{"url_path":"/sec/pbm/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-22","source_url":"https://www.sec.gov/Archives/edgar/data/1985062/0001213900-26-070607-index.html","accession_number":"0001213900-26-070607","cik":"0001985062","ticker":"PBM","issuer_name":"PSYENCE BIOMEDICAL LTD.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1985062/0001213900-26-070607-index.html","primary_entity_key":"0001985062","primary_entity_name":"PSYENCE BIOMEDICAL LTD."},"word_count":4363,"has_tables":true,"body_markdown":"** **\n\nITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS\n\n** **\n\n**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION\nAND RESULTS OF OPERATIONS**\n\n* *\n\n*Unless the context otherwise\nrequires, all references in this section to the “Company,” “we,” “us” or “our” refer to\nthe business of Psyence Biomedical and its subsidiaries.*\n\n* *\n\n*You should read the following discussion and\nanalysis of our financial condition and results of operations in conjunction with our historical condensed consolidated audited financial\nstatements for the years ended March 31, 2026, March 31, 2025 and March 31, 2024 and the related notes included elsewhere in\nthis Report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results\nand the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various\nfactors, including those set forth under “Risk Factors” and elsewhere in this Report.*\n\n* *\n\n*The numbers presented here are\npresented in USD.*\n\n \n\nOverview\n\n** **\n\nPsyence Biomedical Ltd.\n(the “**Company**” or “**PBM**”) is a multi-asset, vertically integrated biopharmaceutical company focused on psychedelic-based therapeutics, with pharmaceutical-grade\ndrug candidates manufactured through its investment in PsyLabs. It is the first life sciences biotechnology\ncompany focused on developing nature-derived (non-synthetic) psilocybin and ibogaine-based psychedelic medicine to be listed on Nasdaq.\nWe are dedicated to addressing unmet mental health needs and are committed to an evidence-based approach in developing safe, effective,\nand FDA-approved nature-derived psychedelic treatments for a broad range of mental health disorders. The Company is currently conducting\nresearch through clinical trials to evaluate the safety and effectiveness of natural psilocybin in treating adjustment disorder in patients\nwith a cancer diagnosis in a palliative care context.\n\n \n\n46\n\n \n\n \n\nOperating Results\n\n** **\n\nSales and marketing costs\n\n \n\nFor the year ended March\n31, 2026, the Company incurred sales and marketing expenses of $218,485 (2025 - $483,530; 2024 – $80,603). The decrease in the\ncurrent year reflects a reduction in investor relations spend and marketing activities compared to the levels incurred during the year\nfollowing the Company’s listing on the NASDAQ in January 2024.\n\n* *\n\nResearch and development expenses and cash\nrebate\n\n \n\nFor the year ended March\n31, 2026, the Company incurred research and development expenses of $1,466,653, compared to $342,168 for the year ended March 31, 2025\nand $954,593 for the year ended March 31, 2024. These costs consisted of $1,384,557 in the current year (March 31, 2025 - $237,168, March\n31, 2024 - $954,593) incurred in relation to the clinical trial, $75,000 (March 31, 2025 - $105,000, March 31, 2024 - $167,306) in licensing\nfees, and $7,096 for general research (March 31, 2025 - $nil, March 31, 2024 - $1,567).\n\n \n\nThe significant year-over-year\nincrease reflects accelerated activity in the Company’s clinical trial program for the treatment of adjustment disorder in palliative\ncare patients, including expanded site costs, patient enrollment costs, and study management expenses under the new contract research\norganization (CRO).\n\n \n\nFor the year ended March\n31, 2026, the Company received $292,247 as a R&D rebate, March 31, 2024, the Company received its first R&D rebate from the Australian\nTax Office (ATO), amounting to $879,344, recognized as other income. This rebate represented 43.5% of the qualifying R&D expenditure\nincurred in Australia during the period. No R&D rebate was received for the year ended March 31, 2025, as clinical trial expenditure\nin Australia was lower compared to the prior year, resulting in reduced qualifying costs for the rebate. The Company anticipates R&D\nexpenditure will continue to increase in future periods as the clinical trial advances toward its primary endpoints and additional trial\nsites are activated.\n\n \n\nGeneral and administration costs\n\n \n\nFor the year ended March\n31, 2026, the Company incurred general and administrative expenses of $892,264, compared to $1,209,847 for the year ended March 31, 2025\nand $557,904 for the year ended March 31, 2024.\n\n \n\nThe decrease in general and\nadministrative expenses in the current year compared to the year ended March 31, 2025 is predominantly due to significant one-time costs\nin the prior year associated with establishing the infrastructure and compliance requirements of a newly U.S.-listed public company. Key\ndrivers of the reduction include lower payroll and related costs, reduced regulatory and compliance fees, and the implementation of cost\nreduction measures across operational support functions. The Company expects general and administrative costs to stabilise at current\nlevels as the corporate infrastructure established following the NASDAQ listing matures, though costs may increase in line with the growth\nof the Company’s operations.\n\n \n\nProfessional and consulting fees\n\n \n\nFor the year ended March\n31, 2026, the Company incurred professional and consulting fees of $3,654,843, compared to $1,623,209 for the year ended March 31, 2025\nand $1,158,484 for the year ended March 31, 2024.\n\n \n\nThe increase in professional\nand consulting fees during the current year was primarily driven by higher legal costs and consultant costs. Consulting fees amounted\nto $2,212,320 (2025 – $928,055; 2024 – $848,955), with the increase in the current year due to a one-off no-fault termination\npayment, share-based compensation, bonuses paid to key consultants and an employee moving to a consultancy contract. Legal fees increased\nsignificantly to $1,279,204 (2025 – $507,692; 2024 – $105,962), driven by the external legal work involved with the KAOS Group\nshareholder dispute, ongoing securities-related legal work, corporate governance matters, and transactional support. Accounting and audit\nfees totaled $163,319 (2025 – $187,462; 2024 – $203,567), a decrease reflecting reduced regulatory filings and efficiency\nin the audit process. The Company expects professional and consulting fees to normalize in future periods as one-off legal shareholder\ndispute and no-fault termination payment costs from the current year are not expected to recur.\n\n* *\n\n47\n\n \n\n* *\n\nOther Gains and Losses\n\n \n\nFor the year ended March\n31, 2026, the Company earned interest income of $263,370, compared to $95,787 and $2,134 for the years ended March 31, 2025 and 2024,\nrespectively. The increase in interest income during the current year was driven by higher cash balances resulting from equity financings\ncompleted during the period.\n\n \n\nThe Company recorded a foreign\nexchange loss of $1,144 in 2026, compared to a loss of $7,317 in 2025 and a loss of $2,696 in 2024. Fluctuations in foreign exchange rates\nduring the year impacted the translation of foreign currency denominated cash and liabilities.\n\n \n\nDuring the year the Company\nentered into a settlement agreement with KAOS Capital Ltd. and Adam Arviv (the “KAOS Group”) to resolve a shareholder dispute\narising from allegations made in January 2026. The Company, its Board of Directors, and officers denied all allegations and any associated\nliability. Under the terms of the settlement, the Company paid US$1,500,000 to the KAOS Group and facilitated the purchase of all 50,220\ncommon shares held by the KAOS Group at US$5.00 per share (US$251,110) by a third party through a loan advanced to a third party. In\nexchange, the KAOS Group withdrew its allegations and provided a full mutual release of all claims, together with customary standstill\nand non-disparagement undertakings for a three-year period ending February 9, 2029. The total net settlement expense of $1,500,000 was\nrecognized in the year ended March 31, 2026 and is presented as Other Expense in the consolidated statements of net income/(loss).* *\n\n* *\n\nInvestment in Psyence Labs\n\n \n\nDuring the year ended March 31, 2026, the Company\nsignificantly expanded its investment in PsyLabs, a British Virgin Islands-based company focused on the production of psychedelic active\npharmaceutical ingredients. The Company acquired additional shares for total cash consideration of $4,000,000 (250 shares in April 2025\nfor $500,000 and a further 1,750 shares in August 2025 for $3,500,000), bringing its total holding to 3,000 shares (16.46%). In February\n2026, the Company exercised a put option and issued 1,146,159 common shares at a fair value of $2,934,167 to acquire a further 2,900 PsyLabs\nshares, increasing its ownership to 27.93%. This level of ownership conferred significant influence, and from February 25, 2026 the investment\nhas been accounted for under the equity method as an investment in associate in accordance with IAS 28.\n\n \n\nThe carrying amount of the investment at March\n31, 2026 was $8,060,928, reflecting the initial carrying amount of $8,106,167 less the Company’s share of PsyLabs’ net loss\nof $45,239 from the date of acquisition of significant influence. During the prior year the Company’s investment of 1,000 shares\nin PsyLabs was valued at $745,000 based on independent third-party transactions.\n\n* *\n\nFair value movements\n\n* *\n\nConvertible note\n\n \n\nDuring the prior year ended\nMarch 31, 2025, the Company recognized a total fair value gain of $5,052,708 related to its convertible note liability, compared to a\nfair value loss of $5,157,397 in the March 31, 2024 year ended. The gain reflects changes in the fair value of the liability as a result\nof market conditions, extinguishment terms, and conversion into common shares.\n\n \n\nAs part of the extinguishment\nof the convertible notes in the prior year, the Company entered into amendments and a termination agreement with the investor, resulting\nin the issuance of additional shares and warrants. The fair value of these instruments, totaling $1,695,080, was recorded as an expense\nin profit or loss. After accounting for this expense, the net fair value gain recognized in profit or loss was $3,357,628 for the prior\nyear.\n\n \n\nThe full conversion and termination\nof the Company’s convertible note obligations occurred during the prior financial year.\n\n* *\n\nPromissory Notes\n\n \n\nDuring the prior year ended\nMarch 31, 2025, the Company fully extinguished its convertible promissory notes issued to Psyence Group Inc. and the NCAC Sponsor. These\nnotes were originally issued in January 2024 for a combined principal of $3.2 million and classified as financial liabilities at fair\nvalue through profit or loss (FVTPL) due to variable conversion features. Both notes were converted into common shares during the prior\nyear under debt-for-equity agreements, including additional shares issued under make-whole provisions.\n\n \n\nAs a result of these conversions\nin the prior year, the Company recognized a total fair value gain of $705,565 in profit or loss—$327,668 on the PGI note and $377,897\non the NCAC note. The fair value of the notes was reduced to nil at March 31, 2025 (2024 – $2,790,492), reflecting the full settlement\nof these liabilities.\n\n \n\n48\n\n \n\n \n\nLiquidity and Capital Resources\n\n \n\nSince incorporation, the Company has financed\nits operations through shareholder investments, a loan facility secured against its expected Australian Tax Office (ATO) R&D rebate,\nand the rebate itself. The Company’s primary uses of liquidity include funding scientific research, clinical studies, general and\nadministrative costs including salaries and professional and consulting fees.\n\n \n\nAs of March 31, 2026, the\nCompany had a cash balance of $7,491,954 and a positive working capital position of $8,487,385 compared to a cash balance of $6,171,130\nand working capital of $5,965,908 as of March 31, 2025. In the Company’s opinion, the working capital is sufficient for the Company’s present requirements.\n\n \n\nThe Company’s ability to continue funding\nits operations and meet planned expenditures depends on various factors, including economic conditions, access to capital markets, regulatory\ndevelopments, and other factors beyond its control.\n\n \n\nThe Company’s current obligations include\nfunding commitments for its Phase IIb Study. These are expected to be met using existing cash and cash equivalents; however, the Company\nremains subject to risks, including the potential inability to raise additional funds through equity, debt, or other financing to meet\nits development plans, operating requirements, and liabilities as they become due.\n\n \n\nThe Company has incurred operating losses and\ncash outflows since inception and, given the nature of its business, will require ongoing financing to support its research and development\nactivities. Its ability to access capital depends on factors such as market conditions, investor sentiment, and the trading price of its\nsecurities. There can be no assurance that additional financing will be available on acceptable terms, or at all.\n\n \n\nThe Company’s primary capital needs include\nfunding research and development, clinical trials, staffing, professional and consulting fees, and general working capital. Access to\nfuture financing remains uncertain and may not be available on terms as favorable as those previously secured.\n\n \n\nResearch and Development\n\n** **\n\nExpenditures on research activities, undertaken\nwith the prospect of gaining new scientific or technical knowledge and understanding, are recognized in the statements of net loss and\ncomprehensive loss as incurred.\n\n \n\nDevelopment expenditures are capitalized only\nif development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits\nare probable, and the Company intends to complete development and has sufficient resources to complete development and to use or sell\nthe asset. Other development expenditures are expensed as incurred. Research and development expenses include all direct and indirect\noperating expenses supporting the products in development. The costs incurred in establishing and maintaining patents are expensed as\nincurred.\n\n \n\n**D. Trend Information**\n\n \n\nThe Company is a clinical-stage biopharmaceutical company. It has no\napproved products, has not generated any revenue from product sales, and does not maintain production, inventory or an order book. Accordingly,\nthe requirement to describe material recent trends in production, sales, inventory, the state of the order book, and costs and selling\nprices is not applicable to the Company in the manner contemplated for a commercial-stage company. The following is a discussion of the\nknown trends, uncertainties, demands, commitments and events that the Company’s management believes are reasonably likely to have\na material effect on the Company’s results of operations, liquidity or capital resources, or that may cause the financial information\nreported in this Report not to be necessarily indicative of the Company’s future operating results or financial condition. This\ndiscussion should be read together with “—Operating Results,” “—Liquidity and Capital Resources” and\n“Item 3.D — Risk Factors.”\n\n \n\n**Continuing operating losses and dependence on external financing.**\n\n \n\nThe Company has incurred operating losses and net cash outflows from\noperations since inception and expects to continue to do so for the foreseeable future as it advances its clinical-development program.\nThe Company’s net loss for the year ended March 31, 2026 was approximately $6.89 million. Because the Company is pre-revenue, its\nability to continue as a going concern and to fund its operations depends on its ability to raise additional capital, and there can be\nno assurance that financing will be available on acceptable terms, or at all. The Company expects this trend of operating losses and reliance\non external financing to continue until such time, if ever, as one or more product candidates receive regulatory approval and are successfully\ncommercialized.\n\n \n\n49\n\n \n\n \n\n**Increasing research and development expenditure.**\n\n \n\nResearch and development expenses increased to approximately $1,466,653\nfor the year ended March 31, 2026 from approximately $342,168 for the year ended March 31, 2025, reflecting accelerated activity in the\nCompany’s Phase IIb clinical trial, including expanded site costs, patient-enrollment costs and study-management expenses. The Company\nanticipates that research and development expenditure will continue to increase in future periods as the Phase IIb Study advances toward\nits primary endpoints, additional trial sites are activated, and the Company prepares for a potential Phase III program. As a result,\nthe Company’s research and development expense for the year ended March 31, 2026 is not necessarily indicative of expected future\nresearch and development expense.\n\n \n\n**Non-recurring expenses in the current year.**\n\n \n\nThe Company’s results for the year ended March 31, 2026 include\ncertain expenses that management does not expect to recur at comparable levels, including a net settlement expense of $1,500,000 in connection\nwith the settlement of the KAOS Group shareholder dispute, and elevated professional and consulting fees attributable to that dispute\nand to a one-off no-fault termination payment. The Company expects professional and consulting fees to normalize in future periods as\nthese non-recurring items do not recur. Conversely, general and administrative expenses, which decreased in the current year following\nthe maturation of the corporate infrastructure established after the Company’s NASDAQ listing, are expected to stabilize at approximately\ncurrent levels, though they may increase in line with the growth of the Company’s operations. For these reasons, the Company’s\nreported expenses for the year ended March 31, 2026 may not be indicative of future results.\n\n \n\n**Variability of the Australian research and development rebate.**\n\n \n\nThe Company received a research and development cash rebate of approximately\n$292,247 for the year ended March 31, 2026 under the Australian Government’s Research and Development Tax Incentive program, compared\nwith no rebate for the year ended March 31, 2025 and approximately $879,344 for the year ended March 31, 2024. Because the rebate is a\nfunction of qualifying Australian research and development expenditure and is subject to an annual application and continued eligibility,\nthe amount and timing of any future rebate is expected to vary from period to period and is not necessarily indicative of amounts that\nmay be received in future periods.\n\n \n\n**Liquidity, the White Lion equity line of credit and dilution.**\n\n \n\nAs of March 31, 2026, the Company had cash of approximately $7,491,954\nand positive working capital of approximately $8,487,385. The Company’s principal near-term source of external liquidity is its\nequity line of credit with White Lion Capital, LLC, the aggregate commitment under which was increased to up to $100,000,000 by Amendment\nNo. 2 in November 2025, and to which an intraday purchase mechanic was added by Amendment No. 3 in April 2026. The Company’s ability\nto draw on the equity line is subject to the conditions and limitations of the purchase agreement, including conditions tied to the trading\nprice and trading volume of the Common Shares, and the Company’s use of the facility, together with sales under any at-the-market\nor other equity program, is expected to result in dilution to existing shareholders and may place downward pressure on the trading price\nof the Common Shares. The extent to which the Company relies on these equity financing sources, and the dilutive effect thereof, is expected\nto be a continuing trend for so long as the Company remains pre-revenue.\n\n \n\n**Equity-method investment in PsyLabs.**\n\n \n\nFrom February 25, 2026, the Company has accounted for its investment\nin PsyLabs under the equity method as an investment in an associate, and recognizes its proportionate share of PsyLabs’ net income\nor loss in the Company’s results of operations. Because PsyLabs is a development-stage enterprise, the Company expects to record\nits share of PsyLabs’ losses for the foreseeable future, and the carrying amount of the investment and the amounts recognized in\nthe Company’s results of operations may fluctuate materially from period to period. The recognition of equity-method results commenced\npart-way through the year ended March 31, 2026 and is therefore not reflected for a full period in the current year’s results.\n\n \n\n**Evolving regulatory and policy environment for psychedelic therapies.**\n\n \n\nThe regulatory and policy environment for psychedelic therapies in\nthe United States has been evolving rapidly, including as a result of the April 2026 federal executive order and related actions by the\nU.S. Food and Drug Administration to accelerate the development of, and access to, psychedelic therapies. While these developments may,\nover time, affect the competitive landscape, the timing of regulatory pathways and investor sentiment toward the sector, they do not change\nthe statutory standards for approval of the Company’s product candidates, and their ultimate effect on the Company is uncertain.\nSee “Item 3.D — Risk Factors.”\n\n \n\nOther than as described above and elsewhere in this Item 5 and in “Item\n3.D — Risk Factors,” the Company is not aware of any trends, uncertainties, demands, commitments or events that are reasonably\nlikely to have a material effect on the Company’s net sales or revenues, income from continuing operations, profitability, liquidity\nor capital resources, or that would cause the financial information reported in this Report not to be necessarily indicative of future\noperating results or financial condition.\n\n \n\n50\n\n \n\n \n\nCritical Accounting Estimates\n\n \n\nThe preparation of financial statements in conformity\nwith IFRS requires management to make certain estimates, judgments and assumptions concerning the future. Actual results may differ from\nthese estimates. The Company’s management reviews these estimates, judgments, and assumptions on an ongoing basis, based on experience\nand other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates\nare adjusted prospectively in the period in which the estimates are revised. The following are deemed to be critical accounting policies\nas these require a high level of subjectivity and judgement and could have a material impact on the Company’s financial statements.\n\n* *\n\n*Fair value of Convertible Debt*\n\n \n\nManagement exercised significant judgment in determining\nthe fair value of the convertible promissory notes classified as financial liabilities measured at fair value through profit or loss (FVTPL)\ndue to their conversion features. Fair value was assessed using valuation techniques incorporating observable and unobservable inputs,\nincluding share price volatility, risk-free interest rates, and conversion terms. Changes in these assumptions had a material impact on\nthe profit or loss recognized during the year.\n\n \n\nQuantitative and Qualitative Disclosures About Financial Instruments\nand Financial Risk Management\n\n** **\n\nIn the normal course of business, the Company\nis exposed to a variety of financial risks: credit risk, liquidity risk, foreign exchange risk and interest rate risk. These financial\nrisks are subject to normal credit standards, financial controls, risk management, as well as monitoring. Our Board has overall responsibility\nfor the establishment and oversight of the Company’s risk management framework.\n\n* *\n\nCredit risk\n\n \n\nCredit risk arises from cash and cash equivalents\nheld with banks. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing\ncounterparty credit risk is to prevent losses on financial assets. The Company minimizes the credit risk of cash and cash equivalents\nby depositing with only reputable financial institutions. The Company also assesses the credit quality of counterparties, taking into\naccount their financial position, past experience and other factors.\n\n* *\n\nLiquidity risk\n\n \n\nLiquidity risk is the risk\nthat the Company will not be able to meet its financial obligations as they fall due.\n\n \n\nThe Company manages liquidity risk through an\nongoing review of future commitments and cash balances available. Historically, the Company’s main source of funding has been through\ninvestments from its parent. The Company’s access to financing is always uncertain and there can be no assurance of continued access\nto significant equity or debt funding on terms satisfactory to the Company, or at all.\n\n* *\n\nForeign exchange risk\n\n \n\nForeign currency risk is the risk that the fair\nvalues of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective\nfunctional currency.\n\n \n\nThe Company operates internationally and is exposed\nto foreign exchange risk from the South African Rand, Great British Pound, Australian Dollar and United States Dollar. Foreign exchange\nrisk arises from transactions as well as recognized financial assets and liabilities denominated in foreign currencies.\n\n \n\nA 10% adverse change in exchange\nrate would have resulted in a loss of $86,443 as of March 31, 2026.\n\n \n\nManagement mitigates the\nrisk of adverse exchange rate movements by holding funds in US dollars.\n\n* *\n\nInterest rate risk\n\n \n\nInterest rate risk is the\nrisk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The\nCompany has no significant interest-bearing assets or liabilities and therefore its income and operating cash flows are substantially\nindependent of changes in market interest rates.\n\n \n\n51\n\n \n\n \n\nCapital Management\n\n** **\n\nThe Company’s objectives when managing its\ncapital are to safeguard its ability to continue as a going concern, to meet its capital expenditures for its continued operations, and\nto maintain a flexible capital structure which optimizes the cost of capital within a framework of acceptable risk. The Company manages\nits capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets.\nTo maintain or adjust its capital structure, the Company may issue new shares, issue debt, or acquire or dispose of assets. The Company\nis not subject to externally imposed capital requirements.\n\n \n\nManagement reviews its capital management approach\non an ongoing basis. The Company considers its shareholders’ equity balance as capital.\n\n \n\nOff-Balance Sheet Arrangements\n\n \n\nWe have no obligations,\nassets or liabilities, which would be considered off-balance sheet arrangements as of March 31, 2026. We do not participate in transactions\nthat create relationships with entities or financial partnerships, often referred to as variable interest entities, which would have\nbeen established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing\narrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial\nassets.\n\n \n\nContractual Obligations\n\n** **\n\nWe do not have any long-term\ndebt, capital lease obligations, operating lease obligations or long-term liabilities.\n\n \n\nJOBS Act\n\n \n\nOn April 5, 2012, the JOBS Act was signed\ninto law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.\nWe qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements\nbased on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting\nstandards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such\nstandards is required for non- emerging growth companies. As such, our financial statements may not be comparable to companies that comply\nwith public company effective dates.\n\n \n\nAdditionally, we are in the process of evaluating\nthe benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth\nin the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among\nother things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant\nto Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging\ngrowth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that\nmay be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional\ninformation about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation\nrelated items such as the correlation between executive compensation and performance and comparisons of executive compensation to median\nemployee compensation. These exemptions will apply for a period of five years following the completion of our IPO or until we are\nno longer an “emerging growth company,” whichever is earlier."}