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    FORA   US34630N1063

FORIAN INC.

(FORA)
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Real-time Estimate Cboe BZX  -  05/24 11:18:08 am EDT
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05/13FORIAN INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)
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05/12Earnings Flash (FORA) FORIAN Reports Q1 Loss $-0.37
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FORIAN INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/13/2022 | 04:58pm EDT

Cautionary Statement for Forward-Looking Information


The following discussion of our financial condition and results of operations
for the three months ended March 31, 2022 and 2021 should be read in conjunction
with our unaudited condensed consolidated financial statements and the notes to
those statements that are included elsewhere in this report. Our discussion
includes forward-looking statements based upon current expectations that involve
risks and uncertainties, such as our plans, objectives, expectations and
intentions. Actual results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under Item 1A. Risk Factors appearing in our
Annual Report on Form 10-K for the year ended December 31, 2021, as filed with
the SEC on March 31, 2022. We use words such as "anticipate," "estimate,"
"plan," "project," "continuing," "ongoing," "expect," "believe," "intend,"
"may," "will," "should," "could," and similar expressions to identify
forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms "Forian", the "Company", "we", "us", and "our" refer to Forian Inc.

Overview


The Company was initially incorporated in Delaware on October 15, 2020 as a
wholly owned subsidiary of Medical Outcomes Research Analytics, LLC ("MOR"),
which was founded in Delaware on May 6, 2019, in connection with the Business
Combination described below. On October 16, 2020, the Company entered into a
definitive agreement with Helix Technologies, Inc. ("Helix") and MOR, pursuant
to which DNA Merger Sub, Inc., a wholly owned subsidiary of the Company ("Merger
Sub"), merged with and into Helix, with Helix surviving the merger as a wholly
owned subsidiary of the Company (the "Merger"). On March 2, 2021, the Company
entered into a definitive agreement with the equity holders of MOR, pursuant to
which the equity holders of MOR contributed their interests in MOR to the
Company in exchange for shares of Company common stock (the "Contribution" and
together with the Merger, the "Business Combination"). Following consummation of
the Business Combination on March 2, 2021, the Company became the parent company
of both Helix and MOR. Helix provides traceability and point of sale technology,
analytics solutions and other products to customers within each vertical of the
cannabis industry to help them improve the performance of their business.

The Company provides innovative software solutions, proprietary data and
predictive analytics to optimize the operational and financial performance of
our customers. Given the prior experience of our management team, our initial
focus is on stakeholders within the healthcare and cannabis industries. However,
we believe the application of our offerings across other verticals to enhance
the transparency and efficacy of our customers' relationships with their
communities and customers is equally compelling.

The Company represents the unique convergence of proprietary healthcare,
consumer and cannabis data, SaaS analytics, innovative data management
capabilities and intelligent data science with a leading cannabis technology
platform yielding the combined power to drive innovation and transparency across
the industries we serve. In MOR, there was early recognition of the opportunity
to bring the sophistication of proven data science technology and analytics
solutions to a prominent cannabis technology platform provider, creating
innovation in both the applications that are key to supporting customer success
within the cannabis industry and to the data science powered insights that drive
healthcare and other mature regulated growth industries. In Helix, there was
realization that the capability set of a technology solutions provider within
more evolved sectors together with the track record of the MOR management team
offered a unique opportunity to enhance the value that Helix brings to its
cannabis customers and to the industry generally.

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The Company's mission is to provide our customers with the best-in-class
critical technology services through a single integrated Forian platform that
enables our customers within the healthcare and cannabis industries to operate
their businesses more safely, efficiently and profitably and to serve our
customers and our customers' stakeholders and constituencies more
comprehensively.

A novel strain of coronavirus (COVID-19) was first identified in December 2019,
and subsequently declared a pandemic by the World Health Organization. Our
business has largely operated in a work-from-home environment since the
inception of the pandemic and, as a result, has experienced limited business
disruption to date. Our management team continues to focus on the highest level
of safety measures to protect our employees. We have not experienced a material
impact to our financial results to date, however, COVID-19 continues to present
significant uncertainty in the future economic outlook for our customers and the
markets we serve.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Revenues


Revenues are derived from Information and Software Products, Services and Other
Products. Information and Software revenues are generated from licensing fees
for our proprietary information and software products. The Company recognizes
revenues from Information and Software products as performance obligations under
customer contracts are satisfied. Services revenues are primarily from contracts
with government agencies and revenue is recognized upon completion of the
various milestones within the contract. Other revenues are primarily from
security monitoring services offerings and the provision of web marketing
services. Contracts for these services have a stated transaction price for
monthly services and are recognized as the services are provided.

Cost of Revenues


Cost of revenues is generated from direct costs associated with the delivery of
our products and services to our customers. The cost of revenues relates
primarily to labor costs, hosting and infrastructure costs and client service
team costs. We record the cost of direct fulfillment as cost of revenues.
Infrastructure and licensed data costs, which are shared across all projects or
groups of projects, are not charged to cost of revenues.

Research and Development


Research and development expenses consist primarily of employee-related
expenses, subcontractor and third-party consulting fees, data fees, and hosted
infrastructure costs. We continue to focus our research and development efforts
on adding new features and applications to our product offerings. Once our
prototypes are proven, we begin to capitalize costs that qualify with the
associated development rather than recording those costs as research and
development.

Sales and Marketing


Sales and marketing expense is primarily salaries and related expenses,
including commissions, for our sales, marketing and product management staff.
Marketing program costs are also recorded as sales and marketing expense
including advertising, market research, and events (such as trade shows,
corporate communications, brand building, etc.). The Company plans to continue
to invest in marketing and sales by expanding our selling and marketing staff,
building brand awareness, attracting new clients and sponsoring additional
marketing events. The timing of these marketing events will affect our marketing
costs in any particular quarter.

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General and Administrative Expenses


General and administrative expenses include salaries and benefits and other
costs of departments serving administrative functions, such as executives,
finance and accounting and human resources. In addition, general and
administrative expense includes non-personnel costs, such as professional fees,
legal fees, accounting and finance advisory fees and other supporting corporate
expenses not allocated to cost of revenues, product and development or sales and
marketing.

Depreciation and Amortization Expenses


Depreciation and Amortization relate to long lived assets used in our business.
Depreciation expense relates primarily to furniture and equipment, computers and
vehicles. Amortization expense relates primarily to identifiable intangibles of
acquired companies.

Transaction Related Expenses


Transaction related expenses relate to the acquisition of Helix on March 2, 2021
and include professional, legal, accounting and finance advisory fees and other
direct expenses.

Results of Operations for the Three Months Ended March 31, 2022 and 2021:


The following table summarizes our condensed results of operations for the
periods indicated:

                                    For the Three Months Ended,
                                March 31, 2022       March 31, 2021
Revenues                        $     6,391,279     $      1,620,609
Costs and Expenses
Cost of Revenues                      1,567,549              457,886
Research and development              3,222,871            1,497,838
Sales and marketing                   1,411,314              598,975
General and administrative            6,088,454            2,784,562
Separation expenses                   5,611,857                    -
Gain on sale of assets                 (202,159 )                  -
Depreciation and amortization           605,674              187,584
Transaction related expenses                  -            1,210,279
Loss from operations            $   (11,914,281 )   $     (5,116,515 )



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Comparison of Three Months Ended March 31, 2022 and 2021

Revenues


Revenues for the three months ended March 31, 2022 were $6,391,279, which
represented an increase of $4,770,670 compared to total revenue of $1,620,609
for the three months ended March 31, 2021. These revenues were primarily from
Information and Software products. The increase is due to the inclusion of
revenues from the Helix acquisition since March 2, 2021, which contributed 38%
of the increase, and higher revenues from the Company's healthcare information
products, which contributed 62% of the increase. Revenues from the Company's
Information products increased $2,961,025 or 416% compared to the three months
ended March 31, 2021.

Cost of Revenues

Cost of revenues increased by $1,109,663 for the three months ended March 31,
2022 from $457,886 for the three months ended March 31, 2021. The increase is
due to higher cost of revenues from the Company's Information products.

Research and Development


Research and development expenses for the three months ended March 31, 2022 were
$3,222,871, which represented an increase of $1,725,033 compared to total
research and development expenses of $1,497,838 for the three months ended March
31, 2021. The increase is due to higher personnel, subcontracted labor, data
licensing and processing expenses related to scaling the Company's products,
which contributed 79% of the increase, and the inclusion of the Helix
acquisition since March 2, 2021, which contributed 21% of the increase.

Sales and Marketing


Sales and marketing expenses for the three months ended March 31, 2022 were
$1,411,314, which represented an increase of $812,339 compared to total sales
and marketing expenses of $598,975 for the three months ended March 31, 2021.
The increase is due to higher salary, commission and consulting expenses related
to scaling the Company's products, which contributed 64% of the increase and the
inclusion of the Helix acquisition since March 2, 2021, which contributed 36% of
the increase.

General and Administrative

General and administrative expenses for the three months ended March 31, 2022
were $6,088,454, which represented an increase of $3,303,892 compared to general
and administrative expenses of $2,784,562 for the three months ended March 31,
2021. The increase is due to higher expenses related to scaling the Company's
management organization, which contributed 13% of the increase, stock-based
compensation expenses related to equity awards granted to key Helix employees
and new Company hires after we became a public company on March 2, 2021, which
contributed approximately 47% of the increase, and the inclusion of the Helix
acquisition since March 2, 2021, which contributed 24% of the increase.

Separation Expenses


Separation expenses for the three months ended March 31, 2022 were $5,611,857,
consisting of $194,814 of severance expenses related to the transfer of
development activities from our Engeni SA subsidiary and $5,417,043 related to
the continued vesting of stock options through March 2, 2023 related to the
separation of two advisors to the Company in accordance with the terms of their
original advisory agreements.

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Gain on Sale of Assets

On March 3, 2022, the Company sold certain assets, consisting of customer contracts, accounts receivable, and other property related to its security monitoring services for $225,575 resulting in a gain of $202,159, which is included in operating expenses in the condensed consolidated statements of operations.

Transaction Related Expenses


Transaction related expenses for the three months ended March 31, 2022 were $0,
which represented a decrease of $1,210,279 compared to transaction related
expenses of $1,210,279 for the three months ended March 31, 2021. These 2021
expenses related to the acquisition of Helix, which was completed on March 2,
2021.

Non-GAAP Financial Measures

In this Quarterly Report on Form 10-Q we have provided a non-GAAP measure, which
we define as financial information that has not been prepared in accordance with
U.S. GAAP. The non-GAAP financial measure provided herein is earnings before
interest, taxes, non-cash and other items ("Adjusted EBITDA"), which should be
viewed as supplemental to, and not as an alternative for, net income or loss
calculated in accordance with U.S. GAAP (referred to below as "Net loss").

Adjusted EBITDA is used by our management as an additional measure of our
Company's performance for purposes of business decision-making, including
developing budgets, managing expenditures and evaluating potential acquisitions
or divestitures. Period-to-period comparisons of Adjusted EBITDA help our
management identify additional trends in our Company's financial results that
may not be shown solely by period-to-period comparisons of net income. In
addition, we may use Adjusted EBITDA in the incentive compensation programs
applicable to some of our employees in order to evaluate our Company's
performance. Our management recognizes that Adjusted EBITDA has inherent
limitations because of the excluded items, particularly those items that are
recurring in nature. In order to compensate for those limitations, management
also reviews the specific items that are excluded from Adjusted EBITDA, but
included in net income, as well as trends in those items contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

We believe that the presentation of Adjusted EBITDA is useful to investors in
their analysis of our results for reasons similar to the reasons why our
management finds it useful and because it helps facilitate investor
understanding of decisions made by management in light of the performance
metrics used in making those decisions. In addition, as more fully described
below, we believe that providing Adjusted EBITDA, together with a reconciliation
of net loss to Adjusted EBITDA, helps investors make comparisons between our
Company and other companies that may have different capital structures,
different effective income tax rates and tax attributes, different capitalized
asset values and/or different forms of employee compensation. However, Adjusted
EBITDA is not intended as a substitute for comparisons based on net loss. In
making any comparisons to other companies, investors need to be aware that
companies use different non-GAAP measures to evaluate their financial
performance. Investors should pay close attention to the specific definition
being used and to the reconciliation between such measures and the corresponding
U.S. GAAP measures provided by each company under applicable SEC rules.

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The following is an explanation of the items excluded by us from Adjusted EBITDA but included in net loss:

• Depreciation and Amortization. Depreciation and amortization expense is a

non-cash expense relating to capital expenditures and intangible assets arising

from acquisitions that are expensed on a straight-line basis over the estimated

useful life of the related assets. We exclude depreciation and amortization

expense from Adjusted EBITDA because we believe that (i) the amount of such

expenses in any specific period may not directly correlate to the underlying

performance of our business operations and (ii) such expenses can vary

significantly between periods as a result of new acquisitions and full

amortization of previously acquired tangible and intangible assets.

Accordingly, we believe that this exclusion assists management and investors in

making period-to-period comparisons of operating performance. Investors should

note that the use of tangible and intangible assets contributed to revenue in

the periods presented and will contribute to future revenue generation and

should also note that such expense will recur in future periods.

• Stock-Based Compensation Expense. Stock-based compensation expense is a

non-cash expense arising from the grant of stock-based awards to employees. We

believe that excluding the effect of stock-based compensation from Adjusted

EBITDA assists management and investors in making period-to-period comparisons

in our Company's operating performance because (i) the amount of such expenses

in any specific period may not directly correlate to the underlying performance

of our business operations and (ii) such expenses can vary significantly

between periods as a result of the timing of grants of new stock-based awards,

including grants in connection with acquisitions. Additionally, we believe that

excluding stock-based compensation from Adjusted EBITDA assists management and

investors in making meaningful comparisons between our Company's operating

performance and the operating performance of other companies that may use

different forms of employee compensation or different valuation methodologies

for their stock-based compensation. Investors should note that stock-based

compensation is a key incentive offered to employees whose efforts contributed

to the operating results in the periods presented and are expected to

contribute to operating results in future periods. Investors should also note

that such expenses will recur in the future.

• Interest Expense. Interest expense is associated with the Notes entered into on

September 1, 2021 in the amount of $24,000,000. The Notes are due on September

1, 2025 and accrue interest at an annual rate of 3.5%. We exclude interest

expense from Adjusted EBITDA (i) because it is not directly attributable to the

performance of our business operations and, accordingly, its exclusion assists

management and investors in making period-to-period comparisons of operating

performance and (ii) to assist management and investors in making comparisons

to companies with different capital structures. Investors should note that

interest expense associated with the Notes will recur in future periods.

• Investment Income. Investment income is associated with the level of marketable

debt securities and other interest-bearing accounts in which we invest.

Interest and investment income can vary over time due to a variety of financing

transactions, changes in interest rates, cash used to fund operations and

capital expenditures and acquisitions that we have entered into or may enter

into in the future. We exclude interest and investment income from Adjusted

EBITDA (i) because these items are not directly attributable to the performance

of our business operations and, accordingly, their exclusion assists management

and investors in making period-to-period comparisons of operating performance

and (ii) to assist management and investors in making comparisons to companies

with different capital structures. Investors should note that interest income

will recur in future periods.

• Foreign Currency Related Gains (Losses). Foreign currency related gains

(losses) result from foreign currency transactions and translation gains and

losses related to our Engeni SA subsidiary. We exclude foreign currency related

gains (losses) from Adjusted EBITDA (i) because these items are not directly

attributable to the performance of our business operations and, accordingly,

their exclusion assists management and investors in making period-to-period

comparisons of operating performance and (ii) to assist management and

investors in making comparisons to companies with different capital structures.

Investors should note that foreign currency related gains (losses) will recur

   in future periods.



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• Other Items. We engage in other activities and transactions that can impact our

net loss. In the periods being reported, these other items included (i) change

in fair value of warrant liability which related to warrants assumed in the

acquisition of Helix; (ii) transaction related expenses which consist of

professional fees and other expenses incurred in connection with the

acquisition of Helix; and (iii) other income which consists of profits on

marketable security investments. We exclude these other items from Adjusted

EBITDA because we believe these activities or transactions are not directly

attributable to the performance of our business operations and, accordingly,

their exclusion assists management and investors in making period-to-period

comparisons of operating performance. Investors should note that some of these

other items may recur in future periods.

• Gain on sale of assets. On March 3, 2022, we sold certain assets, consisting of

customer contracts, accounts receivable, and other property related to our

security monitoring services for $225,575 resulting in a gain of $202,159,

   which is included in operating expenses in the condensed consolidated
   statements of operations.


• Separation expenses. During March 2022, we transferred certain development

activities from our Engeni SA subsidiary to outsourced development facilities.

As a result, we incurred $194,814 in severance and related costs to be recorded

as a charge to operating expenses in 2022. Additionally, on March 2, 2022, we

and two advisors to our Company mutually agreed not to renew special advisor

agreements. Per the terms of the agreements, options to purchase 366,166 shares

of our common stock will continue to vest according to their original terms

through March 2, 2023, and unvested stock options to purchase 732,332 shares of

our common stock were forfeited. The advisors were not required to perform

services to our Company beyond the March 2, 2022 non-renewal date. As a result,

we recorded $5,417,043 of stock compensation expenses related to the options

that will vest over the twelve months ending March 2, 2023 during March 2022.

We exclude these other items from Adjusted EBITDA because we believe these

costs are not directly attributable to the performance of our business

operations and, accordingly, their exclusion assists management and investors

in making period-to-period comparisons of operating performance. Investors

should note that separation expenses are non-recurring.

• Income tax expense. MOR was organized as a limited liability company until the

completion of the Helix acquisition. As a result, we were treated as a

partnership for federal and state income tax purposes through March 2, 2021,

and our taxable income and losses are reported by our members on their

individual tax returns for such period. Therefore, we did not record any income

tax expense or benefit through March 2, 2021. We incurred a net loss for

financial reporting and income tax reporting purposes for this year.

Accordingly, any benefit for federal and state income taxes benefit has been

entirely offset by a valuation allowance against the related deferred tax net

assets. We exclude the income tax expense from Adjusted EBITDA (i) because we

   believe that the income tax expense is not directly attributable to the
   underlying performance of our business operations and, accordingly, its
   exclusion assists management and investors in making period-to-period
   comparisons of operating performance and (ii) to assist management and

investors in making comparisons to companies with different tax attributes.

Limitations on the use of non-GAAP financial measures

There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures provided by other companies.

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The non-GAAP financial measures are limited in value because they exclude
certain items that may have a material impact upon our reported financial
results. In addition, they are subject to inherent limitations as they reflect
the exercise of judgments by management about which items are adjusted to
calculate our non-GAAP financial measures. We compensate for these limitations
by analyzing current and future results on a U.S. GAAP basis as well as a
non-GAAP basis and also by providing U.S. GAAP measures in our public
disclosures.

Non-GAAP financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with U.S. GAAP. We
encourage investors and others to review our financial information in its
entirety, not to rely on any single financial measure to evaluate our business
and to view our non-GAAP financial measures in conjunction with the most
directly comparable U.S. GAAP financial measures.

The following table reconciles the specific items excluded from U.S. GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:


                                                                   For the 

Three Months Ended March 31,

                                                                      2022                      2021

Revenues:

Information and Software                                       $         5,809,094       $        1,408,978
Services                                                                   428,706                   96,311
Other                                                                      153,479                  115,320
Total revenues                                                 $         6,391,279       $        1,620,609

Net loss                                                       $       (11,854,088 )     $       (4,515,653 )

Depreciation & amortization                                                605,674                  187,584
Stock based compensation expense                                         7,904,584                  863,883
Change in fair value of warrant liability                                 (219,840 )               (623,627 )
Transaction related expenses                                                     -                1,210,279
Interest and investment income (expense)                                   232,623                   (1,241 )
Foreign currency related (gains) losses                                    (77,976 )                 24,006
Gain on sale of security monitoring assets                                (202,159 )                      -
Severance expense                                                          194,814                        -
Income tax expense                                                           5,000                        -

Adjusted EBITDA                                                $        (3,411,368 )     $       (2,854,769 )


For the Three Months Ended March 31, 2022

Adjusted EBITDA


Adjusted EBITDA for the three months ended March 31, 2022 was a loss of
$3,411,368 compared to a loss of $2,854,769 for the three months ended March 31,
2021, an increase of $556,599. The increase is primarily due to investments in
product development, customer service, infrastructure, and human capital and the
inclusion of Helix.

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Revenues


Revenues for the three months ended March 31, 2022 were $6,391,279, which
represented an increase of $4,770,670 compared to total revenue of $1,620,609
for the three months ended March 31, 2021. These revenues were primarily from
Information and Software products. The increase is due to the inclusion of
revenues from the Helix acquisition since March 2, 2021, which contributed 38%
of the increase, and higher revenues from the Company's healthcare information
products, which contributed 62% of the increase. Revenues from the Company's
Information products increased $2,961,025 or 416% compared to the three months
ended March 31, 2021.

Revenues for the three months ended March 31, 2022 was $6,391,279 compared to
pro forma revenues adjusted to include revenues from Helix for the period, for
the three months ended March 31, 2021 of $3,629,521. Helix pre-acquisition
revenues during the three months ended March 31, 2021 were $2,008,912. The
increase in pro forma revenue of $2,761,758 is primarily due to increased sales
of healthcare information products.

Liquidity and Capital Resources


Since the Company's inception in 2019, most of the Company's resources have been
devoted to scaling its research and development, sales and marketing, and
management infrastructure. The Company's operations have been financed primarily
from the cash proceeds received from equity issuances and the issuance of
convertible notes. The Company expects to continue to fund its operations and
potential future acquisitions through a combination of cash flow generated from
operating activities, debt financing, and/or additional equity issuances. To
date, the Company has not generated sufficient revenues from the licensing of
information products and software products to fund all of its operating expenses
and as a result the Company has incurred losses and generated negative cash
flows from operations since inception. On April 12, 2021 the Company entered
into a securities purchase agreement with certain accredited investors and
certain of the Company's directors, pursuant to which the Company issued
1,191,743 shares of common stock for aggregate gross proceeds of $12,000,000. On
September 1, 2021, the Company raised proceeds of $24 million through the sale
of 3.5% convertible promissory notes maturing on September 1, 2025. As of March
31, 2022, the Company's principal source of liquidity was aggregate cash and
marketable securities of $27,146,824.

Cash Flows

The following table summarizes selected information about our sources and uses of cash and cash equivalents for the periods presented:

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                                                                    For the Three Months Ended,
                                                                March 31, 2022       March 31, 2021
Net cash used in operating activities                          $     (3,229,774 )   $     (3,608,800 )
Net cash (used in) provided by investing activities                    (667,515 )          5,246,936
Net cash (used in) provided by financing activities                     (13,122 )            292,148
Net (decrease) increase in cash and cash equivalents           $     

(3,910,411 ) $ 1,930,284

Net Cash Used in Operating Activities


Net cash used in operating activities decreased by $379,026 for the three months
ended March 31, 2022 compared to the three months ended March 31, 2021 The
decrease was primarily the result of increased revenues and decreased
transaction related expenses, partially offset by increased operating expense
related to the scaling up of the Company's operations as well as a result of the
Helix acquisition and its operations.

Net Cash Provided by Investing Activities


Net cash used in investing activities of $667,515 decreased by $5,914,451 for
the three months ended March 31, 2022 compared to cash provided by investing
activities of $5,246,936 for the three months ended March 31, 2021. This is
primarily the result of an increase in additions to property and equipment of
$838,379, a net increase in cash invested in marketable securities of $3,990,670
and a decrease in cash acquired of $1,310,977.

Net Cash Provided by Financing Activities


Net cash used in financing activities of $13,122 for the three months ended
March 31, 2022 decreased by $305,270 compared to cash provided by investing
activities of $292,148 for the three months ended March 31, 2021. The decrease
was primarily related to a reduction in cash proceeds received from the exercise
of stock options.

Critical Accounting Policies and Use of Estimates


Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which we have prepared in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). We
believe that several accounting policies are important to understanding our
historical and future performance. We refer to these policies as critical
because these specific areas generally require us to make judgments and
estimates about matters that are uncertain at the time we make the estimate, and
different estimates - which also would have been reasonable - could have been
used. On an ongoing basis, we evaluate our estimates and judgments. We base our
estimates on historical experience and other market-specific or other relevant
assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

Critical accounting policies and estimates are further discussed in our Annual
Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC
on March 31, 2022.

Off Balance Sheet Arrangements

The Company does not have relationships with other organizations or process any transactions that would constitute off balance sheet arrangements.

Recent Accounting Pronouncements


In October 2021, the FASB issued Accounting Standards Update No. 2021-08,
Accounting for Contract Assets and Contract Liabilities from Contracts with
Customers ("ASU 2021-08"). The FASB issued ASU 2021-08 to improve the accounting
for acquired revenue contracts with customers in a business combination by
addressing diversity in practice and inconsistency related to recognition of an
acquired contract liability and payment terms and their effect on subsequent
revenue recognized by the acquirer. The amendment is effective for financial
statements for interim and annual periods beginning after December 15, 2022. The
adoption of this standard is not expected to have a material impact on the
condensed consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements
and does not believe the adoption of such pronouncements will have a material
impact on its financial statements.

                                       40

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Table of Contents

JOBS Act


On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, reduce certain reporting requirements for
an "emerging growth company." As an "emerging growth company," the Company is
electing to take advantage of the extended transition period afforded by the
JOBS Act for the implementation of new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an "emerging growth
company," the Company is not required to, among other things, (i) provide an
auditor's attestation report on our system of internal controls over financial
reporting pursuant to Section 404, (ii) provide all of the compensation
disclosure that may be required of non-emerging growth public companies under
the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with
any requirement that may be adopted by the Public Company Accounting Oversight
Board regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis), and (iv) disclose certain
executive compensation-related items such as the correlation between executive
compensation and performance and comparisons of the chief executive officer's
compensation to median employee compensation. These exemptions will apply until
the fifth anniversary of the business combination or until we no longer meet the
requirements for being an "emerging growth company," whichever occurs first.

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