Forward-Looking Statements





The following discussion of our financial condition and results of operations
for the three and nine months ended September 30, 2020 and 2019 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, 2019, as filed on March 30, 2020 with the SEC. 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 "Helix", the "Company", "we", "us", and "our" refer to Helix Technologies, Inc.





Overview



Helix Technologies, Inc. provides critical infrastructure solutions to the legal
cannabis industry. Our mission is to provide clients with the best-in-class
critical infrastructure services through a single integrated platform which
enables them to run their businesses more safely, efficiently, and profitably.
As we increase our platform's scale and scope, clients will be able to realize
greater cost savings and operating advantages.

Our team is composed of former military, financial services, and technology professionals with deep experience in technology design and development, strategic partnerships, data aggregation, venture capital, private equity, risk-management, security and law enforcement, intelligence, banking, and finance.





Technology is a cornerstone of Helix's service offering. Our technology platform
allows clients to manage their business in a compliant manner with BioTrackTHC's
seed-to-sale software, as well as managing inventory and supply costs
through Cannabase. We focus on utilizing technology as an operations multiplier,
bringing in and managing unique partnerships across the technology and
operations spectrum to tailor and create desired outcomes for our clients.



Within the cannabis industry, no other activity carries as much potential for
unforeseen negative impact as a lapse in compliance operations. Helix brings a
broad range of compliance services to firms in the cannabis industry,
safeguarding their ability to operate while increasing their access to services
that offer them a competitive edge.



We have largely completed the financial and operational integrations of the
previous 24 months, namely the acquisitions of BioTrackTHC, Engeni, Tan Security
and Amercanex. BioTrackTHC specializes in providing cannabis software services,
ranging from monitoring of plant inventory to point-of-sale solutions.
BioTrackTHC's software is used by 9 government entities and more than 2,000
commercial client locations across 34 U.S. states and 6 countries. Engeni
provides a turnkey and comprehensive digital presence solution for small
businesses. The Engeni Growth solution includes an optimized web page, a fully
paid Google pay-per-click campaign, lead capture, lead delivery and ubiquitous
directory/map listings. Engeni has also become the Company's organic offshore
software development platform, and has delivered the second generation of the
BioTrackTHC software. These strategic acquisitions will help field the growing
demand in the Legal Cannabis Industry. Amercanex is a business to business
wholesale marketplace that leverages blockchain technology and is capable of
facilitating wholesale cannabis transactions between licensed businesses on a
global scale. The Company has integrated Amercanex's technology with
BioTrackTHC's software platforms. Integration of the previously announced
acquisitions has already yielded the operational and financial results that the
management team sought, evidenced by strongly improved cash flows from
operations, growing market share, and a greatly accelerated software development
time with increased market responsiveness. These integrations still have room to
yield more financial and operational leverage, which will be welcome in the
unprecedented operating environment that now confronts the industry. Further,
the turnaround of the BioTrackTHC unit is well advanced, with strategic
restructuring in operations and personnel nearly complete, having been initiated
in 2019. The transition of BioTrackTHC from an operation with negative $800,000
of Adjusted EBITDA in 2018 (while still better than competitors) into an
operation that generated nearly $800,000 in Adjusted EBITDA in Q1 2020 and Q2
2020, over $1 million of Adjusted EBITDA in Q3 2020, and is a transformational
success.




Today, the leadership team is focused on keeping our employees and clients as
safe as possible as we continue to execute our strategy in the face of the
emergence of the Covid-19 pandemic. As a former military officer with training
in Nuclear, Biological, and Chemical operations, Helix's CEO is focused on not
only the Company's strategic and operational results, but on the evolution of
the pandemic threat to the business and our lives.



                                       42





On March 11, 2020, the World Health Organization ("WHO") recognized COVID-19 as
a global pandemic, prompting many national, regional, and local governments,
including in the markets that the Company operates in, to implement preventative
or protective measures, such as travel and business restrictions, wide-sweeping
quarantines and stay-at-home orders. As a result, COVID-19 has significantly
curtailed global economic activity, including in the industries in which the
Company operates.




The COVID-19 pandemic has created significant disruption and volatility in the
capital markets, which, depending on future developments, could impact our
capital resources and liquidity in the future. If we need to raise additional
capital to support operations in the future, we may be unable to access the
capital markets.



In response to the health and safety risks and challenges presented by the
COVID-19 pandemic, the Company has been proactively and regularly implementing
measures to protect its employees. These measures include, but are not limited
to, the following:

? Abiding by national, state, and local recommendations to require the wearing of

protective face masks and practicing of social distancing.

? Adopting remote working protocols, systems, and processes.






While the Company is actively working to successfully navigate the financial,
operational, and personnel challenges presented by the COVID-19 pandemic, the
full extent of the impact of COVID-19 on our operational and financial
performance will depend on future developments, including the duration and
spread of the pandemic and related actions taken by the U.S. government, state
and local government officials, and international governments to prevent disease
spread, all of which are uncertain, out of our control and cannot be predicted
at this time. We believe that the economic impacts of the pandemic are not well
understood in terms of scope, scale and duration, and so we continue to focus on
accelerating our execution timeline while using our technology and data
resources to deliver greater reliability and profitability to our customers.

Results of Operations for the three months ended September 30, 2020 and 2019





The following table shows our results of operations for the three months ended
September 30, 2020 and 2019. The historical results presented below are not
necessarily indicative of the results that may be expected for any future
period.



                                             For the Three Months Ended
                                                    September 30,                          Change
                                                2020              2019            Dollars         Percentage
Revenue                                    $    2,893,058     $  2,737,568     $     155,490                6 %
Cost of revenue                                   918,150        1,318,825          (400,675 )            -30 %
Gross margin                                    1,974,908        1,418,743           556,165               39 %

Operating expenses                             43,611,028        4,141,254        39,469,774              953 %

Loss from operations                          (41,636,120 )     (2,722,511 )     (38,913,609 )          1,429 %

Other (expense) income, net                      (482,422 )      1,608,218        (2,090,640 )           -130 %

Loss from discontinued operations          $      (70,259 )   $   (141,276 )   $      71,017              -50 %

Net loss                                   $  (42,188,801 )   $ (1,255,569 )   $ (40,933,232 )          3,260 %

Changes in foreign currency translation
adjustment                                 $       62,069     $   (118,003 )   $     180,072             -153 %

Net loss attributable to common
shareholders                               $  (42,126,732 )   $ (1,373,572 )   $ (40,753,160 )          2,967 %




                                       43





Revenue



Total revenue for the three-month period ended September 30, 2020 was
$2,893,058, which represented an increase of $155,490 compared to total revenue
of $2,737,568 for the three months ended September 30, 2019. The increase
primarily resulted from additional revenue resulting from continued growth in
our software client base and additional services accessed by them.



Cost of Revenues



Cost of revenues for the three months ended September 30, 2020 and 2019
primarily consisted of hourly compensation for security personnel and employees
involved in the creation and development of licensing software. Cost of revenues
decreased by $400,675 for the three months ended September 30, 2020, to $918,150
as compared to $1,318,825 for the three months ended September 30, 2019. The
decrease resulted from cost containment measures we implemented and a reduction
in purchases of installed security equipment.



Operating Expenses



Our operating expenses encompass selling, general and administrative expenses,
salaries and wages, professional and legal fees and depreciation. Selling,
general and administrative expenses consist primarily of rent/moving expenses,
advertising and travel expenses. Salaries and wages is composed of non-revenue
generating employees. Professional services are principally comprised of outside
legal, audit, information technology consulting, marketing and outsourcing
services as well as the costs related to being a publicly traded company. Our
operating expenses during the three months ended September 30, 2020 and 2019
were $43,611,028 and $4,141,254, respectively. The overall $39,469,774 increase
in operating expenses was attributable to intense cost management efforts,
illustrated by the following increases/(decreases) in operating expenses of:



  ? Selling, general and administrative - $(471,049)

  ? Salaries and wages - $307,668

  ? Professional and legal fees - $(199,590)

  ? Depreciation and amortization - $(130,362)

  ? Loss on impairment of intangibles - $39,963,107
The $(471,049) decrease in selling, general and administrative expenses is a
result of decreases in rent expense, advertising and travel expenses resulting
from cost containment measures. The $307,668 increase in salaries and wages
resulted from an increase in stock compensation expense. The $(199,590) decrease
in professional and legal fees primarily resulted from a decrease in legal fees
and costs associated with fundraising and acquisitions. The $(130,362) decrease
in depreciation and amortization was due to reduced amortization of intangible
assets acquired in the Security Grade acquisition as we fully impaired certain
intangible assets in the first quarter of 2020. The $39,963,107 increase in loss
on impairment of intangibles resulted from an impairment of goodwill required by
the equity value of the Company pursuant to the merger agreement with MOR
Analytics LLC. See the Note 21 Subsequent Events for additional information.



Other (Expense) Income, net



Other (expense) income, net consisted of a change in the fair value of
convertible notes, change in the fair value of convertible notes - related
party, change in fair value of warrant liability, gain on asset disposal, loss
on the conversion of convertible notes and interest expense. Other (expense)
income, net during the three months ended September 30, 2020 and 2019 was
$(482,422) and $1,608,218, respectively. The $(2,090,640) decrease in other
(expense) income, net was primarily attributable to a loss on the change in fair
value of convertible notes of $(321,915), gain on the change in fair value of
warrant liability of $67,039, gain on asset disposal of $239,825, loss on the
conversion of convertible notes of $(111,902) and interest expense of
$(355,469).

Loss from Continuing Operations





For the foregoing reasons, we had a loss from continuing operations of
$(42,118,542) for the three months ended September 30, 2020, compared to a loss
from continuing operations of $(1,114,293) for the three months ended September
30, 2019.



                                       44

Loss from Discontinued Operations





Loss from discontinued operations was $(70,259) and $(141,276) for the three
months ended September 30, 2020 and 2019, respectively. These losses related to
the guarding business of the Company, which was sold on July 31, 2020.



Net Loss




For the foregoing reasons, we had a net loss of $(42,188,801) for the three
months ended September 30, 2020, or $(0.36) per basic share, compared to net
loss of $(1,255,569) for the three months ended September 30, 2019, or $(0.02)
per basic share.

Net Loss Attributable to Common Shareholders





For the foregoing reasons, we had a net loss attributable to common shareholders
of $(42,126,732) for the three months ended September 30, 2020, or $(0.36) per
basic share attributable to common shareholders, compared to net loss
attributable to common shareholders of $(1,373,572) for the three months ended
September 30, 2019, or $(0.02) net income per basic share attributable to common
shareholders.




Results of Operations for the nine months ended September 30, 2020 and 2019



The following table shows our results of operations for the nine months ended
September 30, 2020 and 2019. The historical results presented below are not
necessarily indicative of the results that may be expected for any future
period.



                                             For the Nine Months Ended
                                                   September 30,                         Change
                                               2020              2019            Dollars        Percentage

Revenue                                    $   8,800,352     $  7,757,066     $   1,043,286              13 %
Cost of revenue                                2,848,674        3,594,491          (745,817 )           -21 %
Gross margin                                   5,951,678        4,162,575         1,789,103              43 %

Operating expenses                            52,055,830       11,929,552        40,126,277             336 %

Loss from operations                         (46,104,152 )     (7,766,977 )     (38,337,174 )           493 %


Other (expense) income, net                   (2,210,877 )        642,813

(2,938,043 ) -457 %

Loss from discontinued operations $ (65,141 ) $ (160,798 )

$     169,200            -105 %

Net loss                                   $ (48,380,170 )   $ (7,284,962 )   $ (41,106,017 )           564 %

Changes in foreign currency translation
adjustment                                 $     110,264     $   (114,346 )   $     224,610            -196 %

Net loss attributable to common
shareholders                               $ (48,269,906 )   $ (7,399,308 )   $ (40,881,407 )           552 %




Revenue



Total revenue for the nine-month period ended September 30, 2020 was $8,800,352,
which represented an increase of $1,043,286 compared to total revenue of
$7,757,066 for the nine months ended September 30, 2019. The increase primarily
resulted from additional revenue resulting from continued growth in our software
client based, and additional services accessed by them.



                                       45





Cost of Revenues



Cost of revenues for the nine months ended September 30, 2020 and 2019 primarily
consisted of hourly compensation for security personnel and employees involved
in the creation and development of licensing software. Cost of revenues
decreased by $(745,817) for the nine months ended September 30, 2020, to
$2,848,674 as compared to $3,594,491 for the nine months ended September 30,
2019. The decrease resulted from cost containment measures we implemented and a
reduction in purchases of installed security equipment.



Operating Expenses



Our operating expenses encompass selling, general and administrative expenses,
salaries and wages, professional and legal fees and depreciation. Selling,
general and administrative expenses consist primarily of rent/moving expenses,
advertising and travel expenses. Salaries and wages is composed of non-revenue
generating employees. Professional services are principally comprised of outside
legal, audit, information technology consulting, marketing and outsourcing
services as well as the costs related to being a publicly traded company. Our
operating expenses during the nine months ended September 30, 2020 and 2019 were
$52,055,830 and $11,929,552, respectively. The overall $40,126,278 increase in
operating expenses was attributable to the following increases/(decreases) in
operating expenses of:



  ? Selling, general and administrative - $(1,066,569)

  ? Salaries and wages - $900,038

  ? Professional and legal fees - $(844,499)

  ? Depreciation and amortization - $(195,777)

  ? Loss on impairment of intangible assets - $41,333,085




The $(1,066,569) decrease in selling, general and administrative expenses is a
result of decreases in rent expense, advertising and travel expenses. The
$900,038 increase in salaries and wages resulted from share-based compensation
and separation payments to terminated employees. The $(844,499) decrease in
professional and legal fees primarily resulted from a decrease in legal fees and
costs associated with fundraising and acquisitions. The $(195,777) decrease in
depreciation and amortization was due to the full impairment of the Security
Grade customer list in the first quarter of 2020, which reduced subsequent
amortization expense in 2020. The $41,333,085 increase in loss on impairment of
intangibles resulted from an impairment of goodwill required by the equity value
of the Company pursuant to the merger agreement with MOR Analytics LLC. See the
Note 21 Subsequent Events for additional information.

Other (Expense) Income, net





Other (expense) income, net consisted of a change in the fair value of
convertible notes, change in the fair value of convertible notes - related
party, change in fair value of warrant liability, change in fair value of
contingent consideration, gain on asset disposal, loss on conversion of
convertible notes, loss on issuance of warrants, gain on reduction of obligation
pursuant to acquisition, other income and interest expense. Other (expense)
income, net during the nine months ended September 30, 2020 and 2019 was
$(2,210,877) and $642,813, respectively. The $(2,853,690) decrease in other
(expense) income, net was primarily attributable to a loss on the change in fair
value of convertible notes of $(1,104,856), loss on conversion of convertible
notes of $(1,536,324), and interest expense of $(1,029,979), partially offset by
gain on the change in fair value of convertible notes - related party of
$498,233, gain on the change in fair value of warrant liability of $682,717,
other income of $37,507, gain on asset disposal of $239,825 and gain on
reduction of obligation pursuant to acquisition of $2,000, during the nine
months ended September 30, 2020.

Loss from Continuing Operations





For the foregoing reasons, we had a loss from continuing operations of
$(48,315,029) for the nine months ended September 30, 2020, compared to a loss
from continuing operations of $(7,124,164) for the nine months ended September
30, 2019.



                                       46

Loss from Discontinued Operations

Loss from discontinued operations was $(65,141) and $(160,798) for the nine months ended September 30, 2020 and 2019, respectively. These losses related to the guarding business of the Company, which was sold on July 31, 2020.





Net Loss




For the foregoing reasons, we had a net loss of $(48,380,170) for the nine
months ended September 30, 2020, or $(0.46) net loss per common share - basic
and diluted, compared to a net loss of $(7,284,962) for the nine months ended
September 30, 2019, or $(0.10) net loss per common share - basic and diluted.

Net Loss Attributable to Common Shareholders





For the foregoing reasons, we had a net loss attributable to common shareholders
of $(48,269,906) for the nine months ended September 30, 2020, or $(0.46) net
loss per share attributable to common shareholders - basic and diluted, compared
to net loss attributable to common shareholders of $(7,399,308) for the nine
months ended September 30, 2019, or $(0.10) net loss per share attributable to
common shareholders - basic and diluted.

Liquidity, Capital Resources and Cash Flows





Going Concern




Management believes that we will continue to incur losses for the immediate
future. Therefore, we may either need additional equity or debt financing until
we can achieve profitability and positive cash flows from operating activities,
if ever. These conditions raise substantial doubt about our ability to continue
as a going concern. Our condensed consolidated financial statements do not
include any adjustments relating to the recovery of assets or the classification
of liabilities that may be necessary should we be unable to continue as a going
concern. For the nine months ended September 30, 2020, we have generated revenue
and are trying to achieve positive cash flows from operations.

As of September 30, 2020, we had a cash balance of $1,677,041, accounts receivable, net of $744,906 and $5,914,154 in current liabilities. At the current cash consumption rate, we may need to consider additional funding sources toward the end of fiscal 2020. We've taken proactive measures to reduce operating expenses, drive growth in revenue and expeditiously resolve any remaining legal matters.





The successful outcome of future activities cannot be determined at this time
and there is no assurance that, if achieved, we will have sufficient funds to
execute our intended business plan or generate positive operating results.



The condensed consolidated financial statements do not include any adjustments
related to this uncertainty and as to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should we be unable to continue as a going concern.



Capital Resources

The following table summarizes total current assets, liabilities and working capital for the periods indicated:





                       September 30,      December 31,
                           2020               2019             Change
Current assets        $     4,573,684     $   3,518,224     $  1,055,460
Current liabilities         5,914,154         6,934,725       (1,020,571 )
Working capital       $    (1,340,470 )   $  (3,416,501 )   $  2,076,031

As of September 30, 2020, and December 31, 2019, we had a cash balance of $1,677,041 and $556,858, respectively.

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