OnNovember 25, 2020 , Kensington acquired us. The Business Combination was accounted for as a reverse recapitalization in accordance withU.S. GAAP. Under this method of accounting, Kensington was treated as the "acquired" company for financial reporting purposes. Except as otherwise provided herein, our financial statement presentation includes (1) the results of Legacy QuantumScape and its consolidated subsidiaries as our accounting predecessor for periods prior to the completion of the Business Combination, and (2) the results of the Company (including the consolidation of Legacy QuantumScape and its subsidiaries) for periods after the completion of the Business Combination. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statement the related notes appearing elsewhere in this Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" as set forth in this Report. Unless the context otherwise requires, references in this section to "Legacy QuantumScape", "the Company", "we", "us" and "our" refer to the business and operations of LegacyQuantumScape and its consolidated subsidiaries prior to the Business Combination and toQuantumScape Corporation and its consolidated subsidiaries, following the Closing. Overview We are developing next generation battery technology for electric vehicles ("EVs") and other applications. We believe that our technology will enable a new category of battery that meets the requirements for broader market adoption. The lithium-metal solid-state battery technology that we are developing is being designed to offer greater energy density, longer life, faster charging, and greater safety when compared to today's conventional lithium-ion batteries. We are a development stage company with no revenue to date, have incurred a net loss from operations of approximately$49.6 million and$94.3 million for the three and six months endedJune 30, 2021 , respectively and an accumulated deficit of approximately$2.0 billion from our inception throughJune 30, 2021 . The results of operations for the three and six months endedJune 30, 2021 resulted in net income due to the impact of the change in fair value of the Assumed Common Stock Warrant liabilities. We expect to incur an incremental income (expense) for the fair value adjustments for the outstanding Assumed Common Stock Warrant liabilities at the end of each reporting period or through the exercise of the warrants. Excluding the impact of this non-cash fair value adjustment, the Company does not expect to be profitable in the immediate future.
Key Trends, Opportunities and Uncertainties
We are a pre-revenue company. We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed below and in the section titled "Risk Factors" appearing elsewhere in this Report.
Product Development
We are developing our battery technology with the goal of enabling commercial production between 2024 and 2025. We have validated capabilities of our solid-state separator and battery technology in single-layer solid-state cells. We are now working to develop multi-layer cells, to continue improving yield and performance and to optimize all components of the cell.
Our research and development currently includes programs for the following areas:
• Multi-layering. We are working to continue increasing the number of layers
in our cells. In
four-layer cells at the commercially relevant size (70x85mm). In
we announced that we have recently started testing our first 10-layer cells
at the same size. In order to produce commercially-viable solid-state
battery cells, we must produce battery cells which may require from several
dozen to over one hundred layers, depending on our customers' requirements.
We will need to overcome the developmental challenges to stack these layers
and implement the appropriate cell design for our solid-state battery cell. • Continued improvement in the quality of our solid-state separator. We are
working to improve the quality and uniformity of our solid-state separators,
to further improve, among other things, the cycling behavior, power, operating conditions of our cells and to continue to reduce separator thickness.
• Improvement of our separator manufacturing process. We have selected a
method of continuous processing found at scale in both the battery and
ceramic industries and are working on continuous improvement of this
process, including better consistency and higher throughput. Regarding
consistency, tightening the variability of separator quality results in
better yield. Regarding throughput, increasing the volume of separator
production results in the increased quantities required for higher layer
counts and delivery of more test cells to prospective customers. We are automating our manufacturing process and purchasing larger-scale manufacturing equipment. We will need to substantially improve our
manufacturing processes to increase throughput required for higher layer
counts and to achieve the cost, performance and volume levels required for commercial shipments. 23
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• Continued improvement of the cathode. Our cathodes use a conventional
cathode active material such as NMC and is mixed with a catholyte. We plan
to benefit from industry cathode chemistry improvements and/or cost
reduction, which in the future may include use of other cathode active
materials, including NCA and cobalt-free compositions, including LFP, as well as cathode processing advances such as dry electrode processing. Over the years, we have developed catholytes made of differing mixtures of organic polymer and organic liquid electrolyte in order to optimize
performance across multiple metrics such as voltage, temperature, power, and
safety, among others. We continue to test solid, gel and liquid catholytes
in our cells. The solid catholyte is part of our ongoing research and
development investigation into inorganic catholytes. Our solid-state
separator platform is being designed to enable some of the most promising
next-generation cathode technologies, including high voltage or high
capacity cathode active materials, which when combined with a lithium-metal
anode, may further increase cell energy densities.
Our team of over 400 scientists, engineers, technicians, and other staff is highly motivated and committed to solving these challenges ahead. However, any delays in the completion of these tasks will require additional cash use and delay market entry. As we grow our team, the size of our engineering pilot line and our materials consumption, our rate of cash utilization will also increase significantly.Process Development
Our architecture depends on our proprietary solid-state ceramic separator which we will manufacture ourselves. Though our separator's design is unique, its manufacturing relies on well-established, high-volume production processes currently deployed globally in other industries at large scale.
The solid-state separator is being designed to enable our 'anode-free' architecture. As manufactured, our solid-state battery cell has no anode; the lithium-metal anode is formed during the first charge of the cell; 100% of the lithium that forms the anode comes from the cathode material we purchase. Eliminating the anode bill of materials and associated manufacturing costs found in conventional lithium-ion cells could result in a meaningful cost of goods sold advantage for us. In addition, our solid-state battery cell is being designed to reduce the time and capital-intensity of the formation process step as compared to conventional lithium-ion manufacturing. We are focused on the continued expansion of the throughput and capability of ourSan Jose, California engineering line as well as the planning and setup of our QS-0 pre-pilot line and planning for ourQS-1 manufacturing facility. Continued expansion of the throughput and capability of ourSan Jose engineering line and QS-0 serves two purposes. First, the engineering line and QS-0 are intended to provide a sufficient quantity of solid-state separators and cells for internal development and for customer sampling. And second, ourSan Jose engineering line and QS-0 are intended to provide the basis for continued manufacturing process development and help inform tool selection and specifications for equipment forQS-1 . Delays in the successful buildout of ourSan Jose engineering line and QS-0 may impact both our development andQS-1 timelines. We will need to achieve significant cost savings in battery design and manufacturing, in addition to the cost savings associated with the elimination of an anode from our solid-state battery cells, while controlling costs associated with the manufacture of our solid-state separator, including achieving substantial improvements in throughput and yield required to hit commercial targets. Further, we will need to capture industry cost savings in the materials, components, equipment, and processes that we share, notably in the cathode, cell design, and factory.
Commercialization and Market Focus
As noted above, we will continue developing our battery technology with the goal of enabling customer prototype sampling in 2022, samples for use in test cars by 2023, and commercialization beginning between 2024 and 2025. We have validated the performance capabilities of our solid-state separator and battery technology in single-layer solid-state cells at the commercially relevant size (70x85mm) and four-layer solid-state battery cells at a smaller size (30x30mm), four-layer solid-state battery cells at the commercially relevant size (70x85mm); and more recently have started cycling our first 10-layer solid-state cells at the commercially relevant size (70x85mm). We will work to continue improving quality, consistency and throughput, and to optimize all components of the cell. We will continue to work to further develop and validate the volume manufacturing processes to enable high volume manufacturing and minimize manufacturing costs. The funds available to us will enable us to expand and accelerate research and development activities and undertake additional initiatives. Finally, we will continue to use and expand on our engineering line inSan Jose to prepare for high volume manufacturing, to continue to order QS-0 equipment and prepare our QS-0 facility, and plan our productionQS-1 facility through our joint venture partnership withVolkswagen .QS-1 will be built and run by QSV, the joint venture between us andVolkswagen . The QS-1 Expansion would represent a small fraction ofVolkswagen's demand for batteries and implies vehicle volumes under 2.4% ofVolkswagen's total production in 2020, assuming a 100kWh battery pack size. Our goal is to significantly expand the production capacity of the joint venture, in partnership withVolkswagen , to meet more of their projected demand. While we expectVolkswagen will be the first to commercialize vehicles using our battery technology, we intend to work closely with other automotive original equipment manufacturers ("OEMs") to make our solid-state battery cells widely available over time. We are focused on automotive EV applications, which have the most stringent set of requirements for batteries. However, we recognize that our solid-state battery technology has applicability in other large and growing markets including stationary storage and consumer electronics such as smartphones and wearables. 24 -------------------------------------------------------------------------------- We believe that our technology enables a variety of business models. In addition to joint ventures, such as the one withVolkswagen , we may operate solely-owned manufacturing facilities or license technology to other manufacturers. Where appropriate, we may build and sell separators rather than complete battery cells. We intend to continue to invest in research and development to improve battery cell performance, improve manufacturing processes, and reduce cost.
Access to Capital
Following the Business Combination, theMarch 2021 Public Offering, and assuming we experience no significant delays in the research and development of our solid-state battery cells, we believe that our cash resources are sufficient to fund our initial start of production, to fund QS-0 operating expenses, and to partially fund our share of the equity portion of the joint venture's costs of building QS-1 Expansion, net of debt intended to be incurred by the joint venture. However, any delays could materially impact us.
Regulatory Landscape
We operate in an industry that is subject to many established environmental regulations, which have generally become more stringent over time, particularly in hazardous waste generation and disposal and pollution control. Regulations in our target markets include economic incentives to purchasers of EVs, tax credits for EV manufacturers, and economic penalties that may apply to a car manufacturer based on its fleet-wide emissions which may indirectly benefit us in that the regulations will expand the market size of EVs. While we expect environmental regulations to provide a tailwind to our growth, it is possible for certain regulations to result in margin pressures. Trade restrictions and tariffs, while historically minimal between theEuropean Union andthe United States where most of our production and sales are expected, are subject to unknown and unpredictable change that could impact our ability to meet projected sales or margins. Basis of Presentation We currently conduct our business through one operating segment. As a pre-revenue company with no commercial operations, our activities to date have been limited and were conducted primarily inthe United States . Our historical results are reported underU.S. GAAP and inU.S. dollars. Upon commencement of commercial operations, we expect to expand our global operations substantially, including inthe United States and theEuropean Union , and as a result we expect our future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in our historical financial statements. As a result, we expect that the financial results we report for periods after we begin commercial operations will not be comparable to the financial results included in this Report.
Components of Results of Operations
We are a research and development stage company and our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or projected results of operations.
Research and Development Expense
To date, our research and development expenses have consisted primarily of personnel-related expenses for scientists, experienced engineers and technicians as well as costs associated with the expansion and ramp up of our engineering and QS-0 facilities inSan Jose , including the material and supplies to support the product development and process engineering efforts. As we ramp up our engineering operations to complete the development of our solid-state, lithium-metal batteries and required process engineering to meet automotive cost targets, we anticipate that research and development expenses will increase significantly for the foreseeable future as we expand our hiring of scientists, engineers, and technicians and continue to invest in additional plant and equipment for product development (e.g. multi-layer cell stacking, packaging engineering), building prototypes, and testing of battery cells as our team works to meet the full set of automotive product requirements.
General and Administrative Expense
General and administrative expenses consist mainly of personnel-related expenses for our executive, sales and marketing and other administrative functions and expenses for director and officer insurance and outside professional services, including legal, accounting and other advisory services. We are rapidly expanding our personnel headcount and supporting systems, in anticipation of planning for and supporting the ramping up of commercial manufacturing operations and being a public company. Accordingly, we expect our general and administrative expenses to increase significantly in the near term and for the foreseeable future. Upon commencement of commercial operations, we also expect general and administrative expenses to include customer and sales support and advertising costs. 25
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Change in Fair Value of Assumed Common Stock Warrant Liability
The change in fair value of Assumed Common Stock Warrant liabilities consists of the change in non-cash fair value of the Public Warrants and Private Placement Warrants assumed in connection with the Business Combination. We expect to incur an incremental income (expense) for the fair value adjustments for the outstanding Assumed Common Stock Warrant liabilities at the end of each reporting period or through the exercise of the warrants.
Interest Expense
Interest expense consists primarily of interest expense associated with the interest component of our QS-0 facility lease.
Interest Income
Interest income consists primarily of interest income from marketable securities.
Other Income (Expense)
Our other income (expense) consists primarily of gain (loss) on the disposal of fixed assets.
Income Tax Expense / Benefit
Our income tax provision consists of an estimate for
Results of Operations
Comparison of the Three and Six Months Ended
The following table sets forth our historical operating results for the periods indicated (amounts in thousands):
Three Months Ended June 30, $ % Six Months Ended June 30, $ % 2021 2020 Change Change 2021 2020 Change Change Operating expenses: Research and development$ 35,776 $ 12,049 $ 23,727 197 %$ 65,241 $ 25,396 $ 39,845 157 % General and administrative 13,846 2,178 11,668 536 % 29,056 4,747 24,309 512 % Total operating expenses 49,622 14,227 35,395 249 % 94,297 30,143 64,154 213 % Loss from operations (49,622 ) (14,227 ) (35,395 ) 249 % (94,297 ) (30,143 ) (64,154 ) 213 % Other income: Interest expense (238 ) - (238 ) 100 % (238 ) - (238 ) 100 % Interest income 349 281 68 24 % 596 819 (223 ) (27 )% Change in fair value of assumed common stock warrant liabilities 130,504 - 130,504 100 % 99,740 - 99,740 100 % Other (expense) income (5 ) - (5 ) 100 % 98 - 98 100 % Total other income: 130,610 281 130,329 46380 % 100,196 819 99,377 12134 % Net income (loss) 80,988 (13,946 ) 94,934 (681 )% 5,899 (29,324 ) 35,223 (120 )% Less: Net loss attributable to non-controlling interest - (1 ) 1 (100 )% (10 ) (5 ) (5 ) 100 % Net income (loss) attributable to common stockholders$ 80,988 $ (13,945 ) $ 94,933 (681 )%$ 5,909 $ (29,319 ) $ 35,228 (120 )% Research and Development The increase in research and development expense in the three months endedJune 30, 2021 compared to the same period of the prior year primarily resulted from the$9.2 million increase in personnel cost due to the growth in research and development headcount to support technology development, an increase of$3.5 million in material supplies and equipment maintenance to support the increase of research and development cell builds in our commercial form factor, an increase of$1.9 million related to depreciation and amortization, an increase of$2.2 million in facility expenses primarily related to the QS-0 facility and a$1.7 million increase in professional fees, administrative expenses and outside services to support the growth in product development and process engineering efforts. Additionally, non-cash stock-based compensation expense increased by$5.2 million from$1.4 million for the three months ended June 26
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30, 2020 to
The increase in research and development expense in the six months endedJune 30, 2021 compared to the same period of the prior year primarily resulted from the$16.3 million increase in personnel cost due to the growth in research and development headcount to support technology development, an increase of$5.0 million in material supplies and equipment maintenance to support the increase of research and development cell builds in our commercial form factor, an increase of$2.7 million related to depreciation and amortization, an increase of$3.0 million in facility expenses primarily related to the QS-0 facility, and a$2.6 million increase in professional fees and outside services to support the growth in product development and process engineering efforts. Additionally, non-cash stock-based compensation expense increased by$10.3 million from$2.7 million for the six months endedJune 30, 2020 to$13.0 million for the six months endedJune 30, 2021 primarily due to the effect of RSUs granted in the second half of fiscal 2020 and the first half of fiscal 2021.
General and Administrative
The increase in general and administrative expenses in the three months endedJune 30, 2021 compared to the same period of the prior year is due in part to the increase of$4.1 million for stock-based compensation in the three months endedJune 30, 2021 for grants in 2020 and RSUs granted in 2021. Additionally, professional fees and other corporate expenses increased by$3.3 million due to costs associated with business growth, personnel costs increased by$2.4 million due to the headcount increase to support business growth and director and officer insurance expenses increased by$1.8 million . The increase in general and administrative expenses in the six months endedJune 30, 2021 compared to the same period of the prior year is due in part to the increase of$8.6 million for stock-based compensation in the six months endedJune 30, 2021 for grants in 2020 and RSUs granted during the six months endedJune 30, 2021 . Additionally, professional fees and other corporate expenses increased by$6.8 million due to costs associated with business growth, personnel costs increased by$5.2 million due to the headcount increase to support business growth and director and officer insurance expenses increased by$3.6 million . Interest Income
The increase in interest income during the three months ended
The decrease in interest income during the six months ended
Interest Expense
The increase in interest expense during the three and six months endedJune 30, 2021 , as compared to the same period of the prior year was due to the interest expense associated with the QS-0 finance lease, which commenced during the three and six months endedJune 30, 2021 .
Change in Fair Value of Assumed Common Stock Warrant Liability
The change in fair value of Assumed Common Stock Warrant liabilities was due to the change in the estimated non-cash fair value of the Public and Private Placement Warrants at the end of each reporting period or through the exercise of the warrants.
As of
Other Income (Expense)
Other income for the six months ended
Liquidity and Capital Resources
As ofJune 30, 2021 andDecember 31, 2020 , our principal sources of liquidity were our cash and cash equivalents and marketable securities in the amount of approximately$1.6 billion and$997.6 million , respectively. Our cash equivalents are invested inU.S. money market funds and commercial paper. Our marketable securities are invested inU.S. Treasury notes and bonds, commercial paper, and corporate notes and bonds. We have yet to generate any revenue from our business operations. To date, we have funded our capital expenditure and working capital requirements through equity as further discussed below. Our ability to successfully develop our products, commence commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity or debt financing and, over time, our ability to generate cash flows from operations. Prior to the Business Combination, we financed our operations primarily from the sales of redeemable convertible preferred stock. In connection with the Business Combination, we received net cash proceeds of approximately$676.9 million . Additionally, after the Business Combination, we received proceeds from the Series F Preferred Stock Purchase Agreements.
In
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In
We believe that our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Report. We believe it is also sufficient to fund QS-0 operating expenses, and to partially fund our share of the equity portion of the joint venture's costs of building QS-1 Expansion, net of debt intended to be incurred by the joint venture, and fund our operations until we initially commence production of the pilot line solid-state battery through the first commercial sales, assuming we are able to do so as currently contemplated. We may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, disruptions due to the COVID-19 pandemic, competitive pressures, and regulatory developments, among others. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If such financing is not available, or if the financing terms are less desirable than we expect, we may be forced to decrease our level of investment in product development or scale back our operations, which could have an adverse impact on our business and financial prospects.
Cash Flows
The following table provides a summary of our cash flow data for the periods indicated (amounts in thousands):
Six Months Ended June 30, 2021 2020 Net cash used in operating activities$ (54,435 ) $ (22,000 ) Net cash (used in) provided by investing activities (330,539 )
27,758
Net cash provided by financing activities 683,648 14
Cash Used in Operating Activities
Our cash flows used in operating activities to date have been primarily comprised of payroll, material and supplies, facilities expense, and professional service related to research and development and general and administrative activities. As we continue to ramp up hiring for technical headcount to accelerate our engineering efforts ahead of starting the pilot line operations, we expect our cash used in operating activities to increase significantly before we start to generate any material cash flows from our business.
Our net income of$5.9 million for the six months endedJune 30, 2021 was offset by non-cash income of$99.7 million related to the change in fair value of Assumed Common Stock Warrant liabilities, non-cash expense of$23.3 million related to stock-based compensation, non-cash expense of$5.4 million related to amortization of premiums and accretion of discounts on marketable securities, and non-cash expense of$5.2 million related to depreciation and amortization. Cash used during the six months endedJune 30, 2020 included the effect of a net loss of$29.3 million adjusted for non-cash items including expenses of$4.4 million related to stock-based compensation and$3.1 million related to depreciation and amortization.
Cash Flows from Investing Activities
Our cash flows from investing activities to date have been comprised of purchases of property and equipment and purchases and maturities of our marketable securities. We expect the level of capital investment to increase substantially in the near future as we fully build out our engineering lines as well as acquire the property and equipment for QS-0. Proceeds from the maturities of marketable securities increased to$411.0 million for the six months endedJune 30, 2021 , as compared to$62.0 million for the six months endedJune 30, 2020 due to the timing of the maturity of securities. Proceeds from the sales of marketable securities during the six months endedJune 30, 2021 was$121.5 million , as compared to$0 for the six months endedJune 30, 2020 . Cash used for the purchase of marketable securities in the six months endedJune 30, 2021 was$819.3 million , a significant increase over the$24.4 million of cash used for the purchase of marketable securities in the six months endedJune 30, 2020 . Net cash used for property and equipment purchases in the six months endedJune 30, 2021 was$43.7 million , a significant increase over the$9.9 million of cash used for equipment purchases in the six months endedJune 30, 2020 including the purchases for QS-0.
Cash Flows from Financing Activities
The increase in cash provided by financing activities is due to$462.9 million in net proceeds received from theMarch 2021 Public Offering,$112.3 million received from the exercise of Public Warrants,$99.9 million in net proceeds received from the Series F Preferred Stock Agreements and approximately$9.5 million received from the exercise of stock options during the six months endedJune 30, 2021 .
Cash received from financing activities during the six months ended
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Contractual Obligations and Commitments
We currently lease our headquarters, certain other warehouse space and certain equipment through 2032. OnJune 22, 2021 , we amended the terms of our headquarter lease to provide for, among other things, an extension of the lease term toSeptember 2032 . OnApril 2, 2021 , we entered into a lease agreement for premises consisting of approximately 197,000 rentable square feet of space located inSan Jose, California to be used for QS-0. The lease expires onSeptember 30, 2032 . The QS-0 lease is classified as a finance lease.
The following table summarizes our contractual obligations and other commitments
for cash expenditures as of
Within More than Total 1 Year 1-3 Years 3-5 Years 5 Years (in thousands) Operating lease obligations$ 29,900 $ 2,389 $ 3,836 $ 5,289 $ 18,386 Finance lease obligations (1)$ 50,223 $ (4,591 ) $ 7,917 $ 10,545 $ 36,352 Total$ 80,123 $ (2,202 ) $ 11,753 $ 15,834 $ 54,738
(1) The expected payments include expected reimbursements of
primarily for tenant improvement allowance.
Off-Balance Sheet Arrangements
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance withU.S. GAAP. In the preparation of these condensed consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements. Our significant accounting policies are described in Note 2 to our condensed consolidated financial statements included elsewhere in this Report. Our critical accounting policies and estimates were described in Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report. There have been no material changes to our critical accounting policies and estimates since our Annual Report.
Emerging Growth Company Status
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act") and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
Recent Accounting Pronouncements
See Note 3 to the condensed consolidated financial statements in this Report for more information about recent accounting pronouncements, the timing of their adoption, and our, to the extent it has made one, of their potential impact on our financial condition and its results of operations and cash flows. 29
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