What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-16 compared with 2021-05-12 · 99 added, 70 removed, 164 unchanged (51% of the section changed)

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These statements involve known and unknown risks, uncertainties, assumptions and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,””should,””seek,”“predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in

“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 25, 2021.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the Securities and Exchange

Commission (SEC) on March 25, 2021 and other risks described in our prior reports filed with the SEC.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

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Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Since our inception in 2006, we have devoted substantially all of our resources to research and development, raising capital, building our management team and building our intellectual property portfolio.

Since our inception in 2006, we have devoted substantially all our resources to research and development, raising capital, building our management team and building our intellectual property portfolio.

To date, we have financed our operations primarily through the sale of our common stock, Series A convertible preferred stock and warrants and convertible promissory notes.

Through March 31, 2021, we raised an aggregate of $50.4 million from the sale of our Series A convertible preferred stock and warrants and convertible promissory notes and in April 2020, we received $0.5 million in cash pursuant to the Paycheck Protection Program, or the PPP, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act implemented by the U.S.

Small Business Administration.

Through June 30, 2021, we raised an aggregate of $122.9 million from the sale of our Series A convertible preferred stock and warrants and convertible promissory notes, and in April 2020, we received a $0.5 million loan, or the PPP Loan, pursuant to the Paycheck Protection Program, or the PPP, under the Coronavirus Aid, Relief, and Economic Security (CARES) Act implemented by the U.S.

Small Business Administration, which loan was forgiven on May 21, 2021.

On October 6, 2020, we closed the IPO, in which we issued and sold 3,250,000 shares of our common stock at a public offering price of $12.00 per share.

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We received net proceeds of $41.7 million after deducting underwriting discounts and commissions of $3.1 million but before deducting other offering expenses.

We are a development stage company, and all of our programs are in a preclinical stage of development.

On April 28, 2021, we sold 1,000,000 units, each comprising one share of our common stock and one warrant for one-half a share of common stock in a private placement and at a price of $27.00 per share for net proceeds of $26.4 million.

In July 2021, we announced that our three-antibody cocktail (IMM-BCP-01) has demonstrated potent neutralizing activity against the SARS-CoV-2 Delta variant in pre-clinical pseudovirus testing.

Furthermore, IMM-BCP-01 showed in-vitro activity via non-neutralizing mechanisms, such as complement fixation, which we expect will enable viral clearance.

We are a development stage company, and all our programs are in a preclinical stage of development.

To date, we have not generated any revenue from product sales and do not expect to generate revenue from the sale of products for the foreseeable future.

Since inception we have incurred significant operating losses.

Our net losses for the three months ended March 31, 2021 and 2020 were $3.9 million and $2.7 million, respectively.

As of March 31, 2021, we had a cash balance of $36.3 million.

On April 28, 2021, we sold 1,000,000 shares of our common stock in a private placement at a price of $27.00 per share and received gross proceeds of $27.0 million.

Our net losses for the three months ended June 30, 2021 and 2020 were $5.2 million and $2.7 million, respectively, and $9.1 million and $5.4 million for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, we had a cash balance of $59.8 million.

We expect to continue to incur losses for the foreseeable future.

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and hire research and development, clinical and commercial personnel.

If we cannot obtain the necessary funding, we will need to delay, scale back or eliminate some or all of our research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that we might otherwise seek to develop or commercialize independently;

If we cannot obtain the necessary funding on favorable terms, if at all, we will need to delay, scale back or eliminate some or all of our research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that we might otherwise seek to develop or commercialize independently;

consider other various strategic alternatives, including a merger or sale of the Company;

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If we engage in collaborations, we may receive lower consideration upon commercialization of such products than if we had not entered into such arrangements or if we entered into such arrangements at later stages in the product development process.

We currently have no sources of revenue, and our ability to continue as a going concern is dependent on our ability to raise capital to fund our future business plans.

Additionally, volatility in the capital markets and general economic conditions in the United States may be a significant obstacle to raising the required funds.

We currently have no sources of revenue, and our ability to continue as a going concern is dependent on our ability to raise capital to fund our present and future business plans.

Additionally, volatility in the capital markets, the competitive landscape and general economic conditions in the United States may be a significant obstacle to raising the required funds.

We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing research and development activities, particularly if and as we:

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● commence clinical trials for product candidates;

● advance the development of our future pipeline;

● advance the development of our existing and future pipeline;

● obtain, maintain, expand and protect our intellectual property portfolio;

● hire additional research and development, clinical, commercial and administrative personnel;

● pursue regulatory approvals for our current and future product candidates;

● pursue regulatory approvals and implement other regulatory strategies for our current and future product candidates;

● scale up our clinical and regulatory capabilities;

● add operational, financial and management information systems and infrastructure to support our research and development programs, and any future commercialization efforts.

Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

Furthermore, we expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses.

As a result of these anticipated expenditures, we will need substantial additional financing to support our continuing operations and pursue our growth strategy.

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The inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

We expect that our cash as of March 31, 2021, together with additional funds received from a private placement of our common stock in April 2021 will be sufficient to fund our operations through fiscal year 2022.

We expect that our cash as of June 30, 2021 will be sufficient to fund our operations through fiscal year 2022, and fund the planned Phase 1b studies for IMM-ONC-01 and IMM-BCP-01.

We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner than we currently expect.

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COVID-19 Pandemic

The ongoing COVID-19 pandemic will continue to impact our development timelines and its effect on our preclinical research and development is uncertain.

We have established a work-from-home policy for all employees, other than those performing or supporting business-critical operations, such as certain members of our laboratory and facilities staff.

For those employees, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic.

We have taken these precautionary steps while maintaining business continuity so that we can continue to progress our programs.

The future impact of the COVID-19 pandemic on our industry, the healthcare system and our current and future operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

The ongoing COVID-19 pandemic will continue to impact our projected research and development timelines and its effect on our activities is uncertain.

In response to COVID-19, we have taken, and continue to take, proactive measures to prioritize health and safety, including of our employees and other personnel.

These measures included establishing a work-from-home policy for our employees, other than those performing or supporting business-critical operations, and implementing stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID- 19 pandemic.

We have begun to implement a back-to-work policy;

our approach to transitioning back to the office is tailored to the role of each team member and evolves as the specific conditions associated with the COVID-19 pandemic continue to evolve.

We will continue to monitor guidance and regulations from the Centers for Disease Control and local health authorities and will adjust our onsite rules and policies in accordance with this guidance and regulations.

We have also taken, and continue to take, proactive measures to maintain business continuity in the face of the COVID-19 pandemic.

Communication throughout our organization has remained active during the pandemic.

In addition, as part of our vendor management processes, we have ongoing dialogues with third-party service providers, which are intended to ensure that they continue to meet our criteria for business continuity.

Notwithstanding the measures taken, the future impact of COVID-19, including its variants, on our industry, the healthcare system and our current and future operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

See “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 25, 2021 for a discussion of the potential adverse impact of COVID-19 on our business, results of operations and financial condition.

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● personnel-related expenses, including salaries, bonuses, benefits and share-based compensation for employees engaged in research and development functions;

● expenses incurred in connection with the discovery and preclinical development of our discovery programs, including under agreements with third parties, such as consultants, contractors and contract research organizations;

● the cost of developing and validating our manufacturing process for use in our preclinical studies and potential future clinical trials;

● laboratory supplies and research materials;

● expenses incurred in connection with the advancement of our programs, including under agreements with consultants, contractors, contract research organizations and other third-party vendors and suppliers;

● the cost of developing and validating our quality and manufacturing process for use in our preclinical studies and potential future clinical trials;

● laboratory supplies and research materials and other infrastructure-related expenses;

● facilities, depreciation and amortization and other expenses which include direct and allocated expenses.

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In July 2020, we entered into an Other Transaction Authority for Prototype Agreement (the DoD Agreement) with the DoD to fund our efforts in developing Biosynthetic Convalescent Plasma (BCP) to treat COVID-19.

In connection with the DoD Agreement, we record expense reimbursements received from DoD as contra-research and development expenses in the same period the underlying expenses are incurred.

In connection

with the DoD Agreement, we record expense reimbursements received from DoD as contra-research and development expenses in the same period the underlying expenses are incurred.

General and administrative expenses

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We also expect to incur increased costs associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs and investor and public relations costs.

Interest expense, net

Interest expense, net consists of interest expense related to our capital lease obligations and equipment loans payable, offset by interest income earned on our cash.

Interest income (expense), net

Interest income (expense), net consists of interest expense related to our capital lease obligations and equipment loans payable, offset by interest income earned on our cash.

Results of operations

As described above in “— COVID-19 Pandemic,” the ultimate extent of the impact of any epidemic, pandemic, outbreak or other public health crisis on our results of operations will depend on future developments, which are highly uncertain, including new information that may emerge concerning the severity of the COVID-19 pandemic or other public health crisis and actions taken to contain or prevent the further spread, among others.

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our results of operations will depend on future developments, which are highly uncertain, including new information that may emerge concerning the severity of COVID-19 and its variants or other public health crisis and actions taken to contain or prevent the further spread, among others.

Accordingly, we cannot fully predict the extent to which our business and results of operations will be affected.

Many clinical trial sites have been impacted by the pandemic, forcing them to delay enrollment in research trials and it is unclear for how long this will last.

This may impact our ability to commence clinical trials in the future.

Comparison of the three months ended March 31, 2021 and 2020

Three Months Ended March 31,

(in thousands)

For example, many clinical trial sites have been impacted by the pandemic, forcing them to delay enrollment in trials and it is unclear for how long this will last.

This may therefore impact our ability to commence clinical trials in the future.

Comparison of the three and six months ended June 30, 2021 and 2020

Three Months Ended June 30,

Six Months Ended June 30

Operating expenses:

(in thousands)

Research and development

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Loss from operations

Interest expense, net

Interest income (expense), net

Three months ended June 30, 2021

Research and development expenses

Research and development expenses were $2.0 million and $2.1 million for the three months ended March 31, 2021 and 2020, respectively.

Research and development expenses for the three months ended March 31, 2021 reflect the recognition of contra-research and development expenses related to the DoD Agreement in the amount of $4.0 million, which off-sets the expenses recognized in the period for the DoD Agreement.

Other non-DoD related research and development expenses decreased $0.1 million for the three months ended March 31, 2021.

This decrease was primarily the result of a decrease of $0.6 million in supplies and outsourced services for other research and development activities which was offset in part by an increase of $0.4 million in personnel-related costs due to an increase in headcount and stock-based compensation.

Research and development expenses were $3.2 million and $1.9 million for the three months ended June 30, 2021 and 2020, respectively.

Research and development expenses for the three months ended June 30, 2021 reflect the recognition of contra-research and development expenses related to the DoD Agreement in the amount of $4.1 million, which off-sets the expenses recognized in the period for the DoD Agreement.

Other non-DoD related research and development expenses increased $5.4 million for the three months ended June 30, 2021.

This increase was primarily the

result of an increase of $4.3 million in supplies and outsourced services for other research and development activities and an increase of $1.0 million in personnel-related costs due to an increase in headcount and stock-based compensation.

Research and development expenses are expected to increase in the future as we continue our current research programs, initiate new research programs, continue our preclinical development of product candidates and conduct future clinical trials for any of our product candidates.

General and administrative expenses

General and administrative expenses increased by $1.4 million to $1.9 million for the three months ended March 31, 2021 from $0.5 million for the three months ended March 31, 2020.

The increase was primarily a result of a $0.3 million increase in personnel-related costs due to an increase in headcount and stock-based compensation and $1.1 million increase in professional fees, consulting services and legal expenses to support our operations as a public company as well as increases in insurance.

Interest expense, net

Interest expense, net consists of interest expense related to our capital lease obligations, equipment loan payables and long-term debt, offset by interest income related to our cash.

Interest expense decreased $21,000 for the three months ended March 31, 2021 as a result of lower capital lease obligations and equipment loans outstanding.

General and administrative expenses increased by $1.7 million to $2.5 million for the three months ended June 30, 2021 from $0.8 million for the three months ended June 30, 2020.

The increase was primarily a result of a $0.8 million increase in personnel-related costs due to an increase in headcount and stock-based compensation and a $0.7 million increase in professional fees, consulting services, insurance and legal expenses to support our operations as a public company, and a $0.2 million increase in facility-related costs.

Other income consists of forgiveness of the PPP Loan.

Other income increased $0.5 million for the three months ended June 30, 2021 from $0 in the prior year period.

Interest income (expense), net

Interest expense consists of interest related to our capital lease obligations, equipment loan payables and long-term debt.

Interest income consists of interest earned on our cash balances held with financial institutions.

We recognized interest income, net of expense, during the three months ended June 30, 2021 of $1,000 and attributable to the increase in our cash balance from our April 2021 common stock offering.

We recognized interest income $5,000, net of interest expense, during the three months ended June 30, 2020 and attributable to the cash proceeds receive in connection with the sale of our Series A preferred stock.

Six Months Ended June 30, 2021

Research and development expenses

Research and development expenses were $5.2 million and $4.0 million for the six months ended June 30, 2021 and 2020, respectively.

Research and development expenses for the six months ended June 30, 2021 reflect the recognition of contra-research and development expenses related to the DoD Agreement in the amount of $8.0 million, which off-sets the expenses recognized in the period for the DoD Agreement.

Other non-DoD related research and development expenses increased $9.3 million for the six months ended June 30, 2021.

This increase was primarily the result of a increase of $7.7 million in supplies and outsourced services for other research and development activities, an increase of $1.4 million in personnel-related costs due to an increase in headcount and stock-based compensation, and an increase of $0.2 million in facility-related costs.

General and administrative expenses

General and administrative expenses increased by $3.1 million to $4.4 million for the six months ended June 30, 2021 from $1.3 million for the six months ended June 30, 2020.

The increase was primarily a result of a $1.0 million increase in personnel-related costs due to an increase in headcount and stock-based compensation and a $1.7 million increase in professional fees, consulting services, insurance and legal expenses to support our operations as a public company, and a $0.2 million increase in facility-related costs.

Other income consists of forgiveness of the PPP Loan.

Other income increased $0.5 million for the six months ended June 30, 2021 from $0 in the prior year period.

Interest income (expense), net

We recognized interest income, net of expense, of $2,000 during the six months ended June 30, 2021 and attributable to the increase in our cash balance resulting from our April 2021 common stock offering.

We recognized interest expense of $17,000, net of interest income, during the six months ended June 30, 2020 as a result of our capital lease obligations and equipment loans outstanding.

Liquidity and capital resources

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We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and, if successful, the clinical development of our programs.

To date, we have funded our operations primarily with proceeds from the sales of common stock, preferred stock and warrants and convertible promissory notes.

Through March 31, 2021, we raised an aggregate of $95.4 million in gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants and issuance of convertible promissory notes and in April 2020, we received $0.5 million in cash from the PPP.

As of March 31, 2021, we had $36.3 million in cash.

In April 2021, we received $27.0 million in gross proceeds from the sale of our common stock.

We will need to raise additional capital before we exhaust our current cash in order to continue to fund our research and development, including our plans for clinical and preclinical trials and new product development, as well as to fund operations generally.

To date, we have funded our operations primarily with proceeds from the sales of common stock, preferred stock and warrants, the convertible promissory notes and the PPP Loan.

Through June 30, 2021, we raised an aggregate of $122.9 million in gross proceeds from sales of our common stock and warrants, Series A convertible preferred stock and warrants, the issuance of convertible promissory notes, and the PPP Loan.

As of June 30, 2021, we had $59.8 million in cash.

We will need to raise additional capital before we exhaust our current cash to continue to fund our research and development, including our plans for clinical and preclinical trials and new product development, as well as to fund operations generally.

As and if necessary, we will seek to raise additional funds through various potential sources, such as equity and debt financings or through corporate collaboration and license agreements.

We can give no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs.

The following table summarizes our sources and uses of cash for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table summarizes our sources and uses of cash for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

(in thousands)

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Cash provided by financing activities

Net decrease in cash and restricted cash

Net increase in cash and restricted cash

Operating activities

Net cash used in operating activities for the three months ended March 31, 2021 was $3.5 million, consisting primarily of our net loss of $3.9 million, an increase in prepaid expenses and other assets of $1.7 million and a decrease in accrued expenses and other liabilities of $0.2 million.

These uses of cash were offset by noncash charges of depreciation and amortization expense $0.2 million and share-based compensation expense of $0.3 million and an increase in accounts payable of $1.8 million due to our growth in expenditures.

Net cash used in operating activities for the three months ended March 31, 2020 was $2.1 million, consisting primarily of our net loss of $2.7 million, offset by noncash charges of depreciation and amortization expense and share-based compensation expense of $0.3 million and an increase in accounts payable of $0.3 million due to timing of payments.

Net cash used in operating activities for the six months ended June 30, 2021 was $7.3 million, consisting primarily of our net loss of $9.1 million, offset by noncash charges of depreciation and amortization of $0.4 million, and shared-based compensation of $1.1 million and an increase in accrued expenses and other liabilities of $0.3 million and accounts payable of $0.5 million and a decrease in prepaid expenses and other assets of $0.1 million and increased by forgiveness of PPP Loan of $0.5 million.

Net cash used in operating activities for the six months ended June 30, 2020 was $3.5 million, consisting primarily of our net loss of $5.4 million, offset by noncash charges of depreciation and amortization expense $0.3 million and stock-based compensation of $0.2 million and increases in accounts payable and accrued expenses and other liabilities of $1.2 million due to our growth in expenditures and a decrease in prepaid expenses and other assets of $0.2 million.

Investing activities

During the three months ended March 31, 2021 and 2020, we used $31,000 and $55,000, respectively, for the purchase of property and equipment.

During the six months ended June 30, 2021 and 2020, we used $39,000 and $0.4 million, respectively, for the purchase of property and equipment.

Financing activities

During the three months ended March 31, 2021, financing activities provided $0.1 million from the exercise of common stock warrants and stock options, offset by $35,000 for payments related to our equipment loan.

During the three months ended March 31, 2020, financing activities provided $1.0 million from prepayments related to the sale of our Series A convertible preferred stock financing in June 2020 offset in part by $0.2 million for payments related to our capital lease obligations and equipment loan.

During the six months ended June 30, 2021, financing activities provided $27.3 million from proceeds from the sale of common stock and common stock warrants, the exercise of common stock warrants and stock options, offset by the payment of issuance costs, and for payments related to our equipment loan.

During the six months ended June 30, 2020, financing activities provided $11.0 million from the sale of our Series A convertible preferred stock and warrants and $0.5 million from the PPP Loan, offset by $0.3 million for payments related to our capital lease obligations and equipment loan payables and $27,000 for the payment of issuance costs related to the sale of Series A convertible preferred stock and warrants.

Funding requirements

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● further develop our discovery engine;

● continue our current research programs and our preclinical development of product candidates from our current research programs;

● continue our research and development programs for our current and any future product candidates from our current programs;

● seek to identify additional research programs and additional product candidates;

● initiate preclinical testing and clinical trials for any future product candidates we identify and develop;

● initiate non-clinical testing and clinical trials for our product candidates;

● maintain, expand, enforce, defend, and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

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● acquire or in-license products, intellectual property, and technologies;

● operate as a public company.

We expect that our existing cash at March 31, 2021 plus proceeds from the sale of our common stock in April 2021 will enable us to fund our current and planned operating expenses and capital expenditures through fiscal year 2022.

● continue to operate as a public company.

We expect that our existing cash at June 30, 2021 will enable us to fund our current and planned operating expenses and capital expenditures through fiscal year 2022.

Beyond that date, the Company will need additional financing to support its continuing operations and pursue its growth strategy.

We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner that we currently expect.

Because of the numerous risks and uncertainties associated with the development of our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

Because of the numerous risks and uncertainties associated with the development of our programs, we are unable to estimate the

amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

Our future funding requirements will depend on many factors including:

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● the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any product candidates for which we receive regulatory approval;

● the success of our license agreements;

● the success of our intellectual property portfolio;

● our ability to establish and maintain additional collaborations on favorable terms, if at all;

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● the extent to which we acquire or in-license products, intellectual property, and technologies;

● the costs of operating as a public company.

● the costs of continuing to operate as a public company.

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, collaborations, strategic alliances, and licensing arrangements.

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Critical accounting policies and use of estimates

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

The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements.

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The OPM uses the Black-Scholes option-pricing model to determine the price of the call option.

The OPM is appropriate to use when the range of possible future outcomes is so difficult to predict that forecasts would be highly speculative.

appropriate to use when the range of possible future outcomes is so difficult to predict that forecasts would be highly speculative.

Beginning in May 2020, we used the probability-weighted expected return method to determine the value of our common stock.

Under the probability-weighted expected return method, the value of an enterprise’s common stock is estimated based upon an analysis of future values assuming various possible future liquidity events, such as an initial public offering, a strategic sale or merger and remaining a private enterprise without a liquidity event.

The fair market value of the stock is based upon the probability-weighted present value of expected future net cash flows as a result of

distributions to stockholders considering each of the possible future events, as well as the rights and preferences of each class of stock.

The fair market value of the stock is based upon the probability-weighted present value of expected future net cash flows as a result of distributions to stockholders considering each of the possible future events, as well as the rights and preferences of each class of stock.

Given the absence of a public trading market for our capital stock at the time, our board of directors exercised reasonable judgment and considered a number of subjective factors to determine the best estimate of the fair value of our common stock, including:

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This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies.

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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-Q

Item 2. Management’s Discussion and Analysis