Acumen Pharmaceuticals, Inc.

Previous wording

We are a clinical-stage biopharmaceutical company developing a novel disease-modifying approach to target what we believe to be a key underlying cause of Alzheimer’s disease, or AD. Alzheimer’s disease is a progressive neurodegenerative disease of the brain that leads to loss of memory and cognitive functions and ultimately results in death. Our scientific founders pioneered research on soluble amyloid-beta oligomers, or AßOs, which are globular assemblies of the amyloid-beta, or Aß, peptide that are distinct from Aß monomers and amyloid plaques. Based on decades of research and supporting evidence, AßOs have gained increasing scientific acceptance as a primary toxin involved in the initiation and propagation of AD pathology. We are currently focused on advancing a targeted immunotherapy drug candidate, sabirnetug, inour Phase 2 ALTITUDE-AD clinical trial following Phase 1 results in “early AD” patients (patients with mild cognitive impairment or mild dementia due to AD) that were reported in July 2023. Sabirnetug is a recombinant humanized immunoglobulin gamma 2, or IgG2, monoclonal antibody, or mAb, that was designed to selectively target AßOs, has demonstrated functional and protective effects in in vitro assays, and has demonstrated in vivo safety and pharmacologic activity in multiple animal species, including transgenic mouse models for AD.

Current wording

We are a clinical-stage biopharmaceutical company developing a novel disease-modifying approach targeting what we believe to be a key underlying cause of Alzheimer’s disease, or AD. Alzheimer’s disease is a progressive neurodegenerative disease of the brain that leads to loss of memory and cognitive functions and ultimately results in death. Our scientific founders pioneered research on soluble amyloid-beta oligomers, or AßOs, which are globular assemblies of the amyloid-beta, or Aß, peptide that are distinct from Aß monomers and amyloid plaques. Based on decades of research and supporting evidence, AßOs have gained increasing scientific acceptance as a primary toxin involved in the initiation and propagation of AD pathology. We are currently focused on advancing a targeted immunotherapy drug candidate, sabirnetug, inour Phase 2 ALTITUDE-AD clinical trial, and expect to announce top-line results in late 2026. ALTITUDE-AD is a randomized, double-blind, placebo-controlled, three-arm clinical trial designed to evaluate the clinical efficacy, safety and tolerability of sabirnetug with up to 180 participants per arm for a total of 542 participants with mild cognitive impairment or mild dementia due to AD. We plan to use the Integrated Alzheimer’s Disease Rating Scale at 18 months as the primary outcome measure. The active doses for ALTITUDE-AD are 35 mg/kg and 50 mg/kg, dosed intravenously every four weeks. These dose levels and frequency were selected based on extensive pharmacokinetic and pharmacodynamic modeling of our Phase 1 INTERCEPT-AD clinical trial of sabirnetug. Sabirnetug is a recombinant humanized immunoglobulin gamma 2, or IgG2, monoclonal antibody, or mAb, that was designed to selectively target AßOs. In July 2023, we announced topline results from INTERCEPT-AD, which demonstrated that sabirnetug met the primary and secondary objectives of this clinical trial in 62 participants with early AD.

Previous wording

In January 2024, we issued 2,068,246 shares of our common stock under our at-the-market offering program, or the ATM, for net proceeds of $7.9 million, or $3.84 per share.

Current wording

During the year ended December 31, 2025, no shares of our common stock were issued under our at-the-market offering program, or the ATM. In January 2024, we issued 2,068,246 shares of our common stock under our ATM, for net proceeds of $7.9 million, or $3.84 per share.

Previous wording

We have incurred net losses and negative cash flows from operations since our inception. Our net losses were $102.3 million and $52.4 million for the years ended December 31, 2024 and 2023, respectively. Approximately $93.8 million, or 92%, of the net loss for the year ended December 31, 2024 was due to research and development spending. As of December 31, 2024, we had an accumulated deficit of $325.1 million. Our net losses and cash flows from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of nonclinical studies, clinical trials and our expenditures on other research and development activities. We expect our expenses and operating losses will increase substantially for the foreseeable future as we advance sabirnetug in clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, regulatory and quality capabilities, and incur additional costs associated with operating as a public company. It is likely that we will seek third-party collaborators for the future commercialization of sabirnetug or any other product candidate that is approved for marketing. Should we seek to commercialize our products at our own expense, we would incur significant additional expenses for marketing, sales, manufacturing and distribution. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates.

Current wording

We have incurred net losses and negative cash flows from operations since our inception. Our net losses were $121.3 million and $102.3 million for the years ended December 31, 2025 and 2024, respectively. Approximately$104.9 million, or 86%, of the net loss for the year ended December 31, 2025 was due to research and development spending. As of December 31, 2025, we had an accumulated deficit of $446.5 million and cash and cash equivalents and marketable securities of$116.9 million. We expect our expenses and operating losses will increase substantially for the foreseeable future as we advance sabirnetug in clinical development, seek to expand our product candidate portfolio through developing additional product candidates, and incur additional costs associated with operating as a public company. It is likely that we will seek third-party collaborators for the future commercialization of sabirnetug or any other product candidate that is approved for marketing. Should we seek to commercialize our products at our own expense, we would incur significant additional expenses for marketing, sales, manufacturing and distribution. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates.

Previous wording

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. In addition, global economic conditions may impact our ability to raise additional funds, and we may be impacted by disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, rising inflation and supply disruptions, the ongoing conflict between Russia and Ukraine, and Israel and Hamas and related sanctions, and otherwise. If these conditions persist and deepen, we could experience an inability to access additional capital, or our liquidity could otherwise be impacted. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs and/or future commercialization efforts. Our failure to raise capital or enter into such agreements as, and when needed, could have a material adverse effect on our business, results of operations and financial condition.

Current wording

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. In addition, global economic conditions may impact our ability to raise additional funds, and we may be impacted by disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, tariff policy and geopolitical tensions between the United States and foreign countries, rising inflation and supply disruptions, the ongoing conflicts between Russia and Ukraine, the recent military actions involving Iran, and the Israel-Hamas war and related sanctions, and otherwise. If these conditions persist and deepen, we could experience an inability to access additional capital, or our liquidity could otherwise be impacted. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs and/or future commercialization efforts. Our failure to raise capital or enter into such agreements as and when needed could have a material adverse effect on our business, results of operations and financial condition.

Previous wording

•consulting and professional fees related to research and development activities, including stock-based compensation to non-employees;

Current wording

•consulting and professional fees related to research and development activities, including noncash stock-based compensation to non-employees;

Previous wording

•employee-related expenses, including salaries, benefits and stock-based compensation expenses for our research and development personnel.

Current wording

•employee-related expenses, including salaries, benefits and noncash stock-based compensation expenses for our research and development personnel.

Previous wording

As we currently only have one product candidate, sabirnetug, in development, we do not separately track expenses by program. Further, we have historically relied primarily on consultants for research and development activities; our internal research and development personnel costs currently represent approximately 16% of our total research and development expenses. Our research and development expenses increased substantially since initiating the clinical trial program for sabirnetug in 2021. We expect that our research and development expenses will continue to increase, substantially in connection with our continued clinical development activities for sabirnetug.

Current wording

As we currently only have one product candidate, sabirnetug, in clinical development, we do not separately track expenses by program. Further, we have historically relied primarily on consultants for research and development activities; our internal research and development personnel costs currently represent approximately 16% of our total research and development expenses. Our research and development expenses increased substantially since initiating the clinical trial program for sabirnetug in 2021. We expect that our research and development expenses will continue to increase substantially in connection with our continued clinical development activities for sabirnetug.

Previous wording

General and administrative expenses consist primarily of employee-related expenses, including stock-based compensation costs, as well as business insurance, management and business consultants and other related costs. General and administrative expenses also include professional fees for legal, consulting, accounting, auditing, tax and patent services, investor and public relations, recruiting expenses, board of directors’ expenses, information technology, franchise taxes, rent, travel expenses and subscriptions.

Current wording

General and administrative expenses consist primarily of employee-related expenses, including noncash stock-based compensation costs, as well as business insurance, management and business consultants and other related costs. General and administrative expenses also include professional fees for legal, consulting, accounting, auditing, tax, patent services, investor and public relations, board of directors’ expenses, information technology, franchise taxes, rent, travel expenses and subscriptions.

Previous wording

We expect that our general and administrative expenses will increase as our organization and headcount required in the future grows to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees incurred for outside consultants, attorneys and accountants, among other expenses. Additionally, we expect to continue to incur significant expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, director and officer insurance costs, and investor and public relations costs.

Current wording

We expect that our general and administrative expenses will remain consistent for the foreseeable future and may increase as our organization and headcount required in the future grows to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees incurred for outside consultants, attorneys and accountants, among other expenses. Additionally, we expect to continue to incur significant expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, director and officer insurance costs, and investor and public relations costs.

Previous wording

Other income (expense) includes interest income, interest expense, change in fair value of embedded derivatives and other expense, net. Interest income consists of interest income earned, as well as amortization and accretion of premiums and discounts, related to our investments in marketable securities. Interest expense includes interest due under the Loan Agreement, as well as the amortization of the related debt discount. The change in fair value of embedded derivatives relates to the embedded derivatives that were bifurcated from the term loan, borrowed under the Loan Agreement, and accounted for as a derivative at fair value and which is remeasured at each reporting period for the term of the loan. Other expense, net generally consists of fees incurred on our investments in marketable securities.

Current wording

Other income (expense) includes interest income, interest expense, change in fair value of embedded derivatives and other expense, net. Interest income consists of interest income earned, as well as amortization and accretion of premiums and discounts, related to our investments in marketable securities. Interest expense includes interest due under the Loan Agreement, as well as the amortization of the related debt discount. The change in fair value of embedded derivatives relates to the embedded derivatives that were bifurcated from the term loan, borrowed under the Loan Agreement, and accounted for as a derivative at fair value which is remeasured at each reporting period for the term of the loan. Other expense, net generally consists of fees incurred on our investments in marketable securities.

Previous wording

Research and development expenses were $93.8 million and $42.3 million for the years ended December 31, 2024 and 2023, respectively. The $51.5 million increase was primarily due to $35.6 million for CRO costs associated with the ALTITUDE-AD clinical trial, for which we announced the dosing of the first patient in May 2024. Additionally, we incurred $5.3 million for higher personnel-related costs, which included a $1.7 million increase for non-cash stock-based compensation expenses, as well as increases in the following: $3.2 million for license agreement expenses, $2.9 million for manufacturing and materials, $1.4 million for storage, shipping and packaging, $1.1 million for other research projects, $0.8 million for other clinical trial expenses, $0.5 million for travel and conferences, $0.4 million related to services provided by research and development contractors and consultants and $0.3 million for other miscellaneous costs.

Current wording

Research and development expenses were $104.9 million and $93.8 million for the years ended December 31, 2025 and 2024, respectively. The $11.1 million increase was primarily due to a $15.9 million increase for manufacturing and materials mainly associated with our ALTITUDE-AD clinical trial. Additionally, we incurred a $2.6 million increase for personnel-related costs, including share-based compensation expense, a $1.1 million increase for other research expenses including EBD research, a $0.6 million increase for shipping, packaging and storage costs, a $0.4 million increase for other clinical trial costs and $0.3 million for other expenses such as insurance and software. These increased expenses were partially offset by a decrease of $4.7 million for license agreement expense, a $2.3 million decrease in CRO costs associated with our ALTITUDE-AD clinical trial mainly due to pass through costs, a $1.6 million decrease related to services provided by research and development contractors and consultants and a $1.2 million decrease in clinical assay development work.

Previous wording

General and administrative expenses were $20.2 million and $18.8 million for the years ended December 31, 2024 and 2023, respectively. The $1.4 million increase was primarily due to increases of $2.3 million for personnel costs, including an increase of $1.8 million for non-cash stock-based compensation expenses, and $0.3 million for recruiting expenses, partially offset by reductions of $0.5 million in corporate insurance expenses, $0.4 million for consulting expenses and $0.3 million for legal/patent expenses.

Current wording

General and administrative expenses were $18.9 million and $20.2 million for the years ended December 31, 2025 and 2024, respectively. The $1.3 million decrease was primarily due to $0.6 million for recruiting expense, $0.4 million for corporate insurance expense and $0.3 million for consulting costs.

Previous wording

Other income increased by $2.9 million to $11.7 million for the year ended December 31, 2024 from $8.8 million for the year ended December 31, 2023. The increase was primarily attributable to a $3.5 million increase in interest income on our portfolio of marketable securities due to both higher interest rates and higher average investments in marketable securities during 2024, as well as a $3.0 million increase in change in fair value of embedded derivatives due to the decrease in fair value of the embedded derivatives that are bifurcated from the term loan under the Loan Agreement. These increases in other income were partially offset by an increase in interest expense of $3.5 million related to our Loan Agreement funded in November 2023 and other expense, net of $0.1 million.

Current wording

Other income decreased by $9.2 million to $2.5 million for the year ended December 31, 2025 from $11.7 million for the year ended December 31, 2024. The decrease was primarily attributable to a $6.9 million decrease in interest income on our portfolio of marketable securities due to a lower average investment balance in marketable securities during the year ended December 31, 2025. Additionally, there were increased expenses associated with the change in fair value of our embedded derivatives related to our Loan Agreement of $2.1 million. These decreases in other income were partially offset by an increase in interest expense of $0.2 million related to our Loan Agreement and other expense, net of $0.1 million.

Previous wording

Our operations have been financed primarily by net proceeds from the sale and issuance of our common stock and convertible preferred stock, net proceeds from our initial public offering, or the IPO, and the Offering, the issuance of notes, grant revenue and, during our collaboration with Merck, which was in place from 2003 to 2011, certain payments received under our collaboration agreement.

Current wording

Our operations have been financed primarily by net proceeds from the sale and issuance of our common stock and convertible preferred stock, net proceeds from our initial and subsequent public offering, the Private Placement and from sales of shares of our common stock under our ATM, borrowings under the Loan Agreement, the issuance of notes, grant revenue and, during our collaboration with Merck, which was in place from 2003 to 2011, certain payments received under our collaboration agreement.

Previous wording

On July 1, 2022, we filed a shelf registration statement on Form S-3, or the Registration Statement. Pursuant to the Registration Statement, we may offer and sell securities having an aggregate public offering price of up to $200.0 million. In connection with the filing of the Registration Statement, we also entered into a sales agreement, or the Sales Agreement, with BofA Securities, Inc. and Stifel, Nicolaus & Company, Incorporated, as sales agents, pursuant to which we may issue and sell shares of our Common Stock for an aggregate offering price of up to $50.0 million under an ATM, which is included in the $200.0 million of securities that may be offered pursuant to the Registration Statement. On April 23, 2023, we entered into an amendment to the Sales Agreement, or, as amended, the Amended Sales Agreement, to add BTIG, LLC as a sales agent under the Amended Sales Agreement. Pursuant to the Amended Sales Agreement, we will pay the sales agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of our Common Stock. We are not obligated to make any sales of shares of our Common Stock under the ATM. In January 2024, we issued 2,068,246 shares of Common Stock under the ATM for net proceeds of $7.9 million, or $3.84 per share.

Current wording

In connection with the filing of the 2022 Registration Statement, we also entered into a sales agreement, or the Sales Agreement, with BofA Securities, Inc., or BofA, and Stifel, Nicolaus & Company, Incorporated, or Stifel, as sales agents, pursuant to which we may issue and sell shares of our common stock for an aggregate offering price of up to $50.0 million under the ATM, which was included in the $200.0 million of securities that were registered for sale pursuant to the 2022 Registration Statement. On April 23, 2023, we entered into an amendment to the Sales Agreement, or as amended, the Amended Sales Agreement, to add BTIG, LLC, or BTIG, as a sales agent under the Amended Sales Agreement. BTIG, BofA and Stifel are collectively referred to as the Sales Agents. Pursuant to the Amended Sales Agreement, we will pay the Sales Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of our common stock made under the ATM. We are not obligated to make any sales of shares of our common stock under the ATM.

Previous wording

On July 21, 2023, we issued 16,774,193 shares of our common stock in an underwritten public offering, or the Offering, at a price to the public of $7.75 per share. The net proceeds from the Offering, after underwriting discounts and commissions and other offering expenses, were $121.9 million.

Current wording

On July 21, 2023, we issued 16,774,193 shares of our common stock in an underwritten public offering, or the Offering, at a price of $7.75 per share. The aggregate net proceeds from the Offering, after underwriting discounts and commissions and other offering expenses, were $121.9 million.

Previous wording

On November 10, 2023, we received the first tranche of $30.0 million under the Loan Agreement. As of December 31, 2024, we had cash and cash equivalents and marketable securities totaling $231.5 million. Our available-for-sale marketable securities mature over the next two years. Based on our current operating plan, we expect that our existing cash and cash equivalents and marketable securities will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first half of 2027. 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, including based on our decision to initiate other clinical trials or programs.

Current wording

On November 10, 2023, we received the first tranche of $30.0 million under the Loan Agreement.

Previous wording

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, nonclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are generally cancellable by us after giving a certain amount notice. Payments due upon cancellation consist only of payments for services provided and expenses incurred up to the date of cancellation.

Current wording

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, nonclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments and are generally cancellable by us after giving a certain amount of notice. Payments due upon cancellation consist only of payments for services provided and expenses incurred up to the date of cancellation.

Previous wording

Net cash used in operating activities increased by $43.1 million to $86.2 million for the year ended December 31, 2024, from $43.1 million for the year ended December 31, 2023. The $50.0 million increase in our net loss for the year ended December 31, 2024, as adjusted for non-cash net expenses totaling $1.0 million, accounted for a $49.6 million increase in cash used in operating activities as compared to the prior year. Non-cash items included increases in stock-based compensation expense and non-cash interest expense of $3.5 million and $1.0 million, respectively, which were partially offset by an $1.9 million increase in amortization and accretion income on marketable securities, a $2.9 million increase in income related to a change in fair value of embedded derivatives and a $0.7 million decrease in non-cash equipment lease costs. The adjusted net loss was partially offset by working capital changes of $7.8 million, including increases in cash provided by accrued clinical trial expenses of $9.3 million, accounts payable of $4.5 million and other long-term assets of $0.1 million, partially offset by increases in cash used in prepaid expenses and other current assets of $3.3 million and accrued expenses and other current liabilities of $2.8 million.

Current wording

The increase in net cash used in operating activities of $29.3 million to $115.5 million for the year ended December 31, 2025, from $86.2 million for the year ended December 31, 2024, is primarily attributable to an increase in net loss for the year ended December 31, 2025 of $19.0 million, a net increase in noncash adjustments of $6.4 million and working capital changes of $16.7 million. Significant noncash items consisted of decreases in noncash income for amortization and accretion on marketable securities of $4.2 million and the change in fair value of embedded derivatives of $2.0 million. Working capital changes contributed $16.7 million of additional cash used in operations, including increases in cash used for accrued clinical trial expenses and accounts payable of $15.7 million and $9.3 million, respectively, which were partially offset by cash provided by prepaid expenses and other current assets of $5.0 million and accrued expenses and other liabilities of $3.3 million.

Previous wording

Net cash provided by investing activities increased by $219.7 million to $48.0 million for the year ended December 31, 2024 from cash used in investing activities of $171.7 million for the year ended December 31, 2023, and was primarily due to an increase in maturities of marketable securities of $139.8 million and a decrease in purchases of marketable securities of $79.9 million.

Current wording

Net cash provided by investing activities increased by $85.9 million to $133.9 million for the year ended December 31, 2025 from $48.0 million for the year ended December 31, 2024, and was primarily due to a decrease in purchases of marketable securities of $132.7 million, partially offset by a decrease in cash provided by maturities of marketable securities of $46.7 million and an increase of $0.1 million for purchases of property and equipment.

Previous wording

Based on our current operating plan, we believe that our existing cash and cash equivalents and marketable securities will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first half of 2027. 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, including based on our decision to initiate other clinical trials or programs. In addition, changing circumstances may cause us to increase our spending significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We may need to raise additional funds sooner than anticipated if we choose to expand more rapidly than we presently anticipate.

Current wording

Based on our current operating plan, we believe there is substantial doubt about our ability to continue as a going concern for at least 12 months following the date of issuance of our financial statements included in this Annual Report on Form 10-K. We could exhaust our available capital resources sooner than we expect, including if we decide to initiate other clinical trials or programs. In addition, changing circumstances may cause us to increase our spending significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We may need to raise additional funds sooner than anticipated if we choose to expand more rapidly than we presently anticipate.

Previous wording

Additional funding may not be available to us on acceptable terms or at all. Any such funding may result in dilution to stockholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business. We also could be required to seek funds through arrangements with collaborative partners or otherwise that may require us to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us. Any funds we raise may not be sufficient to enable us to continue to implement our long-term business strategy. Further, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide. Additionally, escalation in interest rates, in conjunction with banking failures, may lead to financial institutions being more prudent with capital deployment and tightening lending. If we are unable to raise sufficient additional capital on a timely basis, we could be forced to curtail our planned operations and the pursuit of our business strategy, which would have a material adverse effect on the value of our common stock.

Current wording

Additional funding may not be available to us on acceptable terms or at all. Any such funding may result in dilution to stockholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business. We also could be required to seek funds through arrangements with collaborative partners or otherwise that may require us to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us. Any funds we raise may not be sufficient to enable us to continue to implement our long-term business strategy. Further, our ability to raise additional capital may be adversely impacted by global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide, as well as tariff policy and geopolitical tensions between the United States and foreign countries. Additionally, escalation in interest rates, in conjunction with banking failures, may lead to financial institutions being more prudent with capital deployment and tightening lending. If we are unable to raise sufficient additional capital on a timely basis, we could be forced to curtail our planned operations and the pursuit of our business strategy, which would have a material adverse effect on the value of our common stock.

Previous wording

We calculate the fair value of embedded derivatives using the Monte Carlo option-pricing model, which requires the use of various highly subjective assumptions, including the expected term, expected volatility, risk-free interest rate and expected dividend yield. Our selection of the expected volatility, risk-free interest rate and expected dividend yield are discussed above under Stock-Based Compensation Expense.

Current wording

We calculate the fair value of embedded derivatives using the Monte Carlo option-pricing model, which requires the use of various highly subjective assumptions, including the expected term, expected volatility, risk-free interest rate and expected dividend yield.

Previous wording

We are also a “smaller reporting company,” meaning that the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 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.

Current wording

We are also a “smaller reporting company,” meaning that the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 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.