as compared to $37.0 thousand for the year ended December 31, 2023. The increase is primarily due to interest expenses related to the Term Loan and the SIF Loan. The Company fully repaid and extinguished the Term Loan on October 22, 2024, including $30.0 million in principal and $4.3 million in accrued payable in kind ("PIK") interest. Additionally, the increase in interest expense reflects a decrease in the interest expense benefit from the catch-up method adjustment recorded in 2023 on the SIF Loan, which amounted to $2.9 million in the prior year. Refer to Note 7 to the accompanying consolidated financial statements for further details.

Change in fair value of Term Loan

The fair value of Term Loan increased by $0.6 million for the year ended December 31, 2024 as compared to a decrease of $0.6 million for the year ended December 31, 2023. On April 13, 2023, the Company entered into a Term Loan with PSPIB. The Company opted for the fair value option for accounting for the Term Loan (see Note 2 to the accompanying consolidated financial statements). Changes in the fair value of the Term Loan, excluding changes due to the Company's own credit risk, were recorded as gains or losses in the Company’s consolidated statements of operations and comprehensive loss in each reporting period. The fair value of the Term Loan varied primarily based on the market yield rate, market yield volatility, and the probabilities of various settlement scenarios. The Company fully repaid and extinguished the Term Loan on October 22, 2024.

Term Loan debt issuance costs

Term Loan debt issuance costs decreased by $2.1 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, as there were no advances on the Term Loan during the year ended December 31, 2024.

Gain (loss) on investment in marketable equity securities

Gain (loss) on investment in marketable equity securities increased by $1.5 million for the year ended December 31, 2024 as compared to zero for the year ended December 31, 2023. On January 5, 2024, an investee of the Company was acquired for a combination of cash and stock in an observable orderly transaction. Consequently, the carrying value of the Company's investment was adjusted based on the consideration received, resulting in a net gain of $1.7 million, partially offset by a loss associated with the fair value of the conversion feature of the Zapata Note.

Change in fair value of warrant liabilities

The fair value of warrant liabilities increased by $68.5 million for the year ended December 31, 2024 as compared to a decrease of $0.3 million for the year ended December 31, 2023. The fair value of the warrant liabilities varies primarily with the trading price of the Public Warrants listed on the New York Stock Exchange (see Note 2 and Note 10 to the accompanying condensed consolidated financial statements). As the trading price of the Public Warrants appreciates, generally in correlation with the trading price of the Company’s common stock, the fair value of the warrant liabilities increases.

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Other income (expense), net

Other income (expense), net increased by $5.6 million or 606%, to a net other income of $4.6 million for the year ended December 31, 2024 as compared to net other expense of $0.9 million for the year ended December 31, 2023. The increase was primarily driven by the impact of net foreign exchange gains driven by appreciation of the U.S. Dollar against the Canadian Dollar of $4.0 million, and an increase in interest income of $1.4 million due primarily to interest earned on higher cash and cash equivalent balances.

Liquidity and Capital Resources

In our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2024, we disclosed that there was substantial doubt about our ability to continue as a going concern due to recurring losses, liquidity concerns, debt covenant uncertainties, and reliance on external financing. Since its inception, the Company has incurred net losses and negative cash flows from operations. As of December 31, 2024 and 2023, the Company had an accumulated deficit of $626.9 million and $483.1 million, respectively. For the years ended December 31, 2024 and 2023, the Company incurred a net loss of $143.9 million and $82.7 million, respectively, and the Company had net cash outflows from operating activities of $42.6 million and $60.6 million, respectively. The Company expects to incur additional operating losses and negative cash flows from operating activities as it continues to expand its commercial operations and research and development programs.

As part of management's evaluation of whether there was substantial doubt about our ability to continue as a going concern as of the date of this filing, management considered the results of fundraising activities completed in the fourth fiscal quarter of 2024 and subsequent to the balance sheet date in addition to the factors discussed above. During the year ended December 31, 2024, the Company received $214.2 million in net proceeds from the issuance of 100,249,331 Common Shares under various equity offerings described more fully in Note 15 to the accompanying consolidated financial statements. As of December 31, 2024 and 2023, the Company had cash and cash equivalents of $178.0 million and $41.3 million, respectively, and working capital (current assets less current liabilities) of $154.9 million and $35.8 million, respectively. Additionally, as of December 31, 2024, total assets exceeded total liabilities by $62.6 million, whereas as of December 31, 2023, total liabilities exceeded total assets by $24.5 million. In January 2025, the Company raised an additional $146.2 million in net cash proceeds from an additional equity offering.

As a result of these considerations, management has assessed the Company's liquidity under Financial Accounting Standards Board’s ASC Topic 205-40, “Basis of Presentation—Going Concern,” and determined that it has sufficient capital resources to meet its obligations for at least the next 12 months and does not anticipate any conditions that would raise substantial doubt about the Company's ability to continue as a going concern.

Lincoln Park Purchase Agreement

In conjunction with the Merger with DPCM, the Company and D-Wave Systems entered into a purchase agreement with Lincoln Park Capital Fund, LLC on June 16, 2022 (the "Purchase Agreement") which provides D-Wave the sole right, but not the obligation, to direct Lincoln Park to buy specified dollar amounts up to $150 million of D-Wave's common stock, par value $0.0001 per share through November 1, 2025. The Purchase Agreement may provide the Company and D-Wave with additional liquidity to fund the business, subject to the conditions set forth in the agreement, including volume limitations tied to periodic market prices, ownership limitations restricting Lincoln Park from owning more than 9.9% of the then total outstanding share of common stock of the Company, par value $0.0001, (the "Common Shares") and a floor price of $1.00 at or below which the Company may not sell to Lincoln Park any Common Shares. When the Company sells shares to Lincoln Park, Lincoln Park may resell all, some, or none of those Common Shares at any time or from time to time in its discretion. During the year ended December 31, 2024, the Company has received $44.3 million in proceeds through the issuance of 34,860,416 Common Shares to Lincoln Park under the Purchase Agreement. In order for the Company to issue Common Shares under the Purchase Agreement, the Company's share price must be above the floor price of $1.00. There is no assurance that the floor price will not fall below $1.00 preventing the Company from being able to make sales to Lincoln Park in the future. As of December 31, 2024, D-Wave had $37.8 million of issuance capacity under the Purchase Agreement.

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At-the-Market Offerings

On May 24, 2024, the Company entered into an at-the-market sales agreement (the "$100M ATM") with Needham & Company, LLC, B. Riley Securities, Inc., and Roth Capital Partners, LLC (the "$100M ATM Agents"). Under this agreement, the Company could sell shares of its common stock with an aggregate offering price of up to $100.0 million through or to the Agents. During the year ended December 31, 2024, the Company has received $97.2 million in net proceeds through the issuance of 49,812,287 Common Shares under the Sales Agreement. As of December 31, 2024, D-Wave had zero issuance capacity under the ATM Agreement.

On December 9, 2024, the Company entered into a new sales agreement (the "$75M ATM") with Needham & Company, LLC, Roth Capital Partners, LLC, B. Riley Securities, Inc., and Craig-Hallum Capital Group, LLC (the "$75M ATM Agents"). Under this agreement, the Company could sell shares of its common stock with an aggregate offering price of up to $75.0 million through or to the Agents. During the year ended December 31, 2024, the Company has received $72.9 million in net proceeds through the issuance of 15,576,628 Common Shares under the Sales Agreement. As of December 31, 2024, D-Wave had zero issuance capacity under the ATM Agreement.

On January 10, 2025, the Company entered into another at-the-market sales agreement (the "$150M ATM") with Needham & Company, LLC, Stifel, Nicolaus & Company, Incorporated, B. Riley Securities, Inc., Roth Capital Partners, LLC, The Benchmark Company, LLC, and Craig-Hallum Capital Group, LLC (the "$150M ATM Agents"). Under this agreement, the Company could sell shares of its common stock with an aggregate offering price of up to $150.0 million through or to the Agents. As of March 14, 2025, the Company has received $146.2 million in net proceeds through the issuance of 24,604,021 Common Shares under the Sales Agreement. As of March 14, 2025, D-Wave had zero issuance capacity under the ATM Agreement.

Sales under these agreements are classified as "at-the-market" equity offerings under Rule 415(a)(4) of the Securities Act and may be conducted on the NYSE or other trading platforms. The Agents will use commercially reasonable efforts to sell shares based on the Company’s instructions. The compensation to the Agents is up to 3.0% of the gross sales price, along with expense reimbursements. The Company has also agreed to provide indemnification against certain liabilities under the Securities Act.

The Company is not obligated to sell shares under these agreements. Each agreement may be terminated by: (a) the election of the Agents upon the occurrence of certain adverse events, (b) five business days’ advance notice from the Company to the Agents or five days’ advance notice from any of the Agents to the Company or (c) otherwise by mutual agreement of the parties pursuant to the terms of the Sales Agreement.

Repayment of the Term Loan

In addition, we successfully repaid a significant portion of our outstanding debt obligations, including the Term Loan and Security Agreement ("Term Loan") with PSPIB Unitas Investments II Inc. ("PSPIB" or the "Lender"), a related party to the Company's largest shareholder as of December 31, 2024, that was initially entered into on April 13, 2023 (the "Closing Date"). The Term Loan, outlined in Note 7 - Loans payable, net to the consolidated financial statements, provided for $50.0 million in three tranches, subject to certain terms and conditions. The Company drew down two tranches totaling $30.0 million and, on October 22, 2024, the Company had prepaid the entire the Term Loan, including $30.0 million in principal and $4.3 million in accrued PIK interest.

Cash Flows

The following table sets forth our cash flows for the periods indicated (in thousands):

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Cash Flows Used in Operating Activities

Our cash flows from operating activities are significantly affected by the growth of our business, and are primarily related to research and development, sales and marketing and general and administrative activities. Our operating cash flows are also affected by our working capital needs to support growth in personnel-related expenditures and fluctuations in accounts payable, accounts receivable and other current assets and liabilities.

For the year ended December 31, 2024, net cash used in operating activities was $42.6 million, a decrease of $18.0 million from $60.6 million for the year ended December 31, 2023. The change is primarily due to an increase in noncash items added back to net loss of $55.6 million and an increase in cash released from working capital of $23.6 million, offset by an increase in net loss of $61.2 million. The increase in noncash items was primarily due to an increase in change in fair value of warrant liabilities of $68.5 million, partially offset by a decrease in stock-based compensation of $6.3 million, an increase in unrealized foreign exchange gain of $4.3 million, and a gain on marketable securities of $1.5 million. The decrease in working capital was primarily driven by an increased change in deferred revenue of $15.7 million and an increased change in accrued expenses and other current liabilities of $6.9 million.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the year ended December 31, 2024 was $3.1 million, an increase of $2.5 million from $0.6 million for the year ended December 31, 2023. The increase is primarily due to an increase in purchase of property and equipment of $1.5 million and a purchase of a convertible note of $1.0 million.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the year ended December 31, 2024 was $182.5 million, an increase of $86.8 million from $95.6 million for the year ended December 31, 2023. The increase is primarily due to an increase in proceeds from the issuance of common stock pursuant to the ATM Agreements of $169.9 million, partially offset by an increase in debt repayments of $30.0 million, a decrease in debt financing proceeds of $29.0 million, a decrease in proceeds from the issuance of common stock pursuant to the Purchase Agreement of $19.4 million, a decrease in proceeds of government assistance of $3.0 million and an increase in the payment of tax withheld for common stock issued under stock-based compensation settlements of $2.7 million.

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Contractual Obligations and Commitments

The Company has various operating leases of real estate and equipment. See Note 8 - Leases to the accompanying consolidated financial statements for further discussion of the nature and timing of cash obligations due under these leases.

Critical Accounting Estimates

Our consolidated financial statements included in this Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. We also make estimates and assumptions that affect the reported amounts and related disclosures for the periods presented. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly. Additionally, changes in assumptions, estimates or assessments due to unforeseen events or otherwise could have a material impact on our financial position or results of operations.

The critical accounting estimates, assumptions and judgements we believe to have the most significant impact on our audited annual consolidated financial statements are described below. See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to the audited consolidated financial statements included elsewhere in this Form 10-K for additional information related to critical accounting estimates and significant accounting policies.

Revenue recognition

We recognize revenue from the sale of our services and products. Our contracts with customers often include multiple performance obligations. Our performance obligations are as follows:

•Subscription sales to access our QCaaS cloud platform;

•Professional services related to the development and implementation of quantum computing applications;

•Quantum computing systems;

•Quantum computing application training;

•Application support and maintenance; and

•Printed circuit boards.

Our contracts with customers may include renewals or other options at fixed prices, which typically do not represent a significant discount. Based on our assessment of standalone selling prices, we determined that there were no significant material rights provided to our customers requiring separate recognition.

When we determine that our contracts with customers contain multiple performance obligations, for these arrangements, we allocate the transaction price based on the relative standalone selling price (“SSP”) method by comparing the SSP of each distinct performance obligation to the total value of the contract. We use the SSP for products and services sold together in a contract to determine whether there is variable consideration (e.g. discount) to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when we don't sell the product or service separately, we determine the SSP by considering overall pricing objectives and market conditions, including cost plus a reasonable margin. Significant pricing practices taken into consideration include our discounting practices, the customer demographic, price lists, our go-to-market strategy, historical and current sales and contract prices. In instances where we do not sell or price a product or service separately, we maximize the use of observable inputs by using information that may include market conditions.

Sales of future revenues

On November 20, 2020, the Company entered into an agreement with the Canada Strategic Innovation Fund ("SIF"), wherein SIF committed to providing a conditionally repayable loan to the Company in the amount of up to C$40.0 million ("the SIF Loan"). The SIF Loan is conditionally repayable according to a revenue-based formula. See Note 7 to the accompanying consolidated financial statements for additional information concerning the SIF Loan.

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The accounting treatment for the SIF Loan considers the "sale of future revenues" guidance outlined in ASC 470-10-25. The debt arising from the SIF Loan was recorded at face value and will be amortized using the effective interest method, leading to the accrual of interest expenses over the estimated term of the SIF Loan. The amortization schedule is based on projected cash flows derived from the Company's long-term revenue forecast. Subsequent changes in forecasted cash flows will be accounted for under the catch-up method, which entails adjusting the accrued interest portion of the principal balance through earnings to reflect the effective interest rate. For the year ended December 31, 2024 and 2023, the Company recognized gains related to catch-up method adjustments to the accrued interest portion of the loans payable, net balance of $0.2 million and $2.9 million, respectively, which are included in interest expense on the consolidated statements of operations and comprehensive loss. The liability is classified as non-current, as the current forecast indicates that repayments will not commence within the 12 months following the balance sheet date.

As the SIF Loan is originated through a government program, a market rate of interest is not imputed in accordance with the scope limitations of ASC 835.

Recently Issued and Adopted Accounting Standards

A discussion of recent accounting pronouncements is included in Note 2 to our audited consolidated financial statements included elsewhere in this Form 10-K.

JOBS Act Accounting Election

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, as an emerging growth company we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. In addition, as an emerging growth company, we may take advantage of certain reduced disclosure and other requirements that are otherwise applicable generally to public companies. D-Wave Quantum will take advantage of these exemptions until such time that it is no longer an emerging growth company. D-Wave Quantum will cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement; (ii) the last day of the fiscal year in which its total annual gross revenue is equal to or more than $1.235 billion; (iii) the date on which it has issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which it is deemed to be a large accelerated filer under the rules of the SEC.