ORBITAL ENERGY GROUP, INC.

(OEG)
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Delayed Nasdaq  -  04:00 2022-06-24 pm EDT
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ORBITAL ENERGY GROUP, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

05/16/2022 | 04:43pm EDT

Important Note about Forward-Looking Statements


The following discussion and analysis should be read in conjunction with the
Company's unaudited condensed consolidated financial statements as of March 31,
2022 and notes thereto included in this document and the audited consolidated
financial statements in the Company's 10-K filing for the period ended December
31, 2021 and the notes thereto. In addition to historical information, the
following discussion and other parts of this Form 10-Q contain forward-looking
information that involves risks and uncertainties. The Company's actual results
could differ materially from those anticipated by such forward-looking
information due to factors discussed elsewhere in this Form 10-Q.



The statements that are not historical constitute "forward-looking statements."
Said forward-looking statements involve risks and uncertainties that may cause
the actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements, express or
implied by such forward-looking statements. These forward-looking statements are
identified by their use of such terms and phrases as "expects," "intends,"
"goals," "estimates," "projects," "plans," "anticipates," "should," "future,"
"believes," and "scheduled."



The variables which may cause differences include, but are not limited to, the
following: general economic and business conditions; changes in regulatory
environment; extraordinary external events such as the current pandemic health
event resulting from COVID-19; competition; success of operating initiatives;
operating costs; advertising and promotional efforts; the existence or absence
of adverse publicity; changes in business strategy or development plans; the
ability to retain management; availability, terms and deployment of capital;
business abilities and judgment of personnel; availability of qualified
personnel; labor and employment benefit costs; availability and costs of raw
materials and supplies; and changes in, or failure to comply with various
government regulations. Although the Company believes that the assumptions
underlying the forward-looking statements contained herein are reasonable, any
of the assumptions could be inaccurate; therefore, there can be no assurance
that the forward-looking statements included in this Form 10-Q will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any person that the
objectives and expectations of the Company will be achieved.



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Overview

Orbital Energy Group is a diversified infrastructure services company serving
customers in the electric power, telecommunications, and renewable markets. The
Company is dedicated to maximizing shareholder value through greenfield
development and the acquisition of, and investment in successful,
entrepreneurial led companies to profitably grow revenues by providing
end-to-end solutions to customers, primarily in the renewable, electric power
transmission and distribution, and telecommunications infrastructure markets.
The Company is organized in three segments. The Electric Power segment consists
of Front Line Power Construction, LLC based in Houston, Texas, Orbital Power,
Inc. based in Dallas, Texas, and Eclipse Foundation Group based in Gonzales,
Louisiana. The segment provides comprehensive infrastructure solutions to
customers in the electric power industry. Services performed by Front Line Power
and Orbital Power, Inc. generally include but are not limited to the
engineering, design, installation, upgrade, repair and maintenance of electric
power transmission and distribution infrastructure and substation facilities as
well as emergency restoration services. Eclipse Foundation Group, which began
operations in January 2021, is a drilled shaft foundation construction company
that specializes in providing services to the electric transmission and
substation, industrial, telecommunication and disaster restoration market
sectors, with expertise performing services in water, marsh and rock terrains.



The Telecommunications segment consists of Gibson Technical Services (GTS) along
with its subsidiaries IMMCO, Inc. based in Atlanta, Georgia and Full Moon
Telecom, LLC based in Florida. GTS provides engineering, design, construction,
and maintenance services to the broadband and wireless telecommunication
industries and was acquired by the Company effective April 13, 2021. IMMCO, Inc.
provides enterprise solutions to the cable and telecommunication industries and
was acquired by the Company effective July 28, 2021. Full Moon Telecom, LLC
provides telecommunication services including an extensive array of wireless
service capabilities and was acquired by the Company effective October 22, 2021.
Coax Fiber Solutions was acquired as of March 7, 2022, and is a Georgia based
GDOT Certified contractor specializing in Aerial Installation, directional
drilling, trenching, plowing, and missile crews for telecommunications, power,
gas, water, CCTV, ATMS, and traffic signal cable installation.



Orbital Solar Services, LLC (OSS), based in Raleigh, North Carolina, makes up
the Renewables segment. OSS provides engineering, procurement and construction
("EPC") services that support the development of renewable energy generation
focused on utility-scale solar construction.



The Company has experienced rapid growth through organic growth and acquisitions
as the Company benefits from its 2021 investments and acquisitions and as the
economy continues to emerge from the COVID-19 induced slowdown. First
Quarter 2022 revenue was over twelve times greater than the Company's total
revenue from the first quarter of 2021. Improved revenues and income were as a
result of the inclusion of a full quarter of operations from the November
acquisition of Front Line Construction in the Electric Power segment along with
improved revenue and gross margins from the rest of the segment. The Company's
results also reflect the inclusion of the 2021 Telecom acquisitions that began
operations in the second quarter of 2021. The Company continues to incur
professional fees related to mergers and acquisitions as the Company pursues
both organic growth and growth through acquisitions. The Company's
Telecommunications segment made an additional "tuck-in" acquisition in the first
quarter of 2022 for cash and stock consideration of approximately $1
million. The three-month period ended March 31, 2022 for all segments began to
see tangible benefits from the investments the Company made in 2021 through
improved revenue and gross margins. The Company's results were affected
negatively in the first quarter of 2022 by the $25.3 million loss on
extinguishment of the Company's seller financed debt on the November 2021 Front
Line Construction acquisition. The loss on extinguishment was primarily related
to financial instruments included in the first quarter 2022 loan modification.
Partially offsetting this loss was a  $5.2 million gain on the forfeiture of
restricted stock by a Renewable segment executive.



In the first quarter of 2021, the Company incurred ramp-up costs in the Electric
Power segment that put downward pressure on margins in the first quarter of
2021.The Company also incurred professional fees related to mergers and
acquisitions as the Company pursued both organic and growth through
acquisitions. The three-month period ended March 31, 2021 for both segments were
also negatively affected by generally lower economic activity due to the
COVID-19 pandemic that caused economic slowdowns throughout the world.



For the three months ended March 31, 2022, Orbital Energy Group, Inc. had
consolidated loss from operations of $1.8 million compared to consolidated loss
from operations in the three months ended March 31, 2021 of  $15.6 million.
During the three months ended March 31, 2022, Orbital Energy Group, Inc. had a
consolidated loss from continuing operations of $36.7 million compared to a
loss of $16.3 million in the comparable prior-year period.



During the three months ended March 31, 2022, Orbital Energy Group, Inc. had a
consolidated net loss of $37.6 million compared to a consolidated net loss in
the three months ended March 31, 2021 of $18.0 million. The greater net loss for
the three months ended March 31, 2022, was primarily the result of the loss on
extinguishment of debt related to the loan modification of the seller financed
debt and ongoing merger and acquisition activity. SG&A cost decreases in the
Other segment relate to the 2021 cash-settled SARS mark to market adjustment
along with lower employee performance bonuses.



Revenues from continuing operations increased for the three months ended March
31, 2022 due to the continued ramp-up of the Electric Power and Renewables
segments along with the addition of the Telecommunications segment which was
assembled via acquisitions in 2021 and 2022.


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Continuing Results of Operations

The following tables set forth, for the period indicated, certain financial information regarding revenue and operating results by segment.

For the Three Months Ended March 31, 2022:






                                     Percent of                                   Percent of                          Percent of                       Percent of
(dollars in                           Segment                                      Segment                             Segment                           Segment                         Percent of
thousands)     Electric Power         Revenues          Telecommunications         Revenues         Renewables         Revenues          Other          Revenues          Total        Total Revenues
                                         $%                                           $%                                  $%                          $%                                     $%
Revenues       $        39,695              100.0 %    $             16,095              100.0 %   $     14,464              100.0 %   $        -                 - %   $   70,254              100.0 %
Income
(loss) from
operations     $          (711 )             (1.8 )%   $                477                3.0 %   $        428                3.0 %   $   (1,982 )               - %   $   (1,788 )             (2.5 )%


For the Three Months Ended March 31, 2021:

                                       Percent of                                 Percent of                         Percent of                       Percent of                     Percent of
(dollars in                              Segment                                    Segment                            Segment                          Segment                         Total

thousands) Electric Power Revenues Telecommunications

       Revenues         Renewables        Revenues           Other        
Revenues          Total        Revenues
                         $                  %                     $                            %        $                         %        $                       %       $                     %
Revenues          $         3,189             100.0 %    $                 -                 - %   $      2,372             100.0 %    $       -                 - %   $   5,561           100.0 %
Income (loss)
from operations   $        (4,264 )          (133.7 )%   $                 -                 - %   $     (5,326 )          (224.5 )%   $  (6,032 )               - %   $ (15,622 )        (280.9 )%




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Revenue

The revenues for the three months ended March 31, 2022 increased compared to
the 2021 comparable period primarily due to the additions of the
Telecommunications segment following the acquisitions of GTS in Q2 2021, IMMCO
in Q3 2021, Full Moon in Q4 2021 and Coax Fiber Solutions, LLC in Q1 2022 along
with the acquisition of Front Line Power Construction, LLC to the Company's
Electric Power segment in Q4 2021. In addition, Orbital Power Inc. in the
Electric Power segment has continued to ramp up operations in Q1 2022.
Renewables had significantly higher revenues in the first quarter of 2022
compared to the first quarter of 2021, which was affected by supply chain issues
and a general slow-down caused by the COVID-19 epidemic.



The Electric Power Segment held backlogs of customer orders of approximately
$217.1 million as of March 31, 2022 and $207.7 million at December 31, 2021.
Increases to the backlog are due to the continuous growth of Front Line Power
Construction and Orbital Power Inc. The Telecommunications segment held backlogs
of customer orders of approximately $189.3 million as of March 31,
2022, compared to a backlog of $194.5 million at December 31, 2021. The
Renewables segment had a backlog of $107.1 million as of March 31, 2022 compared
to $121.4 million as of December 31, 2021 which is due to further work being
completed and revenue being recognized in the quarter on projects that make up
this backlog. Of the March 31, 2022 backlog totals, the amounts expected to be
recognized in the twelve months following Q1 are approximately $294.6 million.
The amounts expected to be recognized in the twelve months following
Q1 consist of $131.6 million from the Electric Power segment, $55.9 million from
the Telecommunications segment and $107.1 million from the Renewables segment.



Cost of revenues



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For the three months ended March 31, 2022, the cost of revenues as a percentage
of revenue decreased to 83.5% from 145.3% respectively from the prior-year
period. This decrease was primarily in the Electric Power segment and was
attributable to ramp-up of revenues in the segment both organically and the
addition of Front Line Power Construction.  Margin percentages will vary based
upon the mix of Orbital Power Services projects including emergency response
services, new crew onboarding costs, and the competitive markets in which the
Company competes.



The three months ended March 31, 2021 were affected by start-up costs at the
Company's Orbital Power Services group, lower margin projects during the period
for Orbital Solar Service and was also affected negatively by the COVID-19
pandemic and the resulting world-wide economic slowdown. Ramp-up costs included
onboarding personnel, equipment and supplies in advance of projected work in
order to obtain the necessary resources in a competitive market as the Companye
prepared for forward demand expectations. Additionally, adverse weather
negatively impacted several Electric Power fixed price jobs in the first quarter
of 2021.



The Company expects continued improvement in margins during the remainder of
2022 as the Electric Power segment continues to gain efficiencies and increase
revenues, and the Telecommunications segment sees continued
synergistic benefits from the acquisitions of GTS, IMMCO, Full Moon, Coax Fiber
Solutions.


Selling, General and Administrative Expenses




Selling, General and Administrative (SG&A) expenses include such items as wages,
commissions, consulting, general office expenses, business promotion expenses
and costs of being a public company, including legal and accounting fees,
insurance and investor relations. SG&A expenses are generally associated with
the ongoing activities to reach new customers, promote new product and service
lines including for the Electric Power segment, Renewables segment, and
Telecommunications segments.



During the three months ended March 31, 2022, SG&A decreased
$3.9 million compared to the prior-year comparative periods. The decrease in
SG&A for the quarter were due to decreased SG&A costs in the Renewables segment
due to the $5.2 million forfeiture related to a Renewables Executive
termination. Also contributing to the decreased SG&A was lower executive bonuses
and a $0.3 million positive cash settled SARS mark-to-market fair value
adjustment in 2022 compared to a $1.9 million mark to market expense in the
first quarter of 2021. These decreases were partially offset by increases in
SG&A in the Electric Power and Telecommunications segments primarily due to
organic growth and the Company's 2021 and 2022 aquistions.



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Depreciation and Amortization

(dollars in thousands)



                                              For the Three Months Ended
Depreciation and amortization expense by
Segment                                                March 31,
                                               2022                2021           $ Change       % Change
Electric Power                             $       6,975       $         217     $    6,758         3114.3 %
Telecommunications                                 1,091                   -          1,091          100.0 %
Renewables                                           608               1,089           (481 )        (44.2 )%
Other                                                 16                 441           (425 )        (96.4 )%

Total depreciation and amortization $ 8,690 $ 1,747 $ 6,943 397.4 %

Depreciation and amortization expenses are associated with depreciation on buildings, furniture, equipment, vehicles, and amortization of intangible assets over the estimated useful lives of the related assets.




Depreciation and amortization expense in the three months ended March 31, 2022
were up compared to the three months ended March 31, 2021 primarily due to
additional amortization in the Electric Power and Telecommunication segments and
GTS, IMMCO, Full Moon Telecom, and Front Line Power Construction acquisition
intangibles that were acquired in the second, third and fourth quarter of 2021
and depreciation of equipment used by Orbital Power Services which has been
ramping up their capital expenditures as more crews are added.



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Loss on Extinguishment of debt


Loss on extinguishment of debt in the three ended March 31, 2022 of
$26.0 million was primarily related to loan modifications on the Company's
seller financed debt with the sellers of Front Line Power Construction and
approximately $0.7 million loss on extinguishment in the first three months
ended March 31, 2022 related to the payment of certain loans with stock-based
payments. Loss on extinguishment of debt in the three months ended March 31,
2021 related to the removal of a conversion feature of a note payable.



Other Income (Expense), net

(dollars in thousands)



                                               For the Three Months Ended
Other Income (Expense), net                             March 31,
                                                2022                  2021          $ Change       % Change
Foreign exchange gain (loss)                          (49 )       $         95     $     (144 )       (151.6 )%
Financial instrument expense                         (928 )                  -     $     (928 )       (100.0 )%
Interest income                                        78                   81     $       (3 )         (3.7 )%
Rental income                                         129                  113     $       16           14.2 %
Other income                                          187                   24     $      163          679.2 %
Total Other income (expense)               $         (583 )       $        313     $     (896 )       (286.3 )%




Other income (expense) changes contributing to increased expenses was a $0.9
million mark-to-market loss on the value of a financial instrument liability
related to the Company's syndicated debt offset by interest income, rental
income and other income.

Interest Expense


For the three months ended March 31, 2022, the Company incurred interest expense
of $8.0 million compared to interest for the three months ended March 31, 2021
of $0.7 million. The increase in interest expense in 2022 is related to the
increase in notes payable outstanding in the three months ended March 31, 2022
compared to the three months ended March 31, 2021 primarily related to the Front
Line Power Construction acquisition.



Income Tax Expense

The Company is subject to taxation in the U.S., various state and foreign jurisdictions. The Company continues to record a full valuation allowance against the Company's U.S. and United Kingdom net deferred tax assets and partial valuation allowance against the Company's Canada net deferred tax assets, as it is not more likely than not that the Company will realize a benefit from these assets in a future period.

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For additional analysis, see Note 14, "Income Taxes," of the condensed consolidated financial statements in Part I - Item I, "Financial Statements."

Liquidity and Capital Resources

Company Conditions and Sources of Liquidity


The Company has experienced net losses and cash outflows from cash used in
operating activities over the past years. As of and for the three months ended
March 31, 2022, the Company had an accumulated deficit of $248.5 million, loss
from continuing operations of $36.7 million, and net cash used in operating
activities of $1.6 million.



As of March 31, 2022, the Company had cash and cash equivalents of $20.9 million
available for working capital needs and planned capital asset expenditures and a
working capital deficit of $65.1 million, including current maturities of debt.
These factors initially raise substantial doubt about our ability to continue as
a going concern, but this doubt has been alleviated by the Company's plans to
raise sufficient capital to meet our current obligations over the next twelve
months, in addition to the expected recovery of our assets to satisfy
liabilities in the normal course of business.



The Company has plans to access additional capital to meet its obligations for
the twelve months from the date these financial statements are available to be
issued. Historically, the Company has raised additional equity and debt
financing to fund its expansion; refer to Note 15 - Notes Payable and Line of
Credit. The Company has also funded some of its capital expenditures through
long-term financing with lenders and other investors as also described in
further detail in Note 15 - Notes Payable and Line of Credit and Note 19 -
Subsequent Events. Our ability to raise the additional capital is dependent on a
number of factors, including, but not limited to, the market demand for our
common stock, which itself is subject to a number of business risks and
uncertainties, our creditworthiness and the uncertainty that we would be able to
raise such additional capital at a price that is favorable to us. As of March
31, 2022, the Company has an effective S-3 shelf registration statement with
$112.0 million of aggregate offering value available for the issuance of various
types of securities, including common stock, preferred stock, debt securities
and/or warrants. While management will look to continue funding future
acquisitions, organic growth initiatives and continuing operations by raising
additional capital from sources such as sales of its debt or equity securities
or notes payable in order to meet operating cash requirements, there is no
assurance that management's plans will be successful.



As the Company continues its progression to build a full-service infrastructure
services platform, a successful transition to attaining profitable operations is
dependent upon achieving a level of positive cash flows through generating
adequate revenue growth to support the Company's cost structure. For the three
months ended March 31, 2022, our revenues have increased by $64.7 million
resulting in over a 1,100% increase in revenue compared to the three-month
period ended in 2021. The significant increase in revenues during the year was
primarily driven by the strategic acquisitions of Front Line Power Construction,
LLC, Gibson Technical Services, IMMCO, Inc., and Full Moon Telecom, LLC made
coupled with organic growth within Orbital Power Systems. In addition, two large
utility scale solar projects were awarded to Orbital Solar Systems during the
twelve-month period ended December 31, 2021. We anticipate, based on currently
proposed plans and assumptions relating to our operations, the Company to
generate sufficient revenue growth required to achieve profitability and
generate positive cash flows from operations over the next twelve months. No
assurance can be made that we will be able to obtain profitability and positive
cash flows from our continuing operations.



The Company plans to meet its obligations as they become due over the next
twelve months by raising additional capital through equity and debt financing
sources and expected positive cash flows generated from operations. Given the
considerations, we believe the mitigating effect of management's plans has
alleviated any substantial doubt about the Company's ability to continue as a
going concern.



General

As of March 31, 2022, the Company held cash and cash equivalents of
$20.9 million and restricted cash of $1.2 million. Operations, investments, and
equipment have been funded through cash on hand, the issuance of common stock
authorized by its July 2020 and February 2021 S-3 filings, seller financing, and
the issuance of debt and financing through the sale of future revenues. The
Company filed an S-3 in February of 2021 which became effective in April 2021
for the issuance of additional stock or public debt. In April, 2022, the Company
issued 9,000,000 shares of common stock and pre-funded warrants to purchase up
to 7,153,847 shares of Common Stock for a total raise of $21.0 million before
expenses.  In August of 2021, the Company opened a $4.0 million dollar line of
credit to support additional funding. Major uses of cash in the first
three months of 2022 included the purchases of property and equipment, debt
payments and changes in working capital. The Company continues to work to
improve its short-term liquidity through management of its working capital.
Long-term liquidity is expected to benefit from revenue growth and earnings
through its existing operations. Overall volume growth in the Company's
businesses both organically and through acquisitions are expected to benefit
cash flows as well.



Cash Used in Operations

Cash used in operations of $1.6 million was a $11.9 million decrease in cash used compared to the three-month period in 2021.




The decrease in uses of cash in the first three months of 2022 are primarily
related to higher merger and acquisition costs in the first quarter of 2021 as
compared to 2022 along with company growth in 2022. Due to the large increase in
revenue and associated costs both through acquisitions and organic growth, the
Company was better able to cover it's fixed costs, but increased interest costs
partially offset the benefits of much greater sales. Also with the growth of the
company's revenue comes increased accounts receivables and accounts payable,
which outside of timing, generally have offsetting cash flow effects. In the
short-term, rapid growth can have a detrimental effect on cash flows as sales on
account with positive gross margins waiting to be collected exceed accounts
payable not yet paid. As the Company's growth begins to moderate, overall cash
used in operations will continue to improve through revenue growth associated
with new customers and larger projects. The change in cash used in operating
activities since December 31, 2021, exclusive of net loss, is primarily the
result of the following line items: Timing of cash payments on accounts payable
and accrued liabilities was a combined $12.1 million increase in cash provided
by  operating activities related to larger projects at Orbital Solar
Services and Front Line Power. Changes in cost in excess of billing and accounts
receivable from December 31, 2021 was a combined $10.3 million use of cash for
the period and reflects the greater revenue volumes in the first three months of
2022 compared to the first three months of 2021.

















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S-3 registration

The Company filed an S-3 registration statement on July 17, 2020 containing a
prospectus that was effective in September 2020. The Company utilized this
filing in January 2021 to issue common stock for $45 million before costs. The
Company filed a new S-3 shelf registration in January 2021, which, as amended,
became effective in April 2021. With this filing, Orbital Energy Group may from
time-to-time issue various types of securities, including common stock,
preferred stock, debt securities and/or warrants, up to an aggregate amount of
$150 million. The Company utilized this S-3 registration to issue additional
common stock in July 2021 for $38 million before expenses.



As the Company focuses on growing its infrastructure services market presence
both organically and through strategic acquisitions, technology development,
product and service line additions, and increasing Orbital's market presence, it
will fund these activities together with related operating, sales and marketing
efforts for its various product offerings with cash on hand, and possible
proceeds from future issuances of equity through the S-3 registration statement,
and available debt.



Orbital Energy Group may raise additional capital needed to fund the further
development and marketing of its products and services as well as payment of its
debt obligations.


See the section entitled Recent Sales of Unregistered Securities for a complete listing of all unregistered securities transactions.

Capital Expenditures and Investments


During the first three months of 2022 and 2021, Orbital Energy Group invested
$1.4 million and $2.9 million, respectively, in property and equipment. These
purchases in 2022 were primarily for capital assets associated with the
Company's Electric Power segment and Telecommunications segment. These
investments typically include additions to equipment including vehicles and
equipment for powerline service and maintenance, engineering, furniture,
computer equipment for office personnel, facilities improvements and other fixed
assets as needed for operations. In addition, during the three months ended
March 31, 2022, the Company had proceeds from a notes receivable of $3.5
million. The Company anticipates further investment in fixed assets and
acquisitions during 2022 in support of its on-going business and continued
development of its infrastructure services operations.



Financing Activities


In the three months ended March 31, 2022 and 2021 the Company made cash payments
on notes payable of $5.8 million and proceeds from notes payable of
$9.7 million, respectively. The Company also received $3.5 million in proceeds
from their line of credit and made $2 million in payments on this line of credit
in 2022 compared to $0.4 million paid in the quarter ended March 31, 2021 to
close its line of credit that was acquired with the Orbital Solar Services
business. In the three months ended March 31 2022 and 2021 the Company recorded
payments on finance lease obligations of $1.2 million and one thousand dollars,
respectively.


Recap of Liquidity and Capital Resources


At March 31, 2022, the Company had unrestricted cash and cash equivalents
balances of $20.9 million. At March 31, 2022 the Company had $2.2 million of
cash and cash equivalents balances at domestic financial institutions that were
covered under the FDIC insured deposits programs and $0.4 million covered at
foreign financial institutions.



The Company had a net loss of $37.6 million and cash used in operating activities of $1.6 million during the three months ended March 31, 2022. As of March 31, 2022, the Company's accumulated deficit was $248.5 million.

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The Company expects the revenues from its continuing operations, and cash on
hand, to cover operating and other expenses for the next twelve months of
operations. However, in the short-term, the Company expects to continue to need
cash support as the Company's businesses increase their market positions and
revenue. The Company may issue additional debt or equity to support continuing
operations and acquisition efforts in the remaining months of 2022.



Critical Accounting Policies



The Company has adopted various accounting policies to prepare the consolidated
financial statements in accordance with Generally Accepted Accounting
Principles, ("GAAP"). Certain of the Company's accounting policies require the
application of significant judgment by management in selecting the appropriate
assumptions for calculating financial estimates. In the Company's 2021 Annual
Report on Form 10-K filed on March 31, 2022, the Company identified the critical
accounting policies that affect the Company's more significant estimates and
assumptions used in preparing the Company's consolidated financial statements.



Recent Accounting Pronouncements




See Note 11 Recent Accounting Pronouncements of the condensed consolidated
financial statements in Part I-Item I, "Financial Statements" for a description
of recent accounting pronouncements, including the expected dates of adoption
and estimated effects on financial position, results of operations and cash
flows.



Off-Balance Sheet Arrangements

See Note 20 Commitments and Contingencies of the condensed consolidated financial statements in Part I-Item I, "Financial Statements" for a description of the Company's off-balance sheet arrangements.

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