NANTHEALTH, INC.

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Delayed Nasdaq  -  04:00 2022-08-05 pm EDT
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08/05NANTHEALTH, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)
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08/04NANTHEALTH : REPORTS 2022 SECOND QUARTER FINANCIAL RESULTS - Form 8-K
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08/04TRANSCRIPT : NantHealth, Inc., Q2 2022 Earnings Call, Aug 04, 2022
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NANTHEALTH, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/05/2022 | 02:37pm EDT
The following is a discussion and analysis of our financial condition and the
results of operations as of and for the periods presented below. The following
discussion and analysis should be read in conjunction with the "Consolidated
Financial Statements" and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q ("Quarterly Report"). This discussion contains
forward-looking statements that are based on the beliefs, assumptions, and
information currently available to our management, and are subject to known and
unknown risks, uncertainties, and other factors that may cause our actual
results to differ materially from those expressed or implied by such
forward-looking statements. These risks, uncertainties, and other factors
include, among others, those described in greater detail elsewhere in this
Quarterly Report and in our Annual Report on Form 10-K, particularly in Item 1A,
"Risk Factors".

Overview

NantHealth, Inc. ("we" or "us") provides enterprise solutions that help
businesses transform complex data into actionable insights. By offering
efficient ways to move, interpret, and visualize complex and highly sensitive
information, we help our customers in healthcare, life sciences, logistics,
telecommunications, and other industries, to automate, understand, and act on
data while keeping it secure and scalable.

Our product portfolio comprises the latest technology in payer/provider
collaboration platforms for real-time coverage decision support (NaviNet and
Eviti), and data solutions that include multi-data analysis, reporting and
professional services offerings (Quadris). In addition, OpenNMS, a subsidiary of
ours, helps businesses monitor and manage network health and performance.
Altogether, we generally derive revenue from SaaS subscription fees, support
services, professional services, and revenue sharing through collaborations with
complementary businesses.

We market certain of our solutions as a comprehensive integrated solution that
includes our clinical decision support, payer engagement solutions, data
analysis and network monitoring and management. We also market our clinical
decision support, payer engagement solutions, data analysis and network
monitoring and management on a stand-alone basis. To accelerate our commercial
growth and enhance our competitive advantage, we intend to continue to:

•introduce new marketing, education and engagement efforts and foster
relationships across the health care community to drive adoption of our products
and services;
•strengthen our commercial organization to increase our NantHealth solutions
customer base and to broaden usage of our solutions by existing customers;
•develop new features and functionality for NantHealth solutions to address the
needs of current and future healthcare provider and payer, self-insured employer
and biopharmaceutical company customers, as well as logistics,
telecommunications and other customers through OpenNMS; and
•publish scientific and medical advances.

The acquisition of OpenNMS, an enterprise-grade open-source network management
company, expands and diversifies our software portfolio and service offerings,
adding AI technologies, and enhancing cloud and SaaS capabilities. We believe
OpenNMS will provide our customers with a new set of services to maintain
reliable network connections for critical data flows that enable patient data
collaboration and decision making at the point of care.

Since our inception, we have devoted substantially all our resources to the
development and commercialization of NantHealth solutions. To complement our
internal growth and expertise, we have made several strategic acquisitions of
companies, products and technologies. We have incurred significant losses since
our inception and, as of June 30, 2022, our accumulated deficit was
approximately $1.1 billion. We expect to continue to incur operating losses over
the near term as we expand our commercial operations and invest further in
NantHealth solutions.

We plan to (i) continue investing in our infrastructure, including but not
limited to solution development, sales and marketing, implementation and
support, (ii) continue efforts to make infrastructure investments within an
overall context of maintaining reasonable expense discipline, (iii) add new
customers through maintaining and expanding sales, marketing and solution
development activities, (iv) expand our relationships with existing customers
through delivery of add-on and complementary solutions and services and
(v) continue our commitment of service in support of our customer satisfaction
programs.
                                     - 32 -
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Purchase of Convertible Notes


On April 13, 2021, we and our wholly owned subsidiary, NaviNet (the "Guarantor")
entered into a note purchase agreement (the "Note Purchase Agreement") with
Highbridge Capital Management, LLC and one of its affiliates ("Highbridge") and
Nant Capital, LLC ("Nant Capital"), an entity affiliated with Dr. Patrick
Soon-Shiong, our Executive Chairman, to issue and sell $137.5 million in
aggregate principal amount of our 4.5% convertible senior notes due 2026 (the
"2021 Notes") in a private placement pursuant to an exemption from the
registration requirements of the Securities Act afforded by Section 4(a)(2) of
the Securities Act. The Note Purchase Agreement includes customary
representations, warranties and covenants by us. Under the terms of the Note
Purchase Agreement, we have agreed to indemnify the buyers against certain
liabilities. The 2021 Notes were issued on April 27, 2021. The 2021 Notes will
mature on April 15, 2026, unless earlier repurchased, redeemed or converted.

On April 27, 2021, in connection with the issuance of the 2021 Notes, we entered
into a Third Amended and Restated Promissory Note which amends and restates our
promissory note, dated January 4, 2016, as amended on May 9, 2016, and on
December 15, 2016, between us and Nant Capital, to, among other things, extend
the maturity date of the promissory note to October 1, 2026 and to subordinate
the promissory note in right of payment to the 2021 Notes.

On April 27, 2021, in connection with the issuance of the 2021 Notes, we entered
into a Second Amended and Restated Promissory Note which amends and restates our
promissory note, dated August 8, 2018, as amended on December 31, 2020, between
us and Nant Capital, to, among other things, extend the maturity date of the
promissory note to December 31, 2026 and to subordinate the Second Promissory
Note in right of payment to the 2021 Notes.

COVID-19 Pandemic


In March 2020, the World Health Organization declared the novel coronavirus
(COVID-19) a pandemic. In the same month, the President of the United States
declared a State of National Emergency due to the COVID-19 outbreak. The
COVID-19 pandemic has resulted in intermittent worldwide government restrictions
on the movement of people, goods, and services resulting in increased volatility
in and disruptions to global markets. To date, there has been no material
adverse impact to our business from the COVID-19 pandemic. Given the
unprecedented and evolving nature of the pandemic, the future impact of these
changes and potential changes on us and our contractors, consultants, customers,
resellers and partners is unknown at this time.

However, in light of the uncertainties regarding economic, business, social,
health and geopolitical conditions, our revenues, earnings, liquidity, and cash
flows could be adversely affected, whether on an annual or quarterly basis.
Continued impacts of the COVID-19 pandemic could materially adversely affect our
current and long-term accounts receivable, as our negatively impacted customers
from the pandemic may request temporary relief, delay, or not make scheduled
payments. In addition, the deployment of our solutions may represent a large
portion of our customers' investments in software technology. Decisions to make
such an investment are impacted by the economic environment in which the
customers operate. Uncertain global geopolitical, economic and health conditions
and the lack of visibility or the lack of financial resources may cause some
customers to reduce, postpone or terminate their investments, or to reduce or
not renew ongoing paid services, adversely impacting our revenues or timing of
revenue. Health conditions in some geographic areas where our customers operate
could impact the economic situation of those areas. These conditions, including
the COVID-19 pandemic, may present risks for health and limit the ability to
travel for our employees, which could further lengthen our sales cycle and delay
revenue and cash flows in the near-term.

Nasdaq Delisting


On February 18, 2022, we received a notice (the "Notice") from The Nasdaq Stock
Market LLC ("Nasdaq") informing us that for the last 30 consecutive business
days, the bid price of our common stock had closed below $1.00 per share, which
is the minimum required closing bid price for continued listing on Nasdaq
pursuant to Listing Rule 5450(a)(1) (the "Bid Price Requirement"). The Notice
has no immediate effect on our Nasdaq listing or trading of our common stock. We
have 180 calendar days, or until August 17, 2022, to regain compliance. To
regain compliance, the closing bid price of our common stock must be at least
$1.00 per share for a minimum of ten consecutive business days. If we do not
regain compliance by August 17, 2022 (the "Compliance Date"), we may be eligible
for additional time to regain compliance or if we are otherwise not eligible, we
may request a hearing before a Hearings Panel.

If we do not regain compliance with the Bid Price Requirement by the Compliance
Date, we may be eligible for an additional 180 calendar day compliance period.
To qualify, we would be required to transfer to The Nasdaq Capital Market and
meet the continued listing requirement for the market value of publicly held
shares and all other initial listing standards for The Nasdaq Capital Market,
with the exception of the Bid Price Requirement, and we would need to provide
written notice to Nasdaq of our intention to cure the deficiency during the
additional compliance period. We intend to apply to transfer our securities to
Nasdaq Capital Market and request a second 180-day period to regain compliance
with the Bid Price Requirement.
                                     - 33 -
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2017 Asset Purchase Agreement with Allscripts


On August 3, 2017, we entered into an asset purchase agreement (the "APA") with
Allscripts Healthcare Solutions, Inc.("Allscripts"), pursuant to which we agreed
to sell to Allscripts substantially all of the assets of our provider/patient
engagement solutions business, including our FusionFX solution and components of
its NantOS software connectivity solutions (the "Business"). On August 25, 2017,
we and Allscripts completed the sale pursuant to the APA.

Allscripts conveyed to us 15,000,000 shares of our common stock at par value of
$0.0001 per share that were previously owned by Allscripts as consideration for
the transaction. We retired the shares of stock. Allscripts also paid $1.7
million of cash consideration to us as an estimated working capital payment, and
we recorded a receivable of $1.0 million related to final working capital
adjustments. We are also responsible for paying Allscripts for fulfilling
certain customer service obligations of the business post-closing.

Concurrent with the closing and as contemplated by the APA, we and Allscripts
modified the amended and restated mutual license and reseller agreement dated
June 26, 2015, which was further amended on December 30, 2017, such that, among
other things, we committed to deliver a minimum of $95.0 million of total
bookings over a ten-year period ("Bookings Commitment") from referral
transactions and sales of certain Allscripts products under this agreement (see
Note 9 of the Consolidated Financial Statements). We also agreed that Allscripts
shall receive at least $0.5 million per year in payments from bookings (the
"Annual Minimum Commitment"). If the total payments received by Allscripts from
bookings during such period are less than the Annual Minimum Commitment, we
shall pay to Allscripts the difference between the Annual Minimum Commitment and
the total amount received by Allscripts from bookings during such period. In the
event of a Bookings Commitment shortfall at the end of the ten-year period, we
may be obligated to pay 70% of the shortfall, subject to certain credits. We
will earn 30% commission from Allscripts on each software referral transaction
that results in a booking with Allscripts. We account for the Bookings
Commitment at its estimated fair value over the life of the agreement. The total
estimated liability was $33.2 million and $35.7 million as of June 30, 2022 and
December 31, 2021, respectively.


                                     - 34 -
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Non-GAAP Net Loss from Continuing Operations and Non-GAAP Net Loss Per Share from Continuing Operations


Adjusted net loss from continuing operations and adjusted net loss per share
from continuing operations are financial measures that are not prepared in
conformity with United States generally accepted accounting principles (U.S.
GAAP). Our management believes that the presentation of Non-GAAP financial
measures provides useful supplementary information regarding operational
performance, because it enhances an investor's overall understanding of the
financial results for our core business. Additionally, it provides a basis for
the comparison of the financial results for our core business between current,
past and future periods. Other companies may define these measures in different
ways. Non-GAAP financial measures should be considered only as a supplement to,
and not as a substitute for or as a superior measure to, financial measures
prepared in accordance with U.S. GAAP.

Non-GAAP net loss from continuing operations excludes the effects of (1) stock-based compensation expense, (2) change in fair value of derivatives liability, (3) change in fair value of the Bookings Commitment, (4) noncash interest expense related to convertible notes, (5) intangible amortization, (6) ROU asset impairment and (7) the impacts of certain income tax benefits and provisions from noncash activity.


The following table reconciles Net loss from continuing operations attributable
to NantHealth to Net loss from continuing operations attributable to NantHealth
- Non-GAAP for the three and six months ended June 30, 2022 and 2021
(Unaudited):
                                                           Three Months 

Ended

(Dollars in thousands, except per share amounts)                June 30,                              Six Months Ended June 30,
                                                       2022                   2021                   2022                    2021
Net loss from continuing operations attributable
to NantHealth                                    $     (12,512)         $   

(15,322) $ (28,462) $ (30,735) Adjustments to GAAP net loss from continuing operations attributable to NantHealth:


Loss on Exchange and Prepayment of 2016 Notes                -                    742                       -                    742
Stock-based compensation expense from continuing
operations                                               1,263                    851                   2,653                  1,734

Change in fair value of derivatives liability                -                      -                       -                     (4)
Change in fair value of Bookings Commitment             (2,594)                 2,340                  (2,500)                 4,803
Impairment of ROU asset                                    208                      -                     208                      -
Noncash interest expense related to convertible
notes                                                       36                    187                      73                    510
Intangible amortization from continuing
operations                                               2,233                  2,212                   4,465                  4,425

Tax benefit resulting from certain noncash tax
items                                                       (4)                   (45)                    (44)                   (88)
Total adjustments to GAAP net loss from
continuing operations attributable to NantHealth         1,142                  6,287                   4,855                 12,122
Net loss from continuing operations attributable
to NantHealth - Non-GAAP                         $     (11,370)         $   

(9,035) $ (23,607) $ (18,613)


Weighted average basis common shares outstanding   115,550,244            114,512,542             115,535,822            112,924,619

Net loss per common share from continuing
operations attributable to NantHealth - Non-GAAP $       (0.10)         $       (0.08)         $        (0.20)         $       (0.16)



                                     - 35 -
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The following table reconciles Net loss per common share from continuing operations attributable to NantHealth to Net loss per common share from continuing operations attributable to NantHealth - Non-GAAP for the three and six months ended June 30, 2022 and 2021 (Unaudited):

                                                        Three Months Ended                     Six Months Ended
(Dollars in thousands, except per share amounts)             June 30,                              June 30,
                                                       2022                2021              2022              2021
Net loss per common share from continuing
operations attributable to NantHealth            $    (0.11)            $ (0.13)         $   (0.25)         $ (0.27)
Adjustments to GAAP net loss per common share
from continuing operations attributable to
NantHealth:

Loss on Exchange and Prepayment of 2016 Notes             -                0.01                  -             0.01
Stock-based compensation expense from continuing
operations                                             0.01                0.01               0.02             0.02

Change in fair value of derivatives liability             -                   -                  -                -
Change in fair value of Bookings Commitment           (0.02)               0.01              (0.01)            0.04
Impairment of ROU asset                                   -                   -                  -                -
Noncash interest expense related to convertible
notes                                                     -                   -                  -                -
Intangible amortization from continuing
operations                                             0.02                0.02               0.04             0.04

Tax benefit resulting from certain noncash tax
items                                                     -                   -                  -                -
Total adjustments to GAAP net loss per common
share from continuing operations attributable to
NantHealth                                             0.01                0.05               0.05             0.11
Net loss per common share from continuing
operations attributable to NantHealth - Non-GAAP $    (0.10)            $ (0.08)         $   (0.20)         $ (0.16)





                                     - 36 -
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Components of Our Results of Operations

Revenue


We generate our revenue from the sale of SaaS, maintenance, and services. Our
systems infrastructure and platforms support the delivery and implementation of
value-based care models across the healthcare continuum, and the maintenance of
reliable network connections. We generate revenue from the following sources:

Software-as-a-service related - SaaS related revenue is generated from our
customers' access to and usage of our hosted software solutions on a
subscription basis for a specified contract term. In SaaS arrangements, the
customer cannot take possession of the software during the term of the contract
and generally only has the right to access and use the software and receive any
software upgrades published during the subscription period. Solutions sold under
a SaaS model include our Eviti platform solutions and NaviNet.


Maintenance - Maintenance revenue includes technical support or maintenance on
OpenNMS software during the contract term. Our networking monitoring solutions
typically consist of a term-based subscription to the OpenNMS software license
and maintenance, which entitle customers to unspecified software updates and
upgrades on a when-and-if-available basis. Revenue is recognized over the
maintenance or support term.

Professional services - Professional services revenue is generated from
consulting services to help customers install, integrate and optimize OpenNMS,
sponsored development, and training to assist customers deploy and use OpenNMS
solutions. Sponsored development relates to professional services to build
customer specific functionality, features, and enhancements into the OpenNMS
open source platform. Typically, revenue is recognized over time using direct
labor hours as a measure of progress.

Cost of Revenue


Cost of revenue includes associated salaries and fringe benefits, stock-based
compensation, consultant costs, direct reimbursable travel expenses,
depreciation related to software developed for internal use, depreciation
related to lab equipment, and other direct engagement costs associated with the
design, development, sale and installation of systems, including system support
and maintenance services for customers. System support includes ongoing customer
assistance for software updates and upgrades, installation, training and
functionality. All service costs, except development of internal use software
and deferred implementation costs, are expensed when incurred. Amortization of
deferred implementation costs are also included in cost of revenue. Cost of
revenue associated with each of our revenue sources consists of the following
types of costs:


Software-as-a-service related - SaaS related cost of revenue includes personnel-related costs, amortization of deferred implementation costs, amortization of internal-use software, and other direct costs associated with the delivery and hosting of our subscription services.

Maintenance - Maintenance cost of revenue includes personnel-related costs, amortization of internal-use software, and other direct costs associated with the ongoing support or maintenance provided to our customers.

Professional services - Professional services cost of revenue include personnel-related costs and other direct costs associated with consulting, sponsored development, and training provided to our customers.



We plan to continue to expand our capacity to support our growth, which will
result in higher cost of revenue in absolute dollars. We expect cost of revenue
to decrease as a percentage of revenue over time as we expand NantHealth
solutions and realize economies of scale.

Operating Expenses


Our operating expenses consist of selling, general and administrative, research
and development, amortization of acquisition-related assets, and impairment of
intangible assets, including internal-use software.

                                     - 37 -
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Selling, general and administrative



Selling, general and administrative expense consists primarily of
personnel-related expenses for our sales and marketing, finance, legal, human
resources, and administrative associates, stock-based compensation, advertising
and marketing promotions of NantHealth solutions, and corporate shared services
fees from NantWorks. This includes amortization of deferred commission costs. It
also includes trade show and event costs, sponsorship costs, point of purchase
display expenses and related amortization as well as legal costs, facility
costs, consulting and professional fees, insurance and other corporate and
administrative costs.

We continue to review our other selling, general and administrative investments
and expect to drive cost savings through greater efficiencies and synergies
across our company. Additionally, we expect to continue to incur additional
costs for legal, accounting, insurance, investor relations and other costs
associated with operating as a public company, including costs associated with
other regulations governing public companies as well as increased costs for
directors' and officers' liability insurance and an enhanced investor relations
function. However, we expect our selling, general and administrative expense to
decrease as a percentage of revenue over the long term as our revenue increases
and we realize economies of scale.

Research and development


Research and development expenses consist primarily of personnel-related costs
for associates working on development of solutions, including salaries, benefits
and stock-based compensation. Also included are non-personnel costs such as
consulting and professional fees to third-party development resources.

Substantially all our research and development expenses are related to developing new software solutions and improving our existing software solutions.


We expect our research and development expenses to continue to increase in
absolute dollars and as a percentage of revenue as we continue to make
investments in developing new solutions and enhancing the functionality of our
existing solutions. However, we expect our research and development expenses to
decrease as a percentage of revenue over the long term as we realize economies
of scale from our developed technology.

Amortization of acquisition related assets

Amortization of acquisition related assets consists of noncash amortization expense related to our non-revenue generating technology as well as amortization expense that we recognize on intangible assets that we acquired through our investments.

Interest Expense, Net


Interest expense, net primarily consists of interest expense associated with our
outstanding borrowings, including coupon interest expense, amortization of debt
discounts and amortization of deferred financing offering cost, offset by
interest income earned on our cash and cash equivalents.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign currency gains (losses), changes in the fair value of the Bookings Commitment and other non-recurring items.

Provision for (Benefit from) Income Taxes


Provision for income taxes consists of U.S. federal and state and foreign income
taxes. We are required to allocate the provision for income taxes between
continuing operations and other categories of earnings, such as discontinued
operations. To date, we have no significant U.S. federal, state and foreign cash
income taxes because of our current and accumulated net operating losses
("NOLs").

We record a valuation allowance when it is more likely than not that some
portion or all of a deferred tax asset will not be realized. In making such a
determination, we consider all the available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected
future taxable income, and ongoing prudent and feasible tax planning strategies
in assessing the amount of the valuation allowance. When we establish or reduce
the valuation allowance against the deferred tax assets, our provision for
income taxes will increase or decrease, respectively, in the period such
determination is made.

Net Loss Attributable to Noncontrolling Interests

Net loss attributable to noncontrolling interests consists of losses related to minority ownership of components of our business.

                                     - 38 -
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Results of Operations

The following table sets forth our Consolidated Statements of Operations data for each of the periods indicated (Unaudited):


                                                          Three Months Ended                     Six Months Ended
(Dollars in thousands)                                         June 30,                              June 30,
                                                        2022               2021               2022               2021

Revenue

Software-as-a-service related                       $  15,861          $  15,504          $  31,632          $  31,261

Maintenance                                               428                413                892                795
Professional services                                     208                173                346                200
Total software-related revenue                         16,497             16,090             32,870             32,256
Other                                                       1                  -                  1                  3

Total net revenue                                      16,498             16,090             32,871             32,259

Cost of Revenue
Software-as-a-service related                           5,621              5,444             11,184             10,979

Maintenance                                               469                270                838                477
Professional services                                       9                  1                  9                  7
Amortization of developed technologies                  1,247              1,247              2,494              2,494
Total software-related cost of revenue                  7,346              6,962             14,525             13,957
Other                                                       1                 47                  1                 93

Total cost of revenue                                   7,347              7,009             14,526             14,050

Gross Profit                                            9,151              9,081             18,345             18,209

Operating Expenses
Selling, general and administrative                    14,017             11,837             28,997             24,340
Research and development                                5,861              4,849             11,576              9,862
Amortization of acquisition-related assets                986                985              1,971              1,971

Total operating expenses                               20,864             17,671             42,544             36,173

Loss from operations                                  (11,713)            (8,590)           (24,199)           (17,964)
Interest expense, net                                  (3,470)            (3,803)            (6,920)            (7,371)
Other income (expense), net                             2,642             (3,051)             2,648             (5,621)

Loss from continuing operations before income taxes (12,541) (15,444)

           (28,471)           (30,956)
Provision for (benefit from) income taxes                 (29)                 6                 (9)                (2)
Net loss from continuing operations                   (12,512)           (15,450)           (28,462)           (30,954)
Income from discontinued operations, net of tax
attributable to NantHealth                                  -                 19                  -                 24
Net loss                                              (12,512)           (15,431)           (28,462)           (30,930)
Net loss attributable to noncontrolling interests           -               (128)                                 (219)
Net loss attributable to NantHealth                 $ (12,512)         $ 

(15,303) $ (28,462) $ (30,711)

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The following table sets forth our Consolidated Statements of Operations data as a percentage of revenue for each of the periods indicated (Unaudited):

                                                              Three Months Ended                             Six Months Ended
                                                                   June 30,                                      June 30,
                                                          2022                   2021                   2022                   2021
Revenue
Software-as-a-service related                                96.1  %                96.4  %                96.2  %                96.9  %

Maintenance                                                   2.6  %                 2.6  %                 2.7  %                 2.5  %
Professional services                                         1.3  %                 1.0  %                 1.0  %                 0.6  %
Total software-related revenue                              100.0  %               100.0  %               100.0  %               100.0  %
Other                                                           -  %                   -  %                   -  %                   -  %

Total net revenue                                           100.0  %               100.0  %               100.0  %               100.0  %

Cost of Revenue
Software-as-a-service related                                34.1  %                33.8  %                34.0  %                34.0  %

Maintenance                                                   2.8  %                 1.7  %                 2.5  %                 1.5  %
Professional services                                           -  %                   -  %                 0.1  %                 0.1  %
Amortization of developed technologies                        7.6  %                 7.8  %                 7.6  %                 7.7  %
Total software-related cost of revenue                       44.5  %                43.3  %                44.2  %                43.3  %
Other                                                           -  %                 0.3  %                   -  %                 0.3  %

Total cost of revenue                                        44.5  %                43.6  %                44.2  %                43.6  %

Gross Profit                                                 55.5  %                56.4  %                55.8  %                56.4  %

Operating Expenses
Selling, general and administrative                          85.0  %                73.6  %                88.2  %                75.5  %
Research and development                                     35.5  %                30.1  %                35.2  %                30.6  %
Amortization of acquisition-related assets                    6.0  %                 6.1  %                 6.0  %                 6.0  %

Total operating expenses                                    126.5  %               109.8  %               129.4  %               112.1  %

Loss from operations                                        (71.0) %               (53.4) %               (73.6) %               (55.7) %
Interest expense, net                                       (21.0) %               (23.6) %               (21.1) %               (22.8) %
Other income (expense), net                                  16.0  %               (19.0) %                 8.1  %               (17.5) %

Loss from continuing operations before income taxes (76.0) %

        (96.0) %               (86.6) %               (96.0) %
Provision for (benefit from) income taxes                    (0.2) %                   -  %                   -  %                   -  %
Net loss from continuing operations                         (75.8) %               (96.0) %               (86.6) %               (96.0) %
Income from discontinued operations, net of tax
attributable to NantHealth                                      -  %                 0.1  %                   -  %                 0.1  %
Net loss                                                    (75.8) %               (95.9) %               (86.6) %               (95.9) %
Net loss attributable to noncontrolling interests               -  %                (0.8) %                   -  %                (0.7) %
Net loss attributable to NantHealth                         (75.8) %               (95.1) %               (86.6) %               (95.2) %


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Comparison of the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

Revenue

                                                                                                                                             Period-To-Period Change
                                               Three Months Ended                    Six Months Ended                       Three Months Ended                         Six Months Ended
(Dollars in thousands)                              June 30,                             June 30,                                June 30,                                  June 30,
                                             2022               2021              2022              2021                Amount               Percent             Amount             Percent

Software-as-a-service related            $   15,861          $ 15,504          $ 31,632          $ 31,261          $      357                     2.3  %       $    371                  1.2  %

Maintenance                                     428               413               892               795                  15                     3.6  %             97                 12.2  %
Professional services                           208               173               346               200                  35                    20.2  %            146                 73.0  %
Total software-related revenue               16,497            16,090            32,870            32,256                 407                     2.5  %            614                  1.9  %
Other                                             1                 -                 1                 3                   1                       -  %             (2)               (66.7) %

Total net revenue                        $   16,498          $ 16,090          $ 32,871          $ 32,259          $      408                     2.5  %       $    612                  1.9  %

Comparison of the three month periods ended June 30, 2022 and 2021


Total revenue increased $0.4 million, or 2.5%, for the three months ended June
30, 2022, compared to the prior year period, due to increased SaaS revenue of
$0.4 million, related to increased revenue from Eviti services of $1.6 million
and increased revenue from the recognition of OpenNMS sponsored development
revenue of $0.1 million.

SaaS revenue growth was largely curtailed by decreased NaviNet SaaS revenue of $1.3 million.

Comparison of the six month periods ended June 30, 2022 and 2021


Total revenue increased $0.6 million, or 1.9%, for the six months ended June 30,
2022, compared to the prior year period, primarily due to an increase in SaaS
revenue of $0.4 million.

The $0.1 million increase in maintenance revenue and $0.1 million increase in professional services revenue were attributable to growth in the OpenNMS business in the first quarter of 2022, compared to the prior year period.

We believe that significant opportunities exist for expanded cross-selling across our products and across our existing customer base, including Eviti, NaviNet, and OpenNMS customer bases.

                                     - 41 -
--------------------------------------------------------------------------------
Cost of Revenue

                                                                                                                                         Period-To-Period Change
                                           Three Months Ended                     Six Months Ended                       Three Months Ended                       Six Months Ended
(Dollars in thousands)                          June 30,                              June 30,                                June 30,                                June 30,
                                          2022                2021             2022              2021                Amount               Percent            Amount            Percent

Software-as-a-service related       $    5,621             $ 5,444          $ 11,184          $ 10,979          $      177                    3.3  %       $   205                 1.9  %

Maintenance                                469                 270               838               477          $      199                   73.7  %           361                75.7  %
Professional services                        9                   1                 9                 7                   8                  800.0  %             2                28.6  %
Amortization of developed
technologies                             1,247               1,247             2,494             2,494                   -                      -  %             -                   -  %
Total software-related cost of
revenue                                  7,346               6,962            14,525            13,957                 384                    5.5  %           568                 4.1  %
Other                                        1                  47                 1                93                 (46)                 (97.9) %           (92)                  -

Total cost of revenue               $    7,347             $ 7,009          $ 14,526          $ 14,050          $      338                    4.8  %       $   476                 3.4  %


Comparison of the three month periods ended June 30, 2022 and 2021

Total cost of revenue increased $0.3 million, or 4.8%, for the three months ended June 30, 2022, compared to the prior year period. The increase was primarily related to higher maintenance costs attributable to the growth in the OpenNMS business and higher SaaS related costs due to an increase in headcount.

Comparison of the six month periods ended June 30, 2022 and 2021


Total cost of revenue increased $0.5 million, or 3.4%, for the six months ended
June 30, 2022, compared to the prior year period, primarily due to higher costs
attributable to the growth in the OpenNMS business and an increase in headcount.

Selling, General and Administrative

                                                                                                                               Period-To-Period Change
                                   Three Months Ended                    Six Months Ended                      Three Months Ended                      Six Months Ended
(Dollars in thousands)                  June 30,                             June 30,                               June 30,                               June 30,
                                 2022               2021              2022              2021               Amount              Percent            Amount             Percent

Selling, general and
administrative               $   14,017          $ 11,837          $ 28,997          $ 24,340          $     2,180                18.4  %       $  4,657                19.1  %

Comparison of the three month periods ended June 30, 2022 and 2021


Selling, general and administrative expenses increased $2.2 million, or 18.4%
for the three months ended June 30, 2022, compared to the prior year period. The
increase was driven by $0.7 million in higher consulting and professional costs
attributable to the migration of our information technology infrastructure to
the cloud, our enterprise resource planning implementation project, compliance
expenses and legal fees. In addition, higher personnel costs totaling $1.0
million were attributable to growth in the OpenNMS business and an increase in
entity-wide stock-based compensation.

Comparison of the six month periods ended June 30, 2022 and 2021


Selling, general and administrative expenses increased $4.7 million, or 19.1%
for the six months ended June 30, 2022, compared to the prior year period. The
increase was driven by $2.1 million in higher consulting and professional costs
attributable to our enterprise resource planning implementation project,
compliance expenses and legal fees. In addition, higher personnel costs totaling
$2.0 million were attributable to growth in the OpenNMS business and an increase
in entity-wide stock-based compensation.
                                     - 42 -
--------------------------------------------------------------------------------
Research and Development

                                                                                                                                        Period-To-Period Change
                                           Three Months Ended                     Six Months Ended                      Three Months Ended                      Six Months Ended
(Dollars in thousands)                          June 30,                              June 30,                               June 30,                               June 30,
                                          2022                2021              2022              2021              Amount              Percent            Amount             Percent

Research and development            $    5,861             $ 4,849          $  11,576          $ 9,862          $     1,012                20.9  %       $  1,714                17.4  %


Comparison of the three month periods ended June 30, 2022 and 2021


Research and development expenses increased $1.0 million, or 20.9%, for the
three months ended June 30, 2022, compared to the prior year period. The
increase was primarily driven by $1.1 million in higher costs attributable to
cloud migration services and enterprise application services for our engineering
applications.

Comparison of the six month periods ended June 30, 2022 and 2021


Research and development expenses increased $1.7 million, or 20.9%, for the six
months ended June 30, 2022, compared to the prior year period. The increase was
primarily driven by $1.1 million in higher costs attributable to cloud migration
services and enterprise application services for our engineering applications
and a $0.5 million increase in professional services and consulting costs.

Amortization of Acquisition-related Assets

                                                                                                                                      Period-To-Period Change
                                       Three Months Ended                  Six Months Ended                        Three Months Ended                           Six Months Ended
(Dollars in thousands)                      June 30,                           June 30,                                 June 30,                                    June 30,
                                      2022              2021             2022              2021                Amount                 Percent              Amount               Percent

Amortization of
acquisition-related assets        $      986          $ 985          $   1,971          $ 1,971          $       1                        0.1  %       $          -                   -  %

Comparison of the three month periods ended June 30, 2022 and 2021

Amortization of acquisition-related assets was flat at $1.0 million for the three months ended June 30, 2022 compared to $1.0 million for the three months ended June 30, 2021.

Comparison of the six month periods ended June 30, 2022 and 2021


Amortization of acquisition-related assets was flat at $2.0 million for the six
months ended June 30, 2022 compared to $2.0 million for the six months ended
June 30, 2021.
                                     - 43 -
--------------------------------------------------------------------------------
Interest Expense, net

                                                                                                                                        Period-To-Period Change
                                           Three Months Ended                     Six Months Ended                      Three Months Ended                      Six Months Ended
(Dollars in thousands)                          June 30,                              June 30,                               June 30,                               June 30,
                                          2022                2021              2022              2021              Amount              Percent            Amount             Percent

Interest expense, net               $    3,470             $ 3,803          $   6,920          $ 7,371          $      (333)               (8.8) %       $   (451)               (6.1) %


Comparison of the three month periods ended June 30, 2022 and 2021


Interest expense, net decreased by $0.3 million, or 8.8%, for the three months
ended June 30, 2022, compared to the prior year period. This decrease was driven
by $0.4 million in less noncash interest expense attributable to the lower debt
issuance costs on the 2021 Notes issued in April 2021 as compared to the 5.5%
senior convertible notes that matured in December 2021 (the "2016 Notes"). This
decrease was partially offset by $0.1 million in additional interest on the Nant
Capital Note in the three months ended June 30, 2022, compared to the prior year
period.

Comparison of the six month periods ended June 30, 2022 and 2021


Interest expense, net decreased by $0.5 million, or (6.1)%, for the six months
ended June 30, 2022, compared to the prior year period. This decrease was driven
by $0.6 million in less noncash interest expense attributable to the lower debt
issuance costs on the 2021 Notes issued in April 2021 as compared to the 5.5%
senior convertible notes that matured in December 2021 (the "2016 Notes"). This
decrease was partially offset by $0.2 million in additional interest on the Nant
Capital Note in the six months ended June 30, 2022, compared to the prior year
period.

See the section entitled "Liquidity and Capital Resources" below and refer to
Note 8 and Note 16 to the accompanying Consolidated Financial Statements for
further discussion of our convertible notes and the note with Nant Capital.

Other Income (Expense), net

                                                                                                                                         Period-To-Period Change
                                            Three Months Ended                    Six Months Ended                      Three Months Ended                        Six Months Ended
(Dollars in thousands)                           June 30,                             June 30,                               June 30,                                 June 30,
                                          2022               2021              2022              2021               Amount              Percent             Amount             Percent

Other income (expense), net           $    2,642          $ (3,051)         $  2,648          $ (5,621)         $     5,693               (186.6) %       $  8,269               (147.1) %


Comparison of the three month periods ended June 30, 2022 and 2021


The decrease of $5.7 million Other income (expense), net for the three months
ended June 30, 2022 compared to the prior year period was driven by the change
in the fair value of the Bookings Commitment. The change in the fair value of
the Bookings Commitment is a result of macroeconomic factors. The change in fair
value for the three months ended June 30, 2022 was a gain of $2.9 million,
compared to a loss of $3.1 million for the three months ended June 30, 2021.

Comparison of the six month periods ended June 30, 2022 and 2021


The decrease of $8.3 million Other income (expense), net for the six months
ended June 30, 2022, compared to the prior year period was driven by the change
in the fair value of the Bookings Commitment. The change in the fair value of
the Bookings Commitment is a result of macroeconomic factors. The change in the
fair value for the six months ended June 30, 2022 was a gain of $2.9 million,
compared to a loss of $5.6 million for the six months ended June 30, 2021.

                                     - 44 -
--------------------------------------------------------------------------------

Liquidity and Capital Resources

Sources of Liquidity

As of June 30, 2022, we had cash and cash equivalents of $5.7 million, compared to $29.1 million as of December 31, 2021, of which $0.3 million and $0.8 million, respectively, related to foreign subsidiaries.


We believe our existing cash and cash equivalents, and our ability to borrow on
the $125.0 million promissory note (the "Promissory Note") with Nant Capital,
LLC ("Nant Capital") (see Note 16), will be sufficient to fund operations
through at least 12 months following the issuance date of the financial
statements. We continue to have our Chairman and CEO's intent and ability to
support our operations with additional funds as required. We may also seek to
sell additional equity, through one or more follow-on public offerings or in
separate financings, or sell additional debt securities, or obtain a credit
facility. However, we may not be able to secure such financing in a timely
manner or on favorable terms. We may also consider selling off components of our
business. Without additional funds, we may choose to delay or reduce our
operating or investment expenditures. Further, because of the risk and
uncertainties associated with the commercialization of our existing products as
well as products in development, we may need additional funds to meet our needs
sooner than planned. To date, our primary sources of capital have been the
private placement of membership interests prior to our IPO, debt financing
agreements, including promissory notes with Nant Capital and affiliates,
convertible notes, the sale of our common stock, revenue generated from our
products and services, and proceeds from the sale of components of our business.

Convertible Notes


On April 13, 2021, we and our wholly owned subsidiary, NaviNet entered into a
Note Purchase Agreement with Highbridge and Nant Capital pursuant to which we
issued $137.5 million in aggregate principal amount of our 2021 Notes in a
private placement. The 2021 Notes were issued on April 27, 2021. The total net
proceeds from this offering were approximately $136.8 million, after deducting
Highbridge's debt issuance costs of $0.1 million and $0.6 million in debt
issuance costs paid to third parties in connection with the offering of the 2021
Notes. The 2021 Notes will mature on April 15, 2026, unless earlier repurchased,
redeemed or converted.

On April 27, 2021, concurrent with the 2021 Notes issuance, we used the proceeds
to prepay the remaining $31.9 million of principal amount of the 2016 Notes held
by Highbridge and $0.6 million of accrued interest on such 2016 Notes. On April
27, 2021, in connection with the issuance of the 2021 Notes, we provided a
notice of a fundamental change (as defined in the indenture governing the 2016
Notes) and an offer to repurchase all our outstanding 2016 Notes. On May 25,
2021, we purchased $55.6 million of the outstanding 2016 Notes, including
accrued and unpaid interest thereon. On December 15, 2021, the maturity date of
the 2016 notes, we paid the remaining $9.5 million of the outstanding principal
balance on the 2016 Notes, including accrued and unpaid interest thereon.

Open Market Sale Agreement


On November 12, 2021, we entered into an Open Market Sale Agreement (the "Sale
Agreement") with Jefferies LLC (the "Sales Agent") under which we may offer and
sell up to $30.0 million of shares of our common stock, par value $0.0001 per
share (the "Shares"), from time to time through the Sales Agent. The sales and
issuances of the Shares under the Sale Agreement will be made pursuant to our
effective shelf registration statement on Form S-3 (the "Registration
Statement") that was declared effective on May 6, 2021.

The Sales Agent is not required to sell any specific amount of securities, but
will act as our sales agent using commercially reasonable efforts to sell the
Shares from time to time, consistent with their normal trading and sales
practices, applicable state and federal laws, rules and regulations and the
rules of The Nasdaq Stock Market LLC, based upon instructions from us (including
any price, time or size limits or other customary parameters or conditions we
may impose). We have agreed to pay the Sales Agent a commission of 3.0% of the
aggregate gross proceeds from each sale of the Shares pursuant to the Sale
Agreement and to provide the Sales Agent with customary indemnification and
contribution rights, including for liabilities under the Securities Act of 1933,
as amended.

                                     - 45 -
--------------------------------------------------------------------------------

Nant Capital Notes


In January 2016, we executed a demand promissory note with Nant Capital (the
"Nant Capital Note"), a personal investment vehicle for Dr. Soon-Shiong. As of
June 30, 2022, the total advances made by Nant Capital to us pursuant to the
note was approximately $112.7 million. The Nant Capital Note bears interest at a
per annum rate of 5.0% compounded annually and computed on the basis of the
actual number of days in the year. When a repayment is made, Nant Capital has
the option, but not the obligation, to require us to repay any such amount in
cash, Series A-2 units of NantOmics (based on a per unit price of $1.484) held
by us, shares of our common stock based on a per share price of $18.6126 (if
such equity exists at the time of repayment), or any combination of the
foregoing at the sole discretion of Nant Capital. On April 27, 2021, in
connection with the issuance of the 2021 Notes, we entered into a Third Amended
and Restated Promissory Note which amends and restates its promissory note,
dated January 4, 2016, as amended on May 9, 2016, and on December 16, 2016,
between us and Nant Capital, to, among other things, extend the maturity date of
the promissory note to October 1, 2026 and to subordinate the promissory note in
right of payment to the 2021 Notes.

On August 8, 2018, we executed a promissory note in favor of Nant Capital, with
a maturity date of June 15, 2022. On December 31, 2020, we executed an agreement
with Nant Capital to amend and restate the original promissory note, allowing us
to request advances up a maximum commitment of $125.0 million that bears
interest at a per annum rate of 5.5%, extended the maturity date to December 31,
2023, and created an option for the securitization of the debt under the
promissory note upon full repayment of the 2016 Notes. Interest payments on
outstanding amounts are due on December 15th of each calendar year. On April 27,
2021, in connection with the issuance of the 2021 Notes, we and Nant Capital
entered into a Second Amended and Restated Promissory Note which amends and
restates its promissory note, dated August 8, 2018, as amended on December 31,
2020, between us and Nant Capital, to, among other things, extend the maturity
date of the promissory note to December 31, 2026 and to subordinate the
promissory note in right of payment to the 2021 Notes. As of June 30, 2022, we
were in compliance with the covenants.

If we raise additional funds by issuing equity securities or securities
convertible into equity, our stockholders could experience dilution. Additional
debt financing, if available, may involve covenants restricting our operations
or our ability to incur additional debt. Any additional debt financing or
additional equity that we raise may contain terms that are not favorable to us
or our stockholders and require significant debt service payments, which diverts
resources from other activities. Additional financing may not be available at
all, or in amounts or on terms acceptable to us. If we are unable to obtain
additional financing, we may be required to delay the development,
commercialization and marketing of our products and scale back our business and
operations.

Capital Expenditures

There have been no material changes during the six months ended June 30, 2022 to
our capital expenditure obligations disclosed in our "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in our
Annual Report on Form 10-K for the year ended December 31, 2021. Our principal
material cash requirements consist of obligations under our outstanding debt
obligations related to the 2021 Notes, Nant Capital Note, Bookings Commitment,
and noncancellable leases for our office space. Refer to Note 8, Note 9, Note
10, and Note 16 to the accompanying Consolidated Financial Statements.

Cash Flows


The following table sets forth our primary sources and uses of cash for the
periods indicated:

                                                                            Six Months Ended
(Dollars in thousands)                                                          June 30,
                                                                         2022               2021
Cash (used in) provided by:
Operating activities                                                 $ (20,194)         $ (16,685)
Investing activities                                                    (2,861)            (2,411)
Financing activities                                                      (758)            49,240

Effect of exchange rate changes on cash, cash equivalents and restricted cash

                                                            (78)                 5
Net decrease in cash, cash equivalents and restricted cash           $ 

(23,891) $ 30,149

                                     - 46 -
--------------------------------------------------------------------------------

To date, our operations have been primarily financed through the proceeds from
related party promissory notes, the issuance of convertible notes, the sale of
components of our business, revenue generated from the sales of our products and
services, and through equity issuances, including net cash proceeds from our
IPO. In June 2016, we sold 6,900,000 shares of common stock at a price of $14.00
per share, which includes 400,000 shares sold to the underwriter upon exercise
of their overallotment option to purchase additional shares of common stock. We
raised net proceeds of $83.6 million from our IPO, after underwriting fees,
discounts and commissions of $4.9 million and other offering costs of $8.1
million. In December 2016, we issued convertible notes to a related party and
others for aggregate net proceeds of $102.7 million, $9.9 million from
Cambridge, and $92.8 million from others, after deducting underwriting discounts
and commissions and offering costs of $4.3 million. In February 2020, we
received $47.3 million in proceeds from the sale of our Connected Care Business.
In April 2021, we issued convertible notes to a related party and others for
aggregate net proceeds of $136.8 million, $62.2 million from Nant Capital, and
$74.6 million from Highbridge, after deducting offering costs of $0.7 million.

Operating Activities


Our cash flows from operating activities have been driven by rate of revenue,
billings, and collections, the timing and extent of spending to support product
development efforts and enhancements to existing services, the timing of general
and administrative expenses, and the continuing market acceptance of our
solutions.

In addition, our net loss in the six months ended June 30, 2022 has been greater
than our use of cash for operating activities due to the inclusion of noncash
charges.

Cash used in operating activities of $20.2 million during the six months ended
June 30, 2022 was a result of our continued investments in enhancements to
current products, research and development, sales and marketing, and expenses
incurred as a public company, including costs associated with public company
reporting and corporate governance requirements. During the six months ended
June 30, 2022, our net loss of $28.5 million included noncash items largely due
to $7.9 million of depreciation and amortization, and $2.7 million of
stock-based compensation, partially offset by a $2.5 million decrease in the
fair value of the Bookings Commitment liability.

Changes in working capital increased cash $0.1 million during the six months
ended June 30, 2022. The increase was primarily attributable to a $1.6 million
increase in accounts payable, a $1.2 million increase in related party payables,
a $0.7 million decrease in accounts receivable and a $0.2 million decrease in
prepaid expenses and other current assets, largely offset by a $3.1 million
decrease in accrued and other current liabilities.

Cash used in operating activities of $16.7 million during the six months ended
June 30, 2021 was a result of our continued investments in enhancements to
current products, research and development, sales and marketing, and expenses
incurred as a public company, including costs associated with public company
reporting and corporate governance requirements. During the six months ended
June 30, 2021, our net loss of $30.9 million included noncash items largely due
to $7.7 million of depreciation and amortization, a $4.8 million increase in the
fair value of the Bookings Commitment liability, $1.7 million recognized as
stock based compensation, and a $0.7 million loss on Exchange and Prepayments of
the 2016 Notes.

Changes in working capital decreased cash $1.1 million during the six months
ended June 30, 2021. The decrease in cash was primarily attributable to a $2.8
million decrease in accounts payable, a $2.0 million decrease in accrued and
other current liabilities and a $1.4 million increase in accounts receivable,
largely offset by a $3.9 million increase in related party payables.

Investing Activities

For the six months ended June 30, 2022, net cash used in investing activities was comprised of $2.9 million for the purchase of property and equipment, including internal-use software.

For the six months ended June 30, 2021, net cash used in investing activities was comprised of $2.4 million for the purchase of property and equipment, including internal-use software.

Financing Activities


Cash used in financing activities during the six months ended June 30, 2022 of
$0.8 million was due to repayments of an insurance promissory note, partially
offset by proceeds from exercises of stock options.

Cash provided by financing activities during the six months ended June 30, 2021
was $49.2 million, primarily related to the issuance of the 2021 Notes of $137.5
million, offset by prepayments on the 2016 Notes of $87.5 million (see Note 8 to
the accompanying Consolidated Financial Statements).
                                     - 47 -
--------------------------------------------------------------------------------

New Accounting Pronouncements

See Note 2 to the accompanying Consolidated Financial Statements for a discussion of new accounting standards.

Related Party Transactions

See Note 16 to the accompanying Consolidated Financial Statements for a discussion of related party transactions.

Critical Accounting Policies and Significant Judgments and Estimates


This Management's Discussion and Analysis of our Results of Operations and
Liquidity and Capital Resources is based on our Consolidated Financial
Statements, which we have prepared in accordance with U.S. GAAP. The preparation
of our financial statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of our financial statements, as
well as the reported revenues and expenses during the reported periods. We
evaluate these estimates and judgments on an ongoing basis. We base our
estimates on historical experience and on various other factors that we believe
are 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. We believe the critical
accounting policies and estimates discussed in Note 2 to the Consolidated
Financial Statements of our Annual Report on 10-K that was filed with the SEC on
February 26, 2021, reflect our more significant judgments and estimates used in
the preparation of the Consolidated Financial Statements. Refer to Note 2 to the
accompanying Consolidated Financial Statements for a discussion of any
significant changes to our critical accounting policies and estimates as
disclosed in our 10-K.

Smaller Reporting Company Status


Currently, we qualify as a smaller reporting company. As a smaller reporting
company, we are eligible and have taken advantage of certain exemptions from
various reporting requirements that are not available to public reporting
companies that do not qualify for this classification, including, but not
limited to:

•An opportunity for reduced disclosure obligations regarding executive
compensation in our periodic and annual reports, including without limitation
exemption from the requirement to provide a compensation discussion and analysis
describing compensation practices and procedures,
•An opportunity for reduced financial statement disclosure in registration
statements and in annual reports on Form 10-K, which only requires two years of
audited financial statements rather than the three years of audited financial
statements that are required for other public companies,
•An opportunity for reduced audit and other compliance expenses as we are not
subject to the requirement to obtain an auditor's report on internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002,
and
•An opportunity to utilize the non-accelerated filer time-line requirements
beginning with our annual report for the year ending December 31, 2021 and
quarterly filings thereafter.

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