Human management

ENOCHIAN BIOSCIENCES INC Management’s report and analysis of the financial situation and operating results. (Form 10-Q)

Notice of Forward-Looking Statement




Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance, or
achievements of Enochian Biosciences Inc. ("Enochian," and together with its
subsidiaries, the "Company", "we" or "us") to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are
based on current expectations that involve numerous risks and uncertainties. Our
actual future results and trends may differ materially depending on a variety of
factors, including, but not limited to, the risks and uncertainties discussed in
Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K as filed with
the SEC on September 24, 2021. The Company's plans and objectives are based, in
part, on assumptions involving the continued expansion of the business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes its assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance the forward-looking statements included in this Quarterly
Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.



Our Business


We are a pre-clinical stage biotechnology company committed to using our genetically engineered cell, gene and immune therapy technologies to potentially prevent or cure HIV, HBV, influenza, SARS-CoV-1 and -2 infections and coronaviruses, as well as providing potentially long-term or lifelong cancer remission in some of the deadliest cancers.




Over the past several years, we have expanded the pipeline from a single
potential cure for HIV (autologous transplantation with gene-modified cells;
ENOB-HV-01) to three additional potential cures for HIV, a potential cure for
Hepatitis B Virus (HBV), potential inhaled treatment and prophylaxis/prevention
of all variants of SARS-CoV-1 and -2 (the cause of the COVID-19 pandemic) and
potentially other coronaviruses, and potential cures for many solid tumors,
beginning with pancreatic cancer.



Our integrated platforms encompass innovative interventions in gene and immune
therapies that provide hope for cures or life-long remissions for devastating
diseases. Our platforms can potentially streamline and accelerate pre-clinical,
regulatory, clinical, and production pathways. Because of the relative ease of
administration, our potentially groundbreaking interventions could be used
throughout the world.



Platforms:



Hijack RNA



Our novel approach tricks the virus into sending suicide signals to the infected
cell instead of turning the cell into a virus factory. The technology is
delivered by vectors that would allow it to rapidly treat an infection, or to
lay and wait in ambush until a cell becomes infected, which would prevent
(prophylaxis, similar to taking drugs to protect from becoming infected with
malaria or HIV) future infections.



The delivery mechanism can be adapted for aerosols (eg, respiratory infections like the virus that causes COVID-19 and influenza), intravenous or other delivery mechanisms (eg, for hepatitis B virus and HIV).



Allogeneic Cell Therapy


The human immune system is designed to recognize “self” and destroy “otherness” or “non-self”, such as bacteria, viruses and cancer cells.



                                       23





Alloreactivity (reacting against another person's cells) is the most powerful
response the immune system generates. Several of our technologies take advantage
of the alloreactivity to hyper stimulate a person's immune response to better
attack a chronic infection (e.g., HIV) or solid tumors. In certain treatments
(e.g., HIV and cancer), cells taken from healthy donors are sometimes
genetically modified to further boost the immune system to seek and kill
diseases.



In addition to those platforms, we have an innovative approach to remove cells
from a person living with HIV and genetically modify them so they cannot be
infected with HIV. The unique innovation is an additional genetic alteration to
increase the ability of those cells to survive and expand when they are given
back to the same person (autologous transplantation).



Respiratory Diseases


In April 2021we acquired the exclusive license for pan-SARS-Cornavirus-1 and-2 (SARS-CoV) and pan-Influenza inhalation treatment and prophylaxis.




SARS-CoV-2 has caused the most devastating global pandemic in a century -
COVID-19. Using the Hijack RNA platform technology, in vitroand in vivo results
showing rapid killing of infected cells, but not uninfected cells were presented
at the important Conference on Retroviruses and Opportunistic Infections in
March 2021. Since that time, there has been substantial progress with a Pre-IND
(as defined below) submission expected in the near term.



Influenza has caused dozens of major global pandemics; the most notable in 1918
that killed 50 to 100 million people. There was an H1N1 threat as recently as
2009. The Hijack RNA also has shown promising in vitro results that were
presented at the Annual Conference of the American Society of Gene and Cell
Therapy (ASGCT) in May 2020.



A vector combining SARS-CoV and Influenza Hijack RNA has been designed.

A leading scientist and public health expert are part of our Scientific Advisory Board focused on respiratory diseases.

Human Immunodeficiency Virus (HIV) and Acquired Immunodeficiency Syndrome (AIDS)

HIV attacks the human immune system, specifically killing CD4+ cells, or T cells, which play a central checkpoint role in the immune system. Untreated, HIV dramatically reduces the number of T cells in the body, devastates the immune system, leading to AIDS, a disease in which the immune system cannot fight life-threatening infections and cancers.




Currently there are over 30 antiretroviral drugs, or ART, approved by the U.S.
Food and Drug Administration ("FDA") to treat HIV but these drugs are expensive,
require daily adherence, and can have significant side effects over time. In
addition, on a global basis, as many as 1 million people, including persons in
high-income countries, continue to die each year from HIV/AIDS due to
drug-resistant HIV or lack of access to treatment. To date, there are no
treatments that can eliminate the reservoir of immune cells that are infected
with HIV from the body. Consequently, treatment for HIV is life-long.



There have been several efforts to cure HIV by re-engineering a person's own
T-cells so that these cells no longer express a special protein (C-C chemokine
co-receptor type 5 or CCR5), which HIV uses to gain entry to them. A naturally
occurring mutation that blocks expression of CCR5 on T cells occurs in ~1% of
persons living in or from Northern Europe with no known adverse effects. The
"Berlin patient," and more recently the "London patient" were HIV-positive
persons who developed cancer and were treated with a bone marrow transplant with
cells donated from persons with this naturally occurring mutation of CCR5. The
Berlin and London patients seem to have been effectively cured from HIV
providing proof-of-concept that HIV can be cured. However, because the
transplanted cells come from another person, such transplants carry high risk
and can result in death in a significant proportion of patients. Given the
success with these two patients, several researchers and companies have
attempted to replicate this experience by genetically modifying T cells of
HIV-positive patients to render them unable to be infected by HIV and then
returning them to the patient. Because the transplanted cells are from the same
person, the risks to the patient are much lower. The uptake, or engraftment of
the modified T cells, however, has not been optimal, leading to failure to
achieve a cure. In addition, the transplant pre-treatment that has been used is
bone marrow-destroying chemotherapy, which wipes out the patient's immune system
and can have long-term side effects including the risk of developing cancer.



                                       24




ENOB-HV-01 is a novel, proprietary approach with the potential to overcome the
failures of recent efforts to develop a cure for HIV. The intervention provides
gene-modified T cells with a competitive advantage over non-modified cells in
the HIV-positive person, with the potential to significantly increase
engraftment; and avoid the need for chemotherapy that substantially depletes the
bone marrow and could potentially be given as an outpatient treatment. The
Company met with the FDA INTERACT team on June 2, 2020. INTERACT is the first
available FDA interaction and is a key step in the process towards a potential
Investigational New Drug Application (IND) to study First-in-Human products
potentially leading to marketing authorization via Biologics License Application
(BLA). The FDA Center for Biologics Evaluation and Research (CBER) has numerous
INTERACT requests and grants meetings that are deemed appropriate for this early
FDA engagement. The Enochian BioSciences management team considered the meeting
to be successful with strong alignment between Enochian BioSciences' approach to
developing ENOB-HV-01 and the comments of the FDA reviewers.



The first scientific results of a mouse study on the ENOB-HV-01 approach were presented at the ASCGT annual conference in May 2020.

We are also developing ENOB-HV-12 which will use a novel cellular and immunotherapy approach that could potentially provide preventive and therapeutic HIV vaccines. A study on non-human primates is in progress. Preliminary results could potentially be available by the end of 2022.




Our co-founder and inventor, Dr. Serhat Gümrükcü, who is also the Director of
Seraph Research Institute (SRI), submitted a Pre-IND for ENOB-HV-21, an
innovative treatment of Natural Killer (NK) and Gamma Delta T-Cells (GDT)
collected from another person. It is believed that the GDT cells, a small subset
of immune cells that can be infected with HIV, could be a key factor in
controlling the virus. The initial scientific findings were presented during the
ASCGT Conference in May 2021. Enochian BioSciences has an exclusive license to
use the underlying patent to develop HV-21 for the prevention, treatment, and/or
amelioration of and/or therapy exclusively for HIV in humans, and research and
development exclusively relating to HIV in humans.



On October 18, 2021, the Company announced that FDA comments on an
investigator-initiated Pre-IND were, from Management's perspective, insightful
and helpful with an investigator-initiated IND submission possible in the
near-term with the potential for human trial enrollment to begin in the near to
medium term in 2022.


We are in the development phase of additional product candidates related to our
HIV pipeline. ENOB-HV-31, which is in vivo gene therapy, and ENOB-HV-32, which
is a peptide drug for packaging and distribution.



Hepatitis B (HBV)



Despite the availability of an effective vaccine and treatment that can control
infection if it is taken daily for life, hepatitis B virus (HBV) is the world's
most common serious liver infection. While vaccines are increasingly required
for children, many adults have not been vaccinated. Life-long treatment can be
difficult for certain people and access can be limited.



In that regard, HBV remains the leading cause of liver cancer and the second
leading cause of cancer deaths in the world. Two billion people have been
infected with HBV, approximately 350 million have chronic HBV infection, and
nearly one million people die every year.



Current efforts to develop novel treatment or cure largely focus on approaches
to deplete the pool of a certain type of HBV DNA. Enochian BioSciences has
collaborated with SRI to develop an innovative approach to co-opt HBV
polymerase, a key expanding factor that the virus needs to reproduce itself, to
induce the death of liver cells infected with the virus.



On July 27, 2020, Enochian BioSciences announced the creation of an HBV
Scientific Advisory Board comprised of distinguished leaders in HBV disease,
treatment, and cure. On August 23, 2021, we announced the addition of a third
leading expert with substantial experience in HBV clinical trials.



On September 27, 2021, the Company announced the completion of a
Pre-Investigational New Drug (IND) process following receipt of written comments
from the U.S. Food and Drug Administration (FDA) Center for Biologics Evaluation
and Research (CBER) Office of Tissues and Advanced Therapies (OTAT) for
ENOB-HB-01.



                                       25





The initial in vitro and in vivo work was presented at the biannual HEP DART
meeting in December of 2019, where it was selected as one of the best new
therapies/novel strategies. Additional data was presented at the annual ASCGT
conference in May 2020. A proof-of-concept, in vivo cure study is in advanced
stages. A Pre-IND request has been completed with productive comments and
insights. An IND could potentially be submitted towards the end of 2022 with
potential for enrollment in a clinical trial to begin by the end of 2022 or
in
2023.


In March 2022, Enochian announced a profit-sharing partnership with Caring Cross
to use ENOB-HV-01's "special sauce" to potentially improve the effectiveness and
reduce the cost and toxicity of a CAR-T approach to HIV Cure already in clinical
trials.



Cancer


Based on learning from peer-reviewed publications of Phase I/IIa trials, we have
designed an innovative therapeutic vaccination platform that could potentially
be used to induce life-long remissions from some of the deadliest solid tumors.
Initial preclinical in vitro studies have been encouraging. We initially plan to
target pancreatic cancer, triple-negative breast cancer, glioblastoma, and renal
cell carcinoma. The platform might also allow for non-specific immune
enhancement that could have impact against a broad array of solid tumors. As
with HIV, our approach would potentially allow for outpatient therapy without
ablating or significantly impairing the patient's immune system, as many current
approaches require.



Through a collaboration with a leader in the field of pancreatic cancer, our
first cancer-related therapeutic target, we are developing the pipeline with in
vitro and in vivo proof-of-concept studies to evaluate the potential to induce
long-term remission or cure. Results are expected in the second half 2022. If
the results are promising, a potential Pre-IND and an IND with potential for
enrollment in a clinical trial may begin in 2022.



To date, our operations have been funded by sales of our securities and the
issuance of debt. We have never generated any sales revenue, and we expect this
to continue until our therapies or products are approved for marketing in the
United States and/or Europe. Even if we are successful in having our therapies
or products approved for sale in the United States and/or Europe, we cannot
guarantee that a market for the therapies or products will develop. We may
never
be profitable.



Corporate History


We were incorporated under the laws of the State of Delaware on January 18,
2011, under the name Putnam Hills Corp. and in 2014 we merged with and changed
our name to DanDrit Biotech USA, Inc. In 2018, we acquired Enochian Biopharma
and changed our name to Enochian BioSciences Inc.



COVID-19



The COVID-19 pandemic continues to evolve, and to date has led to the
implementation of various mitigation responses, including government-imposed
quarantines, travel restrictions and other public health safety measures, as
well as leading to reported adverse impacts on healthcare resources, facilities,
and providers across the United States and in other countries. COVID-19 may
cause delays in our research activities. To date, it has not materially affected
our operations; however, it has caused delays in the conduct of experiments due
to limitations of various organizations, in particular those conducting
experiments related to COVID-19. There have also been increases in the cost to
conduct animal studies due to staffing and other limitations.



The full extent to which the COVID-19 pandemic may impact our business and
operations is subject to future developments, which are uncertain and difficult
to predict. Further quarantines, shelter-in-place or similar restrictions and
other actions taken or imposed by foreign, federal, state, and local governments
could adversely impact our or our partners' clinical, research and development,
regulatory and manufacturing operations, or timelines.



We continue to monitor the impact of the COVID-19 pandemic on our business and
operations and will seek to adjust our activities as appropriate. In addition,
the pandemic could result in significant and prolonged disruption of global
financial markets, reducing our ability to access capital, which could in the
future negatively affect the financial resources available to us.



                                       26





   Results of Operations for the three and nine months ended March 31, 2022,
           compared to the three and nine months ended March 31, 2021


The following table shows our revenues, expenses and net loss for the three and nine months ended March 31, 2022and 2021. The financial information below is taken from our unaudited condensed consolidated financial statements.



                                      For the Three Months Ended                                            For the Nine Months Ended
                                               March 31,                    Increase/(Decrease)                     March 31,                      Increase/(Decrease)
                                        2022               2021               $               %              2022               2021                $                %
Operating Expenses
General and administrative
expenses                               2,790,456         1,903,902           886,554           47 %        11,169,724         5,551,331          5,618,393            101 %
Research and development
expenses                               1,212,380         1,119,203            93,177            8 %         6,605,038         3,574,529          3,030,509             85 %
Depreciation and amortization             31,720            30,825               895            3 %            95,258            92,043              3,215              3 %
Total Operating Expense            $   4,034,556      $  3,053,930      $    980,626           32 %     $  17,870,020      $  9,217,903      $   8,652,117             94 %
LOSS FROM OPERATIONS               $  (4,034,556 )    $ (3,053,930 )    $  

(980,626) 32% ($17,870,020) ($9,217,903) ($8,652,117)

           94 %
Other Income (Expense)
Change in fair value of
contingent consideration              (2,078,994 )        (882,498 )      (1,196,496 )        136 %        (5,070,891 )          38,313         (5,109,204 )      (13,335 )%
Interest expense                         (95,207 )         (96,347 )           1,140           (1 )%         (278,327 )        (282,086 )            3,759             (1 )%
Gain (Loss) on currency
transactions                                   -              (221 )             221          100 %                 9           (32,510 )           32,519            100 %
Interest income                            7,291             1,437             5,854          407 %            22,888             8,809             14,079            160 %

Total other (expense) income (2,166,909 ) (977,629 ) (1,189,280 ) 122% (5,326,321 ) (267,474 ) (5,058,847 ) 1,891% Loss before income taxes

           $  (6,201,465 )    $ (4,031,559 )    $ 

(2,169,906) 54% ($23,196,341) ($9,485,377) $(13,710,964) 145% tax advantage

                 $           -      $        849      $       (849 )       (100 )%    $         (34 )    $    124,801      $    (124,835 )         (100 )%
NET LOSS                           $  (6,201,465 )    $ (4,030,710 )    $ (2,170,755 )         54 %     $ (23,196,375 )    $ (9,360,576 )    $ (13,835,799 )          148 %




Revenues


We are a pre-clinical and pre-revenue biotechnology company. We have never generated income and suffered losses since our establishment. We do not anticipate revenue until our therapies or products have been approved for marketing and sale.



Expenses


Our operating expenses for the three months ended March 31, 2022, and March 31,
2021, were $4,034,556 and $3,053,930 respectively, representing an increase of
$980,626, or approximately 32%. The increase in operating expenses primarily
relates to an increase in general and administrative expenses of $886,554.



Our operating expenses for the nine months ended March 31, 2022, and March 31,
2021, were $17,870,020 and $9,217,903, respectively, representing an increase of
$8,652,117 or approximately 94%. The change is primarily related to the increase
in general and administrative expenses of $5,618,393, and an increase in R&D
expenses of $3,030,509.



                                       27





General and administrative expenses for the three months ended March 31, 2022,
and March 31, 2021, were $2,790,456 and $1,903,902, respectively, representing
an increase of $886,554 or approximately 47%. The variance is related to an
increase in compensation and related expenses of $269,688, an increase in legal
expenses of $215,625, an increase in recruiting expenses of $133,007, an
increase in stock-based compensation of $78,248, and a net aggregate of
immaterial increase variances of $189,985.



General and administrative expenses for the nine months ended March 31, 2022,
and March 31, 2021, were $11,169,724 and $5,551,331, respectively, representing
an increase of $5,618,393 or approximately 101%. The largest contributors to the
increase in general and administrative expenses were the increases in
stock-based compensation of $4,163,968, officer compensation of $558,770,
salaries expense and related costs of $395,298, and recruiting expenses of
$250,240, and a net aggregate of immaterial increases of $250,118.



Research and development expenses for the three months ended March 31, 2022, and
March 31, 2021, were $1,212,380 and $1,119,203, respectively, representing an
increase of $93,177 or approximately 8%. The variance is primarily driven by
$74,470 in costs related to CV-01 and HV-12, and an increase of $56,000 in
collaborating partner expenses, partially offset by a net aggregate of
immaterial decreases of $37,293.



Research and development expenses for the nine months ended March 31, 2022, and
March 31, 2021, were $6,605,038 and $3,574,529, respectively, representing an
increase of $3,030,509 or approximately 85%. The largest contributors to the
increase in research and development expenses were the increases in license
costs related to ENOB HB-01 of $1,500,000 for achievement of a milestone, costs
incurred for ENOB HV-21 of $600,000, newly incurred costs with CDMO and CRO
partners totaling $1,447,939 and, new COVID license payments of $150,000,
partially offset by HBV costs and oncology costs that were incurred in the prior
period for a total of $785,000 that was not incurred in the current period.



The Company recorded other expense of $2,166,909 for three months ended March
31, 2022, compared to other expense of $977,629 for the three months ended March
31, 2021, representing an increase in other expense of $1,189,280 or 122%. The
variance is primarily due to the change in fair value of the contingent
consideration liability expense of $1,196,496.



The Company recorded other expense of $5,326,321 for the nine months ended March
31, 2022, compared to other expense of $267,474 for the nine months ended March
31, 2021, representing an increase in other expense of $5,058,847 or 1,891%. The
variance is primarily due to the change in fair value of the contingent
consideration liability expense of $5,109,204.



Net Loss



Net loss for the three months ended March 31, 2022, and 2021, was $6,201,465 and
$4,030,710, respectively, representing an increase in loss of $2,170,755 or
approximately 54%. The increase in net loss was primarily due to an increase in
general and administrative expenses of $886,554, an increase in research and
development expenses of $93,177, and an increase in expense related to the
change in fair value of contingent consideration of $1,196,496.



Net loss for the nine months ended March 31, 2022, and 2021, was $23,196,375 and
$9,360,576, respectively, representing an increase in loss of $13,835,799 or
approximately 148%. The increase in net loss was primarily due to the increase
in general and administrative expenses of $5,618,393, an increase in research
and development costs of $3,030,509, and an increase in expense related to the
change in fair value of contingent consideration of $5,109,204.



Cash and capital resources




We have historically satisfied our capital and liquidity requirements through
funding from shareholders, the sale of our Common Stock and warrants, and debt
financing. We have never generated any sales revenue to support our operations
and we expect this to continue until our therapies or products are approved for
marketing in the United States and/or Europe. Even if we are successful in
having our therapies or products approved for sale in the United States and/or
Europe, we cannot guarantee that a market for the therapies or products will
develop. We may never be profitable.



At this time, we believe we have sufficient liquidity and access to committed
funds to fund our operations for the next twelve months. We may need additional
funds for (a) the purchase of equipment, (b) increases in personnel, and (c)
research and development, specifically to advance towards an Investigational New
Drug Application (IND) following Pre-IND readouts from the FDA for ENOB-CV-01,
ENOB-HB-01, ENOB-HV-01, and ENOB-HV-21. We will also require additional funding
to continue our research and development of ENOB-HV-11/12, ENOB-DC-11,
ENOB-FL-01 and -11 and ENOB-CV-11, to fund the Coronavirus and Influenza
Indications License Agreement in furtherance of treatment related to all
coronaviruses, and for possible future strategic acquisitions of businesses,
products, or technologies complementary to our business. If additional funds are
required, we may raise such funds from time to time through public or private
sales of our equity or debt securities. Such financing may not be available on
acceptable terms, or at all, and our failure to raise capital when needed could
materially adversely affect our growth plans and our financial condition and
results of operations.



                                       28





As of March 31, 2022, the Company had $11,150,917 in cash and working capital of
$4,184,007 as compared to $20,664,410 in cash and working capital of $19,013,100
as of June 30, 2021, a decrease of 46% and 78%, respectively.



Assets


Total assets at March 31, 2022, were $180,100,613 compared to $189,605,225 as of
June 30, 2021. The decrease in total assets was primarily due to the decrease in
cash of $9,513,493. The change in cash is primarily attributed to $6,605,038 in
research and development costs related to the HBV license agreement, costs
related to ENOB-CV-01 for related CDMO and CRO costs, and ENOB-HV-21 studies
along with approximately $5,820,781 in general and administrative expenses, net
of non-cash items, partially offset by an increase in funding totaling
$3,630,039 related to drawdowns from the LPC equity line and warrants exercised
during the period.



Liabilities



Total liabilities at March 31, 2022, were $18,857,916 compared to $14,942,286 as
of June 30, 2021. The increase in total liabilities was primarily related to an
increase of $4,272,891 in the contingent consideration liability as a result of
mark-to-market adjustment, an increase in other current liabilities of $187,106
related to a financing arrangement for a new insurance policy and an increase in
accounts payable of $166,457 due to timing, partially offset by the reduction in
accrued expenses of $715,999.



The following is a summary of the Company’s cash flows (used by) or provided by operating, investing and financing activities:



                                              Nine Months      Nine Months
                                                 Ended            Ended
                                               March 31,        March 31,
                                                 2022              2021

Net cash (Used in) operating activities ($12,681,849) ($7,582,676) Net cash (Used in) investing activities

            (5,156 )        (10,721 )

Net cash provided by financing activities 3,180,274 3,398,599 Effect of exchange rates on cash

                   (6,762 )         24,721

Change in cash and cash equivalents ($9,153,493) ($4,170,077)





Cash Flows



Cash used in operating activities for the nine months ended March 31, 2022, and
2021 was ($12,681,849) and ($7,582,676), respectively. Cash used in operating
activities during the current period included $6,605,038 in research and
development costs related to the HBV license agreement, costs related to
ENOB-CV-01 for related CDMO and CRO costs, and ENOB-HV-21 studies along with
approximately $5,820,781 in general and administrative expenses, net of non-cash
items.



Cash provided by financing activities for the nine months ended March 31, 2022,
was $3,180,274 as compared to cash provided by financing activities of
$3,398,599 during the nine months ended March 31, 2021. During the nine months
ended March 31, 2022, the Company received financing from the drawdown of its
LPC equity line of $3,500,039 and the exercise of warrants held by shareholders
of $130,000.


Off-balance sheet arrangements




The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.



                                       29




Significant Accounting Policies and Critical Accounting Estimates

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often due to the need to make estimates about matters that are inherently uncertain.

For a summary of our accounting policies, see Note 1 to the unaudited condensed consolidated financial statements.

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