BETTER THERAPEUTICS, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes, included in Item 8 of this Annual Report. Unless
otherwise specified all dollar amounts are in
amounts, all amounts are in thousands, unless otherwise noted.
Overview
Our mission is to address unmet needs for treatment of cardiometabolic diseases
such as diabetes and heart disease. The
per year on healthcare, and approximately 90% of that spending is for the
treatment of chronic diseases. Most chronic diseases are caused predominantly by
behaviors, including cardiometabolic diseases such as diabetes and heart
disease. The root causes of cardiometabolic diseases are behaviors relating to
diet, physical activity, and other lifestyle factors, yet current treatments are
focused on reducing the effects of those diseases rather than addressing the
root causes.
In response to addressing the root causes of cardiometabolic diseases, we
developed a proprietary platform for the development of FDA-regulated,
software-based, PDTs for treating diabetes, heart disease, and other
cardiometabolic conditions. Our PDTs deliver a novel form of cognitive
behavioral therapy that enables changes in neural pathways of the brain so that
lasting changes in behavior become possible. In
enrolling patients in a pivotal study of our lead product candidate for the
treatment of patients with type 2 diabetes, BT-001, designed to support a
regulatory submission for marketing authorization from the FDA. Participants
were randomized to receive standard of care with or without BT-001. We announced
primary endpoint data from our clinical trial of BT-001 in
primary efficacy endpoint was the difference in mean change from baseline in A1c
after 90 days of treatment between the two groups and showed highly
statistically significant improvement in A1c between the intervention and
control groups (-0.4%, p <0.001). Clinically meaningful changes (A1c reductions
of 0.4% or more) occurred in 42.7% of the group receiving standard of care and
BT-001 versus 25.4% in the group receiving standard of care alone (difference of
17.3%, p <0.001). We believe this demonstrates that the use of BT-001
significantly improved A1c compared to standard of care alone. The unique
characteristics of prescription digital therapeutics and CMDx, may make it
possible for us to launch multiple products now in development for the treatment
of other CMDx over the next few years.
We are building a fully integrated PDTs company focused on treating the root
causes of cardiometabolic diseases. Our therapeutics are intended to fill a
known gap in the treatment of cardiometabolic diseases and integrate within the
existing healthcare system. We expect primary care providers to prescribe our
therapeutics and insurers to reimburse them much like they would a drug, and for
the patient to remain in the care of their provider while using them.
Financial Overview
Since our inception in 2015, we have focused substantially all of our resources
on conducting research and development activities, including discovery and
preclinical studies, establishing and maintaining our intellectual property,
hiring personnel, raising capital and providing general and administrative
support for these operations. We have recorded revenue from a pilot program with
a private health insurance provider to provide a digital therapeutic program
that includes a mobile app. We have funded our operations to date primarily from
the issuance of convertible notes and simple agreements for future equity
("SAFEs"), the issuance and sale of our preferred units, borrowing on our term
loan agreement and funding from the merger with MCAD.
We have incurred net losses in each year since inception. Our net losses were
respectively. As of
accumulated deficit of
our net losses have resulted from costs incurred in connection with our research
and development programs and from general and administrative costs associated
with our operations. We expect to continue to incur significant expenses and
increasing operating losses over at least the next several years. We expect our
expenses will increase substantially in connection with our ongoing activities,
as we:
•
advance our products through clinical trials;
•
pursue regulatory authorization or clearance of our products;
•
operate as a public company;
•
continue our preclinical programs and clinical development efforts; and
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•
continue research activities for the discovery of new products.
We were initially formed as a limited liability company under the laws of the
connection with our conversion to a
outstanding shares of the members of the limited liability company was converted
into shares of capital stock. On the date of conversion, the following
conversions of limited liability shares took place: (i) each Series Seed
convertible preferred unit converted into one share of Series Seed convertible
preferred stock, (ii) each Series A convertible preferred unit converted into
one share of Series A convertible preferred stock, (iii) each of the common
units issued by the limited liability company (each a "Common Unit") was
converted into one share of common stock, and (iv) each outstanding convertible
note converted into a SAFE with a corresponding investment balance as the
converted convertible notes.
On
special purpose acquisition company. In connection with the merger agreement,
MCAD entered into subscription agreements (the "Subscription Agreements") dated
as of
pursuant to which, among other things, MCAD agreed to issue and sell, in a
private placement immediately prior to the closing of the Business Combination,
an aggregate of 5,000,000 shares of Common Stock for
Shares"). On
million
Agreement, MCAD acquired all of the outstanding shares of Legacy BTX in exchange
for 15,174,729 shares of MCAD. In connection with the merger, MCAD was renamed
Impact of COVID-19
In
pandemic. The ongoing COVID-19 pandemic has not had a significant impact on our
operations. Management is unable to estimate the future financial effects, if
any, to our business as a result of COVID-19 because of the high level of
uncertainties and unpredictable outcomes of this disease.
We are continuing to evaluate the impact of the ongoing COVID-19 pandemic,
including the emergence of new variants of COVID-19, on our business and are
taking proactive measures to protect the health and safety of our employees, as
well as to maintain business continuity. Based on guidance issued by federal,
state and local authorities, we transitioned to a fully remote work model for
our employees, effective
implementing are appropriate, reflecting both regulatory and public health
guidance, to maintain business continuity. We will continue to closely monitor
and seek to comply with guidance from governmental authorities and adjust our
activities as appropriate.
The ultimate impact of the ongoing COVID-19 pandemic or a similar health
epidemic is highly uncertain and subject to change. We do not yet know the full
extent of potential delays or impacts on our business, our clinical trial,
healthcare systems or the global economy as a whole. However, these effects
could harm our operations, and we will continue to monitor the ongoing COVID-19
pandemic closely.
Components of Results of Operations
Revenue
Since our inception in 2015, we have recognized an immaterial amount of revenue
resulting from a pilot program with a private health insurer. We expect that our
primary sources of revenue will be through reimbursement coverage for our
treatments by commercial insurers, Medicare, and Medicaid in the
near-term plan is to obtain broad reimbursement coverage for our first PDT for
treating type 2 diabetes, BT-001. We expect to be successful in obtaining a
broad reimbursement coverage through demonstrating and generating a
comprehensive set of evidence to substantiate the value of BT-001 based on its
impact on clinical outcomes, total cost of care, and durability of effect.
Obtaining a broad reimbursement coverage and timing of obtaining such coverage
for BT-001 and our other product candidates is highly uncertain. As a result,
the timing and the amount of revenue we expect to recognize from monetizing our
product candidates may vary based on various factors.
We also may explore opportunities to partner with pharmaceutical companies
marketing traditional drug therapies for cardiometabolic diseases that may
benefit from an increase in efficacy and durability when combined with our
prescription digital therapeutic.
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Operating Expenses
We classify operating expenses into three main categories: (i) research and
development (ii) sales and marketing and (iii) general and administrative.
Research and Development
Our research and development expenses consist of external and internal expenses
incurred in connection with our research activities and development programs.
These expenses include external expenses, including expenses associated with
contract research organizations engaged to manage and conduct clinical trials;
and other research and development expenses associated with software development
and licenses, and other external development spend. Additionally, our research
and development expenses include internal personnel expenses, including expenses
for salaries, benefits and stock-based compensation, and allocation of certain
overhead expenses.
Research and development costs incurred to develop software and our platform for
internal use are capitalized and separately presented on the balance sheet as
capitalized software development costs. Costs incurred during the preliminary
planning and evaluation stage of the project are expensed as incurred. Costs
incurred during the application development stage of the project are
capitalized. To date, the majority of these expenses have been incurred to
advance our lead product candidate, BT-001.
We expect our research and development expenses to increase substantially for
the foreseeable future as we continue to invest in research and development
activities related to developing our platform and our product candidates, as our
product candidates advance into later stages of development, and as we continue
to conduct clinical trials. The successful development of our platform and our
product candidates is highly uncertain. As a result, we are unable to determine
the duration and completion costs of our research and development projects or
when and to what extent we will generate revenue from the commercialization and
sale of any of our product candidates.
Sales and Marketing
Sales and marketing expenses consist primarily of advertising and public
relations costs and consulting services. We expect our sales and marketing
expenses to increase for the foreseeable future as we prepare to prepare for
commercialization of BT-001. Our sales and marketing efforts are expected to
focus on targeting patients and primary care physicians through general
awareness and branded promotional activities. We expect to incur significant
investments in building a primary care sales force, and our plan and expectation
is to have recruited and deployed such sales force during the first year of
commercialization of our initial product candidate.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs
and professional services including legal, recruiting, audit and accounting
services. Personnel-related costs consist of salaries, benefits, and stock-based
compensation. We expect our general and administrative expenses to increase for
the foreseeable future due to anticipated increases in headcount to advance our
product candidates and as a result of operating as a public company, including
expenses related to compliance with the rules and regulations of the
additional insurance expenses, investor relations activities and other
administrative and professional services.
Interest Expense, Net
Interest expense, net primarily consists of interest expense related to
convertible notes and long-term debt entered into in 2021.
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Results of Operations
Comparisons of the Years Ended
The following table summarizes our results of operations for the periods
presented:
Twelve Months Ended, December 31,
2021 2020 $ Change % Change
Revenue $ - $ 8 $ (8 ) N/M
Operating expenses:
Research and development 19,436 3,660 15,776 431 %
Sales and marketing 2,336 216 2,120 981 %
General and administrative 8,788 2,455 6,333 258 %
Total operating expenses $ 30,560 $ 6,331 $ 24,229 383 %
Loss from operations (30,560 ) (6,323 ) (24,237 ) 383 %
Interest expense, net (185 ) (100 ) (85 ) 85 %
Gain on loan forgiveness 647 - 647 100 %
Change in fair value of SAFEs (10,390 ) 189 (10,579 ) N/M
Loss before provision for income taxes (40,488 ) (6,234 ) (34,254 ) 549 %
Provision for (benefit from) income taxes (153 ) 153 (306 ) -200 %
Net loss
$ (40,335 ) $ (6,387 ) $ (33,948 ) 532 %
N/M - The percentage change is not meaningful
Research and Development Expenses
Research and development expenses were
2021
increase of
costs incurred for clinical trials in 2021 and a
capitalized costs, in personnel related costs as additional full-time personnel
were hired within clinical research, product design and engineering.
Sales and Marketing Expenses
Sales and marketing expenses were
compared to
of
related to an increase of
related expenses and
prepare for product commercialization.
General and Administrative Expenses
General and administrative expenses were
2021
increase of
was primarily related to an increase of
increase of
fees related to the business combination and an increase in business related
insurance of
Interest Expense, Net
Interest expense, net was
increase in interest expense, net was the result of interest expense incurred on
the new secured term loan agreement with Hercules Capital.
Change in Fair Value of SAFEs
The expense related to the change in fair value of our SAFEs was
year ended
subsequent change in fair value of the SAFEs during the year ended
2021
Gain on Loan Forgiveness
On
loan proceeds (the "PPP Loan") from
pursuant to the Paycheck Protection Program established under the Coronavirus
Aid, Relief, and Economic Security Act of 2020 (the CARES Act"). In
the Company received approval of loan forgiveness and recorded a gain on loan
forgiveness of
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Liquidity and Capital Resources
Since our inception through
primarily by the sale of convertible promissory notes, sale of SAFEs and the
sale and issuance of Series Seed and Series A preferred units, which has
resulted in net proceeds of approximately
On
with the merger agreement, MCAD entered into Subscription Agreements with
certain institutional and accredited investors, pursuant to which, among other
things, MCAD agreed to issue and sell, in a private placement immediately prior
to the closing of the Business Combination, an aggregate of 5,000,000 PIPE
Shares. On
Agreement, MCAD acquired all of the outstanding shares of Legacy BTX in exchange
for 15,174,729 shares of MCAD.
On
Hercules Capital. The term loan has a maturity date of
be extended to
assets. Payments due for the term loan are interest-only until
(subject to extension to
achievement of certain milestones), after which principal shall be repaid in
equal monthly installments. Interest is payable monthly in arrears. The
outstanding principal bears interest at the greater of (a) 8.95% or (b) 8.95%
plus the prime rate minus 3.25%. Prepayment of the outstanding principal is
permitted under the secured term loan agreement and subject to certain
prepayment fees. The Company incurred
borrowings under the secured term loan agreement. Debt issuance costs are being
amortized through the maturity date of the secured term loan and are reported as
a direct reduction of long-term debt on the balance sheet. Amortization expense,
included in interest expense, net on the accompanying statements of operations
and comprehensive loss totaled
2021
term charge of the greater of (a)
outstanding principal upon repayment of the loan. The secured term loan
agreement contains customary representations, warranties, non-financial
covenants, and events of default. We are permitted to borrow the loans in four
tranches based on the completion of certain milestones which include, as set
forth more fully in the secured term loan agreement: (i)
closing of the Business Combination, (ii)
positive clinical trial results sufficient to submit a de-novo classification
request with respect to BT-001, (iii)
for such marketing of BT-001 for the improvement of glycemic control and
initiated a pivotal trial for a new indication in people with type 2 diabetes
and received, prior to
from equity financings, and (iv)
Hercules Capital' approval. In
secured term loan agreement.
Our primary use of cash is to fund operating expenses, which consist of research
and development expenses related to our lead product candidate, BT-001, and
preclinical programs, and to a lesser extent, general and administrative
expenses. Cash used to fund operating expenses is impacted by the timing of when
we pay these expenses, as reflected in the change in our outstanding accounts
payable and accrued expenses.
We have incurred negative cash flows from operating activities and investing
activities and significant losses from operations in the past. We expect to
continue to incur operating losses at least for the next 12 months due to the
investments that we intend to make in our business and, as a result, we may
require additional capital resources to grow our business.
We expect to incur substantial expenses in the foreseeable future for the
development and potential commercialization of our product candidates and
ongoing internal research and development programs. At this time, we cannot
reasonably estimate the nature, timing or aggregate amount of costs for our
development, potential commercialization, and internal research and development
programs. However, in order to complete our planned product development, and to
complete the process of obtaining regulatory authorization or clearance for our
product candidates, as well as to build the sales, marketing and distribution
infrastructure that we believe will be necessary to commercialize our product
candidates, if approved, we may require substantial additional funding in the
future. In the event that additional financing is required from outside sources,
we may not be able to raise it on terms acceptable to us, or at all. If we are
unable to raise additional capital when desired, our business, results of
operations, and financial condition would be adversely affected. These factors
raise substantial doubt regarding the Company's ability to continue as a going
concern.
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Summary Statement of Cash Flows
The following table sets forth the primary sources and uses of cash and cash
equivalents for the periods presented below:
Year Ended Year Ended
December 31, December 31,
2021 2010
Cash used in operating activities. $ (30,818 ) $ (5,774 )
Cash used in investing activities (1,071 ) (2,305 )
Cash provided by financing activities 72,332 7,445
Net increase (decrease) in cash and cash equivalents
Cash Used in Operating Activities
In 2021, cash used in operating activities was
loss of
liabilities partially offset by
our operating assets and liabilities was primarily due a net increase in prepaid
expenses and other assets of
accounts payable and accrued expenses of
consisted of share-based compensation expense, deferred income taxes,
depreciation and amortization expense, loss on the change in fair value of SAFEs
and gain on PPP Loan forgiveness.
In 2020, net cash used in operating activities was
net loss of
assets and liabilities and
operating assets and liabilities was primarily due a net decrease in accounts
payable and accrued expenses of
other assets of
compensation expense, deferred income taxes, depreciation expense, loss on the
write-off of property and equipment and change in fair value of SAFEs.
Cash Used in Investing Activities
In 2021, cash used in investing activities was
to capitalized internal-use software costs.
In 2020, cash used in investing activities was
to capitalized internal-use software costs.
Cash Provided by Financing Activities
In 2021, cash provided by financing activities was
in net proceeds from the business combination and PIPE investment,
net proceeds from the issuance of SAFEs and
issuance of long-term debt.
In 2020, cash provided by financing activities was
in net proceeds from the issuance of convertible notes,
from the issuance of SAFEs and
Program note.
Contractual Obligations and Commitments
Contractual obligations are cash amounts that we are obligated to pay as part of
certain contracts that we have entered into during the normal course of
business. We terminated our lease on
have any contractual obligations and other commitments as of
Off-Balance Sheet Arrangements
Since the date of our incorporation, we have not engaged in any off-balance
sheet arrangements.
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Reclassification
Certain prior year amounts have been reclassified for consistency with the
current year presentation. These reclassifications had no effect on the reported
results of operations. An adjustment has been made to the Statement of
Operations and Comprehensive Loss for fiscal year ended
reclassify
to align with industry standards. This change in classification does not affect
previously reported net loss in the Statement of Operations and Comprehensive
Loss.
Critical Accounting Policies, Significant Judgments and Use of Estimates
Our financial statements have been prepared in accordance with generally
accepted accounting principles in
financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities and expenses, as well as the related
disclosure of contingent assets and liabilities as of the date of the financial
statements. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions. We believe that the accounting policies discussed below are critical
to understanding our historical and future performance, as these policies relate
to the more significant areas involving management's judgments and estimates.
While our significant accounting policies are described in the notes to our
financial statements, we believe that the following critical accounting policies
are most important to understanding and evaluating our reported financial
results.
Simple Agreements for Future Equity ("SAFE")
We classify SAFEs as contingently redeemable liabilities under ASC 480 as a
result of certain redemption provisions which may result in the SAFEs being
redeemed for cash or other assets upon a liquidity event with such events not
solely within our control. Additionally, the SAFEs are settleable into a
variable-number of shares of preferred stock, at a stated discount, upon a
preferred stock financing event. As further discussed in footnote 9 of our
financial statements for the period ending on
determined that our preferred stock is contingently redeemable upon certain
events not solely within our control. As a result, the SAFEs would potentially
be settled in contingently redeemable shares with redemption of such shares
being outside of our control.
The SAFEs are measured and recognized at fair value using a
valuation approach and are subject to re-measurement at each balance sheet date.
The
various events, including liquidity events and equity financing events, and
places a value for each event. The fair value of SAFEs was determined to be
and
At the end of each reporting period, changes in fair value during the period are
recognized and presented as a financial statement line item in the consolidated
statements of operations and comprehensive loss.
Share-Based Compensation Expense
We account for share-based compensation expense by measuring and recognizing
compensation expense for all share-based awards made to employees and
non-employees based on estimated grant-date fair values.
Excluding performance-based stock awards, we recognize compensation costs on a
straight-line basis over the requisite service period of the employee and
non-employee, which is generally the option vesting term of four years. For
performance-based awards, share-based compensation expense will be recognized
when it is probable that the performance criteria will be achieved. We recognize
actual forfeitures by reducing the share-based compensation expense in the same
period as the forfeitures occur.
We estimate the fair value of stock options granted to employees and
non-employees using the Black-Scholes option-pricing valuation model. The
Black-Scholes model requires the input of subjective assumptions, including fair
value of the underlying profit interest unit or stock award, expected term,
expected volatility, risk-free interest rate, and expected dividend yield, which
are described in greater detail below. Estimating the fair value of stock
options and profit interest units as of the grant date using the Black-Scholes
option pricing model is affected by assumptions regarding several complex
variables. Changes in the assumptions can materially affect the fair value and
ultimately how much share-based compensation expense is recognized. These inputs
are subjective and generally require significant analysis and judgment to
develop. These inputs are as follows:
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•
Fair value of common stock - Historically, as there has been no public market
for our common stock, the fair value of our common stock was determined by our
Board based in part on valuations of our common stock prepared by a third-party
valuation firm. See the subsection titled "Determination of Fair Value of Common
Stock" below. Now that the business combination is complete we will determine
the fair value of our common stock based on the closing price of our common
stock on the grant date.
•
Expected term - The expected term represents the period that our options granted
are expected to be outstanding and is determined using the simplified method for
employees (based on the mid-point between the vesting date and the end of the
contractual term) and is based on the remaining contractual term for
non-employees. We have very limited historical information to develop reasonable
expectations about future exercise patterns and post-vesting employment
termination behavior for our stock option grants.
•
Expected volatility - Since Legacy BTX was a privately-held company, we have
limited trading history for our common stock, the expected volatility was
estimated based on the average volatility for comparable publicly traded
companies over a period equal to the expected term of stock option grants. The
comparable companies were chosen based on their similar size, life cycle stage,
or area of specialty.
•
Risk-free interest rate - The risk-free interest rate is based on the
constant maturity rates with remaining terms similar to the expected term of the
stock options.
•
Expected dividend yield - We have never paid dividends on our common stock and
have no plans to pay dividends on our common stock. Therefore, we used an
expected dividend yield of zero.
We will continue to use judgment in evaluating the expected volatility, expected
terms, and interest rates utilized for our stock-based compensation expense
calculations on a prospective basis.
Prior to our conversion into a
granted profit interest units to employees and non-employees. In
conjunction with the conversion of the company to a
profits interest units were converted to common stock of Legacy BTX, and the
common stock issued in exchange for the profit interest units continue to be
subject to the same vesting conditions as the previously granted profit
interest. We accounted for the conversion of profit interest units into common
stock as a modification under ASC 718.
The profits interest units were common units with a profits interest
distribution threshold and give the holder a right to share in the appreciation
in the value of Legacy BTX and share in any distributions of profits. The profit
interest unit awards generally vest over four years and automatically in full
upon a sale of the business. The grantees had the right to retain vested units
upon termination of employment or when non-employees ceasing to provide services
or goods to us. Prior to the conversion, we had not made distributions to the
holders of the profits interest units.
Determination of Fair Value of Profit Interests and Common Stock
As there has been no public market for our profit interests or common stock
prior to the date of the business combination, the estimated fair value of our
common stock has been determined by our Board as of the date of each stock award
grant, with input from management, considering contemporaneous independent
third-party valuations of our profit interests and common stock, and the Board's
assessment of additional objective and subjective factors that it believed were
relevant and which may have changed from the date of the most recent valuation
through the date of the grant. These independent third-party valuations were
performed in accordance with the guidance outlined in the
Certified Public Accountants'
Privately-Held-Company Equity Securities Issued as Compensation, or the Practice
Aid. The methodology to determine the fair value of our common stock included
estimating the fair value of the enterprise using a market approach, which
estimates the fair value of a company by including an estimation of the value of
the business based on guideline public companies under a number of different
scenarios. The assumptions used to determine the estimated fair value of our
common stock are based on numerous objective and subjective factors, combined
with management judgment, including external market conditions affecting the
pharmaceutical and biotechnology industry and trends within the industry; our
stage of development; the rights, preferences and privileges of our redeemable
convertible preferred stock relative to those of our common stock; the prices at
which we sold shares of our redeemable convertible preferred stock; our
financial condition and operating results, including our levels of available
capital resources; the progress of our research and development efforts and
business strategy; the timing and probability of future financings; equity
market conditions affecting comparable public companies; general U.S. market
conditions; and the lack of marketability of our common stock.
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The Practice Aid identifies various available methods for allocating enterprise
value across classes and series of capital stock to determine the estimated fair
value of common stock at each valuation date. Given the absence of a public
trading market of our common stock, the Board considered numerous subjective and
objective factors to determine the best estimate of fair value of our profit
interests and common stock underlying the stock options granted to our employees
and non-employees.
The grant date fair value of our common stock was determined using the Option
Pricing Method ("OPM"). Under the OPM, shares are valued by creating a series of
call options with exercise prices based on the liquidation preferences and
conversion terms of each equity class. The estimated fair values of the
preferred and common stock are inferred by analyzing these options. This method
is appropriate to use when the range of possible future outcomes is so difficult
to predict that estimates would be highly speculative, and dissolution or
liquidation is not imminent.
Application of the OPM involves the use of estimates, judgment, and assumptions
that are highly complex and subjective, such as those regarding time from
valuation date to the option or incentive unit expiration, volatility of the
underlying stock or incentive unit, and an assumption for a discount for lack of
marketability. Changes in any or all of these estimates and assumptions, or the
relationships between those assumptions, impact our valuations as of each
valuation date and may have a material impact on the valuation of common stock.
The assumptions underlying these valuations represent our management's best
estimate, which involve inherent uncertainties and the application of management
judgment. As a result, if factors or expected outcomes change and we use
significantly different assumptions or estimates, our stock-based compensation
expense could be materially different.
Now that the Business Combination is completed, we determine the fair value of
our common stock based on the closing price of our common stock on the date of
grant.
JOBS Act
We are an "emerging growth company" as defined in the JOBS Act. The JOBS Act
permits emerging growth companies to take advantage of an extended transition
period to comply with new or revised accounting standards, delaying the adoption
of these accounting standards until they would apply to private companies. We
have elected to use this extended transition period under the JOBS Act until the
earlier of the date we (i) are no longer an emerging growth company or (ii)
affirmatively and irrevocably opt out of the extended transition period provided
in the JOBS Act. As a result, our financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.
We could be an emerging growth company until the last day of the fiscal year
ending after the fifth anniversary of our IPO, although circumstances could
cause us to lose that status earlier, including if we become a "large
accelerated filer" as defined in Rule 12b-2 under the Exchange Act or if we have
total annual gross revenue of
before that time, in which cases we would no longer be an emerging growth
company as of the following
in non-convertible debt during any three year period before that time, we would
cease to be an emerging growth company immediately.
Recently Adopted Accounting Pronouncements
See Note 2 to our annual financial statements for the year ended
2021
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