Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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

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 thereto and other financial information included elsewhere in this Annual Report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our actual results and the timing of events could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report, particularly in the section titled "Risk Factors." Please also see the section titled "Special Note Regarding Forward-Looking Statements."

Overview

We are a clinical-stage biotechnology company committed to the discovery, development, and commercialization of novel, disease-modifying therapies for rare, pediatric LSDs. Our therapeutic philosophy is centered on delivering safe, effective, and patient-friendly treatments that address the underlying pathophysiology of these catastrophic diseases and their significant unmet need. Our multi-modal approach integrates small molecule therapies, including a combination therapy, and a gene therapy, positioning us to potentially address both the genetic and downstream pathological features of LSDs. Our small molecule product candidates share target indications as well as similar mechanisms that have been demonstrated to address lysosomal dysfunction, neuroinflammation, and neuronal loss in our validated animal models that closely mimic human clinical phenotypes. Our most advanced product candidate, PLX-200, targets several LSDs and we intend to launch a Phase 2 proof-of-concept basket trial which may enhance PLX-200's potential to become the standard of care across multiple LSDs.

Our product candidate pipeline includes:

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PLX-200, our most advanced, clinical-stage product candidate, is an oral, repurposed small molecule.

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PLX-300 is a novel, oral small molecule therapy in IND application-enabling studies in treatment of lysosomal storage disorders.

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PLX-100 is a preclinical stage orally administrable combination therapy comprised of our PPARα agonist, PLX-200, and vitamin A, a retinoid X receptor alpha ("RXRα") agonist. PLX-100 is being developed for the treatment of LSDs.

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PLX-400 is a preclinical stage novel gene therapy in treatment of lysosomal storage disorders.

We focus our clinical development program on specific LSDs that are typically treated by symptom and palliative care and, with the exception of CLN2, lack approved disease-modifying therapies. We have accumulated an expansive base of preclinical data and knowledge on CLN2 and CLN3, Sandhoff disease, and NPD type A and type B. Our drug candidates have been validated in gold standard preclinical animal models. With similar broad disease pathology shared across multiple LSDs in terms of substrate accumulation, neuroinflammation and neuronal loss, we believe our small molecule drug candidates have the potential to demonstrate high therapeutic potential in other targeted indications. Our development program of focus includes NCLs, Krabbe disease, Tay-Sachs and Sandhoff Diseases, and NPD types A and B.

We are advancing PLX-200, our most advanced product candidate, through a Phase 2 proof-of-concept basket trial which we refer to as SOTERIA (PLX-200-600). We expect to initiate this trial in the second half of 2026. SOTERIA is an open-label, multi-indication, master study for the treatment of certain LSDs which we believe represent approximately one quarter of the LSD population, including CLN2, CLN3, Krabbe disease, and Sandhoff disease. We held a pre-IND submission meeting in April 2025. We submitted an IND application to the FDA for the SOTERIA trial in August 2025 and received a safe to proceed letter in October 2025. Data readouts from SOTERIA are expected to provide guidance and a clear pathway for each of the four indications towards potentially registrable trials. Further, with the precedent approval of Brineura, a drug approved to treat CLN2 on the basis of a single-arm, natural history comparator, open-label trial, we believe there may be an opportunity in CLN2 and CLN3 for PLX-200 to seek accelerated approval from the FDA based on precedent approval for a third-party drug with a similar trial design. Should PLX-200 evidence overwhelming efficacy from the CLN2 and CLN3 cohorts in the SOTERIA trial, we believe there may be a case to seek accelerated approval. Products studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. The precedent case of cerliponase alfa, a drug approved by FDA in treatment of CLN2, provides a benchmark for accelerated approval based on results generated from an open-label, single arm trial comparing to natural history data studying Batten disease. SOTERIA's current trial design for the CLN2 and CLN3 cohorts share the same open-label, single-arm design using natural history.

PLX-200 has already received authorization under two separate IND applications to initiate potentially single pivotal trials in CLN2 and CLN3, the most prevalent subtypes of NCLs. The IND for CLN2 was filed in December 2019 by Polaryx, with CRO support from Premier Research. A Study May Proceed letter was received in January 2020. The IND for CLN3 was filed in March 2020 by Polaryx, with CRO support from Premier Research. A Study May Proceed letter was received in April 2020.

Since our inception in August 2014, we have devoted substantially all of our resources to raising capital, organizing and staffing our company, business and scientific planning, conducting discovery and research activities, acquiring product programs, establishing and protecting our intellectual property portfolio, developing and progressing our pipeline, establishing arrangements with third parties for the manufacture of our programs and component materials, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue from product sales. Since our inception through the date of this Annual Report, we have funded our operations primarily through the issuance of $21.7 million of common stock and preferred stock.

We have incurred significant operating losses since inception and expect to incur losses in the future as we continue our research and development activities. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of any product candidates we may develop. We incurred net losses of approximately $9.0 million and $30.4 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of approximately $99.6 million.

We expect to continue to incur significantly increased expenses for the foreseeable future if and as we:

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advance the development of our lead product candidates through clinical development, and, if approved by the FDA, commercialization;

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advance our preclinical development programs into clinical development;

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incur manufacturing costs to supply our product candidates;

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seek regulatory approvals for any of our product candidates that successfully complete clinical trials;

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increase our research and development activities to identify and develop new product candidates;

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hire additional personnel;

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expand our operational, financial and management systems;

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meet the requirements and demands of operating as a public company;

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invest in further development to protect and expand our intellectual property;

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ultimately establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize; and

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expand our manufacturing and develop our commercialization efforts.

Due to the numerous risks and uncertainties associated with biopharmaceutical product development and the economic and developmental uncertainty, we may be unable to accurately predict the timing or magnitude of all expenses. Our ability to ultimately generate revenue to achieve profitability will depend heavily on the development, approval, and subsequent commercialization of our product candidates. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As a result, we will need substantial additional funding to support our long-term continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. We may not be able to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we will have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of December 31, 2025, we had cash and cash equivalents of approximately $5.1 million. Based on our current operating plan, we estimate that our existing cash and cash equivalents as of the date of this Annual Report, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through the third quarter of 2026. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

Financial Overview

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for any of our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. We cannot predict if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.

Operating Expenses

Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.

Research and Development Expenses

Research and development expenses consist of costs associated with the preclinical and clinical development of our product candidates, which include:

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personnel-related expenses, including salaries and benefits for employees engaged in research and development functions;

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expenses incurred in connection with the clinical development and regulatory approval of our product candidates, including under agreements with third parties, such as consultants, contractors and CROs; and

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other expenses related to research and development.

We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.

Research and development activities are central to our business model. We expect that our research and development expenses will increase substantially for the foreseeable future in connection with our planned clinical development activities.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation and benefits for our personnel and advisors. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, direct and allocated facility related expenses and other operating costs.

We anticipate that our general and administrative expenses will increase substantially for the foreseeable future as we increase our administrative headcount to operate as a public company and as we advance our product candidates through clinical development. We also will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional services. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur expenses associated with building a sales and marketing team if we choose to commercialize such product candidates on our own.

Other Expense - Direct Listing Offering Costs

Other expense - direct listing offering costs primarily consists of costs related to the direct listing public offering completed on February 2, 2026 (the "Direct Listing"), including legal, accounting, and other expenses.

Other Expense - Recapitalization of Common Stock

Other expense - recapitalization of common stock primarily consists of shares of common stock issued to certain existing stockholders to enable them to substantially align with the implied value of our Company as of that date determined by our Board.

Statements of Operations

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our statements of operations for the periods presented.

		Year Ended December 31,
		2025				2024				$ Change
		(in thousands)
Operating expenses:
Research and development expenses		$	6,266			$	2,811			$	3,455
General and administrative expenses			1,555				1,541				14
Total operating expenses			7,821				4,352				3,469
Operating loss			(7,821	)			(4,352	)			(3,469	)
Other expense - direct listing offering costs			(1,164	)			-				(1,164	)
Other expense - recapitalization of common stock			-				(26,004	)			26,004
Net loss and comprehensive loss		$	(8,985	)		$	(30,356	)		$	21,371

Research and development expenses

Research and development expenses increased by $3.5 million to $6.3 million for the year ended December 31, 2025, as compared to $2.8 million for the year ended December 31, 2024, primarily due to consulting expenses, expenses incurred under two statements of work pursuant to the Rush MSA, CRO services, and stock-based compensation expenses. Research and development expenses were substantially related to PLX-200. Stock-based compensation increased by $2.6 million primarily related to the issuance of 3,704,307 shares of common stock to two existing stockholders in return for an exclusive gene therapy patent license totaling $4.3 million, partially offset by $1.7 million related to Mstone as compensation for advisory services. Of the total 3,704,307 shares issued, 277,823 shares were issued to Rush and 3,426,484 shares were issued to Mstone. Consulting expenses increased by $267 thousand related to the support and business development-related services from Mstone. Expenses incurred under two statements of work pursuant to the Rush MSA increased by $133 thousand. CRO formulation services increased by $248 thousand and CRO toxicology services increased by $88 thousand.

General and administrative expenses

General and administrative expenses increased by $14 thousand to $1.5 million for the year ended December 31, 2025, as compared to $1.5 million for the year ended December 31, 2024, primarily due to decreased stock-based compensation, offset by increased audit and consulting expenses. Stock-based compensation decreased by $285 thousand, primarily due to the conclusion in June 2024 of Mstone's advisory services provided pursuant to the Letter Agreement, offset by increase in stock-based compensation, primarily due to shares issued to a financial advisor for advisory services that began in October 2024. This was offset by an increase in audit fees of $147 thousand and consulting services from Mstone of $97 thousand.

Other expense - direct listing offering costs

Other expense - direct listing offering costs was $1.2 million for the year ended December 31, 2025, as compared to zero for the year ended December 31, 2024 due to legal, accounting, and advisory expenses related to the preparation of the direct listing offering.

Other expense - recapitalization of common stock

Other expense - recapitalization of common stock was zero for the year ended December 31, 2025, as compared to $26.0 million for the year ended December 31, 2024, due to shares of common stock issued to certain stockholders in February 2024 to enable them to be substantially aligned with the implied value of Polaryx as of that date as determined by our Board.

Income taxes

The effective income tax rate was 0.0% for all periods. Currently, we have recorded a full valuation allowance against our net deferred tax assets.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of our programs. From our inception through the date of this Annual Report, we have funded our operations primarily with proceeds from the sales of our equity securities totaling $21.7 million. As of December 31, 2025, we have no outstanding debt.

The following table presents the Company's cash and cash equivalents as of December 31, 2025 and December 31, 2024:

		December 31, 2025				December 31, 2024
Cash and cash equivalents		$	5,143			$	4,621

Cash Flows

The following table presents cash provided by (used in) operating and financing activities during the years ended December 31, 2025 and 2024:

		Year Ended December 31,
		2025				2024
		(in thousands)
Net cash flows (used in) operating activities		$	(3,944	)		$	(2,573	)
Net cash flows provided by financing activities			4,466				7,192
Net change in cash and cash equivalents		$	522			$	4,619

Operating Activities

Net cash used in operating activities was $3.9 million for the year ended December 31, 2025 and was primarily due to a net loss of $9.0 million, offset by working capital increases of $316 thousand and stock-based compensation of $4.7 million.

Financing Activities

Net cash provided by financing activities was $4.5 million for the year ended December 31, 2025 and was primarily due to proceeds from issuance of common stock of $4.5 million partially offset by payments related to issuance of common stock of $27 thousand.

Future Funding Requirements

We do not have any products approved for sale, and we have never generated any revenue from product sales. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current or future product candidates and we do not know when, or if, that will occur. We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our current and future product candidates, and begin to commercialize any approved products. We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. Moreover, we expect to incur additional costs associated with operating as a public company.

The financial statements have been prepared as though we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred operating losses and negative cash flows from operations since inception. As of December 31, 2025, we had an accumulated deficit of approximately $99.6 million. Management expects to continue to incur operating losses and negative cash flows.

We will need to raise additional capital to continue to fund our operations. We believe we will be able to obtain additional capital through equity financings or other arrangements to fund operations; however, there can be no assurance that such additional financing, if available, can be obtained on acceptable terms. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued.

We believe that our existing capital will enable us to fund our operations through the third quarter of 2026. We may need to raise additional capital in connection with our cash needs for capital expenditures and working capital beyond the third quarter of 2026. We have based the foregoing estimate on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we expect.

Our future funding requirements will depend on many factors, including, but not limited to:

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the initiation, progress, timeline, cost and results of our clinical trials for our product candidates;

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the initiation, progress, timeline, cost and results of additional research and preclinical studies related to pipeline development and other research programs we initiate in the future;

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the cost and timing of manufacturing activities, including our planned manufacturing scale-up activities associated with our product candidates and other programs as we advance them through preclinical and clinical development through commercialization;

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the potential expansion of our current development programs to seek new indications;

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the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

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the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, in-licensed or otherwise;

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the effect of competing technological and market developments;

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the payment of licensing fees, potential royalty payments and potential milestone payments;

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the cost of general operating expenses;

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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and

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the costs of operating as a public company.

Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.

If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our preclinical studies, clinical trials, research and development programs or commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations and other licensing arrangements. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

Contractual Obligations and Other Commitments

As of December 31, 2025, we had no non-cancellable commitments for purchase of clinical materials, contract manufacturing, maintenance and committed funding which we expect to pay within one year.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements or holdings in any variable interest entities.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends and the assessment of the probable future outcome. Subjective and significant estimates include, but are not limited to, research and development accruals as well as stock-based compensation expense. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in the statements of operations in the period that they are determined.

We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. For further information, refer to Note 2 "Summary of Significant Accounting Policies" to our financial statements included elsewhere in this Annual Report.

Research and Development Expenses and Accruals

All research and development expenses are charged to operations as incurred. Research and development expenses primarily consist of costs associated with the preclinical and clinical development of the Company's product candidates, including the following:

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external research and development expenses incurred under arrangements with third parties, such as CROs and other vendors and CMOs to produce drug substance and drug product; and

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employee-related expenses, including salaries and benefits.

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced. Most of our service providers invoice monthly in arrears for services performed or when contractual milestones are met. Estimates of accrued expenses as of each balance sheet date in our financial statements are based on facts and circumstances known at that time. We periodically confirm the accuracy of estimates with the service providers and adjust if necessary. The significant estimates in accrued research and development expenses are related to expenses incurred with respect to CROs, contract manufacturing organizations ("CMOs") and other vendors in connection with research and development and manufacturing activities.

We base our expenses related to CROs and CMOs on estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, we estimate the time over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from estimates, the accrual or prepaid expense is adjusted accordingly. Although estimates are not expected to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.

Stock-Based Compensation Expense and Common Stock Valuations

We recognize compensation costs related to stock-based awards to employees and non-employees based on the estimated fair value of the awards on the date of grant and it is recognized as an expense over the requisite service period. For grants containing performance-based vesting provisions, the grant-date fair value of the milestone-based stock-based payment awards is recognized as compensation expense once it is probable that the condition will be achieved. We account for actual forfeitures in the period the forfeitures occur.

We will continue to use judgment in evaluating the assumptions utilized for our stock-based compensation expense calculations on a prospective basis. Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expenses could be materially different.

The calculation of the fair value of awards requires an estimate of the Company's equity value. As the Company historically has been a privately held company with no trading history for its common stock to date, the estimated fair value of the Company's common stock has been approved by the Board, with input from management, valuations by third-party specialists, as well as upon the price per share from recent stock issuances to certain investors at that time. To determine the fair value, management considered the price per share from recent stock issuances to certain investors at that time, most recently available third-party valuations of its common stock and an assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Additional factors include, among others, the nature and history of the Company's business; the Company's stage of development and commercialization; external market conditions; valuations of the Company's industry peers; and the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company. These third-party valuations are performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants' Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The third-party common stock valuations are prepared using the market approach (guideline public company method) to estimate the Company's enterprise value.

Recent Accounting Pronouncements

See Note 2 "Summary of Significant Accounting Policies" to our financial statements included elsewhere in this Annual Report for a discussion of accounting pronouncements recently issued but not yet adopted and their potential impact to our financial statements.

Emerging Growth Company Status and Smaller Reporting Company Status

We are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including relief from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (as amended, the "Sarbanes-Oxley Act"), less extensive disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on executive compensation, and exemptions from stockholder approval of any golden parachute payments not previously approved. We may also elect to take advantage of other reduced reporting requirements in future filings. As a result, our stockholders may not have access to certain information that they may deem important and the information that we provide to our stockholders may be different than, and not comparable to, information presented by other public reporting companies. We could remain an emerging growth company until the earlier of (i) the last day of the year following the fifth anniversary of our listing, (ii) the last day of the year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which would occur if the market value of our common stock and non-voting common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

In addition, the JOBS Act also provides that an emerging growth company may take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. An emerging growth company may therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, as a result, will not be subject to the same implementation timing for new or revised accounting standards as are required of other public companies that are not emerging growth companies, which may make comparison of our financial information to those of other public companies more difficult.

We are also a "smaller reporting company," meaning that the market value of our common stock and non-voting common stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company as long as (i) the market value of our common stock and non-voting common stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our common stock and non-voting common stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.