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

This Management's Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this Annual Report are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned "Risk Factors" in Annual Report. The following should be read in conjunction with our audited financial statements included elsewhere herein.

Overview

We are a commercial stage biotechnology company dedicated to the advancement of regenerative therapies in the fields of immunotherapy, endocrinology, urology, neurology and orthopedics. Our platforms, therapies and products include the following:

Our subsidiary, Creative Medical Technologies, Inc. ("CMT"), was originally created to monetize U.S. Patent No. 8,372,797 and related intellectual property related to the treatment of erectile dysfunction ("ED"), which it acquired in February 2016. Subsequently, we have expanded our development and acquisition of intellectual property beyond urology to include therapeutic treatments utilizing "re-programmed" stem cells, and the treatment of neurologic disorders, lower back pain, Type-1 diabetes, and heart, liver, kidney, and other diseases using various types of stem cells through our ImmCelz, Inc., StemSpine, Inc. and AlloCelz LLC subsidiaries. However, neither ImmCelz Inc., nor AlloCelz LLC have commenced commercial activities.

In 2020, through our ImmCelz Inc. subsidiary, we began developing treatments under our ImmCelz™ platform (CELZ-100), that utilize a patient's own extracted immune cells that are then "reprogrammed/supercharged" by culturing them outside the patient's body with optimized cell-free factors. The immune cells are then re-injected into the patient from whom they were extracted. We believe this process endows the immune cells with regenerative properties (or "supercharges" them) providing them with the ability to treat multiple indications. We have validated this ability through the third-party studies described below that were independently conducted on selected human donor patient cells for accuracy and reproducibility. In contrast to other stem cell-based approaches, the immune cells are significantly smaller in size than stem cells and are believed to more effectively penetrate areas of the damaged tissues and induce regeneration.

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In June 2022, we signed an agreement with Greenstone Biosciences Inc. ("Greenstone") for the development of a human induced pluripotent stem cell (iPSC) pipeline for our ImmCelz™ platform. This project was identified as iPScelz™. The efforts by Greenstone are expected to complement and expand our current work on novel therapeutic cell lines. In May 2023, we announced that we had received confirmation that Greenstone had successfully developed a human induced pluripotent stem cell (iPSC). We estimate that the development of this cell line will save the Company two to three years in research and development time along with associated expenses. The final iPScelz™ results in a viral-free cell line which has great potential for differentiation into therapeutic biologics both for the cellular and cell-free programs along with targeted drug discovery. Greenstone's developments were confirmed by an independent, industry-leading research firm.

In October 2022, we announced the development of our AlloStem™ Clinical Cell Line (CELZ-200), a proprietary allogenic cell line which includes a Master Cell Bank and a Drug Master File. We believe we will able to use this cell line for many of our programs, including our ImmCelz^™ immunotherapy platform for multiple diseases, OvaStem^™ for Premature Ovarian Failure, Type I Diabetes (CELZ-201 CREATE-1), AlloStemSpine® Chronic Lower Back Pain (CELZ-201 ADAPT), and IPScelz™ inducible pluripotent stem cell program in ongoing development with Greenstone.

In November 2022, we announced that the FDA had cleared the Company's Type I Diabetes (CELZ-201 CREATE-1) Investigational New Drug (IND) application for the treatment of Type 1 Diabetes utilizing our AlloStem™ Clinical Cell Line, which will allow us to begin a Phase I/II clinical trial. The primary objective of the study will be to evaluate CELZ-201 treatment in patients with newly diagnosed Type 1 Diabetes. The trial has also received Institutional Board Review (IRB) approval for the trial to proceed as well as approval of the patient recruitment material. Patient recruitment was initiated in September 2023.

In February 2023, we reported positive three-year follow-up data for its StemSpine® pilot study. The three-year data demonstrates continued efficacy of the StemSpine® procedure for treating chronic lower back pain without any serious adverse effects reported.

In March 2023, we reported the following results of independent studies:

	·	ImmCelz™ (CELZ-100) platform required 75% fewer donor patient cells compared to industry standard.
	·	The purity of the final ImmCelz™ (CELZ-100) product was greater than 95% compared to the industry standard of greater than 80%.
	·	ImmCelz™ (CELZ-100) demonstrated a greater than 200% reduction in functional suppression of effector T cells, which are a critical concern for patients with autoimmune issues, while still possessing a high number of functional T regulatory cells.
	·	The ability to verify repeated potency of the final ImmCelz™(CELZ-100) product.

We believe these results show that we will be able to substantially reduce production costs, while allowing for the manufacture of the best clinical product for patients with immune disorders, which will enable us to accelerate our clinical applications and encourage potential collaborations with respect to our ImmCelz™ platform.

In March 2023, we announced that we had filed an application with the FDA to receive Orphan Drug Designation ("ODD") for the treatment of Brittle Type 1 Diabetes using its ImmCelz™ (CELZ-100) platform. In March 2024 we received the ODD from the FDA. This designation provides multiple important benefits to support the therapy's development including tax advantages, user fee exemptions, and the opportunity for market exclusivity following approval.

In April 2023, we reported positive one-year follow-up data and significant efficacy using CELZ-001 to treat patients with Type 2 Diabetes. There were no safety concerns related to CELZ-001 at one year follow-up utilizing the same infusion procedure as in the currently U.S. FDA cleared Type I Diabetes (CELZ-201 CREATE-1) clinical trial. There were 30 patients in the study, 15 received CELZ-001 and the rest received optimized medical therapy. At one year, there was an overall efficacy of 93% in the treated patients demonstrating at least a 50% reduction in insulin requirement.

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In September 2023, we received FDA clearance to initiate a Phase I/II clinical trial of AlloStemSpine® Chronic Lower Back Pain (CELZ-201 ADAPT) using AlloStem™ (CELZ-201-DDT) for the treatment of lower back pain. The first in country study, which will enroll 30 individuals suffering from chronic lower back pain, is designed to evaluate the safety, efficacy, and tolerability of AlloStem™ (CELZ-201-DDT). The minimally invasive procedure uses ultrasound for the targeted delivery of the cell product, and thus prevents radiation exposure to the patient or the injecting physician. This trial, protected by issued patents, is a huge milestone for the Company and for patients suffering from this debilitating problem and their need for opioids for pain.

In October, 2023 we filed for and received approval from an institutional review board (IRB) to proceed with the Phase I/II clinical trial for the treatment of chronic lower back pain with its AlloStemSpine® procedure using AlloStem™ (CELZ-201-DDT ADAPT) cell therapy. The clinical trial is registered on www.clinicaltrials.gov. From November 2023 through July 2024, we:

	·	Selected a clinical research site.
	·	Vetted and contracted with a Contract Research Organization to assist with trial oversight.
	·	Established a Data Safety Monitoring Board (DSMB) and received authorization to proceed with the trial.
	·	Initiated patient recruitment and started dosing study subjects.

In March 2024, we secured FDA authorization for an expanded access therapy using CELZ-201, in managing abnormal glucose tolerance and preventing Type I Diabetes in high-risk individuals. The therapy uses CELZ-201 to potentially prevent Type I Diabetes onset and is believed to be a first in medical history. This personalized medicine approach, focuses on a single high-risk patient. CELZ-201 has a multi-target mechanism to address abnormal glucose tolerance, a Type I Diabetes precursor, at the cellular level.

In June 2024, we announced that we had successfully generated human induced pluripotent stem cells (iPSC)-derived Islet Cells that produce human insulin. We believe this development has the potential for not only clinical translation of the human Islet Cells, but also the stand-alone human insulin which is produced by these cells.

In November, 2024 we announced the successful completion of an independent interim safety review by the Data Safety Monitoring Board (DSMB) of our CELZ-201 ADAPT clinical trial. The DSMB reviewed safety data from the first five dosed patients concluding that the trial may proceed as planned, underscoring the safety profile of CELZ-201 and supporting the advancement of this innovative therapy. This positive review follows the completion of a rigorous 30-day dose-limiting toxicity (DLT) assessment per patient, an important milestone as CELZ-201 moves closer to potentially transformative therapeutic outcomes for patients.

In July 2024, we announced the initiation of a program to diagnose and treat patients exposed to biological and chemical weapons by combining artificial intelligence (AI) with our proprietary iPSC". This iPSC clinically derived line is part of our iPSCelz® program. The program is designed to utilize the predictive capabilities of AI to identify damage to patients exposed to biological or chemical weapons and, based on a clinical diagnosis supported by that assessment, use our validated iPSCelz, ImmCelz™ (CELZ-100) and/or AlloStem™ (CELZ-201-DDT) to develop optimized therapeutic options. The use of AI strengthens the Company's research efficiency, precision, and innovation. In drug discovery, AI accelerates the identification of potential targets and optimizes biological screenings, significantly shortening development timelines. This model enables the Company to accelerate development for civilian and military options for biological optimization of on-site and remote therapeutic interventions. Along with Greenstone Biosciences Inc., the Company continues to evaluate other collaborators, partners and business opportunities to accelerate development without taking away from the core clinical programs.

In January, 2025 we announced promising initial data from the first cohort of the CELZ-201 ADAPT clinical trial. The first cohort of 10 participants (8 receiving CELZ-201-DDT and 2 receiving placebo) completed the study phase without any dose-limiting toxicities or serious adverse events. Blinded preliminary data suggest encouraging therapeutic potential in alleviating back pain and restoring functionality. Following a comprehensive safety review, the independent Data Safety Monitoring Board (DSMB) recommended the trial proceed to the next cohort as planned

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Key Milestones Achieved:

	·	Safety Confirmed: CELZ-201-DDT demonstrated an excellent safety profile, with no serious adverse events reported in the first cohort.
	·	Preliminary Efficacy Signals: Blinded data suggest potential therapeutic benefit in addressing chronic back pain associated with degenerative disc disease.
	·	DSMB Endorsement: The DSMB approved continuation of the study, validating the safety and integrity of the trial design.

We expect to enroll the second cohort in this trial in the first quarter of 2025, with comprehensive data from subsequent cohorts guiding future clinical and regulatory plans.

In February, 2025 we announced an expanded agreement with Greenstone Biosciences Inc. to leverage Artificial Intelligence (AI) in further developing our human induced pluripotent stem cell (iPSC) platform for diabetes treatment. The strategic collaboration is expected to extended the progress made on our proprietary hypoimmune iPSC technology, including our iPSC-derived pancreatic islet cells. The innovative cell lines, developed from Good Manufacturing Practice (GMP) grade human perinatal cells, are currently being used in clinical trials. By integrating AI-driven drug discovery, the partnership aims to identify small molecules that enhance insulin secretion, further refining the therapeutic potential of our hypoimmunogenic iPSC-derived pancreatic islet cells. Additionally, the program is expected to implement multi-gene editing to develop next generation hypoimmune iPSC lines with enhanced stealth, survival, and differentiation capabilities. These advancements will not only optimize pancreatic islet cell function but also expand the platform's applications to other regenerative therapies, addressing critical unmet medical needs.

In March, 2025 we announced the FDA had cleared an expanded dose escalation for our ongoing Phase 1/2 trial of StemSpine® using AlloStem™ (CELZ-201-DDT). This regulatory milestone followed compelling interim blinded data demonstrating statistically significant pain reduction and improved mobility among trial participants.

In August, 2025 we announced the FDA granted Fast Track designation to its lead investigational therapy, CELZ-201-DDT. This designation positions CELZ-201-DDT among a select group of therapies recognized for their potential to address serious medical conditions with high unmet need. Fast Track status enables us to benefit from accelerated FDA interactions, rolling Biologics License Application (BLA) submissions, and eligibility for priority review-potentially expediting the path to market and patient access.

In October, 2025 we announced the launch of the BioDefense Inc. Veterans Initiative, believed to be a first-of-its-kind national program to combat the devastating long-term effects of toxic burn pit exposure among U.S. service members. To execute this initiative, we entered into an agreement with Greenstone Biosciences, Inc., as the exclusive AI and iPSC development partner. We are executing a national program which will provide the critical data infrastructure to:

	·	Decode the genomic and proteomic architecture of toxic-exposure-related injury.
	·	Engineer iPSC-based regenerative repair models using Creative Medical's patented cell platform.
	·	Validate next-generation AI/ML biodefense algorithms for exposure classification and precision intervention.
	·	Develop predictive, preemptive disease modeling systems for deployment across military and civilian populations.

Under this partnership, Greenstone will deploy advanced molecular-sequencing, proteomic profiling, and machine-learning algorithms to analyze cellular data from service members exposed to burn pits. These AI-integrated systems will accelerate the creation of predictive exposure models and precision-engineered regenerative therapies-a groundbreaking leap in both biodefense and AI-enabled medicine.

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In November, 2025, the Company contributed $43,200 to the capital of Bionance, which, together with Mr. Warbington's contribution of $10,800, was used to fund Bionance's $54,000 investment in a convertible promissory note and warrants to purchase common stock issued by Applife Digital Solutions, Inc. To date, the Company has not made any other capital contributions to Bionance, and Bionance has not made any other investments.

In December, 2025 we announced the successful completion of patient enrollment on the ADAPT clinical trial evaluating CELZ-201 (Olastrocel). This enables us to transition the ADAPT program into its next phase focused on follow-up, and data analysis.

On, October 23, 2024 we sold 418,552 shares of common stock at a price of $4.42 per share to certain institutional investors in a registered direct offering priced at-the-market under Nasdaq rules. In a concurrent private placement, we issued the same investors warrants to purchase up to 837,104 shares of common stock at an exercise price of $4.42 per share, which are exercisable until December 19, 2029. Net proceeds from these offerings were approximately $1.6 million. Roth Capital Partners acted as our placement agent for these transactions.

On March 6, 2025 entered into warrant exercise inducement agreements with holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 837,104 shares of common stock of the Company originally issued in October 2024 at the exercise price of $4.42 per share. The aggregate gross proceeds from the exercise of the existing warrants was $3.7 million, before deducting financial advisory fees. The new warrants are exercisable for an aggregate of up to 1,674,208 shares of common stock, at an exercise price of $3.75 per share, for a period of five years following shareholder approval of the exercise price of the warrants that occurred on May 5, 2025.

On October 29, 2025 we entered into warrant exercise inducement agreements with certain holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 1,116,136 shares of common stock of the Company originally issued in March 2025, at the exercise price of $3.75 per share. The aggregate gross proceeds from the exercise of the existing warrants was approximately $4.2 million, before deducting financial advisory fees. The new warrants are exercisable for an aggregate of up to 2,790,340 shares of common stock, at an exercise price of $2.86 per share. The new warrants are exercisable for a period of five years following shareholder approval of the exercise of the warrants that occurred on December 26, 2025.

We were incorporated on December 3, 1998, in the State of Nevada under the name Jolley Marketing, Inc. On May 18, 2016, we completed a reverse merger transaction under which Creative Medical Technologies, Inc. became our wholly owned subsidiary. In connection with this merger, we changed our name to Creative Medical Technologies Holdings, Inc. to reflect our current business.

Our principal executive offices are located at 211 E Osborn Road, Phoenix, AZ 85012.

Results of Operations - For the Year Ended December 31, 2025, and for the Year Ended December 31, 2024

Gross Revenue. We generated $6,000 in gross revenue for the year ended December 31, 2025, in comparison with $11,000 for the comparable period a year ago. The decrease of $5,000 or 46% is due to a slight decrease in CaverStem® sales. Management is currently re-evaluating the marketing strategy for the Caverstem® and FemCelz® products. We are exploring options to achieve market penetration and product profitability with a number of potential partners. However, there can be no assurance that the Company will be successful in that regard.

Cost of Goods Sold. We generated $2,194 in cost of goods sold for the year ended December 31, 2025, in comparison with $4,400 for the comparable period a year ago. The decrease of $2,206 or 50% is due to the decrease in revenue as described above.

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Gross Profit/(Loss). We generated $3,806 in gross profit for the year ended December 31, 2025, in comparison with $6,600 in gross profit for the comparable period a year ago. The decrease of $2,794 or 42% is due to the decrease in revenue.

Selling, General and Administrative Expenses. General and administrative expenses for the year ended December 31, 2025, totaled $3,763,497, in comparison with $3,239,232 for the comparable period a year ago. The increase of $524,265, or 16% is primarily due to increases of $349,363 in salaries tied to timing of bonus payments, $229,650 in increased marketing expenses, and $50,717 in timing of general liability insurance payments, offset by an $89,475 decrease in D&O insurance premiums.

Research and Development Expenses. Research and development expenses for the year ended December 31, 2025, totaled $2,259,796 in comparison to $2,400,777 for the comparable period a year ago. The decrease of $140,981, or 6% was primarily due to the CELZ-201-ADAPT spine trial completing recruitment and dosing, going into follow-up visits and timing in the development of our iPSC cell line in partnership with Greenstone Biosciences Inc.

Operating Loss. For the reasons stated above, our operating loss for the year ended December 31, 2025, was $6,142,814 in comparison with $5,743,861 for the comparable period a year ago.

Other Income. Other income for the year ended December 31, 2025, totaled $147,806 in comparison with $250,380 for the comparable period a year ago. The decreased income of $102,574 or 41%, is due to a $651,655 reduced average balance and lower interest rates on our short-term U.S. treasuries.

Net Income/Loss. For the reasons stated above, our net loss for the year ended December 31, 2025, was $5,995,008 in comparison with a loss of 5,493,481 for the comparable period a year ago.

Amortization Expense. We acquired a patent (U.S. Patent No. 8,372,797) from CMH on February 2, 2016, in exchange for shares of our restricted common stock valued at $100,000. The patent expires in 2026 and we have elected to amortize the patent over a ten-year period on a straight-line basis. On August 25, 2016, CMT entered into a License Agreement which grants it the exclusive right to all products derived from US Patent No. 7,569,385 for multipotent amniotic fetal stem cells. Under the terms of the license agreement, CMT paid an initial license fee within 30 days of entering into the agreement. The patent expires in 2026 and we have elected to amortize the patent over a ten-year period on a straight-line basis. On May 17, 2017, CMT purchased U.S. Patent No. 9,598,673 covering use of various stem cells for treatment of lower back pain from CMH. Under the terms of the agreement, the Company was required to pay CMH $100,000. The agreement was modified in November 2017 to waive payment of the initial license fee, modify the fee structure, and add the ability to convert the outstanding payable balance into common shares. In November 2020, the Company announced the commercialization of the lower back procedure using a patient's own cells ("autologous"). This milestone triggered a milestone payment due from the Company to CMH in the amount of $300,000, which was subsequently paid. The patent expires in 2027, and we have elected to amortize the patent over a ten-year period on a straight-line basis. In December 2020, we entered into a Patent License Agreement with Jadi Cells, Inc. Execution of the contract triggered a milestone payment due from the Company to Jadi Cells, Inc. in the amount of $250,000, which was paid with shares of our common stock in February 2022. In August 2023, the Company paid CMH $100,000 related to the filing of an IND with the FDA per the terms of the agreement. We have elected to amortize the patent over a ten-year period on a straight-line basis.

Amortization expense of $123,327 was recorded for the year ended December 31, 2025, representing the amortization of the ED, multipotent amniotic fetal stem cell and lower back pain patents and the Jadi Cell patent license agreement based upon the remaining life of the patents and license agreement. There was $110,452 of amortization expense recorded for the period ended December 31, 2024.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.

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Liquidity and Capital Resources

As of December 31, 2025, we had $7,208,126 of available cash and certificates of deposit and positive working capital of approximately $7,114,134. In comparison, as of December 31, 2024, we had approximately $5,940,402 of available cash and positive working capital of approximately $5,807,659.

On May 14, 2024, Timothy Warbington, our Chief Executive Officer, purchased one share of our newly designated Series B Preferred Stock for a purchase price of $100. The Series B Preferred Stock had no voting rights other than the right to 100,000,000 votes on a proposal to approve an amendment to the Company's Articles of Incorporation increasing the number of authorized shares of the Company's common provided, however, that the Series B Preferred Stock will be voted in the same proportion as the votes cast by shares of common stock on the Share Increase Proposal. The share of Series B Preferred Stock were automatically redeemed when the Share Increase Proposal was approved. The Series B Preferred Stock was not convertible into common stock.

On, Oct. 23, 2024 we sold 418,552 shares of our common stock at a price of $4.42 per share to certain institutional investors in a registered direct offering priced at-the-market under Nasdaq rules. In a concurrent private placement, we issued the same investors warrants to purchase up to 837,104 shares of common stock. The warrants have an exercise price of $4.42 per share, are exercisable until December 19, 2029. Net proceeds from these offerings were approximately $1.6 Million. Roth Capital Partners acted as the exclusive placement agent for the offerings.

On December 19, 2024, the stockholders of the Company approved an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000 to 25,000,000.

On March 6, 2025 entered into warrant exercise inducement agreements with holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 837,104 shares of common stock of the Company originally issued in October 2024 at the exercise price of $4.42 per share, in exchange for the issuance of new warrants. The aggregate gross proceeds from the exercise of the existing warrants was $3.7 million, before deducting financial advisory fees. The new warrants were exercisable for an aggregate of up to 1,674,208 shares of common stock, at an exercise price of $3.75 per share, for a period of five years following shareholder approval of the exercise price of the warrants that occurred on May 5, 2025.

On October 29, 2025 we entered into warrant exercise inducement agreements with holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 1,116,136 shares of common stock of the Company originally issued in March 2025, at the exercise price of $3.75 per share, in exchange for the issuance of new warrants. The aggregate gross proceeds from the exercise of the existing warrants was approximately $4.2 million, before deducting financial advisory fees. The new warrants are exercisable for an aggregate of up to 2,790,340 shares of common stock, at an exercise price of $2.86 per share. The new warrants are exercisable for a period of five years following shareholder approval of the exercise of the warrants that occurred on December 26, 2025. In addition, in connection with this transaction, the Company agreed to (i) reduce the exercise price of certain warrants issued in May 2022 and December 2021 to $4.73 per share, and (ii) issue warrants to purchase up to 279,036 shares of common stock in the same form as the issued warrants, to an investor that consented to the transaction.

Net Cash used in Operating Activities. We used cash in our operating activities due to our losses from operations. Net cash used in operating activities was $5,856,445 for the year-ended ended December 31, 2025, in comparison to $5,301,292 for the comparable period a year ago, a decrease of $555,153 or 10%. The increase in cash used in operations was primarily related to increased operating expenses.

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Net Cash used in Investing Activities. Cash used from investing activities was $50,500 for the year ended December 31, 2025, due to $50,500 in an investment in a convertible note and common stock purchase warrant of a publicly-traded company. In comparison, we received $6,320,191 for the year ended December 31, 2024 primarily due to $6,520,191 in net certificate of deposit redemptions, offset by a $200,000 payment on a patent purchase agreement.

Net Cash from Financing Activities.

In the year ended December 31, 2025, we received net cash from financing activities of $7,174,666, consisting of proceeds from the exercise of warrants in March and October 2025. During such year, we also used $10,000 on the repurchase of stock, which was offset by $10,800 contributed to the capital of an entity in which we own a controlling interest by the minority member of such entity, which is accounted for as cash of $10,000 received by us in financing activities. In the year ended December 31, 2024, we spent $174,964 on stock repurchases, received $100 from the sale of preferred stock and received $1,629,500 from the sale of common stock and warrants in our October 2024 private offering.

We have continued to realize losses from operations. However, as a result of our recent warrant exercise transactions, we believe we will have sufficient cash to meet our anticipated operating costs and capital expenditure requirements through at least March 2027. We anticipate that we will need to raise additional capital in the future to support our ongoing operations and continue our clinical trials. We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our proposed products through clinical development, manufacturing, and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. There can be no guarantee that we will be successful in our ability to raise capital to fund future operational and development initiatives.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles accepted in the United States. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.