SERA PROGNOSTICS, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and related
notes appearing elsewhere in this Annual Report on Form 10-K. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Form 10-K, including information with respect to our plans and strategy for
our business and related financing, includes forward-looking statements that
involve risks and uncertainties. As a result of many factors, including those
factors set forth in the "Risk Factors" section of this Form 10-K, our actual
results could differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.

Investors and others should note that we routinely use the Investors section of
our website to announce material information to investors and the marketplace.
While not all of the information that we post on the Investors section of our
website is of a material nature, some information could be deemed to be
material. Accordingly, we encourage investors, the media, and others interested
in us to review the information that we share on the Investors section of our
website, www.seraprognostics.com/investors/.

Overview

We are a women's health company utilizing our proprietary proteomics and
bioinformatics platform to discover, develop, and commercialize clinically
meaningful and economically impactful biomarker tests, with an initial focus on
improving pregnancy outcomes. We believe that our method of combining the
disciplines of proteomics and bioinformatics with rigorous clinical testing and
economic analysis enables us to provide physicians and patients with actionable
data and information designed to result in better maternal and neonatal health
at lower cost. Our vision is to deliver pivotal and actionable information to
pregnant women, their physicians, and health care payers to significantly
improve maternal and
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neonatal health and to dramatically reduce health care costs. We have built an
advanced, proprietary, and scalable proteomics and bioinformatics platform to
characterize the biology of pregnancy and to discover and validate key protein
biomarkers found in blood that are highly accurate predictors of dynamic changes
that occur during pregnancy. By incorporating our proprietary technology
platform into our rigorous data-driven development process, we have created a
differentiated approach for effectively addressing major conditions of
pregnancy. We envision that our comprehensive approach will enable us to fully
characterize one of the most important periods in the lives of women and
children, and will help to improve their well-being. Our goal is to develop and
commercialize tests that inform important decisions during all pregnancies. We
also believe that the work we perform in pregnancy can ultimately be leveraged
more broadly to address other areas in medicine and health care.

Our first commercial product, the PreTRM test, is the only broadly validated,
commercially available blood-based biomarker test to accurately predict the risk
of a premature delivery, also known as preterm birth. The PreTRM test is a
non-invasive blood test given to a pregnant woman, carrying a single fetus,
during week 19 or 20 of gestation that provides an accurate prediction of the
expectant mother's risk of delivering spontaneously before 37 weeks' gestation.
Our commercialization strategy includes conducting clinical trials to
demonstrate the health and economic benefits of early and accurate detection of
preterm birth risk coupled with well-recognized interventions in higher risk
patients. Anthem, Inc., or Anthem, whose health plans cover more than 10% of
U.S. pregnancies annually, will make our PreTRM test available to eligible
pregnant members as part of a multi-year contract. Anthem is the nation's second
largest health insurer with greater than 43 million members nationwide. Through
this collaboration, a significant number of physicians and patients in the U.S.
gain access to early and accurate predictions of preterm birth to enable more
informed decision-making during pregnancy. Sera believes that its commercial
collaboration with Anthem further validates the clinical and economic value of
its PreTRM test and significantly de-risks initial commercialization. Sera
further expects this provides a pathway for broader market adoption through
subsequent coverage decisions by major payers. We are actively discovering and
developing several additional biomarker tests to predict other major conditions
of pregnancy, such as preeclampsia, and gestational diabetes, among others, that
have the potential to offer significant health benefits to women and their
babies.

There are approximately 140 million births globally each year. Of these, it is
estimated that as many as 25% are affected by various complications, including:
preterm birth, preeclampsia, fetal growth restriction, stillbirth, hypertension
of pregnancy, gestational diabetes, and others. In the United States, there are
approximately 3.6 million births annually, and over 10% of those pregnancies
result in preterm births with profound short- and long-term health consequences
to the mother and baby. These health consequences are estimated to lead to
associated costs of approximately $25 billion annually in the United States.
Traditional methods to detect prematurity risk in time for proactive management
have been limited and fail to identify the vast majority of women who will
deliver prematurely. We believe our actionable blood-based biomarker test for
prematurity risk can enable patients, physicians, and payers to more proactively
manage and mitigate the complications and associated costs of prematurity. Given
that pregnancy is the launch point for the future health of babies and a key
determinant in the future health of mothers and babies, we believe this area is
ripe for innovation and better tools to improve patient outcomes.

Our operations are located in Salt Lake City, Utah, including a CLIA-certified
laboratory. Since our inception, we have devoted the majority of our efforts and
resources to performing research and development, acquiring product rights,
raising capital, establishing facilities, conducting clinical trials, and
establishing commercial operations to market the PreTRM test. During this
period, we have incurred annual net losses. We have largely funded our
operations with proceeds from the sale and issuance of convertible preferred
stock, debt financings, bank loans, and the sale and issuance of Class A common
stock in our IPO. We completed our IPO in July 2021 and issued 4,687,500 shares
of our Class A common stock at a price of $16.00 per share for net proceeds of
approximately $66.6 million, after deducting underwriting discounts and
commissions and offering expenses payable by us. See Note 10-Capital Structure
for additional details about the IPO.

We have incurred significant operating losses since inception. Our net losses
were $35.0 million and $19.8 million for the years ended December 31, 2021 and
2020, respectively. We expect to incur significant additional operating losses
and negative cash flows for the foreseeable future, principally as a result of
our commercialization activities for the PreTRM test, and to support additional
clinical studies, publications, and anticipated research and development
activities.

We had no significant commercial revenue for the years ended December 31, 2021
and 2020, and we have no recurring sources of licensing or other revenue. We
have signed an agreement with Anthem, pursuant to which Anthem will purchase our
PreTRM test, and we continue to negotiate private payer insurance contracts that
could eventually result in revenues. If we are unable to secure payer contracts
that result in significant revenues or access additional funds, we may be
required to delay, scale back or abandon some, or all, of our development
programs and other operations. Until such time as we can generate significant
revenue from the sales of our products, if ever, we may need to continue to
finance our
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cash needs through equity offerings, debt financings or other capital sources,
potentially including collaborations or other similar arrangements. Debt
financing and preferred equity financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making acquisitions or capital
expenditures or declaring dividends and may require the issuance of warrants. If
we raise additional funds through collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, or product candidates or
grant licenses on terms that may not be favorable to us. If we are unable to
raise additional funds through equity or debt financings when needed, we may
have to significantly delay, reduce, or eliminate some or all of our product
development or future commercialization efforts, or grant rights to develop and
market product candidates that we would otherwise prefer to develop and market
ourselves.

Our ability to access capital when needed is not assured and, if not achieved on
a timely basis, will materially harm our business, financial condition, and
results of operations.

Impact of COVID-19

The degree to which COVID-19 impacts our future business operations, research
and development programs, and financial condition will depend on future
developments, including the ultimate duration and/or severity of the outbreak
and any resurgences, actions by government authorities to contain the spread of
the virus, the effectiveness of vaccines against the virus, and when and to what
extent normal economic and operating conditions can resume. The ability of our
employees and other business partners to travel and conduct other routine
business activity has been and is likely to continue to be disrupted or
adversely affected. The primary impacts to our business have been the early
cessation of enrollment in our Serum Assessment of Preterm Birth Outcomes
Compared to Historical Controls study, or the AVERT PRETERM TRIAL study, in
March 2020, the delayed commencement of enrollment in our PRIME study until
November 2020, and limited access to ordering clinicians as we have initiated
the commercialization of our PreTRM test. Enrollment of 2,800 PRIME study
patients is expected in late 2022, and the interim analysis is expected to occur
in the first half of 2023, depending on disruption due to COVID-19 conditions.
However, our laboratory has remained operational and, to the extent possible, we
are conducting our other business operations with necessary or advisable
modifications to employee travel and many of our employees working remotely. We
will continue to actively monitor the rapidly evolving situation related to
COVID-19 and may take further actions that alter our operations, including those
that may be required by federal, state or local authorities, or that we
determine are in the best interests of our employees and other third parties
with whom we do business. At this point, the extent to which the COVID-19
pandemic may affect our business, operations, and development timelines and
plans, including the resulting impact on our expenditures and capital needs,
remains uncertain and is subject to change.

Collaboration Agreement with Anthem

On February 17, 2021, we entered into a Commercial Collaboration Agreement with
Anthem relating to the commercialization of the PreTRM test. Under the
agreement, we will provide PreTRM tests to eligible individuals enrolled in, or
serviced or covered by, the health insurance products of Anthem. Pursuant to the
agreement, Anthem will purchase a certain minimum number of tests from us for
each of the first three years of the term of the agreement. Additionally, Anthem
has agreed to pay us a certain minimum amount per year for the first three years
of the term of the Commercial Collaboration Agreement. Anthem has been
participating in our PRIME study, and at the conclusion of the PRIME study, we
agreed to enter into Anthem's standard lab provider agreement with longer term
commercial pricing.

Factors Affecting Our Performance

We believe there are several important factors that have impacted, and that we
expect will continue to impact, our operating performance and results of
operations, including:

•our ability to further increase the use and adoption of the PreTRM test;

•our ability to develop and successfully commercialize new products and services
in the future;

•the continued development of the market for proteomics and bioinformatics;

•our ability to secure payer contracts that result in significant revenues or to
access additional funds, including our ability to perform our obligations under
our agreement with Anthem;

•raising substantial additional capital to continue operations and execute on
our business plan, until such time as we can generate significant revenue from
the sales of our products, if ever;
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•obtaining and maintaining intellectual property protection for our technology
and products; and

•other factors described in the "Risk Factors" section and elsewhere in this
report.

Key Components of Our Results of Operations

Revenues

We expect to derive substantially all of our revenue in the near term from sales
of the PreTRM test. To date, we have not generated material revenues from the
commercial sale of the PreTRM test. We have signed an agreement with Anthem and
we continue to engage with other commercial payers to close additional
contracts. These additional contracts could enable an upfront negotiated
reimbursement rate which could eventually result in revenues when health care
providers order the PreTRM test.

Operating Expenses

Cost of Revenue

Cost of revenue reflects the aggregate costs incurred in delivering the
proteomic testing results to clinicians and includes expenses for third-party
specimen collection and shipping costs, as well as our lab personnel, materials
and supplies, equipment and infrastructure expenses associated with clinical
testing, and allocated overhead including rent and equipment depreciation. We
expect costs of revenue will generally move in line with the sales of the PreTRM
test.

Research and Development Expenses

Research and development expenses consist of costs incurred for our research
activities and development of our product candidates. These expenses include:

•clinical studies;

•laboratory processes;

•research and bioinformatic activities;

•biobanking and publication efforts;

•personnel-related expenses, including salaries, payroll taxes, employee
benefits, and stock-based compensation charges for employees engaged in these
research and development activities;

•direct clinical study expenses incurred under agreements with clinical study
sites or contract research organizations;

•consultants engaged in our research and development efforts;

•laboratory materials and supplies;

•facilities costs; and

•depreciation, amortization, and other direct and allocated expenses, including
rent, insurance, and other operating costs, incurred as a result of our research
and development activities.

We expense all research and development costs, both internal and external, in
the period in which they are incurred. We expect that our research and
development expenses will continue to increase for the foreseeable future as we
support additional clinical studies, publications, and other product development
activities.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of salaries, payroll taxes,
employee benefits, and stock-based compensation charges for sales, marketing,
and payer access personnel. Other significant costs include travel, consulting,
public relations, and legal costs related to commercial efforts. We expect
selling and marketing expenses to increase in the future as we incur additional
expenses associated with the commercialization activities for the PreTRM test
and related initiatives. Based on our commercial collaboration with Anthem, we
initially deployed our U.S. based specialty OB-GYN commercial sales force to
cover the key states where Anthem has a significant market share. We expect to
expand our
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dedicated sales force into additional territories in the United States to cover
the entire U.S. OB-GYN sales channel over time as we enter into contracts with
payers and employers.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, payroll
taxes, employee benefits, and stock-based compensation charges for personnel in
executive, finance, information technology, human resources, and other
administrative functions. Other significant costs include facilities, corporate
and intellectual property legal fees, accounting, insurance, consulting, and
other professional fees.

We anticipate that our general and administrative expenses will increase in the
future as we construct the appropriate infrastructure to support expanded
commercialization efforts and ongoing research and development activities. We
expect increased expenses related to audit, tax, and legal services associated
with maintaining compliance with SEC requirements, as well as increased director
and officer insurance premiums, board of director fees, and investor relations
costs associated with operating as a public company for the whole year.

Interest Expense

Interest expense represents interest expense incurred on our loans payable and
convertible promissory note, amortization of a discount feature on a convertible
promissory note, and periodic fair value adjustments on certain liabilities. As
of December 31, 2021, we had no outstanding debt.

Other Income (Expense), Net

Other income (expense), net consists of interest earned on our cash, cash
equivalents, and marketable securities, periodic fair value adjustments on
certain liabilities, and other gains and losses.

Results of Operations

The results of operations presented below should be reviewed in conjunction with
the financial statements and related notes included elsewhere in this report.

Comparison of the Years Ended December 31, 2021 and 2020

The following table summarizes our results of operations for the years ended
December 31, 2021 and 2020:

                                       Year Ended December 31,
                                 2021           2020         $ Change
                                           (in thousands)
Revenue                       $      82      $      25      $      57
Operating expenses:
Cost of revenue                      37             11             26
Research and development         11,019          7,782          3,237
Selling and marketing            10,328          3,645          6,683
General and administrative       14,093          6,558          7,535
Total operating expenses         35,477         17,996         17,481
Loss from operations            (35,395)       (17,971)       (17,424)
Interest expense                   (746)        (1,839)         1,093
Other income (expense), net       1,132            (38)         1,170
Net loss                      $ (35,009)     $ (19,848)     $ (15,161)


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Research and Development Expenses

The following table summarizes our research and development expenses for the
years ended December 31, 2021 and 2020:

                                                 Year Ended December 31,
                                             2021          2020        $ 

Change

                                                      (in thousands)
Research and development expenses:
Clinical studies                          $   3,779      $ 2,557      $  1,222
Research and bioinformatics                   3,031        2,473           558
Laboratory operations                         4,209        2,752         1,457

Total research and development expenses $ 11,019 $ 7,782 $ 3,237

The $3.2 million increase was due to a $1.5 million increase in laboratory
operations costs, a $1.2 million increase in clinical study costs, and a
$0.6 million increase in research and bioinformatics expenses. The $1.5 million
increase in laboratory operations costs is primarily due to a $0.7 million
increase in lab supplies, a $0.5 million increase in stock-based compensation
expense, and a $0.4 million increase in personnel costs driven by increased
headcount, partially offset by a $0.2 million decrease in depreciation expense.
The $1.2 million increase in clinical study costs is primarily due to a
$0.7 million increase resulting from the increased enrollment and site setup
activity in the PRIME study, a $0.4 million increase in personnel costs driven
by increased headcount, and a $0.1 million increase in stock-based compensation
expense. The $0.6 million increase in research and bioinformatics expenses was
primarily due to an increase of $0.4 million in personnel costs driven by
increased headcount, a $0.1 million increase in consulting costs, and a $0.1
million increase in stock-based compensation expense.

Selling and Marketing Expenses

The $6.7 million increase was due primarily to increases of $4.1 million in
personnel-related costs driven by increased headcount, $0.8 million of
consulting and outside services related to developing payer and reimbursement
strategies for the PreTRM test, $0.7 million of marketing programs and materials
development, $0.5 million of increased stock-based compensation expense, and
$0.4 million of travel costs driven by increased headcount and sales activity.

General and Administrative Expenses

The $7.5 million increase was due primarily to increases of $2.3 million of
personnel expenses driven by increased headcount, $1.3 million of professional
services and fees related to public company compliance, $1.1 million of
stock-based compensation expense, $1.1 million of director and officer insurance
costs which increased as a result of our becoming a public company, $0.8 million
of recruiting fees, and $0.5 million of legal expenses.

Interest Expense

The $1.1 million decrease in interest expense between periods was due primarily
to a decrease of $1.4 million in interest expense as a result of the repayment
of all outstanding debt in the first quarter of 2021, partially offset by a
$0.3 million increase in interest expense related to fair value adjustments on
certain liabilities.

Other Income (Expense), net

The $1.2 million increase in other income (expense) was primarily due to a
$1.1 million gain on extinguishment of the PPP loan, which was forgiven in June
2021.

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Liquidity and Capital Resources

Sources of Liquidity

Since inception, we have not generated a significant amount of commercial
revenue from product sales or any other sources and have incurred significant
operating losses and negative cash flows from operations. We anticipate that we
will continue to incur net losses for the foreseeable future. We have financed
our operations primarily through proceeds from the sale and issuance of
convertible preferred stock and convertible notes, bank loans, and the sale and
issuance of Class A common stock in our IPO, which was completed in July 2021.
See Note 10-Capital Structure for additional details about the IPO. As of
December 31, 2021, we had cash and cash equivalents of $58.9 million,
available-for-sale securities of $81.0 million, and our accumulated deficit was
$166.5 million.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

                                                                     Year Ended December 31,
                                                                   2021                      2020
                                                                          (in thousands)
Net cash provided by (used in):
Operating activities                                       $      (31,636)             $     (16,868)
Investing activities                                              (82,559)                      (149)
Financing activities                                              159,594                      9,160

Net increase (decrease) in cash and cash equivalents $ 45,399

           $      (7,857)


Operating Activities

The net cash used in operating activities during the year ended December 31,
2021 was primarily due to a net loss of $35.0 million, partially offset by
non-cash charges of $3.4 million. The net cash used in operating activities
during the year ended December 31, 2020 was primarily due to a net loss of
$19.8 million and a decrease in operating assets and liabilities of
$0.3 million, partially offset by non-cash charges of $3.3 million.

Investing Activities

Net cash used in investing activities was $82.6 million for the year ended
December 31, 2021, representing $82.1 million in purchases of marketable
securities and $1.3 million in purchases of property and equipment, partially
offset by proceeds from maturities and sales of marketable securities of $0.8
million. Net cash used in investing activities was $0.1 million for the year
ended December 31, 2020, representing purchases of property and equipment.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2021
was primarily due to net proceeds of $100.1 million from the sale of Series E
convertible preferred stock, including $1.1 million allocated to common stock
warrants issued in connection with the sale of Series E convertible preferred
stock, net proceeds of $66.6 million from our IPO, and $0.6 million in proceeds
from options exercised, partially offset by $3.1 million and $4.5 million of
loan and note repayments, respectively. Net cash provided by financing
activities for the year ended December 31, 2020 was primarily due to
$10.7 million of net proceeds from the sale of Series D convertible preferred
stock and proceeds of $1.1 million from a loan payable, partially offset by
$2.7 million of note repayments.

Future Funding Requirements

We expect to incur significant additional operating losses and negative cash
flows for the foreseeable future. We expect our losses in the future to arise
principally as a result of our commercialization activities for the PreTRM test,
and to support additional clinical studies and anticipated research and
development activities. We had no significant commercial revenue for the years
ended December 31, 2021 and 2020, and we have no recurring sources of licensing
or other revenue. There can be no assurance that we will eventually achieve
significant revenues or profitability, or if achieved, can sustain
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either on a continuing basis. If we are unable to achieve significant revenues
or raise additional funding, when needed, we may not be able to continue the
development or commercialization of our diagnostic products and could be
required to delay, scale back, or abandon some or all of our development
programs and other operations. No assurance can be given that we will be
successful in raising the required capital at reasonable cost and at the
required times, or at all. Any additional equity financing may not be available
on favorable terms, most likely will be dilutive to our current stockholders,
and debt financing, if available, may involve restrictive covenants and dilutive
financing instruments. Further, our operating plan may change, and we may need
additional funds to meet operational needs and capital requirements for product
development and commercialization sooner than planned. We currently have no
credit facility or committed sources of capital. Our future funding requirements
will depend on many factors, including the following:

•the timing, receipt, and amount of sales, if any, from the PreTRM test;

•the cost and timing of establishing sales, marketing, and other
commercialization capabilities in the United States and abroad;

•our ability to develop and commercialize other products;

•the terms and timing of any collaborative, licensing, and other arrangements
that we may establish;

•the cost, timing, and outcomes of regulatory approvals;

•the scope, rate of progress, results, and cost of our clinical studies, and
other related activities;

•the cost of preparing, filing, prosecuting, defending, and enforcing any patent
claims and other intellectual property rights;

•the extent to which we acquire or invest in businesses, products or
technologies, although we currently have no commitments or agreements relating
to any of these types of transactions;

•partnerships and other strategic options for our product and other product
candidates; and

•other factors described in the "Risk Factors" section and elsewhere in this
report.

We believe that our existing cash and cash equivalents will enable us to fund
our operating expenses and capital expenditure requirements for at least the
next 12 months.

Contractual Obligations and Commitments

Our material cash requirements include the following contractual and other
obligations.

Leases

We have lease arrangements for certain equipment and facilities. As of
December 31, 2021, we had future minimum lease payments of $0.7 million, with
$0.7 million payable within 12 months.

Consulting Agreement

We have a consulting agreement with Blue Ox Healthcare Partners, LLC, or Blue
Ox, to advise us on development of strategies with the goal to obtain widespread
insurance coverage for the PreTRM test. As of December 31, 2021, we had future
minimum payments under this agreement of $1.3 million, with $0.6 million payable
within 12 months.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements,
as defined in the rules and regulations of the SEC.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our management's discussion and analysis of financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these financial statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported revenue and expenses incurred during the reporting periods.
Our estimates are based on our historical experience
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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.

Stock-based Compensation

We maintain a stock-based compensation plan as a long-term incentive for
employees and non-employee consultants. The plan allows for the issuance of
incentive stock options and non-qualified stock options.

We recognize stock-based compensation expense for stock options on a
straight-line basis over the requisite service period and estimate forfeitures
based on historical evidence. Our stock-based compensation costs are based upon
the grant date fair value of options estimated using the Black-Scholes option
pricing model. Input assumptions used in calculating the fair value of
stock-based awards represent management's estimates and involve inherent
uncertainties and the application of management's judgment. These input
assumptions include the expected term of the awards, the expected common stock
price volatility over the term of the awards, risk-free interest rates, and the
expected dividend yield. Changes in the assumptions can materially affect the
fair value and ultimately how much stock-based compensation expense is
recognized. We will continue to use judgment in evaluating the expected
volatility, expected terms, and interest rates utilized for out stock-based
compensation expense calculations on a prospective basis.

Prior to our IPO in July 2021, the fair value of our common stock underlying
stock-based awards was estimated on each grant date by our board of directors.
In order to determine the fair value of our common stock underlying option
grants, our board of directors considered, among other things, valuations of our
common stock prepared by an unrelated third-party valuation firm in accordance
with the guidance provided by the American Institute of Certified Public
Accountants Practice Guide, Valuation of Privately-Held-Company Equity
Securities Issued as Compensation. Prior to our IPO, we considered the fair
value of our common stock, an input to the option pricing models, to be a
critical accounting policy.

For all option grants subsequent to our IPO in July 2021, the fair value of our
Class A common stock was determined by using the closing price per share of our
Class A common stock as reported on Nasdaq.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, or EGC, as defined in the Jumpstart Our
Business Startups Act of 2012, or the JOBS Act. We elected to use the extended
transition period for complying with new or revised accounting standards that
have different effective dates for public and private companies until the
earlier of the date that we (1) are no longer an EGC or (2) affirmatively and
irrevocably opt out of the extended transition period provided in the JOBS Act.
Under the JOBS Act, emerging growth companies can delay adopting new or revised
accounting standards issued subsequent to the enactment of the JOBS Act until
such time as those standards apply to private companies, reduce disclosure
obligations regarding executive compensation in our periodic reports and proxy
statements, and are exempt from the requirements of holding a nonbinding
advisory vote on executive compensation and any golden parachute payments not
previously approved. As an EGC, we are also not required to have our internal
control over financial reporting audited by our independent registered public
accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act. As a result,
our financial statements may not be comparable to companies that comply with the
new or revised accounting pronouncements as of public company effective dates
and we are not required to provide auditor attestation regarding requirements of
Section 404(b) of Sarbanes-Oxley.

We will remain an EGC until the earliest to occur of: (1) the last day of the
fiscal year in which we have at least $1.07 billion in annual revenue; (2) the
last day of the fiscal year in which we are deemed to be a "large accelerated
filer," as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), which would occur if the market value of our
common stock held by non-affiliates exceeded $700.0 million as of the last
business day of the second fiscal quarter of such year; (3) the date on which we
have issued more than $1.0 billion in non-convertible debt securities during the
prior three-year period; and (4) December 31, 2026.
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We are also a "smaller reporting company" as defined in the Exchange Act. We may
continue to be a smaller reporting company even after we are no longer an
emerging growth company. We may take advantage of certain of the scaled
disclosures available to smaller reporting companies until the fiscal year
following the determination that the market value of our voting and non-voting
common stock held by non-affiliates is more than $250 million measured on the
last business day of our second fiscal quarter, or our annual revenues are less
than $100 million during the most recently completed fiscal year and the market
value of our voting and non-voting common stock held by non-affiliates is more
than $700 million measured on the last business day of our second fiscal
quarter.

Recent Accounting Pronouncements

A description of recent accounting pronouncements that may potentially impact
our financial position, results of operations or cash flows is disclosed in Note
2-Significant Accounting Policies, appearing in Part II, Item 8 of this Annual
Report on Form 10-K.