The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related notes for the year endedDecember 31, 2021 included in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission , orSEC . In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Quarterly Report on Form 10-Q, including those factors set forth in the section entitled "Cautionary Note Regarding Forward-Looking Statements and Industry Data" and in the section entitled "Risk Factors" in Part II, Item 1A. Overview We are a biotech innovation company with a mission of prolonging life and enhancing its quality by improving the health of the immune system. We are developing biotechnologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring. Our immune reprogramming technologies are currently at the pre-clinical stage and are designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies. Our immune monitoring technologies are designed to provide a personalized comprehensive profile of the immune system and we plan to utilize them in our upcoming reprogramming clinical trials to monitor subjects' immune response before, during and after drug administration. Immune Reprogramming The discovery of immunosuppressive (anti-rejection and monoclonal) drugs over 40 years ago has made possible life-saving organ transplantation procedures and blocking of unwanted immune responses in autoimmune diseases. However, immune suppression leads to significant undesirable side effects, such as increased susceptibility to life-threatening infections and cancers, because it indiscriminately and broadly suppresses immune function throughout the body. While the use of these drugs has been justifiable because they prevent or delay organ rejection, their use for treatment of autoimmune diseases and allergies may not be acceptable because of the aforementioned side effects. Furthermore, transplanted organs often ultimately fail despite the use of immune suppression, and about 40% of transplanted organs survive no more than 5 years.
New, focused therapeutic approaches are needed that modulate only the small portion of immune cells that are involved in rejection of the transplanted organ, as this approach can be safer for patients than indiscriminate immune suppression. Such approaches are referred to as immune tolerance, and when therapeutically induced, may be safer for patients and potentially allow long-term survival of transplanted tissues and organs.
In the late 1990s, academic research on these approaches was conducted at the Transplant Center inLoma Linda University ("LLU") in connection with a project that secured initial grant funding from theU.S. Department of Defense . The focus of that project was for skin grafting for burn victims. Twenty years of research at LLU and an affiliated incubator led to a series of discoveries that have been translated into a large patent portfolio of therapeutic approaches that may be applied to the modulation of the immune system to induce tolerance to self and transplanted organs. We have an exclusive worldwide license for commercializing this nucleic acid-based technology (which is currently at the pre-clinical stage), named Apoptotic DNA Immunotherapy™ (ADi™) from LLU, which utilizes a novel approach that mimics the way the body naturally induces tolerance to our own tissues ("therapeutically induced immune tolerance"). While immune suppression requires continuous administration to prevent rejection of a transplanted organ, induction of tolerance has the potential to retrain the immune system to accept the organ for longer periods of time. Thus, ADi™ may allow patients to live with transplanted organs with significantly reduced immune suppression. ADi™ is a technology platform which we believe can be engineered to address a wide variety of indications.
We are developing ADi™ products for organ transplantation including skin grafting, autoimmune diseases, and allergies, with the initial focus on skin allografts and psoriasis, as we believe these indications will be most efficient in providing safety and efficacy data in clinical trials. To submit a Biologics License Application ("BLA") for a biopharmaceutical product, clinical safety and efficacy must be demonstrated in a series of clinical studies conducted with human subjects. For products in our class of drugs, the first-in-human trials will be a combination of Phase I (safety/tolerability) and Phase II (efficacy) in affected subjects. To obtain approval to initiate the Phase I/IIa studies, an Investigational New Drug Application will be submitted to compile non-clinical efficacy data as well as manufacturing and pre-clinical safety/toxicology data. To date, we have conducted non-clinical studies in a stringent model of skin transplantation using genetically mismatched donor and recipient animals demonstrating a 3-fold increase in the survival of the skin graft in animals that were tolerized with ADi™ compared to animals that receive immune suppression alone. Prolongation of graft life was observed despite discontinuation of immune suppression after the first 5 weeks. Additionally, in an induced non-clinical model for psoriasis, ADi™ treatment resulted in a 69% reduction in skin thickness and a 38% decrease in skin flaking (two clinical parameters for assessment of psoriasis skin lesions). The Phase I/IIa studies in psoriasis will evaluate the safety/tolerability of ADi™ in patients diagnosed with psoriasis. Since the drug will be administered in subjects diagnosed with psoriasis, effectiveness of the drug to improve psoriatic lesions will also be evaluated. In another Phase I/IIa study, patients requiring skin allografts will receive weekly intra-dermal injections of ADi™ in combination with standard immune suppression to assess safety/tolerability and possibility of reducing levels of immunosuppressive drugs as well as prolongation of graft life. Later phase trials are planned after successful completion of these studies in preparation for submission for a BLA to regulatory agencies. Immune Monitoring We believe that understanding the status of an individual's immune system is key to developing and administering immunotherapies such as ADI™. We have secured an exclusive worldwide license for commercializing a technology platform named AditxtScore™, which provides a personalized comprehensive profile of the immune system. It is intended to be informative for individual immune responses to viruses, bacterial antigens, peptides, drugs, bone marrow and solid organ transplants, and cancer. It has broad applicability to many other agents of clinical interest impacting the immune system, including those not yet identified such as future infectious agents. 19
AditxtScore™ is being designed to allow individuals to understand, manage and monitor their immune profiles in order to be informed about attacks on or by their immune system. We believe AditxtScore™ can also assist the medical community in anticipating possible immune responses and reactions to viruses, bacteria, allergens and transplanted organs. It can be useful in anticipating attacks on the body by having the ability to determine its potential response and for developing a plan to deal with an undesirable reaction by the immune system. Its advantages include the ability to provide a simple, rapid, accurate, high throughput, single platform assay that can be multiplexed to determine the immune status with respect to several factors simultaneously, in 3-16 hours, as well as detect antigen and antibody in a single test (i.e. infectious, recovered, immune). In addition, it can determine and differentiate between various types of cellular and humoral immune responses (T and B cells). It also provides for simultaneous monitoring of cell activation and levels of cytokine release (i.e., cytokine storms). We plan to utilize AditxtScore™ in our upcoming clinical trials to monitor subjects' immune response before, during and after ADI™ drug administration. We are also evaluating plans to obtain FDA approval for AditxtScore™'s use as a clinical assay and seeking to secure manufacturing, marketing and distribution partnerships for application in the Infectious Diseases market, by end of 2020. To obtain FDA approval to use AditxtScore™ as a clinical assay, we plan to conduct validation studies comparing AditxtScore™ to other immunological tests to demonstrate reproducibility of data and to demonstrate the sensitivity of the assays for use in different indications (e.g., detection of antigens present in infectious agents or antibodies against infectious agents). We believe that these data will show AditxtScore™'s ability to multiplex in two ways using a single assay: (i) evaluating the immune response to multiple antigens (from different infectious agents) and (ii) measuring quantities of multiple cytokines. Furthermore, we believe that the additional validation studies will demonstrate AditxtScore™'s ability to measure the presence of several antibody isotypes against several antigens in a single reaction. Our plan is to submit a 510(K) application to the FDA after successful completion of these studies. We have engaged consultants for our communications and submissions to the FDA. Beyond 2021, we plan to develop AditxtScore™ for applications in additional markets such as Organ Rejection, Allergies, Drug/Vaccine Response, and Disease Susceptibility.
The initial application of the platform will be AditxtScore™ for COVID-19 which has been designed to provide a more complete assessment of an individual's infection and immunity status with respect to the SARS-CoV-2 virus. Infection status will be determined by evaluating the presence or absence of the virus, and immunity status by measuring levels of antibodies against viral antigens and their ability to neutralize the virus. We will soon be expanding the panel to measure other components of the immune response such as cellular immunity. In early 2021, we established our AditxtScore™ Immune Monitoring Center inRichmond, Virginia (the "Center"). The Center operates as aClinical Laboratory Improvement Amendments (CLIA) certified facility for the processing of our AditxtScore™ for COVID-19 Lab Developed Test (LDT) for our prospective channel partners, including labs and hospitals.
License Agreement with
OnMarch 8, 2018 , we entered into an Assignment Agreement (the "Assignment Agreement") withSekris Biomedical, Inc. ("Sekris"). Sekris was a party to a license agreement with LLU, entered and made effective onMay 25, 2011 , and amended onJune 24, 2011 ,July 16, 2012 andDecember 27, 2012 (the "Original Agreement," and together with the Assignment Agreement, the "Sekris Agreements"). Pursuant to the Assignment Agreement, Sekris transferred and assigned all of its rights, obligations and liabilities under the Original Agreement, of whatever kind or nature, to us. In exchange, onMarch 8, 2018 , we issued a warrant to Sekris to purchase up to 500,000 shares of our common stock (the "Sekris Warrant"). The warrant was immediately exercisable and has an exercise price of$4.00 per share. The expiration date of the warrant isMarch 8, 2023 . OnMarch 15, 2018 , as amended onJuly 1, 2020 , we entered into a LLU License Agreement directly withLoma Linda University , which amends and restates the Sekris Agreements. Pursuant to the LLU License Agreement, we obtained the exclusive royalty-bearing worldwide license in and to all intellectual property, including patents, technical information, trade secrets, proprietary rights, technology, know-how, data, formulas, drawings, and specifications, owned or controlled by LLU and/or any of its affiliates (the "LLU Patent and Technology Rights") and related to therapy for immune-mediated inflammatory diseases (the ADi™ technology). In consideration for the LLU License Agreement, we issued 25,000 shares of common stock to LLU. Pursuant to the LLU License Agreement, we are required to pay an annual license fee to LLU. Also, we paid LLU$455,000 inJuly 2020 for outstanding milestone payments and license fees. We are also required to pay to LLU milestone payments in connection with certain development milestones. Specifically, we are required to make the following milestone payments to LLU:$175,000 onMarch 31, 2022 ;$100,000 onMarch 31, 2024 ;$500,000 onMarch 31, 2026 ; and$500,000 onMarch 31, 2027 . In lieu of the$175,000 milestone payment due onMarch 31, 2022 , the Company paid LLU an extension fee of$100,000 . Upon payment of this extension fee, an additional year will be added for theMarch 31, 2022 milestone. Additionally, as consideration for prior expenses incurred by LLU to prosecute, maintain and defend the LLU Patent and Technology Rights, we made the following payments to LLU:$70,000 at the end ofDecember 2018 , and a final payment of$60,000 at the end ofMarch 2019 . We are required to defend the LLU Patent and Technology Rights during the term of the LLU License Agreement. Additionally, we will owe royalty payments of (i) 1.5% of Net Product Sales (as such terms are defined under the LLU License Agreement) and Net Service Sales on any Licensed Products (defined as any finished pharmaceutical products which utilizes the LLU Patent and Technology Rights in its development, manufacture or supply), and (ii) 0.75% of Net Product Sales and Net Service Sales for Licensed Products and Licensed Services (as such terms are defined under the LLU License Agreement) not covered by a valid patent claim for technology rights and know-how for a three (3) year period beyond the expiration of all valid patent claims. We also are required to produce a written progress report to LLU, discussing our development and commercialization efforts, within 45 days following the end of each year. All intellectual property rights in and to LLU Patent and Technology Rights shall remain with LLU (other than improvements developed by or on our behalf). 20 The LLU License Agreement shall terminate on the last day that a patent granted to us by LLU is valid and enforceable or the day that the last patent application licensed to us is abandoned. The LLU License Agreement may be terminated by mutual agreement or by us upon 90 days written notice to LLU. LLU may terminate the LLU License Agreement in the event of (i) non-payments or late payments of royalty, milestone and license maintenance fees not cured within 90 days after delivery of written notice by LLU, (ii) a breach of any non-payment provision (including the provision that requires us to meet certain deadlines for milestone events (each, a "Milestone Deadline")) not cured within 90 days after delivery of written notice by LLU and (iii) LLU delivers notice to us of three or more actual breaches of the LLU License Agreement by us in any 12-month period. Additional Milestone Deadlines include: (i) the requirement to have regulatory approval of an IND application to initiate first-in-human clinical trials on or beforeMarch 31, 2022 , which has been extended toMarch 31, 2023 due to payment of a$100,000 extension fee paid inMarch 2022 , (ii) the completion of first-in-human (phase I/II) clinical trials byMarch 31, 2024 , (iii) the completion of Phase III clinical trials byMarch 31, 2026 and (iv) biologic licensing approval by the FDA byMarch 31, 2027 .
License Agreement with
OnFebruary 3, 2020 , we entered into an exclusive license agreement (the "February 2020 License Agreement") withStanford regarding a patent concerning a method for detection and measurement of specific cellular responses. Pursuant to theFebruary 2020 License Agreement, we received an exclusive worldwide license toStanford's patent regarding use, import, offer, and sale of Licensed Products (as defined in the agreement). The license to the patented technology is exclusive, including the right to sublicense, beginning on the effective date of the agreement, and ending when the patent expires. Under the exclusivity agreement, we acknowledged thatStanford had already granted a non-exclusive license in the Nonexclusive Field of Use, under the Licensed Patents in the Licensed Field of Use in the Licensed Territory (as those terms are defined in theFebruary 2020 License Agreement"). However,Stanford agreed to not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory. OnDecember 29, 2021 , we entered into an amendment to theFebruary 2020 License Agreement which extended our exclusive right to license the technology deployed in AditxtScoreTM and securing worldwide exclusivity in all fields of use of the licensed technology. We were obligated to pay and paid a fee of$25,000 toStanford within 60 days ofFebruary 3, 2020 . We also issued 18,750 shares of the Company's common stock toStanford . An annual licensing maintenance fee is payable by us on the first anniversary of theFebruary 2020 License Agreement in the amount of$40,000 for 2021 through 2024 and$60,000 starting in 2025 until the license expires upon the expiration of the patent. The Company is required to pay and has paid$25,000 for the issuances of certain patents. The Company will pay milestone fees of$50,000 on the first commercial sales of a licensed product and$25,000 at the beginning of any clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product. The Company paid a milestone fee for a clinical study for regulatory clearance of an in vitro diagnostic product developed and a potential licensed product of$25,000 in March of 2022. We are also required to: (i) provide a listing of the management team or a schedule for the recruitment of key management positions byMarch 31, 2020 (which has been completed), (ii) provide a business plan covering projected product development, markets and sales forecasts, manufacturing and operations, and financial forecasts until at least$10,000,000 in revenue byJune 30, 2020 (which has been completed), (iii) conduct validation studies bySeptember 30, 2020 (which has been completed), (iv) hold a pre-submission meeting with the FDA bySeptember 30, 2020 (which has been completed), (iv) submit a 510(k) application to the FDA, Emergency Use Authorization ("EUA"), or a Laboratory Developed Test ("LDT") byMarch 31, 2021 (which has been completed), (vi) develop a prototype assay for human profiling byDecember 31, 2021 (which has been completed), (vii) execute at least one partnership for use of the technology for transplant, autoimmunity, or infectious disease purposes byMarch 31, 2022 and (viii) will provide further development and commercialization milestones for specific fields of use in writing byDecember 31, 2022 . In addition to the annual license maintenance fees outlined above, we will payStanford royalties onNet Sales (as such term is defined in theFebruary 2020 License Agreement) during the of the term of the agreement as follows: 4% whenNet Sales are below or equal to$5 million annually or 6% whenNet Sales are above$5 million annually. TheFebruary 2020 License Agreement may be terminated upon our election on at least 30 days advance notice toStanford , or byStanford if we: (i) are delinquent on any report or payment; (ii) are not diligently developing and commercializing Licensed Product; (iii) miss certain performance milestones; (iv) are in breach of any provision of theFebruary 2020 License Agreement; or (v) provide any false report toStanford . Should any events in the preceding sentence occur, we have a thirty (30) day cure period to remedy such violation. Our Team
We have assembled a team of experts from a variety of scientific fields and commercial backgrounds, with many years of collective experience that ranges from founding startup biotech companies, to developing and marketing biopharmaceutical products, to designing clinical trials, and to management of private and public companies. 21 Going Concern We were incorporated onSeptember 28, 2017 and have not generated significant revenues to date. During the six months endedJune 30, 2022 we had a net loss of$11,909,147 and cash of$803,971 as ofJune 30, 2022 . The Company will require significant additional capital to operate in the normal course of business and fund clinical studies in the long-term. As a result of theJanuary 2021 Securities Purchase Agreement, theAugust 2021 Offering, theOctober 2021 Offering, and theDecember 2021 Offering we received net proceeds of approximately$35,000,000 during the last twelve months. We believe that the remaining funds on hand will not be sufficient to fund our operations for the next 12 months and such creates substantial doubt about our ability to continue as a going concern beyond one year. Financial Results
We have a limited operating history. Therefore, there is limited historical financial information upon which to base an evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. Our condensed financial statements as ofJune 30, 2022 , show a net loss of$11,909,147 . We expect to incur additional net expenses over the next several years as we continue to maintain and expand our existing operations. The amount of future losses and when, if ever, we will achieve profitability are uncertain.
Results of Operations
Results of operations for the three months ended
We generated revenue of$214,715 and$0 for the three months endedJune 30, 2022 and 2021, respectively. Cost of sales for the three months endedJune 30, 2022 and 2021 was$174,858 and$0 , respectively. During the three months endedJune 30, 2022 , we incurred a loss from operations of$5,770,957 . This is due to general and administrative expenses of$3,788,952 , which includes$375,352 in stock-based compensation, research and development of$1,187,920 , which includes$154,237 in stock-based compensation, and sales and marketing expenses of$833,942 , which includes$754,699 in stock-based compensation. The$1,187,920 in research and development is mainly comprised of$602,434 in consulting expenses, and$714,443 in compensation offset by a one-time adjustment to research and development purchases. During the quarter, the Company transitioned from purchasing certain inventory items to internally manufacturing these items. During the three months endedJune 30, 2021 , we incurred a loss from operations of$5,775,007 . This is due to general and administrative expenses of$4,798,313 , which includes$772,430 in stock-based compensation, research and development of$932,751 , and sales and marketing expenses of$43,943 . The$932,751 in research and development is comprised of$3,185 in licensing fees,$470,325 in product development, and$459,241 in other research and development expense.
The increase in expenses during the three months ended
Results of operations for the six months ended
We generated revenue of$424,994 and$0 for the six months endedJune 30, 2022 and 2021, respectively. Cost of sales for the six months endedJune 30, 2022 and 2021 was$362,929 and$0 , respectively. During the six months endedJune 30, 2022 , we incurred a loss from operations of$11,887,888 . This is due to general and administrative expenses of$8,413,110 , which includes$827,337 in stock-based compensation, research and development of$2,616,302 , which includes$303,527 in stock-based compensation, and sales and marketing expenses of$920,541 , which includes$754,699 in stock-based compensation. The$2,616,302 in research and development is mainly comprised of$1,102,372 in consulting expenses, and$1,542,854 in compensation offset by a one-time adjustment to research and development purchases. During the quarter, the Company transitioned from purchasing certain inventory items to internally manufacturing these items. During the six months endedJune 30, 2021 , we incurred a loss from operations of$11,868,039 . This is due to general and administrative expenses of$9,896,830 , which includes$2,237,332 in stock-based compensation, research and development of$1,868,703 , and sales and marketing expenses of$102,506 . The$1,868,703 in research and development is comprised of$72,545 in licensing fees,$975,889 in product development, and$820,269 in other research and development expense. The increase in expenses during the six months endedJune 30, 2022 compared to the six months endedJune 30 2021 was due to the Company continuing to execute its business plan and incur costs of being a public company.
Liquidity and Capital Resources
We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As ofJune 30, 2022 , we had an accumulated deficit of$79,261,956 . We had working capital deficit of$3,403,188 as ofJune 30, 2022 . During the six months endedJune 30, 2022 , we purchased$274,073 in fixed assets, for which we made cash payments of$274,073 . These fixed assets were purchased to continue the buildout of our operations. Approximately$215,000 of these purchased fixed assets were lab equipment,$54,000 was for computers, and$5,000 was for office furniture. 22
Our condensed financial statements have been prepared assuming that we will continue as a going concern.
We have funded our operations from proceeds from the sale of equity and debt securities. OnJuly 2, 2020 , we completed our IPO and raised approximately$9.5 million in net proceeds. At the time of the IPO, we believed that these funds would be sufficient to fund our operations for the foreseeable future. OnSeptember 10, 2020 , we completed a follow-on public offering. In connection therewith, we issued 2,400,000 units, or Follow-On Units, excluding the underwriters' option to cover overallotments, at an offering price of$4.00 per Follow-On Unit, resulting in gross proceeds of approximately$9.6 million . OnJanuary 25, 2021 , the Company entered into a securities purchase agreement with an institutional accredited investor (the "Investor") for the sale of a$6,000,000 senior secured convertible note (the "Convertible Note"). The Convertible Note had a term of 24 months, was originally convertible at a price of$4.00 per share and was issued at an original issuance discount of$1,000,000 . OnAugust 30, 2021 , the Company entered into a defeasance and waiver agreement with the Investor, pursuant to which the Noteholder has agreed in exchange for (a) a cash payment by the Company to the Investor of$1.2 million (the Cash Payment"), (b) a waiver, in part of the conversion price adjustment provision such that theJanuary 2021 Note shall be convertible into 4,802,497 shares of common stock (without giving effect to the conversion notice received by the company form the Noteholder prior to the date hereof totaling (1,005,748 shares) (the "Shares"), and (c) a voluntary and permanent reduction by the Company of the exercise price of the warrant to purchase 800,000 shares of the common stock of the Company (the "January 2021 Warrant") to$2.53 per share. As ofJune 30, 2022 , the outstanding principle of the convertible note had been converted to 4,802,497 shares of common stock.
On
OnOctober 20, 2021 , we completed an offering for net proceeds of$3.8 million . As part of this offering, we issued 2,833,333 shares of the Company's common stock OnDecember 6, 2021 , we completed an offering for net proceeds of$16.0 million . As part of this offering, we issued 8,246,430 units consisting of shares of the Company's common stock and warrant to purchase shares of the Company's common stock and 8,328,570 prefunded warrants. The warrant issued as part of the units had an exercise price of$1.15 and the prefunded warrants had an exercise price of$0.001 .
We may need to raise significant additional capital to continue to fund our operations and the clinical trials for our product candidates. We may seek to sell common stock, preferred stock or convertible debt securities, enter into a credit facility or another form of third-party funding or seek other debt financing. In addition, we may seek to raise cash through collaborative agreements or from government grants. The sale of equity and convertible debt securities may result in dilution to our stockholders and certain of those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities, or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights. The source, timing, and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of our clinical development program. Funding may not be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay, scale back or eliminate expenses including some or all our planned development, including our clinical trials. While we may need to raise funds in the future, we believe the current cash reserves should be sufficient to fund our operation for the foreseeable future. Because of these factors, we believe that this creates doubt about our ability to continue as a going concern. Contractual Obligations
The following table shows our contractual obligations as of
Payment Due by Year Total 2022 2023 2024 2025 2026 Lease$ 3,975,797 $ 599,939 $ 1,149,247 $ 1,034,084 $ 708,804 $ 483,723
Financed asset 451,392 339,880 111,512 - - - Total contractual obligations$ 4,427,189 $ 939,819 $ 1,260,759 $
1,034,084$ 708,804 $ 483,723 23
Critical Accounting Polices and Estimates
Our condensed financial statements are prepared in accordance with generally accepted accounting principles inthe United States . The preparation of our condensed financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that our critical accounting policies described under the heading "Management's Discussion and Analysis of Financial Condition and Plan of Operations-Critical Accounting Policies" in our Prospectus, datedSeptember 1, 2020 , filed with theSEC pursuant to Rule 424(b), are critical to fully understanding and evaluating our financial condition and results of operations. The following involve the most judgment and complexity: ? Research and development ? Stock-based compensation expense ? Fair value of common stock
Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of
theSEC . JOBS Act OnApril 5, 2012 , the JOBS Act was enacted. Section 107 of the JOBS Act provides that an "emerging growth company" can 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. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. When favorable, we have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an "emerging growth company," we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by thePublic Company Accounting Oversight Board ("PCAOB") regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an "emerging growth company" until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of$1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO (December 31, 2025 ); (iii) the date on which we have issued more than$1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the
SEC . 24
Recently Issued and Adopted Accounting Pronouncements
See Note 3 - Summary of Significant Accounting Policies to the accompanying condensed financial statements for a description of other accounting policies and recently issued accounting pronouncements.
Recent Developments
See Note 11 - Subsequent Event to the accompanying condensed financial statements for a description of material recent developments.
© Edgar Online, source