What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-09 · 129 added, 58 removed, 255 unchanged (42% of the section changed)

25 unchanged sentences

Senti’s lead product candidates utilize off-the-shelf healthy adult donor derived NK cells to create CAR-NK cells outfitted with its gene circuit technologies in several oncology indications with high unmet need.

We have incurred net losses of $12.1 million and $18.7 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $23.7 million and $35.9 million, respectively, and an accumulated deficit of $256.5 million and $244.3 million,

respectively.

Net cash flows used in operating activities were $11.7 million and $16.3 million during the three months ended March 31, 2024 and 2023, respectively.

We have incurred net losses of $11.2 million and $18.7 million for the three months ended June 30, 2024 and 2023, respectively, and net losses to $23.3 million and $37.4 million for the six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $15.9 million and $35.9

million, respectively, and an accumulated deficit of $267.7 million and $244.3 million, respectively.

Net cash flows used in operating activities were $20.0 million and $30.0 million during the six months ended June 30, 2024 and 2023, respectively.

Substantially all of our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

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• continue preclinical development of our current and future product candidates and initiate additional preclinical studies;

• continue to expand our pipeline by exploring new partnerships and collaborations that align with our strategic goals;

• fund clinical development of our current product candidates;

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In connection with the transaction, we are entitled to receive total consideration of $37.8 million before the end of 2025, of which $18.9 million was due at closing and was netted against prepayment owed by us for manufacturing and research activities to GeneFab.

The remaining $18.9 million will be paid to us in installments in 2024 and 2025, subject to satisfaction of certain conditions.

The remaining $18.9 million is anticipated to be paid to us in the first half of 2025, subject to satisfaction of certain conditions.

The Company determined that the $18.9 million for future manufacturing and research activities, inclusive of the volume discount provided, was executed at market terms and does not result in any impact to the total consideration received from GeneFab for the disposal of the business.

We also agreed to grant a license to GeneFab under certain of our intellectual property rights to conduct manufacturing services and to research, develop, manufacture and commercialize products outside of oncology, pursuant to a license agreement under negotiation.

GeneFab was provided an option to purchase up to 19,633,444 shares (i.e.

up to $20.0 million worth) of our common stock at a per share exercise price of $1.01867 (the “GeneFab Option”).The GeneFab Option is exercisable for a period of 36 months following the execution of the license agreement.

GeneFab was provided an option to purchase up to 1,963,344 shares (i.e., up to $20.0 million worth) of our common stock at a per share exercise price of $10.18670 (the “GeneFab Option”).

The GeneFab Option is exercisable for a period of 36 months following the execution of the license agreement.

The GeneFab Option may be exercised in installments of common stock equal to no more than 19.9% of our outstanding shares of common stock as of the closing date of the transaction.

As additional consideration for the transaction, we entered into a seller economic share agreement with GeneFab, pursuant to which we will be entitled to receive ten percent of the realized gains of GeneFab’s parent company arising and resulting from any cash or in-kind distributions from GeneFab in connection with a dividend or sale event, subject to the terms and conditions of the GeneFab Economic Share.

company arising and resulting from any cash or in-kind distributions from GeneFab in connection with a dividend or sale event, subject to the terms and conditions of the GeneFab Economic Share.

As the assets and contractual rights transferred to GeneFab were determined to constitute a business as defined in ASC 805, Business Combinations , we accounted for the disposal by applying the derecognition guidance in ASC 810, Consolidations , which requires that a gain or loss be recognized for the difference between the carrying value of the assets sold and the fair value of the consideration received (or receivable).

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In accordance with ASC 205, Presentation of Financial Statements , we determined that the disposal of the non-oncology business, including the equipment and transfer of in-house manufacturing services in the Alameda facility, represented a strategic shift that will have a major effect on our operations and financial results, thus meeting the criteria to be reported as discontinued operations.

As a result, we have retrospectively restated our condensed consolidated balance sheet at December 31, 2022 and condensed consolidated statements of operations for the three months ended March 31, 2023 to reflect the assets and liabilities and operating results, respectively, related to the disposed business in discontinued operations.

As a result, we have retrospectively restated our condensed consolidated statements of operations for the three and six months ended June 30, 2023 to reflect the operating results related to the disposed business in discontinued operations.

We have chosen not to segregate the cash flows of the disposed business in the condensed consolidated statements of cash flows.

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Food and Drug Administration (“FDA”) in December 2023, and on the partnership of our SENTI-301A program in China with Celest.

On July 17, 2024, the Company filed a Certificate of Amendment to Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, pursuant to which we effected a 1-for-10 reverse stock split (the “Reverse Stock Split”) of Company’s issued and outstanding common stock.

The Reverse Stock Split became effective as of 5:00 p.m.

(Eastern Time) on July 17, 2024, and the Company’s common stock began trading on a split-adjusted basis on the Nasdaq Capital Market at the market open on July 18, 2024.

All references in this Report to number of common shares, price per share and weighted average number of shares outstanding have been adjusted to reflect the Reverse Split on a retroactive basis.

On August 2, 2024, the Company received notification from Nasdaq that for ten consecutive business days, the closing bid price of the Company’s common stock was at least $1.00 per share, and accordingly, the Company regained compliance with the Bid Price Rule, and that the matter is now closed.

On August 3, 2024, the Company executed the agreement with California Institute of Regenerative Medicine (“CIRM”) for a grant award of $8 million.

Pursuant to the executed agreement with CIRM, the first tranche of the grant award is expected to be received in August 2024.

The CIRM grant will support the ongoing clinical development of SENTI-202.

Components of Results of Operations

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• the cost of consultants engaged in research and development, regulatory, and clinical related services;

• the cost to develop our manufacturing process and manufacturing product candidates for use in our research, preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and CMOs;

• facilities, depreciation and other expenses, which include allocated expenses for rent and maintenance of facilities, insurance and supplies;

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Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Personnel-related expenses, including share-based compensation $ 2,121 $ 2,469 $ 4,621 $ 4,860

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Product candidates in clinical development generally have higher development costs than those in preclinical stages of development, primarily due to the increased size and duration of clinical trials.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the

preclinical development of any of our product candidates.

At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical development of any of our product candidates.

However, we expect that our research and development expenses and manufacturing costs will increase in connection with our planned preclinical and clinical development activities in the near term and in the future.

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General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel in executive, finance and other administrative functions.

Other significant costs include legal fees relating to corporate matters, professional fees for accounting and consulting services and an allocation of facility-related costs.

Other significant costs include legal fees relating to corporate matters, professional fees for accounting and consulting services, insurance and an allocation of facility-related costs.

Our general and administrative costs related to the assets sold to GeneFab are included in discontinued operations.

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Three Months Ended

(unaudited) (unaudited)

June 30, Six Months Ended

2024 2023 2024 2023

(unaudited) (unaudited) (unaudited) (unaudited)

Personnel-related expenses, including share-based compensation $ 649 $ 6,358 $ 4,147 $ 13,116

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Change in Fair Value of GeneFab Economic Share - related party

The change in fair value of GeneFab Economic Share is a result of the change in the volatility at each reporting period.

The change in fair value of GeneFab Economic Share is a result of the change in the equity value of GeneFab and the volatility at each reporting period.

Change in Fair Value of GeneFab Option - related party

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GeneFab sublease Income - related party

Other income (expense) is primarily comprised of income from our sublease with GeneFab.

Sublease Income is primarily comprised of income from our sublease agreements with GeneFab.

Net Income (Loss) from Discontinued Operations

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Net income (loss) from discontinued operations is summarized below (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six months ended June 30,

2024 2023 2024 2023

Operating expenses:

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended

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Operating expenses

Research and development (included related party cost of $3,632 and $—, respectively)

Research and development (including related party cost of $3,637 and $—, respectively)

9,151 6,876 2,275

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Contract revenue .

For the three months ended March 31, 2023, we generated revenue from contracts and license agreements of $1.0 million.

The Company earned no revenue in the three months ended March 31, 2024.

For the three months ended June 30, 2023, we generated revenue from contracts and license agreements of $0.7 million.

We earned no revenue in the three months ended June 30, 2024.

The decrease of $0.7 million was primarily due to completion of services provided under the Spark collaboration agreement in 2023 that did not occur in 2024.

Grant income .

For the three months ended March 31, 2023, we generated revenue from grants of $0.3 million, from the SBIR SENTI-202 grant funding.

The Company earned no revenue from grants in the three months ended March 31, 2024.

For the three months ended June 30, 2023, we generated revenue from grants of $0.3 million, from the SBIR SENTI-202 grant funding.

We earned no revenue from grants in the three months ended June 30, 2024.

Research and development expenses .

Research and development expenses were $8.8 million and $7.1 million for the three months ended March 31, 2024 and 2023, respectively.

The increase o f $1.7 million w as primarily due to an increase of $2.6 million in external services and supplies cost offset by a decrease of $0.9 million in office and facilities cost .

Research and development expenses were $9.2 million and $6.9 million for the three months ended June 30, 2024 and 2023, respectively.

The increase o f $2.3 million w as primarily due to an increase of $3.5 million in external services and supplies cost offset by a decrease of $0.9 million in office and facilities cost and a decrease of $0.3 million in personnel-related expenses .

General and administrative expenses .

General and administrative expenses were $7.5 million and $9.2 million for the three months ended March 31, 2024 and 2023, respectively.

The decrease of $1.7 million was primarily due to a decrease of $3.3 million in personnel-related expenses offset by an increase of $0.7 million in facilities costs, an increase of $0.5 million in depreciation and amortization costs as well as an increase of $0.4 million in professional services costs.

General and administrative expenses were $4.2 million and $9.2 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease of $5.0 million was primarily due to a decrease of $5.7 million in personnel-related expenses and a decrease of $0.4 million in professional services costs offset by an increase of $0.7 million in facilities costs, an increase of $0.3 million in depreciation and amortization costs.

Interest income, net .

Interest income was $0.3 million and $1.1 million for the three months ended March 31, 2024 and 2023, respectively.The decrease is attributed to lower average cash balances in the relevant periods.

Interest income was $0.2 million and $0.8 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease is attributed to lower average cash balances in the relevant periods.

Change in fair value of GeneFab Economic Share - related party.

For the three months ended June 30, 2024, the change in fair value of GeneFab economic Share was a loss of $1.5 million primarily due to the decrease in the GeneFab equity value, which is a significant input in the measurement of the GeneFab Economic Share.

There was no comparative activity for three months ended June 30, 2023

Change in fair value of GeneFab Option - related party.

For the three months ended March 31, 2024, the change in fair value of GeneFab Option was a gain of $2.3 million primarily due to the decrease in the fair value of our common stock, which is a significant input in the measurement of the GeneFab Option.

For the three months ended June 30, 2024, the change in fair value of GeneFab Option was a gain of $1.6 million primarily due to the decrease in the fair value of our common stock, which is a significant input in the measurement of the GeneFab Option.

There was no comparative activity for three months ended June 30, 2023.

GeneFab sublease income - related party.

For the three months ended March 31, 2024, sublease income was $1.5 million from the sublease to GeneFab for the Alameda facility.

For the three months ended June 30, 2024, sublease income was $1.6 million from the sublease of Alameda facility as well as a portion of our corporate headquarter premises to GeneFab.

There was no comparative activity for three months ended June 30, 2023.

Net income (loss) from discontinued operations.

For the three months ended March 31, 2023, net loss from discontinued operations was $4.9 million.

For the three months ended June 30, 2023, net loss from discontinued operations was $4.4 million.

Discontinued operations relate to the transfer of in-house manufacturing activities in the Alameda facility, to GeneFab, and include the costs and depreciation of equipment and related deposits or liabilities, as well as manufacturing personnel-related costs.

There were no discontinued operations for three months ended June 30, 2024.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended

2024 2023 Change

Contract revenue $ — $ 1,723 $ (1,723)

Grant income — 500 (500)

Total revenue — 2,223 (2,223)

Operating expenses

Research and development (including related party cost of $7,269 and $—, respectively)

17,929 13,936 3,993

General and administrative 11,728 18,440 (6,712)

Total operating expenses 29,657 32,376 (2,719)

Loss from operations (29,657) (30,153) 496

Other income (expense)

Interest income, net 568 1,855 (1,287)

Change in fair value of contingent earnout liability — 207 (207)

Change in fair value of GeneFab Note Receivable - related party 195 — 195

Change in fair value of GeneFab Economic Share - related party (1,418) — (1,418)

Change in fair value of GeneFab Option - related party 3,945 — 3,945

GeneFab sublease income - related party 3,047 — 3,047

Other income (expense) 6 (12) 18

Total other income, net 6,343 2,050 4,293

Net loss from continuing operations (23,314) (28,103) 4,789

Net loss from discontinued operations — (9,316) 9,316

Net loss $ (23,314) $ (37,419) $ 14,105

Contract revenue .

For the six months ended June 30, 2023, we generated revenue from contracts and license agreements of $1.7 million.

We earned no revenue in the six months ended June 30, 2024.

The decrease of $1.7 million was primarily due to completion of services provided under the Spark collaboration agreement in 2023 that did not occur in 2024.

Grant income .

For the six months ended June 30, 2023, we generated revenue from grants of $0.5 million, from the SBIR SENTI-202 grant funding.

We earned no revenue from grants in the six months ended June 30, 2024.

Research and development expenses .

Research and development expenses were $17.9 million and $13.9 million for the six months ended June 30, 2024 and 2023, respectively.

The increase of $4.0 million was primarily due to an increase of $6.1 million in professional services costs, partially offset by a decrease of $1.8 million in office and facility costs, as well as a decrease of $0.2 million in personnel-related expenses.

General and administrative expenses .

General and administrative expenses were $11.7 million and $18.4 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease of $6.7 million was primarily due to a decrease of $9.0 million in personnel-related expenses, offset by an increase of $1.4 million in office and facility costs and an increase of $0.9 million in depreciation and amortization.

Interest Income, net.

Interest income was $0.6 million and $1.9 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease is attributed to lower average cash balances in the relevant periods.

Change in fair value of GeneFab Economic Share.

For the six months ended June 30, 2024, the change in fair value of GeneFab Economic Share was a loss of $1.4 million primarily due to the decrease in the GeneFab equity value, which is a significant input in the measurement of the GeneFab Economic Share.

There was no comparative activity for six months ended June 30, 2023.

Change in fair value of GeneFab Option.

For the six months ended June 30, 2024, the change in fair value of GeneFab Option was a gain of $3.9 million primarily due to the decrease in the fair value of our common stock as well as an increase in volatility, which are significant inputs in the measurement of the GeneFab Option.

There was no comparative activity for six months ended June 30, 2023.

GeneFab sublease income - related party.

For the six months ended June 30, 2023, sublease income was $3.0 million from the sublease of Alameda facility as well as a portion of our corporate headquarter premises to GeneFab.

There was no comparative activity for six months ended June 30, 2023.

Net income (loss) from discontinued operations.

For the six months ended June 30, 2023 net loss from discontinued operations was $9.3 million.

There were no discontinued operations for six months ended June 30, 2024.

Liquidity and Capital Resources

Sources of Liquidity

From inception to March 31, 2024, we raised aggregate gross proceeds of $300.1 million from the Merger and PIPE Financing, the issuance of shares of our common stock, the issuance of shares of our redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements and governmental grants.

On August 31, 2022, we entered into the Purchase Agreement with Chardan.

From inception to June 30, 2024, we raised aggregate gross proceeds of $300.1 million from the Merger and PIPE Financing, the issuance of shares of our common stock, the issuance of shares of our redeemable convertible preferred stock, the issuance of convertible notes and, to a lesser extent, through collaboration agreements and governmental grants.

On August 31, 2022, we entered into the Purchase Agreement with Chardan, as amended and restated from time to time.

Pursuant to the Purchase Agreement, we have the right, in our sole discretion, to sell to Chardan up to the lesser of:

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As consideration for Chardan’s commitment to purchase shares of our common stock at our direction upon the terms and subject to the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, we issued 10,000 shares of our common stock to Chardan and paid a $0.4 million document preparation fee.

Other than the issuance of the commitment shares of our common stock to Chardan, we issued 1,300,000 shares of common stock up until March 31, 2024 aggregating to net proceeds of $1.2 million, under the Purchase Agreement.

There were no shares issued within the three months ended March 31, 2024.

Other than the issuance of the commitment shares of our common stock to Chardan, we issued 130,000 shares of common stock up until June 30, 2024 aggregating to net proceeds of $1.2 million, under the Purchase Agreement.

There were no shares issued within the six months ended June 30, 2024.

We do not have any products approved for sale and have not generated any revenue from product sales or otherwise.

We have incurred net losses and negative cash flows from continuing operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.

As of March 31, 2024, we had $23.7 million in cash and cash equivalents, and an accumulated deficit of $256.5 million.

As of June 30, 2024, we had $15.9 million in cash and cash equivalents, and an accumulated deficit of $267.7 million.

We will need substantial additional funding to support our continuing operations and pursue our development strategy.

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Adequate funding may not be available to us on acceptable terms, if at all.

Should we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of our product candidates or delay our efforts to expand our product pipeline.

Should we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of

our product candidates or delay our efforts to expand our product pipeline.

As substantial doubt exists about the Company’s ability to continue as a going concern, we may also be required to sell or license to other parties’ rights to develop or commercialize our product candidates that we would prefer to retain.

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The remaining consideration of $18.9 million will be received in installments during 2024 and 2025, subject to satisfaction of certain conditions.

The remaining consideration of $18.9 million is anticipated to be received in the first half of 2025, subject to satisfaction of certain conditions.

The following table sets forth a summary of our cash flows from continuing and discontinued operations for each of the periods indicated (in thousands):

Three Months Ended

Six Months Ended

Net cash from operating activities $ (20,027) $ (29,979)

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Operating Activities

For the three months ended March 31, 2024, net cash used in operating activities of $11.7 million was primarily due to our loss of $12.1 million with non-cash adjustments of $2.3 million gain from change in fair value of the GeneFab Option, $1.5 million for depreciation and amortization of operating lease right-of-use-assets and $1.3 million for stock-based compensation expense.

Other material changes comprised of $3.5 million decrease in GeneFab prepaid expenses offset by $2.6 million decrease in accounts payable and accrues expenses and $0.9 million decrease in operating lease liabilities.

For the three months ended March 31, 2023, net cash used in operating activities of $16.3 million was primarily due to our net loss of $18.7 million with non-cash adjustments of $3.8 million for stock-based compensation expense, $0.9 million for depreciation and amortization of operating lease right-of-use assets and $0.6 million for accretion of discount on short-term investments.

Other material changes comprised of $1.6 million decrease in accounts payable and accrued expenses and other current liabilities, $0.4 million decrease in deferred revenue, $0.4 million increase in prepaid expenses and other assets offset by $0.9 million increase in operating lease liabilities.

For the six months ended June 30, 2024, net cash used in operating activities of $20.0 million was primarily due to our loss of $23.3 million with non-cash adjustments of $3.9 million gain from change in fair value of the GeneFab Option, $1.4 million loss from change in fair value of GeneFab Economic Share, $2.9 million for depreciation and amortization of operating lease right-of-use-assets and $0.5 million for stock-based compensation expense.

Other material changes comprised of $7.1 million decrease in GeneFab prepaid expenses, and $0.8 million decrease in prepaid expenses and other assets offset by $3.2 million decrease in accounts payable and accrued expenses and $1.9 million decrease in operating lease liabilities.

For the six months ended June 30, 2023, net cash used in operating activities of $30.0 million was primarily due to our net loss of $37.4 million with non-cash adjustments of $7.2 million for stock-based compensation expense, $2.1 million for depreciation and amortization of operating lease right-of-use assets and $1.0 million for accretion of discount on short-term investments and $0.2 million for the change in fair value of contingent earnout liability.

Other material changes comprised of $1.2 million decrease in accounts payable and accrued expenses and other current liabilities, $0.6 million decrease in deferred revenue, offset by $1.0 million increase in operating lease liabilities.

Investing Activities

For the three months ended March 31, 2024, net cash used in investing activities was nominal.

For the three months ended March 31, 2023, net cash used in investing activities of $9.5 million was due to $18.0 million purchases of short-term investments and $6.5 million purchases of property and equipment offset by $15.0 million cash received upon maturity of short-term investments.

For the six months ended June 30, 2024, net cash used in investing activities was nominal.

For the six months ended June 30, 2023, net cash provided by investing activities of $8.8 million was due to $37.0 million cash received upon maturity of the short-term investments offset by $18.0 million purchases of short-term investments and $10.2 million purchases of property and equipment.

Financing Activities

For the three months ended March 31, 2024, there was no cash provided by financing activities.

For the three months ended March 31, 2023, net cash used in financing activities was nominal.

For the six months ended June 30, 2024, there was no cash provided by financing activities.

For the six months ended June 30, 2023, net cash of $0.2 million was provided by financing activities, primarily due to $0.3 million proceeds from the issuance of our common stock under the Employee Stock Purchase Plan (“ESPP”).

Funding Requirements

Based upon our current operating plans, substantial doubt exists about whether our existing cash and cash equivalents will be sufficient to fund our operations, including clinical trial expenses and capital expenditure requirements, beyond twelve months from the date of this Quarterly Report.

Based upon our current operating plans, substantial doubt exists about whether our existing cash and cash equivalents will be sufficient to fund our operations, including clinical trial expenses and business operating expenses requirements, beyond twelve months from the date of this Quarterly Report.

We anticipate that we will continue to seek additional funding, though the precise timing of such may prove uncertain.

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Operating Leases for details on our lease obligations.

During the year ended December 31, 2021, we entered into a three-year collaboration and option agreement with BlueRock Therapeutics LP (“BlueRock”) under which we granted BlueRock an option to execute an exclusive or non-exclusive license to develop, manufacture and commercialize cell therapy products (See Part I, Item 1, Notes to Condensed Consolidated Financial Statements (Unaudited), Note 13.

Related Parties for details into the

BlueRock agreement).

In consideration for the option, we are responsible for up to $10.0 million in research and development costs and expenses associated with the collaboration plan incurred over the three-year term.

Following the closing of the Merger, former holders of Legacy Senti common stock and preferred stock may receive up to 200,000 additional shares of our common stock in the aggregate, in two equal tranches of 100,000 shares of common stock per tranche.

The share price milestone for the first tranche was not satisfied during the First Tranche Term and any such rights to receive the first tranche of additional shares of the Company’s common stock have been cancelled and extinguished.

Refer to Note 7.

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Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles, or GAAP.

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

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GAAP that require us to make subjective estimates and judgments about matters that are inherently uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

During the three months ended March 31, 2024, there have not been any other significant changes to our critical accounting policies and estimates, from those presented in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that are of significance, or potential significance, to us.

During the six months ended June 30, 2024, there have not been any other significant changes to our critical accounting policies and estimates, from those presented in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that are of significance, or potential significance, to us.

Emerging Growth Company Status

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Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company if (1) the

market value of our common stock held by non-affiliates is less than $250 million as of the last business day of the second fiscal quarter, or (2) our annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter are less than $100 million and the market value of our common stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter.

We will remain a smaller reporting company if (1) the market value of our common stock held by non-affiliates is less than $250 million as of the last business day of the second fiscal quarter, or (2) our annual revenues in our most recent fiscal year completed before the last business day of our second fiscal quarter are less than $100 million and the market value of our common stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter.

Segment Information

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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