What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2021-11-09 · 291 added, 214 removed, 12 unchanged (98% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking

statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives,

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report

on Form 10-Q contains statements that relate to future events and expectations and, as such, constitute forward-looking statements, within

the meaning of the Private Securities Litigation Reform Act of 1995.

Certain statements, other than purely historical information, including

estimates, projections, statements relating to our strategies, outlook, business and financial prospects, business plans, objectives,

and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.”

within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E

of the Securities Exchange Act of 1934.

These forward-looking statements generally are identified by the words “believes,”

“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,”

“plan,” “may,” “will,” “would,” “will be,” “will continue,” “will

likely result,” and similar expressions.

We intend such forward-looking statements to be covered by the safe-harbor

provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement

for purposes of complying with those safe-harbor provisions.

Forward-looking statements are based on current expectations

and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited

changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally

accepted accounting principles.

These risks and uncertainties should also be considered in evaluating forward-looking statements and

undue reliance should not be placed on such statements.

We undertake no obligation to update or revise publicly any forward-looking

statements, whether as a result of new information, future events or otherwise.

Further information concerning our business,

including additional factors that could materially affect our financial results, is included herein and in our other filings with the

full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving

factors that we may not be able to accurately predict at the present time.

continue to abide by federal, state, and local safety regulations, including having unvaccinated employees work from home, and providing

protective measures for our vaccinated employees who choose to work in our offices, including hygiene best practices as recommended by

the Centers for Disease Control and local authorities.

Our customers provide essential services in the healthcare industry and we believe

that our digital communication technology is more important than ever in this environment.

However, our revenue often comes from advertising

or marketing budgets, and in a sustained economic downturn, those categories of spending may be cut.

will continue to closely monitor the updates regarding the spread of COVID-19 and its variants, the distribution of vaccines developed

to combat COVID-19, and applicable vaccine mandates, and we will adjust our business operations according to guidelines from federal,

state, local or foreign authorities.

In light of the foregoing, we may take actions that alter our business operations, or that we determine

are in the best interests of our employees, customers, partners and stockholders.

Highlights through October 2021

Generated sales of $16.1 million

for the quarter ended September 30, 2021, a 53% increase over the same period in 2020.

Generated sales of $41.0 million

for the nine months ended September 30, 2021, a 52% increase over the same period in 2020.

Achieved positive cash flow

from operations of $2.1 million for the nine months ended September 30, 2021.

Completed all integration

work for previous two acquisitions and paid last earnout payment related to acquisitions in the quarter ended March 31, 2021.

Raised an additional $70.7

million of capital in a public offering during the quarter ended March 31, 2021.

Enhanced our leadership team

by adding a new Chief Operating Officer and Chief Financial Officer in October 2021.

Expanded our pipeline for

our new Real World Evidence (“RWE”) messaging solution that we launched in Q2.

We continued to execute on our omnichannel strategy

by partnering with Demandbase, which leverages the combination of institutional and in-workflow behavioral data at the point-of-care,

and now expands our platform to personalize support and engagement of providers and patients at all care points along the patient

journey and enables our customers to tailor account-based engagement experiences.

We implemented Therapy

Initiation Workflow solution which allows life sciences companies to simplify therapy initiation by presenting healthcare providers

with a fully electronic option to synchronize enrollment, benefits verification, prior authorization, and patient support onboarding.

This new solution continues to expand the breadth of our platform beyond digital communications by enabling patients to obtain the

therapies they need through life sciences’ support which is facilitated through our Therapy Initiation and Persistence Platform .

of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

Our total revenue reported for the three months ended September 30, 2021

was approximately $16.1 million, an increase of 53% over the approximately $10.5 million from the same period in 2020.

Our total revenue

for the nine months ended September 30, 2021 was approximately $41.0 million, an increase of 52% over the approximately $26.9 million

from the same period in 2020.

The increased revenue resulted from increases in sales throughout our solutions.

cost of revenue, comprised primarily of revenue share expense, increased slightly as a percentage of revenue in the quarter and nine

months ended September 30, 2021, as compared to the same periods in 2020.

These changes were the result of solution mix, both as it relates

to solutions itself and the partners through which the solutions are delivered.

Additional discussion is included in the gross margin

section below.

These forward-looking statements generally are identified by the words “believes,” “project,” “expects,”

“anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,”

“will,” “would,” “will be,” “will continue,” “will likely result,” and similar

Forward-looking statements

are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ

materially from the forward-looking statements.

Forward-looking statements are not guarantees of future performance.

Although OptimizeRx

believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, these expectations may

not be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements

due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond OptimizeRx’s control.

Forward-looking

statements are subject to risks and uncertainties.

Actual results could differ materially from those expressed in or implied by such forward-looking

statements due to a variety of factors, including:

disruptions to our business or the business of our customers due to the global pandemic;

the inability to support our technology and scale our operations successfully, developing and implementing new and updated applications,

features and services for our portals may be more difficult and expensive and take longer than expected;

dependence on a concentrated

group of customers;

inability to maintain contracts with electronic prescription platforms, agreements with electronic prescription

platforms and electronic health record systems being subject to audit;

inability to attract and retain customers;

inability to comply

with laws and regulations that affect the healthcare industry;

developments in the healthcare industry;

inability to manage

inability to identify suitable acquisition candidates, complete acquisitions or integrate

acquisitions successfully;

inability to attract and retain key employees;

economic, political, regulatory and other risks arising from

our international operations;

inability to protect our intellectual property;

cybersecurity incidents;

in the performance, reliability and availability of our network infrastructure;

lack of a consistent active trading market for our common

and v olatility in the market price of our common stock.

The risks and uncertainties included here

are not exhaustive.

Further information concerning our business, including additional factors that could materially affect our financial

results, is included herein and in our other filings with the SEC, including our Annual Report on Form 10-K for the year ended December

Moreover, we operate in a rapidly changing and competitive environment.

New risk factors emerge from time to time, and it is

not possible for management to predict all such risk factors.

Further, it is not possible

to assess the effect of all risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual

results to differ materially from those contained in any forward-looking statements.

Given these risks and uncertainties, investors should

not place undue reliance on forward-looking statements as a prediction of actual results.

In addition, we disclaim any obligation to update

any forward-looking statements to reflect events or circumstances that occur after the date of this report.

Corporation is a digital health technology company incorporated in the State of Nevada.

We enable care-focused engagement between life

sciences organizations, healthcare providers, and patients at critical junctures throughout the patient care journey.

Connecting over

healthcare providers and millions of their patients through an intelligent technology platform embedded within a proprietary

point-of-care network, OptimizeRx helps patients start and stay on their medications.

pandemic has continued to create unprecedented challenges in the healthcare industry which has increased the demand for unique solutions

ranging from access to accurate and timely information to increasing the accessibility of medications and care management.

pandemic did not have a material net impact on our financial statements during the first quarter of 2022.

continue to monitor the impact of COVID-19 on our operations and key stakeholders.

The Company cannot reasonably predict the ultimate

impact of the COVID-19 pandemic, including the extent of any impact on our business, results of operations and financial condition, which

will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and

may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, the acceptance,

safety and efficacy of vaccines, and global economic conditions.

Company Highlights through April 2022

Generated sales of $13.7 million for the first three months of 2022, a 22% increase over the same period in 2021.

Achieved positive cash flow from operations of $4.1 million.

Announced a definitive agreement to acquire the EvinceMed platform and related assets and closed on the transaction.

Introduced new key performance indicators to increase transparency and provide investors additional ways to chart our ability to execute against our “land and expand” strategy.

Published Company’s first Environmental, Social and Governance (ESG) Report

Key Performance Indicators

We developed a number of key performance indicators

in the first quarter of the year and intend to monitor these going forward, to evaluate our business, measure our performance, identify

trends affecting our business and make strategic decisions.

Average revenue per top 20 pharmaceutical manufacturer.

Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the company recognized through pharmaceutical

manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2020 revenue” over the last twelve months, divided

by the total number of the aforementioned pharmaceutical manufacturers that our solutions helped support over that time period.

uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical

and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

increase in the average in twelve months ended March 31, 2022 as compared to the twelve months ended March 31, 2021 is primarily the result

of our focus on signing larger and more comprehensive deals and through supporting additional brands.

Rolling Twelve Months

Ended March 31

Average revenue per top 20 pharmaceutical manufacturer

Percent of top 20 pharmaceutical manufacturers

that are customers.

Percent of top 20 pharmaceutical manufacturers that are customers is calculated by taking the number of revenue

generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2020

revenue” over the last 12 months, which is then divided by 20—which is the number of pharmaceutical manufacturers included

in the aforementioned list.

The Company uses this metric to monitor its progress in penetrating key customers within its largest customer

vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

The increase from twelve months ended March 31, 2021

to the twelve months ended March 31, 2022 reflects continued penetration into this core customer

base and reflects two new top 20 pharma customers in the twelve months ended March 31, 2022.

Rolling Twelve Months

Ended March 31

Percent of top 20 pharmaceutical manufacturers that are customers

Percent of total revenue attributable to top

20 pharmaceutical manufacturers.

Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking

the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma

companies by 2020 revenue” over the last twelve months, divided by our consolidated revenue over the same period.

The Company uses

this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and

believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

from this core group of customers grew slightly slower than our overall revenue, enabling us to maintain a similar percentage of revenues

from this group.

Rolling Twelve Months

Ended March 31

Percent of total revenue attributable to top 20 pharmaceutical manufacturers

Net revenue retention.

Net revenue retention

is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers

in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period).

uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with

a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers.

retention rate in the twelve months ended March 31, 2021 was higher as a result of unplanned disruption to the industry caused by the

Covid-19 pandemic.

Our customers shifted funds previously designated for in-person events to digital marketing throughout the initial

quarters of the pandemic.

By the middle of 2021, while the pandemic continued, there was less disruption and customers shift towards digitals

solutions became more normalized.

Rolling Twelve Months

Ended March 31

Net revenue retention

Revenue per average full-time employee.

We define revenue per average full-time employee as total revenue over the last twelve months divided by the average number of employees

over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at

the end of the same period of the prior year).

The Company uses this metric to monitor the productivity of its workforce and its ability

to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability.

rate grew more quickly than our increase in the number of employees, allowing us to achieve more productivity.

We were able to do this

by taking advantage of the expandable technology infrastructure that we have built over the years.

Rolling Twelve Months

Ended March 31

Revenue per average full-time employee

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

Our total revenue reported for the three months

ended March 31, 2022 was approximately $13.7 million, an increase of 22% over the approximately $11.2 million from the same period in

The increased revenue resulted from increases in sales in our messaging and access solutions.

We expect that our revenues will continue to grow

for the balance of 2022 as a result of the new clients we secured in the first quarter of the year as well as those we expect to pick

up for the remainder of the year.

In addition, we believe that the foundations we laid in 2020 and 2021, including increased pharmaceutical

brands, an increased distribution network, and strong growth in our messaging solutions will result in steady growth throughout the year.

Cost of Revenues

The cost of revenue increased from $5.1 million

to $5.6 million primarily as a result of the increase in revenue.

Our cost of revenues as a percentage of revenues decreased for the quarter

ended March 31, 2021.

This improvement was a result of solution mix, both as it relates to solutions and the partners through which the

messages are delivered and increases in the type of services we provide that are not subject to revenue share.

Additional discussion is

included in the gross margin section below.

Three Months Ended

Cost of Revenues %

Gross Margin %

reflected in the table above, our gross margin decreased slightly in both the three and nine months ended September 30, 2021 compared

with the prior year.

This is the result of solution mix.

In general, there has been an increase in the percentage of activity flowing

through our higher cost channels compared with a year ago.

This was offset by the launch of our RWE solution.

Our RWE solution includes

a much higher percentage of program design, which carries a higher margin than the delivery of the actual messages.

We expect our gross

margin to remain relatively constant for the balance of the year.

expenses increased from approximately $6.2 million for the three months ended September 30, 2020 to approximately $9.0 million for the

same period in 2021.

Operating expenses increased from approximately $19.0 million for the nine months ended September 30, 2020 to approximately

$23.5 million for the same period in 2021.

Overall, this increase results from our efforts to expand our product line and build out our

organization to establish a strong base for current and future growth.

Our expenses increased at a lower rate than our revenues as a

result of the operating leverage of our model.

The detail of expenditures by major category is reflected in the table below.

September 30,

Salaries, Wages,

As reflected in the table above, our gross margin,

which is the difference between our revenues and our cost of revenues, increased for the three months ended March 31, 2022, as a result

of solution mix.

In general, there has been an increase in the percentage of activity flowing through our lower cost channels compared

with a year ago.

Additionally, revenue increases in our access solutions and RWE includes a much higher percentage of program design,

which carries a higher margin than the delivery of the actual messages.

We expect our gross margin to remain relatively constant for the

balance of the year.

Operating Expenses

Operating expenses increased from approximately

$6.8 million for the three months ended March 31, 2021 to approximately $11.8 million for the same period in 2022, an increase of approximately

This increase in expense is due to investment in, and expansion of, our workforce to enable future growth.

Stock based compensation,

a noncash expense, had the greatest increase over prior year and is discussed in greater detail below.

The detail of expenditures by major category is reflected in the table

Three Months Ended

Salaries, Wages, & Benefits

Stock-Based Compensation

Contractors and Consultants

3 unchanged sentences

Advertising and Promotion

Technology Infrastructure

Integration and Exclusivity

Technology Infrastructure Costs

Integration Incentives

Office, Facility, and Other

and Amortization

Operating Expense

increase in operating expenses related to salaries, wages, and benefits and other human resource related costs is due to the expansion

of our team to support additional growth.

Through the end of September, we have hired 32 new people this year, largely in areas focused

on increasing revenue.

This increase is partly offset by the decrease in contractors and consultants, as we have brought functions in

house that were previously outsourced.

expect salaries, wages, and benefits to continue to increase in the fourth quarter due to the full impact of new hires already in place,

as well as new hires in the pipeline.

expense remains down on a year to date basis as a result of pandemic-related travel restrictions, We reopened travel at the end of the

second quarter and incurred significantly more travel expenses in the quarter ended September 30, 2021 than in the prior year due relaxed

travel restrictions.

Professional fees increased in both the three and nine months ended

September 30, 2021 compared with the prior year.

With the assistance of an outside legal firm, we undertook a comprehensive governance

review of our bylaws, board charters, equity compensation plan, and overall corporate policies to enhance and improve our overall governance.

This review accounts for the majority of the year to date increase.

In addition, due to the increase in our market cap, our outside auditors

are now required to render an opinion on our internal controls.

Our expenditures on professional fees in connection with the preparation

for and work related to that audit in 2021 increased in the quarter ended September 30, 2021.

We would expect professional fees to remain

at a similar level for the balance of the year.

relations expense increased due to the expansion of our communication efforts to reach retail investors and expand our shareholder base.

infrastructure costs increased due to continued investment in our operating systems to facilitate new products as well as the implementation

of additional software products to increase efficiency and information dissemination.

costs increased as we have purchased more data, primarily to aid in our selling effort and allow customers to target their messages more

appropriately, thereby increasing our ability to charge premium prices for more highly targeted messages.

and exclusivity costs represent payments to partners for access and/or exclusivity and increased because of new agreements signed.

payments are usually made in lump sums and expensed over the term of the contracts.

These expenses are an important part of our ability

to expand our network.

Our office, facility and other expenses increased primarily because

of the addition of new employees, including recruiter fees, as well as the reopening of our offices.

other variances in the table above are the result of fluctuations in the ordinary course of business.

expect our overall operating expenses to increase on a quarterly basis for the balance of the year as we further implement our business

We do not expect human resource costs to increase as quickly as revenues, however we do expect to hire additional employees to

support and accelerate our anticipated growth.

Income (Loss)

had net income of $.04 million for the three months ended September 30, 2021, as compared to a net loss of $0.3 million during the same

period in 2020.

We had a loss of approximately $0.2 million for the nine months ended September 30, 2021, as compared to net loss of

approximately $3.6 million during the same period in 2020.

The reasons and specific components associated with the change are discussed

Overall, the net income for three months ended September 30, 2021 and decreased loss for the nine month period ended September

30, 2021 resulted from the increased margin generated by our higher revenues, partially offset by the increased operating expenses.

and Capital Resources

of September 30, 2021, we had total current assets of $108.4 million, compared with current liabilities of $7.6 million, resulting in

working capital of approximately $100.8 million and a current ratio of 14.8 to 1.

This represents an increase from our working capital

of approximately $23 million and current ratio of 3 to 1 at December 31, 2020.

operating activities provided approximately $2.1 million in cash flow during the nine months ended September 30, 2021, compared with

cash used of approximately $3.7 million in the same period in 2020.

The cash provided in the 2021 period was the result of our net loss

increased by noncash expenses, which resulted in positive cash flow.

This was partially offset by working capital used in the reduction

of liabilities and to support growth in accounts receivable due to our increased revenue levels.

The cash used in the 2020 period was

primarily the result of increased investment in working capital;

in particular, we made a $2.0 million prepayment to a partner that was

expensed over the balance of the year.

used insignificant amounts in investing activities in both the nine months ended September 30, 2021 and 2020.

These investments related

to purchases of equipment as well as investments related to the expansion of our network capabilities in our adherence solution.

financing activities provided $72.9 million in the nine months ended September 30, 2021, compared with cash used of approximately $3.1

million in the same period in 2020.

We raised $70.7 million in a public offering of our common stock as well as generated $3.8 million

from the issuance of shares related to the exercise of stock options.

These were partially offset by the payment of $1.6 million in earnout

payments from a previous acquisition.

We have no remaining earnout payments due in the future.

In the 2020 period, financing activities

used approximately $4.4 million related to earnout payments from a previous acquisition, offset by $1.3 million from the issuance of

shares related to the exercise of stock options.

main source of liquidity has historically been from the issuance of common stock.

We do not anticipate the need to raise additional capital

in the short or long term for operating purposes or to fund our growth plans.

We are focused on growing our revenue, channel and partner

However, as a company in a market that is active with merger and acquisition activity, we may have opportunities, such as for

acquisitions or strategic partner relationships, which may require additional capital.

We will assess these opportunities as they arise

with the view of maximizing shareholder value.

Party Transaction

Lang, one of our Board Members, is the CEO of Eversana, a leading global provider of services to the life sciences industry.

is similar to other customers we generate revenue from, such as agencies or resellers.

In 2021 we have recognized revenue of $150,000

from Eversana and have open contracts as of September 30, 2021 that will result in an additional $160,000.

These contracts were sourced

by Eversana on behalf of life science customers of theirs.

The contracts are at market rates and were generated in the normal course

Accounting Policies

December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion

and Analysis.

The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a

company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often

as a result of the need to make estimates about the effect of matters that are inherently uncertain.

There have been no material changes

to our critical accounting policies as described in the footnotes to our financial statements included in our annual report on Form 10-K

for the year ended December 31, 2020;

however, we consider our critical accounting policies to be those related to determining the amount

of revenue to be billed, the timing of revenue recognition, calculation of revenue share expense, stock-based compensation, capitalization

and related amortization of intangible assets, impairment of assets, and the fair value of liabilities.

Issued Accounting Pronouncements

December 2019, the FASB issued ASU No.

Depreciation and Amortization

Total Operating Expense

The increase in operating expense related to salaries,

wages, and benefits and other human resource related costs is due to the expansion of our team to support additional growth.

our compensation expense to continue to increase on a quarter over quarter basis, although at a lower rate, due to the full impact of

new hires during the first quarter as well as new hires in the pipeline.

Since March 31, 2021, we have added to our staff in several key

areas, including product development, sales, and IT, and the addition of our Chief Financial Officer/Chief Operations Officer.

the past 12 months we hired 20 net additional employees.

Stock-based compensation increased by $2.5 million

from $0.7 million for the three months ended March 31, 2021 to $3.2 million for the same period in 2022.

Stock based compensation is awarded

to all full-time employees upon their start date as well as to certain key employees to encourage high performance.

In the fourth quarter

of 2021, we issued a significant market-based grant with a requisite service period of less than 3 years.

The expense for the market-based

award is amortized over the expected service period.

The impact on first quarter expense is $1.5 million.

Contractors and consultants increased 43% as we

have incurred consulting costs associated with building a scalable infrastructure.

Travel expenses increased significantly as a result

of relaxed travel restrictions related to the Covid-19 pandemic.

Professional fees increased 52% over prior year

primarily as a result of fees related to management’s assessment of internal controls and external audit fees due to Sarbanes-Oxley.

Previously we were exempt from the Sarbanes-Oxley Act Section 404B requirement.

Our advertising and promotion increased over the

same period prior year as we continue to invest in growth initiatives.

Technology infrastructure costs increased due

to continued investment in our operating systems to facilitate new products as well as the implementation of additional software products

to increase efficiency and information dissemination.

Integration incentives, which represent payments

to partners for access and/or exclusivity, increased because of new agreements signed in the second half of 2021.

These payments are usually

made in lump sums and expensed over the term of the contracts.

These expenses are an important part of our ability to expand our network.

Data costs decreased 38% over the same period

in the prior year as we have continued to evaluate our data vendors and partner with the most effective and valuable providers.

All other variances in the table above are the

result of normal fluctuations in activity.

We expect our overall operating expenses to increase

in the second quarter of 2022 as we further implement our business plan and expand our operations.

However, we expect operating expense

to increase at a slower rate throughout the balance of the year.

We had a net loss of approximately $3.8 million

for the three months ended March 31, 2022, as compared to a net loss of approximately $0.6 million during the same period in 2021.

reasons and specific components associated with the change are discussed above.

Overall, the increase in net loss resulted from significant

investments made in our people and technology infrastructure.

Liquidity and Capital Resources

As of March 31, 2022, we had total current assets

of approximately $112.7 million, compared with current liabilities of approximately $6.9 million, resulting in working capital of approximately

$105.8 million and a current ratio of approximately 16 to 1.

This represents an increase from our working capital of approximately $105.7

million and current ratio of 12 to 1 at December 31, 2021.

operating activities provided $4.1 million during the three months ended March 31, 2022, compared with $1.7 million in the same period

We had a net loss of $3.8 million for the period 2022, but noncash expenses of $3.6 million and working capital generated by

the collection of receivables offset the loss.

We had proceeds from financing activities of approximately

$0.3 million related to the exercise of stock options during the three months ended March 31, 2022.

For the same period in 2021, we raised

$70.7 million in a public offering of our common stock as well as generated $1.1 million from the issuance of shares related to the exercise

of stock options.

These proceeds in 2021 were partially offset by the payment of $1.6 million in earnout payments from a previous acquisition.

We believe that funds generated from operations,

together with existing cash, will be sufficient to finance our current operations and planned growth for the next twelve (12) months.

In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations.

However, we may seek additional

debt or equity financing to supplement cash from operations to fund acquisitions or strategic partner relationships, make capital expenditures,

and satisfy working capital needs.

We currently have an effective shelf registration statement,

which allows us to issue, in unlimited amounts, securities, including common stock, preferred stock, debt securities, warrants, and units.

Critical Accounting Policies

our consolidated financial statements in conformity with accounting principles generally accepted in the United States.

The preparation

of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented.

results could differ from those estimates and assumptions.

Our significant accounting policies are described in Note 2 to the Consolidated

Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Annual Report on Form 10-K).

The accounting

policies we used in preparing these financial statements are substantially consistent with those we applied in our 2021 Annual Report

on Form 10-K.

Our critical accounting policies are described in Management’s Discussion and Analysis included in the 2021 Annual

Report on Form 10-K.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No.

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

is intended to improve consistent application and simplify the accounting for income taxes.

ASU 2019-12 removes certain exceptions to

the general principles in Topic 740 and clarifies and amends existing guidance.

ASU 2019-12 was effective for annual and interim reporting

periods beginning after December 12, 2020, with early adoption permitted.

The adoption of this standard did not have a material effect

on our financial position, results of operations, or cash flows.

Balance Sheet Arrangements

of September 30, 2021, there were no off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

ASU 2019-12 is intended to improve consistent application and simplify

the accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends

existing guidance.

ASU 2019-12 was effective for annual and interim reporting periods beginning after December 15, 2020, with early adoption

The adoption of this standard did not have a material effect on our financial position, results of operations, or cash flows.

Not Yet Adopted

ASU Topic 2021-08 Business Combinations (Topic

805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract

liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with

ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.

The standard is effective for the Company’s fiscal

year beginning January 1, 2023, with early adoption permitted.

The Company is currently evaluating the effect of this pronouncement on

its Consolidated Financial Statements, but it is not expected to have a material impact.

Off Balance Sheet Arrangements

As of March 31, 2022, there were no off-balance sheet arrangements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis