What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-30 compared with 2021-03-01 · 97 added, 68 removed, 123 unchanged (57% of the section changed)

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Our strategy is to build a diversified biopharmaceutical business based on a pipeline of novel drug candidates addressing oncology and hematology indications .

During 2020, our primary focus has been on our transcriptional regulation program which is evaluating fadraciclib as a single agent in solid tumors and in combination with venetoclax in patients with relapsed or refractory AML/MDS and CLL.

The anti-mitotic program is evaluating CYC140, a PLK1 inhibitor, in advanced leukemia/MDS patients.

The DNA damage response program is evaluating an oral combination of sapacitabine and venetoclax in patients with relapsed or refractory AML/MDS and an investigator sponsored trial is evaluating an oral combination of sapacitabine and olaparib in patients with BRCA mutant breast cancer.

Cyclacel currently retains virtually all marketing rights worldwide to the compounds associated with the Company’s drug programs.

During 2021, our primary focus has been on our transcriptional regulation program which is evaluating fadraciclib, a CDK2/9 inhibitor, in solid tumors and hematological malignancies .

The anti-mitotic program is evaluating CYC140, a PLK1 inhibitor, in advanced cancers.

We currently retain virtually all marketing rights worldwide to the compounds associated with our drug programs.

Agreements to Sell Securities

On August 12, 2021, we entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

("Cantor"), pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50.0 million through Cantor as the sales agent.

Cantor may sell our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act.

Subject to the terms and conditions of the Sales Agreement, Cantor will use commercially reasonable efforts consistent with its normal trading and sales practices to sell shares of our common stock from time to time, based upon our instructions, including any price, time or size limits specified by us.

We have provided Cantor with customary

indemnification rights, and Cantor will be entitled to a commission at a fixed rate equal to 3.0% of the gross proceeds per share sold.

We have no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement.

The Sales Agreement will terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement.

During the year ended December 31, 2021, the Company sold 752,425 shares under the Sales Agreement for net proceeds of approximately $4.0 million.

On March 12, 2021, we entered into an Underwriting Agreement (the “Underwriting Agreement”) with Oppenheimer & Co.

Inc., as representative of the underwriters identified therein (collectively, the “Underwriters”), pursuant to which we agreed to issue and sell 1,807,143 shares of common stock, $0.001 par value per share, at a public offering price of $7.00 per share (the “Offering”) along with a 30-day overallotment option to purchase up to an additional 271,071 shares of common stock at the public offering price, less underwriting discounts and commissions.

The closing of the offering occurred on March 16, 2021, and the net proceeds to us (including exercise of the over-allotment option) were approximately $13.5 million, after deducting placement agent fees and other offering expenses payable by us.

On December 18, 2020 we entered into a definitive securities purchase agreement with Acorn Bioventures, LP, a biotech-focused fundamental investor.

Under the agreement, Acorn Bioventures has agreed to purchase in a registered direct offering 485,912 shares of common stock and 237,745 shares of newly designated Series B Preferred Stock (convertible into shares of common stock at a ratio of 1:5), and in a concurrent private placement, warrants to purchase 669,854 shares of common stock, for aggregate net proceeds of approximately $6.9 million.

The offering is priced at-the-market pursuant to the rules of the Nasdaq Stock Market.

The warrants will be exercisable beginning twelve months following the date of issuance, will expire on the five-year anniversary of the date of issuance, and have an exercise price of $4.13 per share.

On April 24, 2020 we announced the public offering of (i) 4,000,000 shares of its common stock (or pre-funded warrants to purchase common stock in lieu thereof) and (ii) common warrants to purchase up to 4,000,000 shares of common stock.

The offering was priced at-the-market pursuant to the rules of the Nasdaq Stock Market.

The warrants became exercisable beginning twelve months following the date of issuance, will expire on the five-year anniversary of the date of issuance, and have an exercise price of $4.13 per share.

On April 24, 2020 we announced the public offering of (i) 4,000,000 shares of our common stock (or pre-funded warrants to purchase common stock in lieu thereof) and (ii) common warrants to purchase up to 4,000,000 shares of common stock.

Each share of common stock and, as applicable, each pre-funded warrant, was sold together with a common warrant to purchase one share of common stock at a combined effective price to the public of $5.00 per share and accompanying common warrant, and/or $4.999 per pre-funded warrant and accompanying common warrant.

For each pre-funded warrant the Company sold, the number of shares of common stock the Company offered was decreased on a one-for-one basis.

For each pre-funded warrant we sold, the number of shares of common stock we offered was decreased on a one-for-one basis.

The common warrants are immediately exercisable at a price of $5.00 per share of common stock and will expire five years from the date of issuance.

The shares of common stock and/or the pre-funded warrants, and the accompanying common warrants, were purchased together in the offering, but were issued separately and became immediately separable upon issuance.

After deducting placement agent fees and other offering expenses payable by the Company, total net proceeds of the public offering are approximately $18.3 million.

After deducting placement agent fees and other offering expenses payable by us, total net proceeds of the public offering are approximately $18.3 million.

Dividend on Preferred Stock

On December 11, 2020, the Board of Directors declared a quarterly cash dividend in the amount of $0.15 per share on the Company’s Preferred Stock.

On December 13, 2021, the Board of Directors declared a quarterly cash dividend in the amount of $0.15 per share on our Preferred Stock.

The cash dividend was paid on February 1, 2022 to the holders of record of the Preferred Stock as of the close of business on January 14, 2022.

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● Payroll and personnel-related expenses, including consultants and contract research organizations;

● Preclinical studies and laboratory supplies and materials;

● Preclinical studies and materials;

● Technology license costs;

● Stock-based compensation;

● Rent and facility expenses for our office and laboratories.

● Rent and facility expenses for our office.

The following table provides information with respect to our research and development expenditures for the years ended December 31, 2020 and 2021 (in thousands except percentages):

Year ended December 31,

Transcriptional Regulation (fadraciclib)

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Research and development expenses represented 45% and 67% of our operating expenses for the years ended December 31, 2020 and 2021, respectively.

Research and development expenses remained relatively flat at $4.7 million and $4.8 million for the years ended December 31, 2019 and December 31, 2020, respectively.

Research and development expenses relating to transcriptional regulation increased by $0.6 million from $3.1 million for the year ended December 31, 2019 to $3.7 million for the year ended December 31, 2020, as the clinical evaluation of fadraciclib progressed.

Research and development expenses relating to CYC140 decreased by $0.1 million from $0.7 million for the year ended December 31, 2019 to $0.6 million for the year ended December 31, 2020, primarily as a result of a reduction in expenditures associated with drug supply manufacturing which were not required in 2020.

Research and development expenses relating to DNA Damage Response decreased by $0.3 million from $0.5 million for the year ended December 31, 2019 to $0.2 million for the year ended December 31, 2020, primarily as a result of expenditures associated with drug supply manufacturing not being required in 2020.

Research and development expenses relating to other research and development decreased by $0.1 million from approximately $0.4 million for the year ended December 31, 2019 to $0.3 million for the year ended December 31, 2020, due to a reduction in consultancy costs.

We anticipate that overall research and development expenses for the year ended December 31, 2021 will increase compared to the year ended December 31, 2020 as we progress our clinical development programs.

Research and development expenses increased by $10.7 million from $4.8 million for the year ended December 31, 2020 to $15.5 million for the year ended December 31, 2021.

Expenditure for the transcriptional regulation program increased by $7.4 million relative to the respective comparative period.

This was due to an increase in clinical trial costs of $4.4 million associated with the opening of clinical trial sites for the evaluation of fadraciclib in Phase 1/2 studies which were not included in the MD Anderson alliance, increase in purchases of clinical supplies of $1.2 million, commencement of pre-clinical and toxicology studies costs of $1.1 million and employment costs of $0.7

Research and development expenses relating to CYC140 increased by $3.0 million relative to the respective comparative period.

This was due largely to increases in pre-clinical evaluation costs of $0.7 million, clinical trial supply manufacturing costs of $1.7 million and employment costs of $0.4 million.

We anticipate that overall research and development expenses for the year ended December 31, 2022 will increase compared to the year ended December 31, 2021 as we progress our clinical development into streamlined Phase 1/2 programs which were not included in the concluded MD Anderson alliance.

General and administrative

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The following table summarizes the total general and administrative expenses for the years ended December 31, 2020 and 2021 (in thousands except percentages):

Year ended December 31,

Total general and administrative expenses

Total general and administrative expenses represented 55% and 33% of our operating expenses for the years ended December 31, 2020 and 2021, respectively.

Our general and administrative expenditures increased by $0.9 million from $5.0 million for the year ended December 31, 2019 to $5.9 million for the year ended December 31, 2020 due to an increase in legal, professional and recruitment costs relating to expansion of clinical team.

We expect general and administrative expenditures for the year ended December 31, 2021 to reduce slightly compared to our expenditures for the year ended December 31, 2020, due to lower recruitment and professional costs.

Our general and administrative expenditures increased by $1.6 million from $5.9 million for the year ended December 31, 2020 to $7.5 million for the year ended December 31, 2021.

The increase was due to $0.4 million costs related to the assignment of our lease facility in Dundee, Scotland and increases in legal and professional costs of $0.5 million, employment and recruitment costs of $0.2 million relating to expansion of the clinical team and stock compensation costs of $0.5 million.

We expect general and administrative expenditures for the year ended December 31, 2022 to be lower than our expenditures for the year ended December 31, 2021, due to reduced recruitment and professional costs.

Other income (expense), net

The following table summarizes the other income (expense) for years ended December 31, 2020 and 2021 (in thousands except percentages):

Year ended December 31,

Foreign exchange gains

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Total other income

Total other income, net, increased by approximately $0.4 million from approximately $0.6 million for the year ended December 31, 2019 to approximately $1.0 million for the year ended December 31, 2020.

The increase in other income is primarily related to higher royalties receivable under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by the Company in March 2006) sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Life Technologies Corporation) through an APA and other related agreements.

The assets and technology were not part of the Company’s product development plan following the transaction between Xcyte and Cyclacel in March 2006.

Accordingly, the company recognized $231,000 and $891,000 of other income arising from sales related to this transaction during the years ended December 31, 2019 and 2020, respectively.

Total other income, net, decreased by approximately $0.8 million from approximately $1.0 million for the year ended December 31, 2020 to approximately $0.2 million for the year ended December 31, 2021.

The decrease in other income is primarily related to lower royalties received under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by us in March 2006) sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Life Technologies Corporation) through the APA and

other related agreements.

The assets and technology were not part of our product development plan following the transaction between Xcyte and us in March 2006.

Accordingly, we recognized $891,000 and $144,000 of other income arising from sales related to this transaction during the years ended December 31, 2020 and 2021, respectively.

We have no knowledge of TSC’s activities and cannot predict when we may receive income under the APA, if any.

Increases in other income was offset by a $0.2 million reduction in interest income due to lower yields during the year ended December 31, 2020 compared to the year ended December 31, 2019.

Foreign exchange gains (losses)

Foreign exchange gains decreased by $79,000 to a gain of $22,000 for the year ended December 31, 2020 compared to a gain of approximately $0.1 million for the year ended December 31, 2019.

We have a number of intercompany loans in place between our parent company based in New Jersey and our subsidiary based in Scotland.

Foreign exchange gains increased by $22,000 to a gain of $44,000 for the year ended December 31, 2021 compared to a gain of approximately $22,000 for the year ended December 31, 2020.

We have intercompany loans in place between our parent company based in New Jersey and our subsidiary based in Scotland.

The intercompany loans outstanding are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature.

Therefore, all unrealized foreign exchange gains or losses arising on the intercompany loans are recognized in other comprehensive income until repayment of the intercompany loan becomes foreseeable.

Favorable unrealized foreign exchange movements related to intercompany loans resulted in a gain of $7.6 million for the year ended December 31, 2020 and a gain of $6.8 million for the year ended December 31, 2019.

Unfavorable unrealized foreign exchange movements related to intercompany loans resulted in a loss of $2.1 million for the year ended December 31, 2021 and a gain of $7.6 million for the year ended December 31, 2020.

Other income (expense), net will continue to be impacted by changes in foreign exchange rates and the receipt of income under the APA.

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Credit is taken for research and development tax credits, which are claimed from the United Kingdom’s taxation and customs authority (HMRC), in respect of qualifying research and development costs incurred.

This credit is an offset to research and development expenditure recorded in the consolidated statement of operations.

The following table summarizes total income tax benefit for the years ended December 31, 2020 and 2021 (in thousands except percentages):

Year ended December 31,

Total income tax benefit

The income tax benefit remained relatively flat at approximately $1.3 million and $1.2 million the years ended December 31, 2019 and December 31, 2020, respectively.

The income tax benefit increased significantly by approximately $2.6 million, from $1.2 million for the year ended December 31, 2020 to $3.8 million for the year ended December 31.

The level of tax credits recoverable is linked directly to qualifying research and development expenditure incurred in any one year.

We expect to continue to be eligible to receive United Kingdom research and development tax credits for the foreseeable future and will continue to elect to receive payment of the tax credit.

The amount of tax credits we will receive is entirely dependent on the amount of eligible expenses we incur and could be restricted by any future cap introduced by HMRC.

We expect to continue to be eligible to receive United Kingdom research and development tax credits for the year ending December 2022 and will continue to elect to receive payment of the tax credit.

Beyond 2022, we cannot be certain to be eligible to receive this tax credit.

The amount of tax credits we will receive is entirely dependent on the amount of eligible research and development expenses we incur and could be restricted by any future cap introduced by HMRC.

As we expect our eligible expenses to be higher in the fiscal year ended December 31, 2022, the level of tax credits recoverable is anticipated to be higher in 2022 compared to the fiscal year ended December 31, 2021.

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Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash provided by financing activities

Operating activities

Net cash used in operating activities decreased by $1.5 million, from $9.4 million for the year ended December 31, 2019 to $7.9 million for the year ended December 31, 2020.

The decrease in cash used by operating activities was primarily the result of a decrease in working capital of $2.1 million, offset by an increase in net loss of $0.6 million.

The change in working capital was due to settlement of large, end of clinical trial trade payables during the prior year.

Net cash used in operating activities increased by $10.6 million, from $7.9 million for the year ended December 31, 2020 to $18.5 million for the year ended December 31, 2021.

The increase in cash used by operating activities was primarily the result of an increase in our year-over-year net loss of $10.4 million, an increase in working capital of $1.2 million, offset by an increase in non-cash stock-based compensation of $0.7 million and a change in our lease liability of $0.3 million.

Investing activities

Net cash used in investing activities decreased by $124,000 for the year ended December 31, 2020 due to an increase in capital expenditures on IT software and no proceeds from sale of property and equipment during the current year.

Net cash used in investing activities decreased by $69,000 for the year ended December 31, 2021 due to a decrease in capital expenditures on IT software.

Financing activities

Net cash provided by financing activities was $29.5 million for the year ended December 31, 2020, primarily as a result of approximately $18.3 million in net proceeds from the issuance of common stock and accompanying common stock warrants under a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, approximately $4.5 million from warrant exercises associated with this agreement and approximately $6.9 million of net proceeds from the issuance of common stock and accompanying common stock warrants in a securities purchase agreement with Acorn Bioventures, LP.

This was offset by dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock.

Net cash provided by financing activities was $3.8 million for the year ended December 31, 2019, primarily as a result of approximately $4.1 million in net proceeds from the issuance of common stock under the Sales Agreement with Wainwright, offset by dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock.

Net cash provided by financing activities was $21.7 million for the year ended December 31, 2021 as a direct result of receiving approximately:

- $13.5 million in net proceeds from the issuance of common stock under an underwriting agreement with Oppenheimer & Co.

- $4.5 million from warrant exercises associated with a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, and

- $4.0 million from the issuance of common stock under a controlled equity offering sales agreement with Cantor Fitzgerald & Co., and

- offset by dividend payments of approximately $0.2 million to the holders of our 6% Convertible Exchangeable Preferred Stock.

Net cash provided by financing activities was $29.5 million for the year ended December 31, 2020, primarily as a result of receiving approximately:

- $18.3 million in net proceeds from the issuance of common stock and accompanying common stock warrants under a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC,

- approximately $4.5 million from warrant exercises associated with the co-placement agency agreement with Roth Capital Partners,

- approximately $6.9 million of net proceeds from the issuance of common stock and accompanying common stock warrants in a securities purchase agreement with Acorn Bioventures, LP, and

- offset by dividend payments of approximately $0.2 million to the holders of our 6% Convertible Exchangeable Preferred Stock.

Operating Capital and Capital Expenditure Requirements

We expect to continue to incur substantial operating losses in the future and cannot guarantee that we will generate any significant product revenues until a product candidate has been approved by the FDA or EMA in other countries and successfully commercialized.

We believe that existing funds together with cash generated from operations, including the R&D tax credit, and recent financing activities, are sufficient to satisfy our planned working capital, capital expenditures and other financial commitments through 2022.

However, we do not currently have sufficient funds to complete development and commercialization of any of our drug candidates.

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Although we are not reliant on institutional credit finance and therefore not subject to debt covenant compliance requirements or potential withdrawal of credit by banks, we are reliant on the availability of funds and activity in equity markets.

We do not know whether additional funding will be available on acceptable terms, or at all.

We do not know whether additional funding will be available on acceptable terms, or at

If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or make changes to our operating plan.

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Payments Due by Period

Operating Lease Obligation(1)

(1) Operating lease obligations relate primarily to leasing of office and laboratory space at our Dundee, UK and Berkeley Heights, New Jersey locations.

The lease for our Dundee location, which was entered into in October 2000, expires in October 2025 and the lease for our Berkeley Heights location, which was entered into in August 2020, expires in July 2022.

Operating Lease Obligations (1)

(1) Operating lease obligations relate primarily to leasing of office space at our Berkeley Heights, New Jersey location.

The lease for our Berkeley Heights location, which was entered into in August 2020, expires in July 2022.

Off-Balance Sheet Arrangements

Since our inception, we have not had any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, which are typically established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

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We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements.

Clinical Trial Accounting

Accrued Research and Development Costs

Accrued research and development costs comprise our best estimates related to the cost of clinical trials, laboratory, and manufacturing activities that were incurred, but not paid or invoiced, as of the end of a reporting period.

Data management and monitoring of our clinical trials are performed with the assistance of contract research organizations, or CROs, or clinical research associates, or CRAs, in accordance with our standard operating procedures.

Typically, CROs and CRAs bill monthly for services performed, and others bill based upon milestones achieved.

For outstanding amounts, we accrue unbilled clinical trial expenses based on estimates of the level of services performed each period.

Costs of setting up clinical trial sites for participation in the trials are expensed immediately as research and development expenses.

Clinical trial costs related to patient enrollment are accrued as patients are entered into and progress through the trial.

Any initial payment made to the clinical trial site is recognized upon execution of the clinical trial agreements and expensed as research and development expenses.

Typically, CROs and CRAs bill monthly for services performed, or based upon milestones achieved.

We accrue unbilled clinical trial expenses based on estimates of the level of services performed each period.

Moreover, clinical trial costs related to patient enrollment are accrued as patients are entered into and progress through the trial.

We also perform outsourced laboratory and manufacturing activities.

We accrue for unbilled laboratory and manufacturing activities performed by third parties based on estimates of their progress towards completing the requested tasks.

As of December 31, 2021, we accrued $2.3 million of clinical trial, laboratory, and manufacturing costs that we believe had been incurred as of year-end but had not been invoiced.

This represents approximately 15% of our total research and development expense for the year ended December 31, 2021.

The comparable accrual for unbilled research and development costs as of December 31, 2020 was approximately $0.8 million.

This accrual represented approximately 16% of our total research and development expense for the year ended December 31, 2020.

When recording these accruals, we must make judgments about the progress of our various clinical activities.

We (as well as our CROs and CRAs) are reliant on information being provided timely and accurately by the multitude of clinics and hospitals where the studies are being conducted, some of which are located internationally.

We must also make estimates about the progress our third-party vendors are making towards completing laboratory and manufacturing activities.

Stock-based Compensation

We grant stock options, restricted stock units and restricted stock to officers, employees, directors and consultants under the Company’s 2018 Equity Incentive Plan (the 2018 Plan) and the 2020 Inducement Equity Incentive Plan..

We grant stock options, restricted stock units and restricted stock to officers, employees, directors and consultants under our 2018 Equity Incentive Plan (the 2018 Plan) and the 2020 Inducement Equity Incentive Plan.

We measure compensation cost for all stock-based awards at fair value on date of grant and recognize compensation over the requisite service period.

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Changes in any of these variables could result in significant adjustments to the expense recognized for share-based payments.

We grant certain stock compensation awards that vest only upon achievement of certain performance conditions.

If, in our judgment, achievement of those performance conditions is not probable, we do not recognize any compensation cost for those awards.

As of December 31, 2020, we have outstanding 16,524 restricted stock unit awards that contain one or more performance conditions.

None of these awards have satisfied their performance criteria and have not yet vested pursuant to their terms.

At this time, management does not believe that the performance conditions are probable of being met.

Accordingly, we have not recorded any compensation cost associated with these grants.

If our judgment as to the likelihood of the awards vesting changes, we could recognize up to approximately $187,000 of compensation cost in future periods.

Recent Accounting Pronouncements Not Yet Effective

The FASB has issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

This standard simplifies the accounting for convertible instruments, such as convertible debt or convertible preferred stock, by eliminating two potential methods in accounting for the embedded conversion feature.

The standard also removes certain conditions previously used to evaluate whether a freestanding financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity.

Finally, ASU 2020-06 requires that an entity use the if-converted method in calculating the effects of convertible instruments on diluted earnings per share, with one limited exception.

As a smaller reporting company, the amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those years.

Early adoption is permitted, but no earlier than for fiscal years beginning after December 15, 2020.

The Company is currently evaluating the effects of this guidance.

In November 2021 , the FASB issued ASU No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance .

This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605 or based on International Accounting Standard No.

ASU 2021-10 will become effective for us on January 1, 2022.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and determined it will not have a material impact.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) .

The new ASU addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options.

This amendment is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

We do not believe that this new guidance will have a material impact on its financial statements for any past transactions, but it could change the way that we account for subsequent amendments to our outstanding warrants, if any.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis