10-Q
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75

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-38542

 

Kezar Life Sciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-3366145

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

4000 Shoreline Court, Suite 300

South San Francisco, CA, 94080

(650) 822-5600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.001 par value

KZR

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of August 5, 2022, the registrant had 68,369,530 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations

2

 

Condensed Consolidated Statements of Comprehensive Loss

3

 

Condensed Consolidated Statement of Stockholders’ Equity

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 6.

Exhibits

64

 

 

 

 

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains 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. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “potential,” “project,” “plan,” “expect,” “seek,” “should,” “target” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

statements regarding the impact of the ongoing COVID-19 pandemic and its effects on our operations, research and development, clinical trials and financial position, and its potential effects on the operations of third-party manufacturers, contract research organizations, other service providers, and collaborators with whom we conduct business;
our plans to develop and commercialize our product candidates;
the initiation, timing, progress and expected results of our current and future clinical trials and our research and development programs;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to successfully acquire or in-license additional product candidates or other technology on reasonable terms;
our ability to maintain and establish collaborations or strategic relationships or obtain additional funding;
the timing and likelihood of obtaining regulatory approval of our current and future product candidates;
our expectations regarding the potential market size and the rate and degree of market acceptance of such product candidates;
our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources;
the implementation of our business model and strategic plans for our business and product candidates;
the scope of protection we are able to establish and maintain for intellectual property rights and the duration of our patent rights covering our product candidates;
developments or disputes concerning our intellectual property or other proprietary rights;
the scalability and commercial viability of our manufacturing methods and processes;
our expectations regarding government and third-party payor coverage and reimbursement;
our ability to compete in the markets for our product candidates;
the impact of government laws and regulations;
developments relating to our competitors and our industry; and
the factors that may impact our financial results.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements in this report, whether as a result of new information, future events or otherwise, after the date of this report.

Unless the context otherwise requires, the terms “Kezar,” “Kezar Life Sciences,” “the Company,” “we,” “us,” “our” and similar references in this Quarterly Report on Form 10-Q refer to Kezar Life Sciences, Inc. and our wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd.

 

 

 

 

 

ii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

105,387

 

 

$

62,882

 

Marketable securities

 

 

201,451

 

 

 

145,473

 

Prepaid expenses

 

 

3,805

 

 

 

2,570

 

Other current assets

 

 

685

 

 

 

729

 

Total current assets

 

 

311,328

 

 

 

211,654

 

Property and equipment, net

 

 

3,518

 

 

 

3,283

 

Operating lease right-of-use asset

 

 

2,374

 

 

 

2,714

 

Other assets

 

 

282

 

 

 

282

 

Total assets

 

$

317,502

 

 

$

217,933

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,922

 

 

$

2,028

 

Accrued and other current liabilities

 

 

4,646

 

 

 

4,985

 

Operating lease liabilities, current

 

 

1,285

 

 

 

1,199

 

Total current liabilities

 

 

7,853

 

 

 

8,212

 

Operating lease liabilities, noncurrent

 

 

2,557

 

 

 

3,223

 

Debt, noncurrent

 

 

9,728

 

 

 

9,622

 

Total liabilities

 

 

20,138

 

 

 

21,057

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.001 par value, 125,000,000 shares authorized as of June 30,
   2022 (unaudited) and December 31, 2021;
68,341,642 and 56,259,747 shares issued
   and outstanding as of June 30, 2022 (unaudited) and December 31, 2021,
   respectively

 

 

68

 

 

 

56

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized, zero shares issued
   and outstanding as of June 30, 2022 (unaudited) and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

511,325

 

 

 

377,765

 

Accumulated other comprehensive loss

 

 

(1,164

)

 

 

(291

)

Accumulated deficit

 

 

(212,865

)

 

 

(180,654

)

Total stockholders' equity

 

 

297,364

 

 

 

196,876

 

Total liabilities and stockholders' equity

 

$

317,502

 

 

$

217,933

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

 

1


 

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,346

 

 

$

9,341

 

 

$

22,290

 

 

$

18,627

 

General and administrative

 

 

4,977

 

 

 

3,668

 

 

 

9,911

 

 

 

7,430

 

Total operating expenses

 

 

16,323

 

 

 

13,009

 

 

 

32,201

 

 

 

26,057

 

Loss from operations

 

 

(16,323

)

 

 

(13,009

)

 

 

(32,201

)

 

 

(26,057

)

Interest income

 

 

408

 

 

 

47

 

 

 

516

 

 

 

101

 

Interest expense

 

 

(272

)

 

 

 

 

 

(526

)

 

 

 

Net loss

 

$

(16,187

)

 

$

(12,962

)

 

$

(32,211

)

 

$

(25,956

)

Net loss per common share, basic and diluted

 

$

(0.25

)

 

$

(0.25

)

 

$

(0.52

)

 

$

(0.50

)

Weighted-average shares used to compute net loss per common
   share, basic and diluted

 

 

64,279,634

 

 

 

51,904,701

 

 

 

62,465,092

 

 

 

51,483,709

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

2


 

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(16,187

)

 

$

(12,962

)

 

$

(32,211

)

 

$

(25,956

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(64

)

 

 

(13

)

 

 

(39

)

 

 

(24

)

Unrealized (loss) gain on marketable securities

 

 

(318

)

 

 

(2

)

 

 

(834

)

 

 

6

 

Total other comprehensive loss, net of tax

 

 

(382

)

 

 

(15

)

 

 

(873

)

 

 

(18

)

Comprehensive loss

 

$

(16,569

)

 

$

(12,977

)

 

$

(33,084

)

 

$

(25,974

)

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

3


 

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share amounts)

 

 

 

COMMON STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED
OTHER
COMPREHENSIVE

 

 

ACCUMULATED

 

 

TOTAL
STOCKHOLDERS'

 

 

 

SHARES

 

 

AMOUNTS

 

 

CAPITAL

 

 

INCOME/(LOSS)

 

 

DEFICIT

 

 

EQUITY

 

Balance at December 31, 2021

 

 

56,259,747

 

 

$

56

 

 

$

377,765

 

 

$

(291

)

 

$

(180,654

)

 

$

196,876

 

Issuance of common stock under the ATM Agreement,
   net of offering costs of $
1,504

 

 

3,245,738

 

 

 

4

 

 

 

48,638

 

 

 

 

 

 

 

 

 

48,642

 

Issuance of common stock under equity incentive plans

 

 

59,174

 

 

 

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,104

 

 

 

 

 

 

 

 

 

3,104

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(491

)

 

 

 

 

 

(491

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,024

)

 

 

(16,024

)

Balance at March 31, 2022

 

 

59,564,659

 

 

$

60

 

 

$

429,715

 

 

$

(782

)

 

$

(196,678

)

 

$

232,315

 

Issuance of common stock under the ATM Agreement,
   net of offering costs of $
2,409

 

 

8,665,961

 

 

 

8

 

 

 

77,892

 

 

 

 

 

 

 

 

 

77,900

 

Issuance of common stock under equity incentive plans

 

 

111,022

 

 

 

 

 

 

420

 

 

 

 

 

 

 

 

 

420

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,298

 

 

 

 

 

 

 

 

 

3,298

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(382

)

 

 

 

 

 

(382

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,187

)

 

 

(16,187

)

Balance at June 30, 2022

 

 

68,341,642

 

 

$

68

 

 

$

511,325

 

 

$

(1,164

)

 

$

(212,865

)

 

$

297,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCK

 

 

ADDITIONAL
PAID-IN

 

 

ACCUMULATED
OTHER
COMPREHENSIVE

 

 

ACCUMULATED

 

 

TOTAL
STOCKHOLDERS'

 

 

 

SHARES

 

 

AMOUNTS

 

 

CAPITAL

 

 

LOSS

 

 

DEFICIT

 

 

EQUITY

 

Balance at December 31, 2020

 

 

46,359,743

 

 

$

46

 

 

$

267,093

 

 

$

(137

)

 

$

(126,024

)

 

$

140,978

 

Issuance of common stock under the ATM Agreement,
   net of offering costs of $
330

 

 

1,705,800

 

 

 

2

 

 

 

10,671

 

 

 

 

 

 

 

 

 

10,673

 

Issuance of common stock under equity incentive plans

 

 

14,325

 

 

 

 

 

 

48

 

 

 

 

 

 

 

 

 

48

 

Vesting related to shares of common stock issued
   pursuant to early exercises

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,928

 

 

 

 

 

 

 

 

 

1,928

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,994

)

 

 

(12,994

)

Balance at March 31, 2021

 

 

48,079,868

 

 

$

48

 

 

$

279,747

 

 

$

(140

)

 

$

(139,018

)

 

$

140,637

 

Issuance of common stock under equity incentive plans

 

 

66,440

 

 

 

 

 

 

282

 

 

 

 

 

 

 

 

 

282

 

Vesting related to shares of common stock issued
   pursuant to early exercises

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,937

 

 

 

 

 

 

 

 

 

1,937

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,962

)

 

 

(12,962

)

Balance at June 30, 2021

 

 

48,146,308

 

 

$

48

 

 

$

281,973

 

 

$

(155

)

 

$

(151,980

)

 

$

129,886

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

4


 

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(32,211

)

 

$

(25,956

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

848

 

 

 

745

 

Stock-based compensation

 

 

6,402

 

 

 

3,865

 

Amortization of premiums and discounts on marketable securities

 

 

579

 

 

 

1,045

 

Amortization of debt discount and issuance costs and other
   non-cash interest

 

 

106

 

 

 

 

Loss on disposition of fixed assets

 

 

4

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Prepaid expenses, other current assets and other long-term assets

 

 

(1,191

)

 

 

(21

)

Accounts payable, accrued and other current liabilities

 

 

(560

)

 

 

(576

)

Operating lease liabilities

 

 

(580

)

 

 

(504

)

Net cash used in operating activities

 

 

(26,603

)

 

 

(21,402

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(632

)

 

 

(24

)

Purchases of marketable securities

 

 

(142,080

)

 

 

(37,913

)

Maturities of marketable securities

 

 

84,689

 

 

 

53,500

 

Net cash (used in) provided by investing activities

 

 

(58,023

)

 

 

15,563

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock and warrants, net of issuance costs

 

 

126,542

 

 

 

10,673

 

Proceeds from issuance of common stock under employee stock incentive plans

 

 

628

 

 

 

344

 

Net cash provided by financing activities

 

 

127,170

 

 

 

11,017

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(39

)

 

 

(24

)

Net increase in cash and cash equivalents

 

 

42,505

 

 

 

5,154

 

Cash and cash equivalents at the beginning of period

 

 

62,882

 

 

 

21,228

 

Cash and cash equivalents at the end of period

 

$

105,387

 

 

$

26,382

 

Supplemental disclosures of noncash investing and financing information:

 

 

 

 

 

 

Reclassification of employee stock liability to equity upon vesting

 

$

 

 

$

14

 

Unpaid offering costs in accrued liabilities

 

$

 

 

$

25

 

Purchase of property and equipment in accounts payable

 

$

557

 

 

$

16

 

Supplemental disclosures

 

 

 

 

 

 

Cash paid for interest

 

$

219

 

 

$

 

 

 

 

 

 

 

 

 

See accompanying notes to the unaudited condensed consolidated financial statements

 

5


 

Kezar Life Sciences, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Description of the Business

Description of Business

Kezar Life Sciences, Inc. (the “Company,” “we,” “us,” or “our”) was incorporated in the state of Delaware in February 2015 and commenced operations in June 2015. The Company is a clinical-stage biotechnology company discovering and developing breakthrough treatments in immune-mediated and oncologic disorders. The Company’s principal operations are in South San Francisco, California, and it operates in one segment.

Liquidity

Since commencing operations in mid-2015, substantially all of the Company’s efforts have been focused on research, development, and the advancement of the Company’s product candidates, zetomipzomib (KZR-616) and KZR-261. The Company’s ultimate success depends on the outcome of these ongoing research and development activities. The Company has not yet generated product sales and as a result has experienced operating losses since inception and had an accumulated deficit of $212.9 million as of June 30, 2022. The Company expects to incur additional losses in the future to conduct research and development and will need to raise additional capital to fully implement management’s business plan. The Company intends to raise such capital through the issuance of additional equity, and potentially through borrowings, strategic alliances with partner companies and other licensing transactions. However, if such financing is not available at adequate levels, the Company may need to reevaluate its operating plans. Management believes that its existing cash, cash equivalents and marketable securities will be sufficient to fund the Company’s cash requirements for at least 12 months following the issuance of these financial statements.

In December 2021, the Company entered into a Sales Agreement (the “ATM Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which the Company can offer and sell, from time to time at its sole discretion through Cowen, as its sales agent, shares of its common stock having an aggregate offering price of up to $200.0 million. Any shares of its common stock sold will be issued pursuant to the Company’s shelf registration statement on Form S-3ASR (File No. 333-261774). The Company will pay Cowen a commission equal to 3.0% of the gross sales proceeds of any shares of its common stock sold through Cowen under the ATM Agreement and also has provided Cowen with indemnification and contribution rights. During the three and six months ended June 30, 2022, the Company sold an aggregate of 8,665,961 and 11,911,699 shares of its common stock at a weighted average purchase price of $9.27 and $10.95 per share, respectively, pursuant to the ATM Agreement for net proceeds of approximately $77.9 million and $126.5 million, respectively.

2. Summary of Significant Accounting Policies

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 17, 2022 (the “Annual Report”), and there have been no material changes during the six months ended June 30, 2022.

Basis of Presentation and Consolidation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the Company’s accounts and those of its wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd., which is a proprietary company limited by shares. All intercompany balances and transactions have been eliminated upon consolidation.

The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Annual Report.

Unaudited Condensed Consolidated Financial Statements

The accompanying financial information as of June 30, 2022 is unaudited. The interim condensed consolidated financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that our management considers

 

6


 

necessary for the fair statement of the results of operations for the interim periods covered and of our financial condition at the date of the interim balance sheet. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in our Annual Report.

Use of Estimates

The preparation of 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 expenses during the reporting period. Significant items subject to such estimates and assumptions include the stock-based compensation, and accrued research and development costs. Management bases its estimates on historical experience and on various other market-specific relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

The Company anticipates that the ongoing COVID-19 pandemic, recent geopolitical events and supply-chain concerns could have an impact on our clinical development timelines. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s consolidated financial statements.