FRESH VINE WINE, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to those statements as included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. See "Cautionary Note Regarding Forward-looking Statements" included elsewhere in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in Part I "Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 . OverviewFresh Vine Wine, Inc. (the "Company") is a premier producer of low carb, low calorie, premium wines inthe United States . Founded in 2019,Fresh Vine Wine brings an innovative "better-for-you" solution to the wine market. We currently sell seven proprietary varietals: Cabernet Sauvignon, Pinot Noir, Chardonnay, Sauvignon Blanc, Rosé, Sparkling Rosé, and a limited Reserve Napa Cabernet Sauvignon. All varietals are produced and bottled inNapa, California . Our wines are distributed acrossthe United States andPuerto Rico through wholesale, retail, and direct-to-consumer (DTC) channels. We are able to conduct wholesale distribution of our wines in all 50 states andPuerto Rico , and we are licensed to sell through DTC channels in 43 states. As ofSeptember 30, 2022 , we hold active relationships with wholesale distributors in 48 states, up from 43 states as ofJune 30, 2022 , and currently have additional states in which licensing is pending. We are actively working with leading distributors, includingSouthern Glazer's Wine & Spirits (SGWS),Johnson Brothers , andRepublic National Distributing Company (RNDC), to expand our presence across the contiguousUnited States .
Our core wine offerings are priced strategically to appeal to mass markets and sell at a list price between$15 and$25 per bottle. Given theFresh Vine Wine brand's celebrity backing, "better-for-you" appeal, and overall product quality, we believe that it presents today's consumers with a unique value proposition within this price category. Additionally,Fresh Vine Wine is one of very few products available at this price point that includes a named winemaker,Jamey Whetstone .
Our marketing activities focus primarily on consumers in the 21-to-34 year old demographic with moderate to affluent income and on those with a desire to pursue a healthy and active lifestyles, which is reinforced through our sports marketing partnerships across all four majorUnited States professional sports leagues. Our asset-light operating model allows us to utilize third-party assets, including land and production facilities. This approach helps us mitigate many of the risks associated with agribusiness, such as isolated droughts or fires. Because we source product inputs from multiple geographically dispersed vendors, we reduce reliance on any one vendor and benefit from broad availability/optionality of product inputs. This is particularly important as aCalifornia -based wine producer where droughts or fires can have an extremely detrimental impact to a company's supply chain if not diversified. The Company delivered strong first half 2022 top line operational results and is looking forward to inclusion in future seasonal retail resets for both large and national chains. The Company has heavily invested in inventory throughSeptember 30, 2022 , specifically through advanced purchases of wine in response to increased demand, as well to support the introduction of new varietals in 2022 including Sauvignon Blanc, Rosé and Sparkling Rosé. The Company believes that this increase in inventory will allow the Company to meet balance of year and early 2023 demand as well as mitigate supply chain risks the industry is facing. The Company has added headcount in the first and second quarters of 2022 to support operational growth and national sales distribution while also maintaining a cash preservation plan. See note 15 to the accompanying financial statements for additional information on the Company's cash preservation initiatives. 18 Key Financial Metrics We use net revenue, gross profit (loss) and net income (loss) to evaluate the performance ofFresh Vine Wine . We also use the non-financial key metrics of cases sold and point of distribution (PODs). For the quarter endedSeptember 30, 2022 ,Fresh Vine Wine branded offerings sold approximately 6,200 cases of wine (approximately 310,000 5oz glasses), compared to 6,200 and 8,400 cases in the first and second quarters of 2022, respectively. The Company added 4,649 PODs in the nine months endedSeptember 30, 2022 , bringing total PODs to 5,560, up from 911 PODS as ofDecember 31, 2021 . These metrics are useful in helping us to identify trends in our business, prepare financial forecasts and make capital allocation decisions, and assess the comparable health of our business relative to our direct competitors. Three months ended Nine months ended September 30, September 30, 2022 2021 2022 2021 Net revenue$ 535,584 $ 546,621 $ 2,484,086 $ 1,050,765 Gross profit$ (65,962 ) $ 223,810 $ 434,436 $ 343,692 Net loss$ (2,560,040 ) $ (1,531,046 ) $ (11,405,173 ) $ (8,094,635 )
Components of Results of Operations and Trends That May Impact Our Results of Operations
Net Revenue Our net revenue consists primarily of wine sales to distributors and retailers, which together comprise our wholesale channel, and directly to individual consumers through our DTC channel. Net revenues generally represent wine sales and shipping, when applicable, and to a lesser extent branded merchandise and wine club memberships. For wine and merchandise sales, revenues are recognized at time of shipment. ForWine Club memberships, revenues are recognized quarterly at the time of fulfilment. We refer to the volume of wine we sell in terms of cases. Each case contains 12 standard bottles, in which each bottle has a volume of 750 milliliters. Cases are sold through Wholesale/Retail or DTC channels. The following factors and trends in our business have driven net revenue results sinceJanuary 1, 2021 , and are expected to be key drivers of our net revenue for the foreseeable future:
Brand recognition: As we expand our marketing presence and drive visibility through traditional and modern marketing methods, we expect to build awareness and name recognition forFresh Vine Wine in consumers' minds. Brand awareness will be built substantially through social media channels, where we are able to immediately access more than 30 million potential consumers through our celebrities' Instagram and Facebook platforms. Additionally, it will be built through complementary sports marketing partnerships across theNational Football League ,National Hockey League ,National Basketball Association , and MajorLeague Baseball . Portfolio evolution: As a relatively new, high-growth brand, we expect and seek to learn from our consumers. We will continuously evolve and refine our products to meet our consumers' specific needs and wants, adapting our offering to maximize value for our consumers and stakeholders. Our growth mindset, coupled with our differentiated production and distribution platform, will enable us to accelerate growth and deliver on our value proposition over time. 19 One way in which we will evolve our portfolio is through product extensions.Fresh Vine Wine added a sixth varietal, Sauvignon Blanc, late in the second quarter of 2022 and seventh varietal, Sparkling Rosé, in the third quarter of 2022, currently offering seven varietals (Cabernet Sauvignon, Cabernet Sauvignon Reserve, Pinot Noir, Chardonnay, Sauvignon Blanc, Rosé, and Sparkling Rosé) within its product portfolio. In the future, we can use the same knowledge and supplier networks to launch new varietals with much greater efficiency than we were previously able to achieve. Distribution expansion and acceleration: Purchasing by distributors and loyal accounts that continue to feature our wines are key drivers of net revenue. We plan to continue broadening our distributor network, adding new geographies, and increasing each distributor's average order size as we accelerate growth. Opportunistic evaluation of strategic acquisitions: With strong internal knowledge and a depth of experience in private equity and the broader financial services industry, we intend to maintain a strategic and opportunistic approach to evaluating acquisitions and growing through acquisition. We will also remain open to other inorganic growth activities, including joint ventures and strategic alliances, as we seek to accelerate this business to market. While we have not identified any prospective targets to date, we consider this a core competency of our leadership team and believe that this presents us with a viable growth alternative as we move forward. Seasonality: In line with industry norms, we anticipate our net revenue to peak during the quarter spanning from October through December due to increased consumer demand around the major holidays. This is particularly true in our DTC revenue channel, where marketing programs will often be aligned with the holiday season and product promotions will be prevalent. Revenue Channels Our sales and distribution platform is built upon a highly developed network of distributor accounts. Within this network, we have signed agreements in place with several of the nation's largest distributors includingSouthern Glazer's Wine & Spirits and RNDC, among others. While we are actively working with these distributors in certain markets, they operate acrossthe United States and we intend to grow our geographic/market presence through these relationships. The development of these relationships and impacts to our related product mix will impact our financial results as our channel mix shifts.
? Wholesale channel: Consistent with sales practices in the wine industry, sales
to retailers and distributors occur below SRP (Suggested Retail Price). We work
closely with distributors to increase wine volumes and the number of products
sold by their retail accounts in their respective territories.
? DTC channel: Wines sold through our DTC channels are generally sold at SRP,
although we do periodically offer various promotions. Our DTC channel continues
to grow as a result of a number of factors, including expanded e-commerce sites
and social media capabilities.
? Related party services: We have entered into service agreements with related
parties in the wine industry to provide representation and distribution
services. These services were suspended in
lean team to prioritize the growth and expansion of the
Wholesale channel sales made on credit terms generally require payment within 30 days of delivery; however our credit terms withSouthern Glazer's Wine & Spirits requires payment within 60 days of delivery. During periods in which our net revenue channel mix reflects a greater concentration of wholesale sales, we typically experience an increase in accounts receivable for the period to reflect the change in sales mix; payment collections in the subsequent period generally reduce our accounts receivable balance and have a positive impact
on cash flows. While we seek to increase revenue across all channels, we expect the majority of our future revenue to be driven through the wholesale channel. We intend to maintain and expand relationships with existing distributors and form relationships with new distributors as we work to grow the Company. With multiple varietals within theFresh Vine Wine portfolio, we consider ourselves to be a 'one-stop shop' for better-for-you wines. We continue to innovate with new products at competitive price points and strive to enhance the experience as we increase revenue with new and existing consumers. 20 In the DTC channel, our comprehensive approach to consumer engagement in both online and traditional forums is supported by an integrated e-commerce platform. Our marketing efforts target consumers who have an interest in healthy and active lifestyles. We attempt to motivate consumers toward a simple and easy purchasing decision using a combination of defined marketing programs and a modernized technology stack. Increasing customer engagement is a key driver of our business and results of operations. We continue to invest in our DTC channel and in performance marketing to drive customer engagement. In addition to developing new product offerings and cross-selling wines in our product portfolio, we focus on increasing customer conversion and retention. As we continue to invest in our DTC channel, we expect to increase customer engagement and subsequently deliver greater satisfaction. We also distribute our wines via other wine e-commerce sites such asWine.com and Vivino.com and plan to continue to add affiliate retail websites.
Net Revenue Percentage by Channel
We calculate net revenue percentage by channel as net revenue made through our wholesale channel to distributors, through our wholesale channel directly to retail accounts, and through our DTC channel, respectively, as a percentage of our total net revenue. We monitor net revenue percentage across revenue channels to understand the effectiveness of our distribution model and to ensure we are employing resources effectively as we engage customers. See Note 2 to the accompanying financial statements for further details. Cost of Revenues
Cost of revenues (or cost of goods sold) is comprised of all direct product costs such as juice, bottles, caps, corks, labels, capsules, storage and shipping. Additionally, we also categorize boxes and quality assurance testing within our cost of revenues. We expect that our cost of revenues will increase as our net revenue increases. As the volume of our product inputs increase, we intend to work to renegotiate vendor contracts with key suppliers to reduce overall product input costs as a percentage of net revenue. Additionally, the Company includes shipping fees in all DTC revenues. These fees are paid by end consumers at time of order and subsequently itemized within
the cost of each individual sale. As a commodity product, the cost of wine fluctuates due to annual harvest yields and the availability of juice. This macroeconomic consideration is not unique toFresh Vine Wine , although we are conscious of its potential impact to our product cost structure. Gross Profit (Loss) Gross profit (loss) is equal to our net revenue less cost of revenues. As we grow our business in the future, we expect gross profit to increase as our revenue grows and as we optimize our cost of revenues. For the three-month period endedSeptember 30, 2022 the Company experienced a gross loss due to the timing of revenue recognition as net revenues for product shipped were insufficient to cover fixed costs such as storage and shipping fees in combination with variable product costs.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses consist of selling expenses, marketing expenses, and general and administrative expenses. Selling expenses consist primarily of direct selling expenses in our wholesale and DTC channels, including payroll and related costs, product samples, processing fees, and other outside service fees or consulting fees. Marketing expenses consist primarily of advertising costs to promote brand awareness, contract fees incurred as a result of significant sports marketing agreements, customer retention costs, payroll, and related costs. General and administrative expenses consist primarily of
payroll and related costs.
Equity-Based Compensation
Equity-based compensation consists of the non-cash expense resulting from our
issuance of equity or equity-based grants issued in exchange for employee or
non-employee services. We measure equity-based compensation cost at the grant
date based on the fair value of the award and recognize the compensation expense
over the requisite service period, which is generally the vesting period. We
recognize any forfeitures as they occur.
21
Comparison of the Three and Nine Months ended
Net Revenue, Cost of Revenues and Gross Profit
Three months ended Nine months ended
September 30, Change September 30, Change
2022 2021 $ % 2022 2021 $ %
Net revenue $ 535,584 $ 546,621 (11,037 ) -2 % $ 2,484,086 $ 1,050,765 1,433,321 136 %
Cost of revenues 601,546 322,811 278,735 86 % 2,049,650 707,073 1,342,577 190 %
Gross profit $ (65,962 ) $ 223,810 (289,772 ) -129 % $ 434,436 $ 343,692 90,744 26 %
For the three months ended September 30, 2022 , net revenue was flat compared to
the same periods in 2021 due to timing of orders and seasonality. For the nine
months ended September 30, 2022 , we experienced an increase of 136% in net
revenue compared to the same periods in 2021. The increase in net revenue for
the nine month period was primarily attributable to our increasing presence in
the wholesale market and additional varietal offerings. In correlation with
increasing sales, cost of revenues during the three and nine months ended
September 30, 2022 increased 86% and 190%, respectively, compared to the same
periods in 2021 due to volumes of shipments as well as higher storage fees.Selling, general and administrative expenses
Three months ended Nine months ended
September 30, Change September 30, Change
2022 2021 $ % 2022 2021 $ %
Selling expenses $ 296,408 $ 92,638 203,770 220 % $ 1,020,340 $ 274,490 745,850 272 %
Marketing expenses 463,541 589,019 (125,478 ) -21 % 2,137,408 1,162,583 974,825 84 %
General and
administrative
expenses $ 1,640,233 $ 613,161 1,027,072 168 % $ 5,997,700 $ 1,535,459 4,462,241 291 %
For the three and nine months ended September 30, 2022 , selling, general and
administrative expenses increased 85% and 208%, respectively, compared to the
same periods in the 2021. Selling, general and administrative expense increases
were largely driven by certain one-time charges associated with the leadership
transition described in Note 6 to the accompanying financial statements, as well
as increases in general and administrative expenses due to higher staffing
headcount and related salaries and additional consulting, legal and financial
expenses as operational activity increased from 2021 to 2022. In addition, the
Company incurs incremental costs due to the Company being a public reporting
company in 2022, such as higher professional services for accounting, finance
and legal, as well as higher insurance expenses and listing fees, among others.
The increase in selling expenses primarily relates to our sponsorship agreements
in the sports and entertainment industry. The period-over-period increase in
marketing expenses primarily resulted from increased advertising, social media
marketing, tastings, and other promotion materials and events. We typically
expect selling and marketing expenses to follow our sales volume growth as the
activities are intended to generate revenues, however we expect these expenses
to be higher in the initial growth phase of the Company and begin to normalize
in the coming quarters.
22
Cash Flows
Nine months ended
September 30,
Cash provided by (used in): 2022 2021
Operating activities $ (12,261,556 ) $ (2,011,612 )
Investing activities - (250 )
Financing activities (387,069 ) 2,236,527
Net (decrease) increase in cash
Cash used in operating activities increased in the 2022 period primarily due to$3,771,586 spent to accelerate our inventory levels to meet anticipated demand as well as higher advertising and marketing expenses resulting from increased sponsorships, marketing agreements and other promotions aimed at accelerating our growth during 2022. In addition, the Company increased staffing levels to support the increased scale of our operations, as well as other costs associated with expansion into new markets. See note 15 to the accompanying financial statements for information on recent cash preservation initiatives.
Net cash used in investing activities was
Net cash used in financing activities was$387,069 and net cash provided by financing activities was$2,236,527 for the nine months endedSeptember 30, 2022 and 2021, respectively. The cash used in financing activities during the nine months endedSeptember 30, 2022 was primarily to pay off outstanding debt. The cash provided by financing activities in the nine months endedSeptember 30, 2021 was primarily due to proceeds from issuance of member units.
Liquidity and Capital Resources
Our primary cash needs are for working capital purposes, such as driving awareness through advertising and marketing spend, adding staff, funding operations, and purchasing inventory. Prior to ourDecember 2021 initial public offering, we funded our operational cash requirements primarily with funds advanced fromDamian Novak , our Executive Chairman and co-founder, and entities affiliated withMr. Novak . We also received proceeds from the sale of ClassW Units representing membership interests in the Company, which converted into common stock upon ourDecember 2021 conversion to a corporation (the "LLC Conversion"), and we received short term loans in the form of promissory notes from two of our equity holders, which supplemented the loans fromMr. Novak and his affiliates as sources of operating capital, along with limited cash flows from our operating activities. See "Financing Transactions" below. We have incurred losses and negative cash flows from operations since our inception inMay 2019 , including an operating loss of approximately$11.4 million for the nine months endedSeptember 30, 2022 and operating losses of approximately$9.9 million and$1.3 million during the years endedDecember 31, 2021 and 2020, respectively. As ofSeptember 30, 2022 , we had an accumulated deficit of$12,022,524 and a total stockholders' equity of$8,141,971 . As ofSeptember 30, 2022 , we had$3,415,316 in cash, accounts receivable of$585,551 , inventory of$3,930,646 , prepaid expenses of$2,046,177 of which$1,289,760 is current prepaid expenses. OnSeptember 30, 2022 , current assets amounted to$9,165,660 and current liabilities were$1,881,197 resulting in a working capital surplus (with working capital defined as current assets minus current liabilities) of$7,284,463 . We expect to incur losses in future periods as we continue to invest in our business. The Company incurred net losses of$2,560,040 and$11,405,173 for the three and nine months endedSeptember 30, 2022 , compared to net losses of$1,531,046 and$8,094,635 for the three and nine months endedSeptember 30, 2021 , respectively. As reflected on its statements of cash flows, the Company's net cash used in operating activities during the nine months endedSeptember 30, 2022 and 2021, was$12,261,556 and$2,011,612 , respectively. 23 Although the Company's revenue generated during the nine months endedSeptember 30, 2022 represents a 136% increase over its revenues generated in same period of 2021, in addition to paying IPO fees and settling pre-IPO net outstanding related party debt in the fourth quarter of 2021, the Company's operating expenses have significantly exceeded its revenues over these periods. During the nine months endedSeptember 30, 2022 the Company has purchased additional inventory in efforts to mitigate supply chain risks and incurred additional expenses in order to invest in sales and marketing activities and increase staffing and infrastructure to position the Company for future growth. Meanwhile, the Company has put in place several cash preservation initiatives starting in the third quarter of 2022, as reflected by the decrease in our net loss to$2,560,040 in the third quarter of 2022 as compared to$4,558,890 during the second quarter of 2022. See note 15 to the accompanying financial statements for additional information on recent cash preservation initiatives. The Company currently holds no debt and will seek debt or equity financing in the near term to sustain existing operations. If adequate financing is not available, the Company may be forced to curtail near-term growth priorities, take measures to severely reduce our expenses and business operations, or discontinue them completely. Such financing may be dilutive. At the current pace of incurring expenses and without receipt of additional financing, the Company projects that the existing cash balance will be sufficient to fund current operations into the first quarter of 2023, after which additional financing will be needed to satisfy obligations. Additional financing may not be available on favorable terms or at all. If additional financing is available, it may be highly dilutive to existing shareholders and may otherwise include burdensome or onerous terms. The Company's inability to raise additional working capital in a timely manner would negatively impact the ability to fund operations, generate revenues, grow the business and otherwise execute the Company's business plan, leading to the reduction or suspension of operations and ultimately potentially ceasing operations altogether. Should this occur, the value of any investment in the Company's securities could be adversely affected. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In an effort to preserve capital, the Company's leadership team has already deferred certain investments in additional inventory, curtailed its sales and marketing efforts and staffing, and taken other measures to reduce expenses and business operations. Collectively, these cost reduction efforts have reduced the Company's cash requirements by more than$6.3 million for the second half of calendar year 2022, preserving capital for our highest priority expenses and investments and providing additional runway for the growth strategy to gain traction in market. See note 15 to the accompanying financial statements for additional information on recent cash preservation initiatives, including the termination of ten employees on the internal sales team and the engagement of a third party vendor to more efficiently and effectively facilitate current and future sales.
In parallel, the Company continues to execute its growth strategy, opening up new distributor and retail relationships, expanding to new geographic markets, and introducing new product extensions. As noted in note 15 to the accompanying financial statements, the Company has also engaged a third party vendor as a strategic approach to grow direct to consumer sales. The Company believes that these efforts will further accelerate top-line growth in ways that will only improve liquidity measures as the Company converts receivables to cash. Financing Transactions
We have funded our operations through a combination of debt and equity financings.
Since the Company's inception inMay 2019 ,Damian Novak , our Executive Chairman and co-founder, and affiliates ofMr. Novak have incurred expenses on our behalf or advanced funds to us from time to time as needed to satisfy our working capital requirements and expenses. The reimbursable expenses and advances were reflected as related party payables on our balance sheet and were not evidenced promissory notes or other written documentation. OnDecember 17, 2021 , we used a portion of the proceeds from our initial public offering to repay$2.0 million , representing the outstanding amount of these related party payables, net of related party receivables thatMr. Novak and his affiliates owed to us at that time. InNovember 2020 , we sold 50,000 ClassW Units representing membership interests in the Company to an investor at a price of$5.00 per unit, for gross proceeds of$250,000 . Such ClassW Units converted into an aggregate of 309,672 shares of our common stock upon the LLC Conversion. InJanuary 2021 , we sold 40,000 ClassW Units representing membership interests in the Company to an investor at a price of$5.00 per unit, for gross proceeds of$200,000 . Such ClassW Units converted into an aggregate of 247,738 shares of our common stock upon the LLC Conversion. During the period fromApril 2021 throughSeptember 2021 , we sold an aggregate of 60,388 ClassW Units representing membership interests in the Company to investors at a price of$34.94 per unit, for gross proceeds of$2,109,945 . Such ClassW Units converted into an aggregate of 374,017 shares of our common stock upon the LLC Conversion. 24
InSeptember 2021 , the Company entered into an agreement with an unrelated party to pledge certain eligible accounts receivable for a cash advance at a percentage of the outstanding amount, with the remaining balance due upon collection from the customer. The agreement has an initial term of one year which will automatically renew for successive one year terms unless the Company provides a notice of termination at least 60 days prior to the termination date. The receivables are pledged with full recourse, which means we bear the risk of non-payment. The amounts advanced to the Company are classified as a secured loan on our balance sheet and any fees computed on the outstanding amounts are treated as interest expense on our statement of operations. See Note 12 to the accompanying financial statements for more details. InSeptember 2021 , we issued a$216,000 promissory note to a stockholder of the Company that became due and payable upon theDecember 17, 2021 closing of our initial public offering. InOctober 2021 , we issued another$216,000 promissory note to a different stockholder of the Company that became due and payable upon theDecember 17, 2021 closing of our initial public offering. Collectively, the stockholders holding these notes owned approximately 3.63% of our outstanding shares immediately prior to our initial public offering. InDecember 2021 , we completed an initial public offering of our common stock, in which we sold 2,200,000 shares. The shares began trading onThe NYSE American stock exchange onDecember 14, 2021 . The shares were sold at an initial public offering price of$10.00 per share, resulting in net proceeds to the Company of approximately$19.2 million , after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
Critical Accounting Policies and Estimates
The Company's significant accounting policies are detailed in "Note 1: Summary of Significant Accounting Policies" to the financial statements included in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . The Company follows these policies in preparation of the financial statements.
Off-Balance Sheet Arrangements
We have not engaged in any off-balance sheet activities as defined in Item 303(a)(4) of Regulation S-K.
Accounting Standards and Recent Accounting Pronouncements
See Note 1 to our financial statement for a discussion of recent accounting pronouncements.
Emerging Growth Company Status
Pursuant to the JOBS Act, a company constituting an "emerging growth company" is, among other things, entitled to rely upon certain reduced reporting requirements and is eligible to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are an emerging growth company and have elected to use this 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 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. Our financial statements may, therefore, not be comparable to those of other public companies that comply with such new or
revised accounting standards.
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