XML 44 R29.htm IDEA: XBRL DOCUMENT v3.22.2.2

Stock-based compensation

6 Months Ended

12 Months Ended

Jun. 30, 2022

Dec. 31, 2021

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation

12. Stock-based compensation

In connection with a transaction between entities under common control by which the Company became the reporting entity in April 2020, the Board of Directors approved the 2020 Equity Incentive Plan (the “New Plan”) by which options granted under the New Plan were presenting similar commercial terms of the options granted under the D-Wave December 2013 Amended and Restated Equity Incentive Plan. In the accompanying consolidated financial statements and notes, options issued under previous stock option plans and respective compensation expenses are retrospectively presented as if such options had been issued and outstanding under the 2020 Equity Incentive Plan for all periods during which the previous reporting entity was under common control.

Options granted under the Plan generally vest over four years with a one-year cliff. Upon the first anniversary of the vesting start date, 25% of the options vest; the remaining 75% of the options vest in 36 equal monthly installments following the first anniversary of the vesting start date, provided the option holder continues to have a full-time active employment or service relationship with the Company on each vesting date. The options expire on the 10th anniversary of the grant date. As of December 31, 2021 and 2020, 16,336,134 and 12,654,807 options granted under the Plan remained outstanding, respectively.

Stock option valuation

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option.

• Risk-Free Interest Rate. The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term.

• Expected Term. The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has estimated the expected term of its employee awards using the SAB Topic 14 Simplified Method allowed by the FASB and SEC, for calculating expected term as it has limited historical exercise data to provide a reasonable basis upon which to otherwise estimate expected term. Certain of the Company’s options began vesting prior to the grant date, in which case the Company uses the remaining vesting term at the grant date in the expected term calculation.

• Expected Volatility. As the Company is privately held and there has been no public market for its common stock to date, the expected volatility is based on the average historical stock price volatility of comparable publicly-traded companies in its industry peer group, financial, and market capitalization data.

• Expected dividend Yield. The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.

• Fair Value of Underlying Common Stock. Because the Company’s common stock is not yet publicly traded, the Company must estimate the fair value of common stock. The Board of Directors considers

numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved. The factors considered include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s Convertible Redeemable Preferred Stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares.

The assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2021 and 2020 are as follows:

		Years ended December 31,
		2021				2020
Expected dividend yield			0%				0%
Expected volatility			56%				45%
Expected term (years)			8.53				9.41
Risk-free interest rate			0.87%				0.43%

Common stock option activity

The following table summarizes the Company’s stock option activity during the periods presented (in thousands except share and per share data):

		Number of options outstanding				Weighted average exercise price ($)				Weighted average remaining contractual term (years)				Aggregate intrinsic value ($)
Balance as of December 31, 2020			12,654,807				0.81				9.38				—
D-Wave options granted			4,369,866				0.82				—				—
D-Wave options exercised			(105,203	)			0.81				—				—
D-Wave options forfeited			(171,204	)			0.81				—				—
D-Wave options expired			(412,132	)			0.81				—				—
Balance as of December 31, 2021			16,336,134				0.81				8.55				80,179
Options unvested as of December 31, 2021			6,943,273				0.81				8.53				77,423
Options exercisable as of December 31, 2021			9,392,861				0.81				8.20				46,116

The aggregate intrinsic value of stock options was calculated as the difference between the exercise price of the stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted average grant date fair values per share of stock options granted during the years ended December 31, 2021 and 2020 were $1.99 and $0.35, respectively.

The total fair values of the stock options vested during the years ended December 31, 2021 and 2020 were $1,733,745 and $1,035,000, respectively.

Common stock warrants

A continuity of the Company’s United States dollar common stock warrants issued and outstanding is as follows:

		Number of common stock warrants				Weighted average exercise price ($)				Number of preferred stock warrants				Weighted average exercise price ($)
Balance as of December 31, 2020			617,972				1.75				3,247,637				1.92
Granted during the period			—				—				—				—
Expired during the period			—				—				—				—
Exercised during the period			—				—				—				—
Balance as of December 31, 2021			617,972				1.75				3,247,637				1.92

The Company did not record any movements during the year ended December 31, 2021.

As of December 31, 2021, the following United States dollar common stock warrants were outstanding and exercisable:

		Number of warrants outstanding				Weighted average exercise price ($)				Expiry Date				Number exercisable
			617,972			$	1.75				14-April-22				617,972
Total, December 31, 2021			617,972			$	1.75								617,972

As of December 31, 2021, the following United States dollar preferred stock warrants were outstanding and exercisable:

		Number of warrants outstanding				Weighted average exercise price ($)				Expiry Date				Number exercisable
			3,247,637			$	1.92				29-Nov-26				1,299,055
Total, December 31, 2021			3,247,637			$	1.92								1,299,055

Stock-based compensation

The following table summarizes the stock-based compensation expense classified in the consolidated statements of operations and comprehensive loss as follows (in thousands):

		Years ended December 31,
		2021				2020
Research and development		$	338			$	1,513
General and administrative			1,164				1,346
Sales and marketing			237				130
Total stock-based compensation		$	1,739			$	2,989

DWave System [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-based compensation

8. Stock-based compensation

Stock option valuation

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option.

• Risk-Free Interest Rate. The Company estimates its risk-free interest rate by using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term.

• Expected Term. The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has estimated the expected term of its employee awards using the SAB Topic 14 Simplified Method allowed by the FASB and SEC, for calculating expected term as it has limited historical exercise data to provide a reasonable basis upon which to otherwise estimate expected term. Certain of the Company’s options began vesting prior to the grant date, in which case the Company uses the remaining vesting term at the grant date in the expected term calculation.

• Expected Volatility. As the Company is privately held and there has been no public market for its common stock to date, the expected volatility is based on the average historical stock price volatility of comparable publicly-traded companies in its industry peer group, financial, and market capitalization data.

• Expected Dividend Yield. The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.

• Fair Value of Underlying Common Stock. Because the Company’s common stock is not yet publicly traded, the Company must estimate the fair value of common stock. The Board of Directors considers

numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved. The factors considered include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s Convertible Redeemable Preferred Stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares.

There were no options granted during the six months ended June 30, 2022. The assumptions used to estimate the fair value of stock options granted during the six months ended June 30, 2021 are as follows:

		Six months ended June 30,
		2022				2021
Expected dividend yield			—				0	%
Expected volatility			—				50	%
Expected term (years)			—				6.08
Risk-free interest rate			—				0.83	%

Common stock option activity

The following table summarizes the Company’s stock option activity during the periods presented (in thousands except share and per share data):

		Number of options outstanding				Weighted average exercise price ($)				Weighted average remaining contractual term (years)				Aggregate intrinsic value ($)
Balance as of December 31, 2021			16,336,134				0.81				8.55				80,179
Granted			—				—
Exercised			(174,378	)			0.81
Forfeited			(840,002	)			0.81
Expired			(11,077	)			0.81
Balance as of June 30, 2022			15,310,677				0.81				7.96				75,144
Unvested as of June 30, 2022			4,698,271				0.81				7.77				73,479
Exercisable as of June 30, 2022			10,612,406				0.81				7.43				52,098

The aggregate intrinsic value of stock options was calculated as the difference between the exercise price of the stock options and the estimated fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted average grant date fair values per share of stock options granted during the six months ended June 30, 2022 was nil as no stock options were granted. The weighted average grant date fair values per share of stock options granted during the six months ended June 30, 2021 was 0.62.

The total fair values of the stock options vested during the six months ended June 30, 2022 and 2021 was $1,703,000 and $535,000 respectively.

Common stock warrants

On April 14, 2022, 617,972 common stock warrants with an exercise price of $1.75 expired. As of June 30, 2022 there are no common stock warrants outstanding.

Preferred stock warrants

The Company did not record any movements during the six months ended June 30, 2022.

As of June 30, 2022, the following United States dollar preferred stock warrants were outstanding and exercisable:

		Number of warrants outstanding				Weighted average exercise price ($)				Expiry Date				Number exercisable
			3,247,637			$	1.92				29-Nov-26				1,299,055
Total, June 30, 2022			3,247,637			$	1.92								1,299,055

Stock-based compensation

The following table summarizes the stock-based compensation expense classified in the consolidated statements of operations and comprehensive loss as follows (in thousands):

		Three months ended June 30,
		2022				2021
Research and development		$	117			$	58
General and administrative			641				74
Sales and marketing			58				37
Total stock-based compensation		$	816			$	169

		Six months ended June 30,
		2022				2021
Research and development		$	210			$	88
General and administrative			1,270				173
Sales and marketing			120				69
Total stock-based compensation		$	1,600			$	330

X

- Definition

The entire disclosure for share-based payment arrangement.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-URI https://asc.fasb.org/topic&trid=2228938

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (l)
-URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901

Reference 4: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (a)(1)
-URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (h)(2)(i)
-URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (h)(2)
-URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901

+ Details

Name:	us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

No definition available.

+ Details

Name:	us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardLineItems
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Details

Name:	dei_LegalEntityAxis=qbts_DwaveSystemMember
Namespace Prefix:
Data Type:	na
Balance Type:
Period Type: