FAST RADIUS, INC. This Quarterly Report on Form 10-Q contains statements that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believes," "expects," "intends," "estimates," "projects," "anticipates," "will," "plan," "may," "should," or similar language are intended to identify forward-looking statements. It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under "Risk Factors" in Item 1A herein and in our other filings with theSecurities and Exchange Commission (the "SEC"). Unless otherwise required by law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date of such statement. As used in this section, unless the context suggests otherwise, "we," "us," "our," "Company," "Fast Radius" refer toFast Radius, Inc. , aDelaware corporation (f/k/aECP Environmental Growth Opportunities Corp. ("ENNV")), collectively withFast Radius Operations, Inc. , aDelaware corporation ("LegacyFast Radius ") and its consolidated subsidiaries. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q, and Legacy Fast Radius' audited consolidated financial statements and related notes for the year endedDecember 31, 2021 included in our Current Report on Form 8-K/A filed with theSEC onMarch 30, 2022 .
Overview
We are a leading cloud manufacturing and digital supply chain company. We are headquartered inChicago with offices inAtlanta ,Louisville , andSingapore and micro-factories inChicago and at the UPS Worldport facility inLouisville, Kentucky . We have built and are scaling a Cloud Manufacturing Platform which includes both physical infrastructure -Fast Radius micro-factories and third-party supplier factories - and a proprietary software layer. Our Cloud Manufacturing Platform supports engineers, product developers, and supply chain professionals across the product design and manufacturing lifecycle.
We offer a wide and growing range of manufacturing technologies, including additive manufacturing (often referred to as 3D printing), CNC machining, injection molding, sheet metal, urethane casting, and other manufacturing methods. We offer these manufacturing capabilities through our own micro-factories as well as a network of curated third-party suppliers.
Recent Developments Business combination OnFebruary 4, 2022 ("the Closing Date"), the Company consummated a business combination with Legacy Fast Radius, pursuant to whichENNV Merger Sub, Inc. , a wholly owned subsidiary of the Company ("Merger Sub"), merged with and into Legacy Fast Radius, with Legacy Fast Radius surviving the Merger as a wholly owned subsidiary of the Company (the "Business Combination"). After giving effect to the Business Combination, the Company owns, directly or indirectly, all of the issued and outstanding equity interests of Legacy Fast Radius and its subsidiary and the equity holders of Legacy Fast Radius immediately prior to the Business Combination own a portion of the Company's common stock, par value$0.0001 per share ("Common Stock"). While the legal acquirer in the Business Combination is ENNV, for financial accounting and reporting purposes underU.S. GAAP ("GAAP"), Legacy Fast Radius was the accounting acquirer and the Business Combination was accounted for as a "reverse recapitalization." A reverse recapitalization (i.e., a capital transaction involving the issuance of stock by ENNV for Legacy Fast Radius' stock) does not result in a new basis of accounting, and the condensed consolidated financial statements of the combined entity represent the continuation of the condensed consolidated financial statements of Legacy Fast Radius in many respects. Accordingly, the consolidated assets, liabilities and results of operations of Legacy Fast Radius became the historical condensed consolidated financial statements of the combined company, and ENNV's assets, liabilities and results of operations were consolidated with those of LegacyFast Radius beginning on the acquisition date. Operations prior to the Business Combination are presented as those of Legacy Fast Radius. The net assets of ENNV were recognized at historical cost, with no goodwill or other intangible assets recorded.
Concurrently with the execution of the Merger Agreement, ENNV entered into
subscription agreements (collectively, the "Subscription Agreements"), with
certain third-party investors, including, among others,
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pursuant to which the PIPE Investors agreed to subscribe for and purchase, and
ENNV agreed to issue and sell, to the PIPE Investors an aggregate of 7,500,000
shares of Common Stock (the "PIPE Shares") for a purchase price of $10.00 per
share, or an aggregate purchase price of $75.0 million , in a private placement
(the "PIPE Investment "). Under the Subscription Agreements, ENNV granted certain
registration rights to the PIPE Investors with respect to the PIPE Shares. The
PIPE Shares were issued concurrently with the closing of the Business
Combination on the Closing Date.
Upon consummation of the Business Combination, the closing of the PIPE
Investment and payment of certain other amounts that were contingent on the
closing of the Business Combination, the most significant change in our reported
financial position was an increase in cash and cash equivalents of approximately
$73 million , primarily due to $75.0 million in gross proceeds from the PIPE
Investment and $29.6 million in proceeds from the Trust Account, partially
offset by cash payments that were disbursed at the Closing which included $8.3
million of transaction expenses, $2.5 million in debt repayments, $8.2 million
in directors' and officers' ("D&O") insurance premiums, and $12.8 million
related to IT and other costs.
In connection with the Business Combination, over 31.5 million ENNV shares were
submitted for redemption. As a result, the condition to Fast Radius' obligation
to consummate the Business Combination that the amount of cash available in
ENNV's trust account immediately prior to the effective time of the Business
Combination, after deducting the amount required to satisfy payments to ENNV
stockholders in connection with the redemptions, the payment of any deferred
underwriting commissions being held in ENNV's trust account and the payment of
certain transaction expenses, plus the gross proceeds from the PIPE Investment
to be consummated in connection with the closing of the Business Combination, is
equal to or greater than $175 million (such condition, the "Minimum Cash
Condition") was not satisfied. Therefore, in connection with the closing of the
Business Combination, we waived the Minimum Cash Condition.
The reduction in available cash upon closing of the Business Combination due to
those share redemptions may reduce our ability to invest in our growth strategy.
To the extent that our resources are insufficient to satisfy our cash
requirements, we may need to seek additional equity or debt financing. If the
needed financing is not available, or if the terms of financing are less
desirable than we expect, we may be forced to make changes to our long-term
growth strategy in the discretion of our management and the Board. These changes
may include, but are not limited to, decreasing our level of investment in new
product launches and related marketing initiatives and scaling back our existing
operations, which could have an adverse impact on our business and financial
prospects.
In addition, as a consequence of the Business Combination, we became the
successor to an SEC -registered and Nasdaq-listed company, which requires us to
hire additional personnel and implement procedures and processes to address
public company regulatory requirements and customary practices. We expect to
incur additional annual expenses as a public company for, among other things,
D&O liability insurance, director fees and additional internal and external
accounting, legal and administrative resources, including increased audit and
legal fees. Our future results of operations and financial position may not be
comparable to historical results as a result of the Business Combination.
COVID-19 pandemic
In March 2020 , the World Health Organization declared the outbreak of the new
strain of the coronavirus ("COVID-19") to be a pandemic. The COVID-19 pandemic
is having widespread, rapidly evolving, and unpredictable impacts on global
society, economies, financial markets, and business practices. Federal and state
governments have implemented measures in an effort to contain the virus,
including social distancing, travel restrictions, border closures, limitations
on public gatherings, work from home, supply chain logistical changes, and
closure of non-essential businesses. To protect the health and well-being of its
employees, suppliers, and customers, the Company previously made substantial
modifications to employee travel policies, implemented office closures as
employees were advised to work from home, and cancelled or shifted its
conferences and other events to virtual-only. The COVID-19 pandemic has impacted
and may continue to impact the Company's business operations, including its
employees, customers, partners, and communities, and there is substantial
uncertainty in the nature and degree of the pandemic's continued effects over
time. In particular, the COVID-19 virus continues to surge in various parts of
the world, including China , and such surges have impacts on the Company's
suppliers and may cause supply chain issues, parts shortages and delayed
shipping times. COVID-19 and other similar outbreaks, epidemics or pandemics
could have a material adverse effect on the Company's business, financial
condition, results of operations, cash flows and prospects as a result of any of
the risks described above and other risks that the Company is not able to
predict.
If the COVID-19 pandemic continues for a prolonged duration, we or our customers
may be unable to perform fully on our contracts, which will likely result in
increases in costs and reductions in revenue. These cost increases may not be
fully recoverable or adequately covered by insurance. The long-term effects of
COVID-19 to the global economy and to us are difficult to assess or predict and
may include a further decline in the market prices of our products, risks to
employee health and safety, risks for the deployment of our products and
services and reduced sales in geographic locations impacted. Any prolonged
restrictive measures put in place in order to control COVID-19 or other adverse
public health developments in any of our targeted markets may have a material
and adverse effect on our business operations and results of operation.
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Results of Operations
Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31,
2021
The following table sets forth a summary of our consolidated results of
operations, as well as the dollar and percentage change for the period:
For the Three Months Ended March 31,
(in thousands) 2022 2021 Change ($) Change (%)
Revenues $ 6,262 $ 3,796 $ 2,466 65 %
Cost of revenues (1) 5,629 2,966 2,663 90 %
Gross Profit 633 830 (197 ) -24 %
Operating expenses
Sales and marketing (1) 6,336 3,469 2,867 83 %
General and administrative (1) 38,225 7,712 30,513 396 %
Research and development (1) 3,332 1,146 2,186 191 %
Total operating expenses 47,893 12,327 35,566 289 %
Loss from Operations (47,260 ) (11,497 ) (35,763 ) 311 %
Change in fair value of warrants 5,295 (1,253 ) 6,548 -523 %
Change in fair value of derivatives 30 - 30 n/m
Interest income and other income
(expense), net (1 ) 9 (10 ) -111 %
Interest expense, including
amortization of debt issuance costs (2,664 ) (45 ) (2,619 ) 5820 %
Loss before income taxes (44,600 ) (12,786 ) (31,814 ) 249 %
Provision for income taxes - - - n/m
Net Loss $ (44,600 ) $ (12,786 ) $ (31,814 ) 249 %
(1) Includes stock-based compensation,
as follows:
Cost of Revenues $ 115 $ 4 $ 111 2775 %
General and Administrative 17,545 219 17,326 7911 %
Selling and Marketing 1,183 - 1,183 n/m
Research & Development 1,525 31 1,494 4819 %
Total $ 20,368 $ 254 $ 20,114 7919 %
Revenues
Revenues increased 65% from $3.8 million to $6.3 million for the three months
ended March 31, 2022 compared to the prior-year period. The increase in 2022 was
attributable to sales from new customers and an increase in revenue from
existing customers.
Cost of Revenues
Cost of revenues increased 90% from $3.0 million to $5.6 million for the three
months ended March 31, 2022 compared to the prior-year period. The increase in
of cost of revenues was primarily attributable to the increase in revenues.
Additionally, cost of revenues was impacted by an investment we made in a new
CNC manufacturing facility in 2021, which is currently running at low
utilization as we ramp up production.
Operating Expenses
Sales and Marketing
Sales and marketing expenses increased 83% from $3.5 million to $6.3 million for
the three months ended March 31, 2022 compared to the prior-year period. The
increase in sales and marketing expenses in 2022 was attributable to increases
in spend related to online advertising and marketing and promotional activities
combined with organizational headcount growth within the function. Additionally,
we recorded incremental stock compensation expense in the first quarter of 2022
as our outstanding restricted stock units ("RSUs") included a performance
condition that became probable upon the closing of the Business Combination.
General and Administrative
General and administrative expenses increased 396% from $7.7 million to $38.2
million for the three months ended March 31, 2022 compared to the prior-year
period. The most significant increase in 2022 was attributable to incremental
stock compensation expense in the first quarter of 2022 as our outstanding RSUs
included a performance condition that became probable upon the closing of the
Business Combination and cash bonuses paid to certain employees that were
contingent on the closing of the Business Combination. Additionally, we recorded
expense of approximately $5.8 million related to our software subscription
agreement with Palantir. Finally, we incurred incremental legal, consulting and
accounting costs to support our growth, including costs related to the Business
Combination, and new costs associated with being a publicly-traded company.
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Research and Development
Research and development expenses increased 191% from $1.1 million to $3.3
million for the three months ended March 31, 2022 compared to the prior-year
period. The $3.3 million of research and development expenses for the three
months ended March 31, 2022 included $4.1 million of gross research and
development expenses, primarily related to our Cloud Manufacturing Platform,
that was offset by $0.8 million of internal-use software costs that were
capitalized. No software development costs were capitalized in the three months
ended March 31, 2021 . The increase in gross spend in 2022 is attributable to our
continued focus on developing the Cloud Manufacturing Platform. Additionally, we
recorded incremental stock compensation expense in the first quarter of 2022 as
our outstanding RSUs included a performance condition related to the closing of
the Business Combination.
Change in fair value of warrants
The income recorded in 2022 was attributable to mark to market adjustments on
warrant liabilities and was attributable to a decrease in our enterprise
valuation.
Change in fair value of Derivatives
The income recorded in 2022 was attributable to mark to market adjustments on
embedded derivatives associated with 2021 convertible debt issuances. All
outstanding derivative liabilities, along with the related convertible debt
instruments, were converted into Common Stock at the closing of the Business
Combination. Refer to Note 5 and Note 12 of the consolidated financial
statements included elsewhere in this Report for additional information on
derivative liabilities.
Interest income and other income
The decrease in interest income was primarily attributable to a decrease in our
average money market account balance in 2022 as compared to 2021.
Interest expense, including amortization of debt issuance costs The increase in interest expense was primarily attributable to higher outstanding debt levels in 2022 compared to 2021. Refer to Note 5 for additional information related to indebtedness.
Non-GAAP Financial Measures In addition to our results determined in accordance with GAAP, we believe the below non-GAAP financial measures are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.
We define "EBITDA" as net loss plus interest expense, income tax expense, depreciation and amortization expense.
We define "Adjusted EBITDA" as EBITDA adjusted for stock-based compensation, changes in the fair value of warrant liability, changes in the fair value of derivative liabilities, and transaction and related costs.
To provide investors with additional information regarding our financial results, we are presenting EBITDA and Adjusted EBITDA, non-GAAP financial measures, in the table below along with a reconciliation to net loss, the most directly comparable measure calculated and presented in accordance with GAAP.
Adjusted EBITDA We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.
Our definition of Adjusted EBITDA may differ from that used by other companies and therefore comparability may be limited. In addition, other companies may not present Adjusted EBITDA or similar metrics. Thus, our adjusted EBITDA should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as net loss.
In addition, Adjusted EBITDA has limitations as an analytical tool, including:
•
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash used for capital expenditures for such replacements or for new capital expenditures;
•
Adjusted EBITDA does not include the dilution that results from stock-based compensation or any cash outflows included in stock-based compensation, including from our purchases of shares of outstanding common stock;
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Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and other companies may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
We provide investors and other users of our financial information with a reconciliation of Adjusted EBITDA to net loss. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Adjusted EBITDA in conjunction with net loss. Stock compensation expense is a non-cash expense relating to stock-based awards issued to executive officers, employees, and outside directors, consisting of options and restricted stock units. We exclude this expense because it is a non-cash expense and we assess our internal operations excluding this expense, and we believe it facilitates comparisons to the performance of other companies in our industry. Change in the fair value of warrant liability is a non-cash gain or loss impacted by the fair value of the issued liability-classified warrants. We believe the assessment of our operations excluding this activity is relevant to our assessment of internal operations and to comparisons with the performance of other companies in our industry. Change in the fair value of derivative liabilities is a non-cash gain or loss impacted by the fair value of the derivative liabilities. We believe the assessment of our operations excluding this activity is relevant to our assessment of internal operations and to comparisons with the performance of other companies in our industry.
Transaction costs are costs for advisory, consulting, accounting and legal expenses in connection with the Business Combination as well as certain bonuses to employees that were contingent on the closing of the Business Combination.
The following table provides a reconciliation of net loss, the most closely comparable GAAP financial measure, to EBITDA and Adjusted EBITDA:
For the Three Months Ended March 31,
(in thousands) 2022 2021
Net loss $ (44,600 ) $ (12,786 )
Interest expense 2,664 45
Income tax expense (benefit), net - -
Depreciation and amortization 654 231
EBITDA (41,282 ) (12,510 )
Stock compensation expense 20,368 254
Change in fair value of warrant liability (5,295 ) 1,253
Change in fair value of derivative liability (30 ) -
Transaction costs 4,994 2,776
Adjusted EBITDA (21,245 ) (8,227 )
Liquidity and Capital Resources
We measure liquidity in terms of our ability to fund the cash requirements of
our business operations, including working capital and capital expenditure
needs, contractual obligations and other commitments, with cash flows from
operations and other sources of funding. Our current liquidity needs include the
working capital to support the purchase of custom component parts from our
third-party supplier partners on behalf of our customers. In many cases, we pay
our suppliers prior to being paid by our customers, resulting in a need for
working capital. We also consume cash through other growth initiatives,
including investing in new micro-factories, sales and marketing expenses and
development of our Cloud Manufacturing Platform. Additionally, we will consume
cash for additional expenses as a public company for, among other things, D&O
liability insurance, director fees and additional internal and external
accounting, legal and administrative resources, including increased audit and
legal fees. Our ability to maintain, expand and grow our business will depend on
many factors, including our working capital needs and the evolution of our
operating cash flows.
We had $57.4 million in cash and cash equivalents as of March 31, 2022 . Upon
consummation of the Business Combination, we received approximately $73 million
in cash, primarily due to $75.0 million in gross proceeds from the PIPE
Investment and $29.6 million in proceeds from the Trust Account, partially
offset by cash payments that were disbursed at the Closing which included $8.3
million of transaction expenses, $2.5 million in debt repayments, $8.2 million
in D&O insurance premiums, and $12.8 million related to IT and other costs.
Certain other transaction costs associated with and liabilities assumed as a
result of the Business Combination totaling approximately $14 million as of
March 31, 2022 have been deferred until later in 2022 or 2023.
On May 11, 2022 , the Company entered into the Purchase Agreement with Lincoln
Park , pursuant to which Lincoln Park has committed to purchase up to $30.0
million of Common Stock. Under the terms and subject to the conditions of the
Purchase Agreement, the
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Company has the right, but not the obligation, to sell to Lincoln Park , and
Lincoln Park is obligated to purchase up to $30.0 million of Common Stock. Such
sales of Common Stock by the Company, if any, will be subject to certain
limitations, and may occur from time to time, at the Company's sole discretion,
over the 24-month period commencing on the date that is one business day
following the satisfaction of certain customary conditions, including
effectiveness of a registration statement covering the resale of such shares of
Common Stock. Refer to Note 14 for additional information related to the
Purchase Agreement.
We expect our capital expenditures and working capital requirements to continue
to increase in the immediate future as we are still in the growth stage of our
business and expect to continue to make substantial investments in our business,
including in the expansion of our product portfolio and research and
development, sales and marketing teams, in addition to incurring additional
costs as a result of being a public company. Our short-term liquidity priorities
are to pay off existing indebtedness and liabilities, to fund ongoing working
capital needs, and to invest in the Company's growth strategy.
We believe the cash we obtained from the Business Combination and the PIPE
Investment , as well as potential proceeds available under the Purchase Agreement
with Lincoln Park , are not sufficient to meet our working capital and capital
expenditure requirements for a period of at least twelve months from the date of
this Quarterly Report on Form 10-Q. We expect to seek additional cash to fund
our growth through future debt or equity financing transactions; however, there
can be no assurance that we will be able to obtain additional capital on terms
acceptable to us, if at all, or that we will generate sufficient future revenues
and cash flows to fund our operations. Failure to secure additional funding may
require us to modify, delay, or abandon some of our planned future expansion or
development, or to otherwise enact operating cost reductions available to
management, which could have a material adverse effect on our business,
operating results, financial condition, and ability to achieve our intended
business objectives.
As of
OnFebruary 4, 2022 , the 2021 SVB Loan was amended to extend the maturity date from the Closing Date toApril 3, 2023 and required payment of$2.0 million of the$20.0 million outstanding principal balance upon consummation of the Business Combination. This amendment also added the original$0.8 million fee due at the SPAC closing to the amended loan's outstanding principal balance, deferring its repayment until maturity. In exchange for the extension of the loan, we will pay an additional fee of$2.1 million due at maturity. We will make six interest-only payments beginningMarch 1, 2022 and will begin paying$2.4 million in principal beginningSeptember 1, 2022 . Additionally, onFebruary 4, 2022 , as part of the closing of the Business Combination, the related party convertible notes that had a carrying value of$12.5 million as ofDecember 31, 2021 were converted into Common Stock. 15,516,639 ENNV liability-classified warrants were also assumed as part of the Business Combination with a carrying and fair value of$2.5 million as ofMarch 31, 2022 . Finally, certain other transaction costs associated with and liabilities assumed as a result of the Business Combination totaling approximately$14 million as ofMarch 31, 2022 have been deferred until later in 2022 or 2023. Other commitments InMay 2021 , we entered into a master subscription agreement with Palantir for access to Palantir's proprietary software for a six-year period for a total of$45.0 million . The non-cancellable future minimum payments due on this firm purchase agreement are$10.1 million after taking into account the$9.4 million payment made to Palantir at Close. Refer to Note 6 of the consolidated financial statements included elsewhere in this Report for additional information on our agreement with Palantir.
Cash Flows
The following table sets forth a summary of cash flows for the three months
ended
For the Three Months Ended March 31,
(in thousands) 2022 2021
Net cash used by operating activities $ (48,133 ) $ (9,094 )
Net cash used by investing activities $ (1,610 ) $ (1,372 )
Net cash generated by financing activities $ 93,401 $ 584
Net increase (decrease) in cash flows $ 43,658 $ (9,882 )
Operating Activities
Cash used in operating activities for the three months ended March 31, 2022 and
2021 was $48.1 million and $9.1 million , respectively. The increase in operating
cash outflows in 2022 was partly due to higher operating losses in the current
year. Additionally, we used a portion of the proceeds from the Business
Combination described below in Financing Activities to make cash payments
related to various transaction and other costs that became due as a result of
the Business Combination.
27-------------------------------------------------------------------------------- Investing Activities Cash used in investing activities for the three months endedMarch 31, 2022 and 2021 was$1.6 million and$1.4 million , respectively. The increase was attributable to higher purchases of property and equipment and capitalized software development costs during the period. Financing Activities Cash provided by financing activities for the three months endedMarch 31, 2022 and 2021 was$93.4 million and$0.6 million , respectively. In 2022, we received proceeds from the Business Combination of approximately$97.6 million , net of transaction costs. A portion of those proceeds were used to settle debt obligations of$2.9 million and to pay various transaction and other expenses included in Operating Activities above. Additionally, we made payments of approximately$1.4 million related to deferred underwriting fees associated with the ENNV IPO in 2021 that were assumed as a result of the Business Combination. Refer to Note 3 of the condensed consolidated financial statements included elsewhere in this Report for additional information on the Business Combination. Contractual Obligations Our contractual obligations consist primarily of debt liabilities and operating leases which impact our short-term and long-term liquidity and capital needs. The table below is presented as ofMarch 31, 2022 . Payments Due By Period More than 5 (in thousands) Total 2022 2023-2024 2025-2026 years
Contractual obligations Operating leases$ 6,034 $ 2,193 $ 2,971 $ 870 $ - Debt 31,463 12,147 19,109 207 - Interest on debt 2,063 1,500 557 6 - Purchase commitments 10,125 5,625 2,250 2,250 -
Total contractual obligations
$ 3,333 $ -
Off-Balance Sheet Arrangements
As of
Critical Accounting Policies and Estimates The preparation of consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our most significant estimates and judgements involve valuation of our equity, including assumptions made in the fair value of stock-based compensation. Such policies are summarized in the Management's Discussion and Analysis of Financial Condition and Results of Operations section in our Current Report on Form 8-K/A filed with theSEC onMarch 30, 2022 . Although we regularly assess these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from management's estimates if these results differ from historical experience or other assumptions prove not to be substantially accurate, even if such assumptions are reasonable when made.
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