You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report.
As discussed in the section titled "Special Note Regarding Forward Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth in the section titled "Risk Factors" under Part I, Item 1A.
Overview
We are a biopharmaceutical company focused on the development of the next wave of medicine for the treatment of inflammatory diseases, including dermal, respiratory, and gastrointestinal diseases. We are developing next-generation, highly selective, oral small-molecule inhibitors of KIT, a cell surface receptor that serves as the master regulator of mast cell function and survival. Early clinical studies have demonstrated that KIT inhibition has the potential to address the treatment of a broad range of mast-cell-mediated inflammatory diseases, and that a titratable, oral, intracellular small molecule inhibitor may provide an attractive therapeutic profile against this target. Our initial focus is on developing a KIT inhibitor to treat chronic urticaria.
In
Since our inception in 2019, we have devoted substantially all of our efforts to
organizing and staffing our company, business planning, raising capital,
establishing our intellectual property portfolio, acquiring or discovering
product candidates, research and development activities for
We have incurred significant operating losses since inception. Our ability to
generate product revenue sufficient to achieve profitability will depend heavily
on the successful development and eventual commercialization of future product
candidates. Our net losses were
•
advance any future KIT inhibitor product candidates through nonclinical studies and clinical development;
•
discover and develop new product candidates;
•
obtain, expand, maintain, defend and enforce our intellectual property portfolio;
•
manufacture, or have manufactured, nonclinical, clinical and potentially commercial supplies of any future oral KIT inhibitor product candidates;
•
seek regulatory approvals for any future oral KIT inhibitor product candidates;
•
establish a sales, marketing and distribution infrastructure to commercialize any future oral KIT inhibitor product candidates, if approved;
•
identify additional compounds or product candidates and acquire rights from third parties to those compounds or product candidates through licenses;
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hire additional clinical, scientific and management personnel, as well as administrative staff to support the growth of our business;
•
add operational, financial and management information systems and personnel;
•
incur additional legal, accounting and other costs associated with operating as a public company;
•
experience delays related to the ongoing COVID-19 pandemic in
•
establish licenses, collaborations or strategic partnerships.
Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures related to our research and development activities.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate. In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.
As a result, we will need substantial additional funding to support our
continuing operations and pursue our growth strategy. Until such time as we can
generate significant revenue from product sales, if ever, we expect to finance
our operations through equity offerings, debt financings or other capital
sources, which could include collaborations, strategic alliances or additional
licensing arrangements. We may be unable to raise additional funds or enter into
such arrangements when needed, on favorable terms, or at all. Our failure to
raise capital or enter into such agreements as, and when, needed, could have a
material adverse effect on our business, results of operations and financial
condition, including requiring us to have to delay, reduce or eliminate product
development or future commercialization efforts. The amount and timing of our
future funding requirements will depend on many factors including the successful
advancement of any future oral KIT inhibitor product candidates. Our ability to
raise additional funds may also be adversely impacted by potential worsening
global economic conditions and disruptions to and volatility in the credit and
financial markets in
Because of the numerous risks and uncertainties associated with development of treatment of mast cell driven inflammatory diseases, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
We oversee and manage third party
As of
License Agreement with
On
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Pursuant to the Novartis Agreement, we made a one-time payment of
For a more detailed description of this agreement, see Note 5 to our audited consolidated financial statements included elsewhere in this Annual Report.
Impact of COVID-19 on Our Business
The impact of COVID-19 on our future results will largely depend on future
developments, which are highly uncertain and cannot be predicted with
confidence, such as the duration of the pandemic, the impact of variants,
evolving travel restrictions and social distancing in
Components of Our Results of Operations
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. If our development efforts for our any product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.
Operating Expenses
Research and Development
Research and development expenses account for a significant portion of our operating expenses and consist primarily of costs incurred in connection with the discovery, nonclinical development, clinical development and manufacturing of potential future product candidates, and include:
Direct Costs
•
expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our clinical trials; CDMOs that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct our clinical trials, nonclinical studies and other scientific development services;
•
the cost of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches;
•
costs of outside consultants, including their fees, stock-based compensation and related travel expenses;
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•
costs related to compliance with quality and regulatory requirements; and
•
payments made under third-party licensing agreements.
Indirect Costs
•
personnel-related expenses including, salaries, benefits, stock-based compensation and other related costs for individuals involved in research and development activities; and
•
facilities and other expenses not directly tied to a program.
We expense research and development costs as incurred. We recognize direct development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors or our estimate of the level of service that has been performed at each reporting date. Payments for these development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued expenses.
A significant portion of our research and development costs to date have been third-party costs, which we track on an individual product candidate basis after a clinical product candidate has been identified. Our indirect research and development costs are primarily personnel-related costs and facilities and other costs. Employees and infrastructure are not directly tied to any one program and are deployed across our programs. As such, we do not track these costs on a specific program basis. We utilize third party contractors for our research and development activities and CDMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities.
Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue to discover and develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. If any future product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
Our research and development expenses may vary significantly in the future based on factors, such as:
•
the number and scope of nonclinical and IND-enabling studies;
•
per patient trial costs;
•
the number of trials required for approval;
•
the number of sites included in the trials;
•
the countries in which the trials are conducted;
•
the length of time required to enroll eligible patients;
•
the number of patients that participate in the trials;
•
the drop-out or discontinuation rates of patients;
•
potential additional safety monitoring requested by regulatory agencies;
•
the duration of patient participation in the trials and follow-up;
•
the cost and timing of manufacturing our product candidates;
•
the phase of development of our product candidates;
•
the efficacy and safety profile of our product candidates;
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the extent to which we establish additional collaboration or license agreements; and
•
whether we choose to partner any of our product candidates and the terms of such partnership.
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Any changes in the outcome of any of these variables with respect to the development of any future product candidates in nonclinical and clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA, EMA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any clinical trials following the applicable regulatory authority's acceptance and clearance, we could be required to expend significant additional financial resources and time to complete clinical development than we currently expect. We may never obtain regulatory approval for any product candidates that we develop.
The successful development of any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of any other product candidates we may develop. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of any future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation expenses for personnel in executive and other administrative functions. Other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services, and expenses for rent, insurance and other operating costs.
We expect that our general and administrative expenses will continue to increase
in the foreseeable future as our business expands to support our continued
research and development activities, including any future clinical trials. These
increases will likely include increased costs related to the hiring of
additional personnel and fees to outside consultants, among other expenses. We
also anticipate increased expenses associated with being a public company,
including costs for audit, legal, regulatory and tax-related services related to
compliance with the rules and regulations of the
Total Other (Income) Expense, Net
Change in Fair Value of Anti-Dilution Right Liability
We classified the anti-dilution right liability under the Novartis Agreement, as a liability on our consolidated balance sheets as the anti-dilution right liability represented a freestanding financial instrument that required us to transfer equity instruments upon future equity closings. The anti-dilution right liability was initially recorded at fair value upon the date of issuance and was subsequently remeasured to fair value at each reporting date. The issuance date fair value of the derivative liability was recognized as a research and development expense upon entering into the agreement with Novartis. Changes in the fair value of the anti-dilution right liability were recognized as a component of other expense in our consolidated statements of operations. Changes in the fair value of the anti-dilution right liability were recognized until the anti-dilution rights liability was satisfied in the first quarter of 2021.
In
Change in Fair Value of Preferred Stock Tranche Liability
In connection with the issuance of our Series A Preferred Stock, we granted investors future tranche rights to purchase the Preferred Stock. We classified the preferred stock tranche liability for the future purchase and option to purchase Series A Preferred Stock as a liability on our consolidated balance sheets as the preferred stock tranche liability is a freestanding financial instrument that will require us to transfer equity instruments upon future closings of the Series A Preferred Stock. The preferred stock tranche liability was initially recorded at fair value upon the date of issuance and is subsequently remeasured to fair value at each reporting date. Changes in the fair value of the preferred stock tranche liability are recognized as a component in other (income) expense, net in the consolidated statements of operations. Changes in the fair value of the preferred stock tranche liability were recognized until the tranche liability were fulfilled or otherwise extinguished in the fourth quarter of 2021.
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In
Other Income
Other income primarily consists of interest income generated from interest bearing money market accounts.
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net
losses we have incurred in each period or for our earned research and
development tax credits, as we believe, based upon the weight of available
evidence, that it is more likely than not that all of our net operating loss
carryforwards and tax credits will not be realized. As of
Results of Operations
Comparison of the year ended
The following table summarizes our results of operations for each of the periods presented (in thousands, except percentages):
Year Ended December 31, 2021 2022 $ Change % Change Operating expenses: Research and development$ 15,748 $ 24,407 $ 8,659 55 % General and administrative 3,256 13,301 10,045 309 Total operating expenses 19,004 37,708 18,704 98 Loss from operations 19,004 37,708 18,704 98 Other (income) expense, net: Change in fair value of anti-dilution right liability 682 - (682 ) (100 ) Change in fair value of preferred stock tranche liability 9,928 - (9,928 ) (100 ) Other income (5 ) (2,553 ) (2,548 ) * Total other (income) expense, net 10,605 (2,553 ) (13,158 ) (124 ) Net loss$ 29,609 $ 35,155 $ 5,546 19 % *Percentage not meaningful.
Research and Development Expenses
The following table summarizes our research and development expenses for each of the periods presented (in thousands, except percentages):
Year Ended December 31, 2021 2022 $ Change % Change Direct costs:THB001 $ 11,062 $ 11,130 $ 68 1 % Other discovery and development 2,105 7,129 5,024 239 Indirect costs: Personnel-related 2,569 6,023 3,454 134 Facilities and other 12 125 113 942 Total research and development expenses$ 15,748 $ 24,407 $ 8,659 55 % 80
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Research and development expenses increased by
•
a
•
a
•
a
•
a
General and Administrative Expenses
General and administrative expenses increased by
Total Other (Income) Expense, Net
Total other (income) expense, net decreased by approximately
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have incurred significant losses in each period and on an aggregate basis. We have not yet commercialized any product candidates, and we do not expect to generate revenue from sales of any product candidates or from other sources for several years, if at all.
On
As of
Cash Flows
The following table provides information regarding our cash flows for each of the periods presented (in thousands):
Year EndedDecember 31, 2021 2022
Net cash used in operating activities
- (36 )
Net cash provided by financing activities 135,749 195,991
Net increase in cash and cash equivalents
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Net cash used in operating activities for the year ended
Net cash used in operating activities for the year ended
We had no investing activities for the year ended
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the year ended
Net cash provided by financing activities for the year ended
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, research and development services, compensation and related expenses and general overhead costs. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Following the closing of our IPO, we expect to incur additional costs associated with operating as a public company.
Based on our current operating plan, we believe that our existing cash and cash equivalents, will be sufficient to fund our operations and capital expenses through at least the next twelve months. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.
Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:
•
the timing, cost and progress of nonclinical and clinical development activities;
•
the cost of regulatory submissions and timing of regulatory approvals;
•
the number and scope of nonclinical and clinical programs we decide to pursue;
•
the progress of the development efforts of parties with whom we may in the future enter into collaborations and/or research and development agreements;
•
the timing and amount of milestone and other payments we are obligated to make under our Novartis Agreement or any future license agreements;
•
the cash requirements of any future acquisitions or discovery of product candidates;
•
our ability to establish and maintain collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties on favorable terms, if at all;
•
the costs involved in prosecuting and enforcing patent and other intellectual property claims;
•
the costs of manufacturing our product candidates by third parties;
•
the cost of commercialization activities if any future oral KIT inhibitor product candidates are approved for sale, including marketing, sales and distribution costs;
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•
our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates; and
•
our need to implement additional internal systems and infrastructure, including financial and reporting systems to satisfy our obligations as a public company.
A change in the outcome of any of these or other variables with respect to the development of any future oral KIT inhibitor product or development candidates we may develop in the future could significantly change the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.
Until such time, if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of equity offerings, debt
financings or other capital sources, which could include collaborations,
strategic alliances or licensing arrangements. We currently have no credit
facility or committed sources of capital. Adequate additional funds may not be
available to us on acceptable terms, or at all. To the extent that we raise
additional capital through the sale of equity or convertible debt securities,
the ownership interests of our existing stockholders may be diluted, and the
terms of these securities may include liquidation or other preferences that
could adversely affect the rights of such stockholders. Debt financing, if
available, may involve agreements that include restrictive covenants that limit
our ability to take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends, that could adversely impact our
ability to conduct our business. If we raise additional funds through
collaborations, strategic alliances or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future
revenue streams, research program or product candidates, or grant licenses on
terms that may not be favorable to us. If we are unable to raise additional
funds through equity or debt financings when needed, we may be required to
delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market product
candidates that we would otherwise prefer to develop and market ourselves. Our
ability to raise additional funds may be adversely impacted by potential
worsening global economic conditions and disruptions to and volatility in the
credit and financial markets in
Contractual Obligations and Other Commitments
Novartis Agreement
We may incur contingent royalty payments that we are required to make under the Novartis Agreement. Due to the uncertainty of the achievement and timing of the events requiring payment under our license agreement with Novartis, the amounts to be paid by us are not fixed or determinable at this time. We are required to pay Novartis royalties on all sales of licensed products, with such royalty percentages in the mid-single digits of sales. We have not paid any royalties to date as we have no products commercially approved for sale. For additional information regarding the license agreement and royalties payable to Novartis, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report.
Lease Obligations
On
Purchase and Other Obligations
We enter into contracts in the normal course of business with CROs, CDMOs and other third-party vendors for nonclinical research studies and testing, clinical trials and testing and manufacturing services. Most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments due upon cancellation consist of payments for services provided or expenses incurred, including non-cancellable obligations of our service provided up to one year after the date of cancellation.
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Critical Accounting Policies
This management's discussion and analysis is based on our consolidated financial
statements, which have been prepared in accordance with
While our accounting policies are described in more detail in the notes to our consolidated financial statements included elsewhere in this Form 10-K, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates.
As part of the process of preparing our financial statements, we are required to estimate our accrued and prepaid third-party research and development expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued and prepaid expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued and prepaid research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.
We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred.
Stock-Based Compensation
We measure stock-based payment awards granted to employees and non-employees as stock-based compensation expense at fair value, based on the date of the grant, and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. Our stock-based payments include stock options and grants of restricted stock awards. For stock-based awards with service-based vesting conditions, we recognize compensation expense using the straight-line method. For awards with both performance and service-based vesting conditions, we record expense using an accelerated attribution method, once the performance conditions are considered probable of being achieved, using our best estimates.
At inception of the 2019 Stock Incentive Plan, we adopted the guidance of Accounting Standards Update, or ASU, No. 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, or ASU No. 2018-07, prior to the issuance of any stock option grants. The measurement date for non-employee awards is the date of grant without changes in the fair value of the award. Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis.
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We classify stock-based compensation expense in our statements of operations in the same manner in which the award recipient's salary and related costs are classified or in which the award recipient's service payments are classified. The fair value of each stock option is estimated on the grant date using the Black-Scholes option pricing model, which requires inputs based on certain subjective assumptions, including:
•
Fair Value of Common Stock-See the subsection titled "-Common Stock Valuations" below.
•
Expected Term-The expected term represents the period that the stock-based awards are expected to be outstanding. We use the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the options.
•
Expected Volatility-Due to our limited operating history and lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the average volatility for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.
•
Risk-Free Interest Rate-The risk-free interest rate is based on the
•
Expected Dividend Yield-We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
The fair value of each restricted common stock award is estimated on the date of
grant based on the fair value of our common stock on that same date. See Note 8
to our consolidated financial statements included elsewhere in this Annual
Report for information concerning certain of the specific assumptions we used in
applying the Black-Scholes option pricing model to determine the estimated fair
value of our stock options granted in the years ended
Common Stock Valuations
Historically, for all periods prior to our IPO that was completed on
Once a public trading market for our common stock was established in connection with the completion of our IPO, the fair value of our common stock is determined based on the quoted market price of our common stock.
Internal Controls Over Financial Reporting
A company's internal control over financial reporting is a process designed by, or under the supervision of, a company's principal executive and principal financial officers, or persons performing similar functions, and effected by a company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. A material weakness is a significant deficiency, or a combination of significant deficiencies, in internal control over financial reporting such that it is reasonably possible that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
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During the preparation of our consolidated financial statements for the year
ended
We are implementing measures designed to improve our internal control over financial reporting to remediate this material weakness, including formalizing our processes and internal control documentation and strengthening supervisory reviews by our financial management; hiring additional qualified accounting and finance personnel and engaging financial consultants to enable the implementation of internal control over financial reporting and segregating duties amongst accounting and finance personnel. In addition, we have implemented an accounting software system with the design and functionality to segregate incompatible accounting duties, which we currently expect will be fully implemented in our 2023 fiscal year.
While we are implementing these measures, we cannot assure you that these efforts will remediate our material weakness and significant deficiencies in a timely manner, or at all, or prevent restatements of our financial statements in the future. If we are unable to successfully remediate our material weakness, or identify any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, and the market price of our common stock may decline as a result.
Emerging Growth Company and Smaller Reporting Company Status
Under Section 107(b) of the Jumpstart Our Business Startups Act of 2012, or the
JOBS Act, an "emerging growth company" can delay the adoption of new or revised
accounting standards until such time as those standards would apply to private
companies. We have elected this exemption to delay adopting new or revised
accounting standards until such time as those standards apply to private
companies. Where allowable we have early adopted certain standards as described
in Note 2 of our consolidated financial statements included elsewhere in this
Annual Report. As a result, our consolidated financial statements may not be
comparable to companies that comply with the new or revised accounting
pronouncements as of public company effective dates. We will continue to remain
an "emerging growth company" until the earliest of the following: (i)
We are also a "smaller reporting company," meaning that the market value of our
stock held by non-affiliates plus the proposed aggregate amount of gross
proceeds to us as a result of our IPO was less than
If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Recent Accounting Pronouncements
We have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 2 to our consolidated financial statements included elsewhere in this Annual Report, such standards do not have a material impact on our financial statements or do not otherwise apply to our operations.
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