SAB BIOTHERAPEUTICS, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)

You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the accompanying notes included in Part I, Item 1 of this Form 10-Q. Some of
the information contained in this discussion and analysis contains
forward-looking statements that involve risks, uncertainties, and assumptions.
As a result of many factors, including those factors set forth in the section
titled "Risk Factors," our actual results could differ materially from those
discussed in or implied by these forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in the section titled "Risk Factors." Please also refer to the section
titled "Special Note Regarding Forward Looking Statements."

Special note regarding forward-looking statements

This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended, that are not historical facts and involve
risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of
historical fact included in this Form 10-Q including, without limitation,
statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding the Company's financial position, business
strategy and the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.

Insight

We are a clinical-stage biopharmaceutical company advancing a new class of
immunotherapies based on its human polyclonal and monoclonal antibodies. We have
applied advanced genetic engineering and antibody science to develop
transchromosomic (Tc) bovine herds that produce fully human antibodies targeted
to specific diseases, including infectious diseases such as COVID-19 and
influenza, immune system disorders including T1D and organ transplantation, and
cancer. Our versatile and scalable DiversitAb platform is applicable to a wide
range of human diseases, capable of producing specifically targeted,
high-potency immunotherapies. The platform has been expanded and validated
through funding awarded from U.S. government emerging disease and medical
countermeasures programs, the most recent of which totals up to approximately
$203.6 million. We are advancing clinical programs in two indications, and
preclinical development in three indications. In addition, we are executing on
two research collaborations with global pharmaceutical companies, including CSL
Behring and an undisclosed collaboration.

We generated total revenue of $11.8 million and $16.9 million for the three
months ended March 31, 2022 and 2021, respectively. Our revenue to date has been
primarily derived from government grants, including for the development of a
COVID-19 therapeutic. Approximately $78.2 million in funding remains for our
current government grants, with an additional $1.6 million remaining for our
current government grants pending approval of extensions on the funding for two
of the grants.


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We plan to focus a substantial portion of our resources on continued research
and development efforts towards deepening our technology and expertise with our
platform and as well as indications in infectious disease, autoimmune, and
oncology indications. As a result, we expect to continue to make significant
investments in these areas for the foreseeable future. We incurred research and
development expenses of $13.3 million and $12.8 million for the three months
ended March 31, 2022 and 2021, respectively, and general and administrative
expenses of $5.2 million and $3.3 million for the three months ended March 31,
2022 and 2021, respectively. We have also experienced significant growth in our
workforce in recent periods, increasing from 139 employees as of December 31,
2021, to 148 employees as of March 31, 2022. We expect to continue to incur
significant expenses, and we expect such expenses to increase substantially in
connection with our ongoing activities, including as we:

invest in research and development activities to optimize and develop our DiversitAb platform;

develop new and advance preclinical and clinical progress pipeline programs;

market and find partners to market our products;

expand and improve operations to deliver products, including investments in manufacturing;

acquire businesses or technologies to support the growth of our business;

continue to establish, protect and defend our intellectual property and patent portfolio;

•
operate as a public company.

To date, we have primarily funded our operations through government agreements, including for the development of a therapeutic antibody and rapid response program against COVID-19, as well as the issuance and sale of common stock. .

Our net income for the three months ended March 31, 2022 was $1.0 million and
our net income for the three months ended March 31, 2021 was $1.4 million. As of
March 31, 2022, we had an accumulated deficit of $28.1 million with cash and
cash equivalents totaling $22.4 million.

RECENT DEVELOPMENTS

PPP loan

In February 2021, we submitted a forgiveness application related to our Paycheck
Protection Program (or PPP) loan (PPP Loan). In March 2021, the U.S. Small
Business Administration (SBA) approved the forgiveness of the PPP Loan, plus
accrued interest.

Business Combination

On October 22, 2021, we consummated the Business Combination pursuant to that
certain Agreement and Plan of Merger, dated June 21, 2021 ("Business Combination
Agreement"), by and among Big Cypress Acquisition Corp. (BCYP), Big Cypress
Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of
BCYP, and SAB Biotherapeutics, Inc., which changed its name to SAB Sciences,
Inc. and became our wholly-owned subsidiary in connection with the Business
Combination (and which we refer to now as Legacy SAB). Upon completion of the
Business Combination, and pursuant to the terms of the Business Combination
Agreement, the stockholders of Legacy SAB exchanged their Legacy SAB shares for
our shares of common stock, and options to purchase shares of Legacy SAB were
converted into options to purchase our shares of common stock. Additionally, (i)
we issued 10,491,937 shares of common stock to the former stockholders of Legacy
SAB, which are being held in escrow and which will be released if certain
conditions are met prior to October 22, 2026, and (ii) we granted 1,508,063
contingently issuable restricted stock units to the holders of Legacy SAB
options, which restricted stock units will be settled in our shares of common
stock if the same conditions are met prior to October 22, 2026. For more
information, see Note 1 to our consolidated financial statements, Nature of
Business.

Key Factors Affecting Our Results of Operations and Future Performance

We believe that our financial performance has been, and in the foreseeable
future will continue to be, primarily driven by multiple factors as described
below, each of which presents growth opportunities for our business. These
factors also pose important challenges that we must successfully address in
order to sustain our growth and improve our results of operations. Our ability
to successfully address these challenges is subject to various risks and
uncertainties, including those described in the section captioned "Part I, Item
1A, Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, and supplemented with the following revised or additional
risk factors in "Part II, Item 1A, Risk Factors."

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Components of operating results

Revenue

Our revenue has historically been generated through grants from government and
other (non-government) organizations. We currently have no commercially-approved
products.

Grant revenue is recognized for the period that the research and development
services occur, as qualifying expenses are incurred or conditions of the grants
are met. We concluded that payments received under these grants represent
conditional, nonreciprocal contributions, as described in Accounting Standards
Codification ("ASC") 958, Not-for-Profit Entities, and that the grants are not
within the scope of ASC 606, Revenue from Contracts with Customers, as the
organizations providing the grants do not meet the definition of a customer.
Expenses for grants are tracked by using a project code specific to the grant,
and the employees also track hours worked by using the project code.

For the three months ended March 31, 2022 and 2021, we worked on the following scholarships:

Government grants

Total income from government grants was approximately $11.8 million and
$16.9 million respectively, for the three months ended March 31, 2022 and 2021.

National Institute of Health - National Institute of Allergy and Infectious
Disease ("NIH-NIAID") (Federal Award #1R44AI117976-01A1) - this grant was for
$1.4 million and started in September 2019 through August 2021. For the three
months ended March 31, 2022 and 2021, there was approximately $27,000 and
$56,000, respectively, in grant income recognized. The Company applied for an
extension on the grant funding, and the extension is pending approval-we have
not historically experienced challenges renewing grant funding. If approved,
there is approximately $186,000 in funding remaining for this grant as of March
31, 2022.


NIH-NIAID (Federal Award #1R41AI131823-02) - this grant was for approximately
$1.5 million and started in April 2019 through March 2021. The grant was
subsequently amended to extend the date through March 2022. For the three months
ended March 31, 2022 and 2021, there was approximately $13,000 and $9,000
respectively, in grant income recognized. There is approximately $801,000 in
funding remaining for this grant as of March 31, 2022.


NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313-01, Subaward
#S-10511-01) - this grant was for approximately $2.7 million and started in
August 2017 through July 2021. For the three months ended March 31, 2022 and
2021 there was approximately $23,000 and $0, respectively, in grant income
recognized from this grant. The Company applied for an extension on the grant
funding, and the extension is pending approval-we have not historically
experienced challenges renewing grant funding. If approved, there is
approximately $1.4 million in funding remaining for this grant as of March 31,
2022.


Department of Defense, Joint Program Executive Office for Chemical, Biological,
Radiological and Nuclear Defense Enabling Biotechnologies ("JPEO") through
Advanced Technology International - this grant was for a potential of $25
million, awarded in stages starting in August 2019 and with potential stages
running through February 2023. Additional contract modifications were added to
this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the
contract total to $204 million. For the three months ended March 31, 2022 and
2021, there was approximately $11.7 million and $16.9 million, respectively, in
grant income recognized from this grant. There is approximately $77.4 million in
funding remaining for this grant as of March 31, 2022.


Grants for the JPEO contract are cost reimbursement agreements, with reimbursement of our direct research and development expenses (labor and consumables) with overhead (based on actual, reviewed quarterly) and fees fixed (9%).


Operating Expenses

Research and development costs

Research and development expenses primarily consist of salaries, benefits,
incentive compensation, stock-based compensation, laboratory supplies and
materials for employees and contractors engaged in research and product
development, licensing fees to use certain technology in our research and
development projects, fees paid to consultants and various entities that perform
certain research and testing on our behalf. Research and development expenses
are tracked by target/project code. Indirect general and administrative costs
are allocated based upon a percentage of direct costs. We expense all research
and development costs in the period in which they are incurred.

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Research and development activities consist of discovery research for the development of our platform and the various indications on which we are working. Historically, we have not tracked our research and development expenditures on a product-candidate-by-product-candidate basis.

For the three months ended March 31, 2022 and 2021, we had contracts with
multiple contract research organizations ("CRO") to conduct and complete
clinical studies. In the case of SAB-185, the CRO has been contracted and paid
by the US government. For SAB-176, PPD Development, LP, acting as CRO oversaw
the Phase 1 safety study. The terms of that agreement are subject to
confidentiality, and the status of the agreement is that it is current, in good
standing and approximately 90% of the contract has been paid through December
31, 2021. SAB has also contracted with hVIVO Services Limited to conduct the
Phase 2a influenza study on SAB-176. The terms of that agreement are subject to
confidentiality, and the status of the agreement is that it is current, in good
standing and approximately 90% of the contract has been paid through March 31,
2022.

We expect to continue to incur substantial research and development expenses as
we conduct discovery research to enhance our platform and work on our
indications. We expect to hire additional employees and continue research and
development and manufacturing activities. As a result, we expect that our
research and development expenses will continue to increase in future periods
and vary from period to period as a percentage of revenue.

Major components within our research and development expenses are salaries and
benefits (laboratory & farm), laboratory supplies, animal care, contract
manufacturing, clinical trial expense, outside laboratory services, project
consulting, and facility expense. Our platform allows us to work on multiple
projects with the same resources, as the research and development process of
each product is very similar (with minimal differences in the manufacturing
process). Research and development expenses by component for the three months
ended March 31, 2022 and 2021:

                                            Three Months Ended March 31,
                                               2022                2021
Salaries & benefits                       $     3,346,934      $  2,015,631
Laboratory supplies                             1,926,698         3,805,074
Animal care                                       677,703         1,056,303
Contract manufacturing                          4,429,203         3,635,633
Clinical trial expense                             57,318           128,691
Outside laboratory services                     1,216,094           944,632
Project consulting                                401,324           421,741
Facility expense                                1,228,039           670,077
Other expenses                                     41,031           104,222

Total research and development expenditure $13,324,344 $12,782,004

General and administrative expenses

General and administrative expenses primarily consist of salaries, benefits, and
stock-based compensation costs for employees in our executive, accounting and
finance, project management, corporate development, office administration, legal
and human resources functions as well as professional services fees, such as
consulting, audit, tax and legal fees, general corporate costs and allocated
overhead expenses. General and administrative expenses also include rent and
facilities expenses allocated based upon total direct costs. We expect that our
general and administrative expenses will continue to increase in future periods,
primarily due to increased headcount to support anticipated growth in the
business and due to incremental costs associated with operating as a public
company, including costs to comply with the rules and regulations applicable to
companies listed on a securities exchange and costs related to compliance and
reporting obligations pursuant to the rules and regulations of the SEC and stock
exchange listing standards, public relations, insurance and professional
services. We expect these expenses to vary from period to period in absolute
terms and as a percentage of revenue.

Non-operating income (expenses)

Gain on change in fair value of warrant liabilities

Gain on change in fair value of warrant liabilities includes changes in fair value of warrant liabilities.

Paycheck Protection Program SBA Loan Debt Extinguishing Gain

The gain on extinguishing the debt consists of the cancellation of the PPP loan, plus accrued interest.

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Other income

Other income mainly consists of capital gains on disposals of fixed assets.

interest income

Interest income includes interest earned on cash balances in our bank accounts.

Interest expense

Interest expense primarily includes interest related to borrowings under notes payable for equipment.

income tax expense

Income tax expense consists primarily of federal and state domestic income taxes.

Operating results

The following tables present our operating results for the three months ended March 31, 2022 and 2021:

                                                         Three Months Ended March 31,
                                                           2022                2021
Revenue
Grant revenue                                         $    11,803,077      $  16,927,734
Total revenue                                              11,803,077         16,927,734
Operating expenses
Research and development                                   13,324,344         12,782,004
General and administrative                                  5,186,072          3,331,806
Total operating expenses                                   18,510,416         16,113,810
Income (loss) from operations                              (6,707,339 )     

813 924

Changes in fair value of warrant liabilities                7,849,572                  -
Gain on debt extinguishment of Paycheck Protection
Program SBA Loan                                                    -            665,596
Interest expense                                              (72,022 )          (75,192 )
Interest income                                                 7,933              5,506
Total other income                                          7,785,483            595,910
Income before income taxes                                  1,078,144          1,409,834
Income tax expense                                             92,281                  -
Net income                                            $       985,863      $   1,409,834




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Comparison of the three months ended March 31, 2022 and 2021

Revenue

                  Three Months Ended March 31,
                     2022                2021            Change         % Change
Revenue         $    11,803,077      $ 16,927,734     $ (5,124,657 )        (30.3 )%
Total revenue   $    11,803,077      $ 16,927,734


Revenue decreased by $5.1 million, or 30.3%, in the three months ended March 31,
2022 as compared to the three months ended March 31, 2021 primarily due to a
decrease in work performed under the JPEO government grant. Included in revenues
for the three months ended March 31, 2022 is $0.3 million for fixed asset
purchases, as compared to $1.8 million for fixed asset reimbursement and $1.5
million for animal purchases for the three months ended March 31, 2021. We
anticipate future revenues will be substantially derived from current period
directly reimbursable expenses such as laboratory supplies, labor costs, and
consulting fees plus, when applicable, an overhead charge and a flat-rate fixed
fee. Our belief is future period total revenues will trend roughly in line with
total research and development expenses incurred in the same period.

Research and Development

                               Three Months Ended March 31,
                                  2022                2021            Change          % Change
Research and development     $    13,324,344      $ 12,782,004     $    542,340              4.2 %
Total research and
development expenses         $    13,324,344      $ 12,782,004


Research and development expenses increased by $0.6 million, or 4.4%, in the
three months ended March 31, 2022 as compared to the three months ended March
31, 2021, primarily due to increased headcount in the research and development
function, contract manufacturing, increased clinical work, and increases in our
production capacity and the associated expenses for materials and supplies
supporting research and development activities. Please refer to the research and
development expenses by component for the three months ended March 31, 2022 and
2021 table above for additional information.

General and administrative

                                Three Months Ended March 31,
                                  2022                 2021            

Change % General and administrative change $5,186,072 $3,331,806 $1,854,266

             55.7 %
Total general and
administrative expenses      $     5,186,072       $  3,331,806


General and administrative expenses increased by $1.9 million, or 55.8%, in the
three months ended March 31, 2022 as compared to the three months ended March
31, 2021, primarily due to increases in business, regulatory consulting, and
other compliance costs (year-over-year increase of $0.9 million, 103%);
insurance costs (year-over-year increase of $0.7 million, 2,786%); and
recruiting expenses (year-over-year increase of $0.1 million, 477%). Further, we
recognized considerable increased expenses as a result of becoming a public
company in 2021 (year-over-year increase for corporate governance and other
support costs of $0.3 million, 173%).

Non-operating Income

                                 Three Months Ended March 31,
                                   2022                 2021             Change         % Change
Changes in fair value of
warrant liabilities          $      7,849,572       $           -     $  7,849,572             N/M
Gain on debt
extinguishment of Paycheck
   Protection Program SBA
Loan                                        -             665,596         (665,596 )           N/M
Total non-operating income   $      7,849,572       $     665,596


Total non-operating income changed by $7.2 million in the three months ended
March 31, 2022 as compared to the three months ended March 31, 2021, primarily
due to changes in the fair value of the warrant liabilities, partially offset by
the forgiveness of the PPP Loan, plus accrued interest, in 2021.


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Interest Expense

                            Three Months Ended March 31,
                              2022                 2021           Change       % Change
Interest expense         $       72,022       $       75,192     $ (3,170 )         (4.2 )%
Total interest expense   $       72,022       $       75,192


Interest expense remained largely unchanged in the three months ended March 31,
2022 as compared to the three months ended March 31, 2021, driven by adding no
new Finance Leases or other interest-bearing debt.

Interest Income

                          Three Months Ended March 31,
                            2022                2021          Change       % Change
Interest income         $       7,933       $       5,506     $ 2,427           44.1 %
Total interest income   $       7,933       $       5,506


Interest income remained largely unchanged in the three months ended March 31,
2022 as compared to the three months ended March 31, 2021, due to higher cash
balances, offset by lower interest rates on money market funds, along with
higher bank fees.

Income Tax Expense

                              Three Months Ended March 31,
                                   2022                 2021       Change      % Change
Income tax expense         $             92,281         $   -     $ 92,281          N/M
Total income tax expense   $             92,281         $   -


Income tax expense increased by approximately $92,000 in the three months ended
March 31, 2022 as compared to the three months ended March 31, 2021, primarily
attributable to the elimination of the existing option to deduct research and
development expenditures and requirement for taxpayers to amortize them over
five years pursuant to IRC Section 174.

Starting in 2022, TCJA amendments to IRC Section 174 will no longer permit an
immediate deduction for research and development (R&D) expenditures in the tax
year that such costs are incurred. The 2022 first quarter effective income tax
rate was impacted by the Section 174 capitalization requirement combined with
the restriction on net operating losses to only reduce taxable income by 80%. We
will continue to recognize income tax expense and make quarterly estimated tax
payments under enacted tax rates and laws expected to be in effect for the
current tax year.

Cash and capital resources

As of March 31, 2022 and December 31, 2021, we had $22.4 million and $33.2
million, respectively, of cash and cash equivalents. Additionally, as of
December 31, 2021 we had $6.3 million in restricted cash held in escrow pending
the final settlement of the Forward Share Purchase Agreement. Upon final
settlement of the Forward Share Purchase Agreement, $817,060 in cash was
released to the Company and the remaining $5.5 million was delivered to
Radcliffe for the repurchase of 546,658 shares of the Company's common stock. To
date, we have primarily relied on grant revenue in the form of government grants
and the sale of common stock.

Our standard repayment terms for accounts receivable are thirty days from the
invoice date. As a majority of our accounts receivable is from work performed
under government grants, we have not had an uncollectible accounts receivable
amount in over 5 years.

We intend to continue to invest in our business and, as a result, may incur
operating losses in future periods. We expect to continue to invest in research
and development efforts towards expanding our capabilities and expertise along
our platform and the indications we are working on, as well as building our
business development team and marketing our solutions to partners in support of
the growth of the business. Based on our current business plan, we believe the
net proceeds from the Business Combination, together with our existing cash and
cash equivalents and anticipated cash flows from operations, will be sufficient
to meet our working capital and capital expenditure needs over at least the next
twelve months.

Our future capital requirements will depend on many factors, including, but not
limited to our ability to successfully secure additional government grants and
to secure contracts with new partners for the successful development and
commercialization of our products. If we are unable to execute on our business
plan and adequately fund operations, or if the business plan requires a level of
spending in excess of cash resources, we may be required to negotiate
partnerships in which we receive greater near-term payments at the expense of
potential downstream revenue. Alternatively, we may need to seek additional
equity or debt financing, which may not be available on terms acceptable to us
or at all. To the extent that we raise additional capital through the sale of
equity or convertible debt

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securities, the ownership interest of our shareholders will be diluted, and the
terms of these securities may include liquidation or other preferences that
adversely affect the rights of our common shareholders. Debt financing and
preferred equity financing, if available, may involve agreements that include
covenants restricting our ability to take specific actions, such as incurring
additional debt, selling or licensing our assets, making product acquisitions,
making capital expenditures, or declaring dividends. If we are unable to
generate sufficient revenue or raise additional capital when desired, our
business, financial condition, results of operations and prospects would be
adversely affected.

Sources of liquidity

Since our inception, we have funded our operations primarily from revenue in the form of government grants and equity financing.

Equity financing and exercise of options

As of March 31, 2022, we have raised approximately $82.5 million since our
inception from the issuance and sale of convertible preferred shares, net of
issuance costs associated with such financings, the Business Combination with
BCYP, and exercises of employee stock options.

We are not currently eligible to file a shelf registration statement; however,
we believe that shelf registration statements can contribute, when used, to
greater financing flexibility. To that end, we plan to file a shelf registration
statement on Form S-3 with the SEC once we are eligible to do so. Until such
time, if ever, we can generate substantial product revenue to support our cost
structure, we expect to finance our cash needs through a combination of
government or non-profit grants, equity offerings, debt financings,
collaborations, and other similar arrangements.

Notes payable

In December 2017, the Company entered into a loan agreement for the purchase of
a tractor for $116,661 at a 3.6% interest rate. The loan included annual
payments of $25,913 for the next five years starting in December 2018. The
tractor loan balance as of March 31, 2022 and December 31, 2021 was $25,013. The
total amount of the remaining loan balance is due in full in the fourth quarter
of 2022.

On March 27, 2020, President Trump signed into law the "Coronavirus Aid, Relief
and Economic Security Act ("CARES Act"). In April 2020, the Company entered into
a loan agreement (the "PPP Loan") with First Premier Bank under the Paycheck
Protection Program (the "PPP"), which is part of the CARES Act administered by
the United States Small Business Administration ("SBA"). As part of the
application for these funds, the Company, in good faith, certified that the
current economic uncertainty made the loan request necessary to support the
ongoing operations of the Company. The certification further requires the
Company to take into account its current business activity and its ability to
access other sources of liquidity sufficient to support ongoing operations in a
manner that is not significantly detrimental to the business. Under the PPP, the
Company received proceeds of approximately $661,612. In accordance with the
requirements of the PPP, the Company utilized the proceeds from the PPP Loan
primarily for payroll costs. The PPP Loan has a 1.00% interest rate per annum,
matures in April 2022 and is subject to the terms and conditions applicable to
loans administered by the SBA under the PPP. Under the terms of PPP, all or
certain amounts of the PPP Loan may be forgiven if they are used for qualifying
expenses, as described in the CARES Act. The Company recorded the entire amount
of the PPP Loan as debt. In February 2021, the Company submitted a forgiveness
application related to its PPP Loan. In March 2021, the SBA approved the
forgiveness of the PPP Loan, plus accrued interest. We recorded a gain on
extinguishment of PPP Loan of $665,596 for the forgiveness of the PPP Loan and
accrued interest within gain on debt extinguishment of Paycheck Protection
Program SBA Loan on the consolidated statement of operations for the three
months ended March 31, 2021.

Please refer to note 10 of the Company’s consolidated financial statements, Notes payable, for more information on our debt.

Cash flow

The following table summarizes our cash flows for the three months ended March
31, 2022 and 2021:

                                                        Three Months Ended March 31,
                                                           2022               2021
Net cash (used in) provided by operating
activities                                           $    (10,293,508 )   $ 

9,453,495

Net cash used in investing activities                      (1,280,934 )      (1,890,156 )
Net cash used in financing activities                      (5,562,167 )         (45,471 )
Net (decrease) increase in cash, cash equivalents,
and restricted cash                                  $    (17,136,609 )   $   7,517,868




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Operational activities

Net cash from operating activities decreased by $19.7 million in the three
months ended March 31, 2022 as compared to the three months ended March 31,
2021, primarily due to a $5.1 million decrease in revenue, $2.0 million increase
in general and administrative expenses, along with an increase non-cash working
capital (excluding impacts of the Forward Purchase Agreement) of $5.1 million.

Investing activities

Net cash from investing activities increased by $0.6 million in the three months
ended March 31, 2022 as compared to the three months ended March 31, 2021,
primarily due to a decrease in purchases of equipment and substantial completion
of the HQ expansion.

Financing Activities

Net cash from financing activities decreased by $5.5 million in the three months
ended March 31, 2022 as compared to the three months ended March 31, 2021,
primarily due to the final settlement of the Forward Share Purchase Agreement
whereby $5.5 million of restricted cash was utilized for a repurchase of 546,658
shares of the Company's common stock.

Contractual obligations and commitments

The following table summarizes our contractual obligations and commitments as of
March 31, 2022:

                                                            Payments Due by Period
                                                   Less than                                        Over
                                     Total          1 year         1-3 years      3-5 years        5 years
Notes payable (1)                 $    25,013     $    25,013     $        

– $ – $ – Liabilities related to operating leases (2) 2,634,446 1,239,615 1,394,831

              -               -
Finance lease liabilities (2)       6,719,586         427,061         805,413        802,992       4,684,120
Total                             $ 9,379,045     $ 1,691,689     $ 2,200,244     $  802,992     $ 4,684,120


(1)

An annual payment remaining on the purchase of a tractor.

(2)

We are party to certain contractual arrangements for equipment, lab space, and
an animal facility, which meet the definition of leases under FASB ASC Topic
842, Leases ("ASC 842").

We enter into contracts in the normal course of our business with third parties, including CROs. These payments are not included in the table above, as the amount and timing of these payments are not known.

From March 31, 2022there have been no material changes outside the normal course of business of our contractual commitments and obligations.

Income taxes

We had approximately $22.4 million of federal net operating loss carryforwards
as of March 31, 2022. Our carryforwards are subject to review and possible
adjustment by the appropriate taxing authorities. Our effective tax rate will
vary depending on the relative use of tax credits, changes in the valuation of
our deferred tax assets and liabilities, applicability of any valuation
allowances, limitation of application for our NOL carryforwards, and changes in
tax laws in jurisdictions in which we operate.

These carryforwards may generally be utilized in any future period but may be
subject to limitations based upon changes in the ownership of our shares in a
prior or future period. We have not quantified the amount of such limitations,
if any.

Beginning in 2022, the U.S. Tax Cuts and Jobs Act of 2017 ("TCJA") eliminated
the existing option to deduct research and development expenditures and requires
taxpayers to amortize them over five years pursuant to IRC Section 174. The new
amortization period begins with the midpoint of any taxable year that IRC
Section 174 costs are first incurred, regardless of whether the expenditures
were made prior to or after July 1, and runs until the midpoint of year five for
activities conducted in the United States or year 15 in the case of development
conducted on foreign soil.

The Company continues to record a valuation allowance on its net deferred tax
assets. The valuation allowance increased by approximately $1.6 million during
the three months ended March 31, 2022. The company has not recognized any
reserves for uncertain tax positions.

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Off-balance sheet arrangements

We did not have, for the periods presented, and we do not currently have, any
off-balance sheet financing arrangements or any relationships with
unconsolidated entities or financial partnerships, including entities sometimes
referred to as structured finance or special purpose entities, that were
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes.

Significant Accounting Policies and Estimates

We have prepared our consolidated financial statements in accordance with U.S.
GAAP. Our preparation of these consolidated financial statements requires us to
make estimates, assumptions and judgments that affect the reported amounts of
assets, liabilities, revenue, expenses, and related disclosures. We evaluate our
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 could therefore differ materially from these
estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2
to the Company's consolidated financial statements, Summary of Significant
Accounting Policies, we believe the following accounting policies to be critical
to the judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue recognition

Our income is mainly generated by grants from the government and other (non-governmental) organisations.

Grant revenue is recognized for the period that the research and development
services occur, as qualifying expenses are incurred, or conditions of the grants
are met. We concluded that payments received under these grants represent
conditional, nonreciprocal contributions, as described in ASC 958,
Not-for-Profit Entities, and that the grants are not within the scope of ASC
606, Revenue from Contracts with Customers, as the organizations providing the
grants do not meet the definition of a customer. Expenses for grants are tracked
by using a project code specific to the grant, and the employees also track
hours worked by using the project code.

Stock-based compensation

We recognize compensation cost relating to stock-based payment transactions
using a fair-value measurement method, which requires all stock-based payments
to employees, directors, and non-employee consultants, including grants of stock
options, to be recognized in operating results as compensation expense based on
fair value over the requisite service period of the awards. Prior to the
Business Combination, the grant date fair value of our common stock was
typically determined by our board of directors with the assistance of management
and a third-party valuation specialist. Subsequent to the Business Combination,
the board of directors elected to determine the fair value of our post-merger
common stock based on the closing market price at closing on the date of grant.
In determining the fair value of our stock-based awards, we utilize the
Black-Scholes option-pricing model, which uses both historical and current
market data to estimate fair value. The Black-Scholes option-pricing model
incorporates various assumptions, such as the value of the underlying common
stock, the risk-free interest rate, expected volatility, expected dividend
yield, and expected life of the options. For awards with performance-based
vesting criteria, we estimate the probability of achievement of the performance
criteria and recognize compensation expense related to those awards expected to
vest. No awards may have a term in excess of ten years. Forfeitures are recorded
when they occur. Stock-based compensation expense is classified in our
consolidated statements of operations based on the function to which the related
services are provided. We recognize stock-based compensation expense over the
expected term.


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In addition to considering the results of the independent third-party
valuations, our board of directors considered various objective and subjective
factors to determine the fair value of our common shares as of each grant date,
which may be a date other than the most recent independent third-party valuation
date, including:

the prices at which we most recently sold preferred stock and the superior rights and privileges of preferred stock over our common stock at the time of each grant;

the lack of liquidity of our shareholders’ equity as a private company;

our stage of development and business strategy and material risks relating to our business and industry;

our financial condition and results of operations, including our levels of available capital resources and expected results;

developments in our business, including the achievement of milestones such as entering into partnership agreements;

the valuation of publicly traded companies in the life sciences, biopharma and health technology sectors, as well as recently completed mergers and acquisitions of peer companies;

any external market conditions affecting our industry and trends within our industry;

the likelihood of achieving a liquidity event for the holders of our preferred
shares and holders of our common shares, such as an initial public offering, or
IPO, or a sale of our company, given prevailing market conditions; and

analysis of IPOs and market performance of similar companies in our industry.

The assumptions underlying these valuations represented management's best
estimates, which involved inherent uncertainties and the application of
management's judgment. As a result, if factors or expected outcomes change and
we use significantly different assumptions or estimates, the fair value of our
common shares and our stock-based compensation expense could be materially
different.

See Note 12 to the Company's consolidated financial statements, Stock Option
Plan, for information concerning certain specific assumptions we used in
applying the Black-Scholes option pricing model to determine the estimated fair
value of our stock options granted for the three months ended March 31, 2022 and
2021.

Stock-based compensation expense was $0.9 million and $0.3 million for the three
months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, we had
$7.5 million of total unrecognized stock-based compensation cost related to
non-vested options, which we expect to recognize in future operating results
over a weighted-average period of 2.27 years.

Valuations of Warrant Liabilities

We are required to periodically estimate the fair value of our Private Placement
Warrant liabilities with the assistance of an independent third-party valuation
firm. The assumptions underlying these valuations represented our best
estimates, which involved inherent uncertainties and the application of
significant levels of our judgment. The fair value of our Public Warrant
liabilities are determined by reference to the quoted market price.

The warrants are accounted for as liabilities in accordance with ASC 815-40,
Derivatives and Hedging-Contracts in Entity's Own Equity, and were presented
within warrant liabilities on the consolidated balance sheet as of March 31,
2022 and December 31, 2021. The initial fair value of the warrant liabilities
were measured at fair value on the Closing Date, and changes in the fair value
of the warrant liabilities were presented within changes in fair value of
warrant liabilities in the consolidated statement of operations for the three
months ended March 31, 2022.

On the Closing Date, we established the fair value of the Private Placement
Warrants utilizing both the Black-Scholes Merton formula and a Monte Carlo
Simulation ("MCS") analysis. Specifically, we considered a MCS to derive the
implied volatility in the publicly listed price of the Public Warrants. We then
considered this implied volatility in selecting the volatility for the
application of a Black-Scholes Merton model for the Private Placement Warrants.
We determined the fair value of the Public Warrants by reference to the quoted
market price.

The Public Warrants were classified as a Level 1 fair value measurement, due to
the use of the quoted market price, and the Private Placement Warrants held
privately by Big Cypress Holdings LLC, a Delaware limited liability company
which acted as the Company's sponsor in connection with the IPO (the "Sponsor"),
were classified as a Level 3 fair value measurement, due to the use of
unobservable inputs.

The initial measurement on the Closing Date for the Public Warrant liability was
approximately $6.3 million and the change in fair value of the Public Warrant
liability was approximately $4.0 million for the year ended December 31, 2021.
The change in fair value of the Public Warrant liability for the three months
ended March 31, 2022 was approximately $7.5 million

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The key inputs into the valuations as of the March 31, 2022 and December 31,
2021 were as follows:

                                                      March 31,       December 31,
                                                        2022              2021
Risk-free interest rate                                     2.42 %             1.24 %
Expected term remaining (years)                             4.56            

4.81

Implied volatility                                          49.0 %             43.0 %
Closing common stock price on the measurement date   $      3.76     $      

7.81


See Note 13 to the Company's consolidated financial statements, Fair Value
Measurements, for information concerning certain specific assumptions we used in
applying the Black-Scholes Merton formula and MCS to determine the estimated
fair value of the Private Placement Warrants outstanding for the three months
ended March 31, 2022.

Common Stock Valuations

Prior to becoming a public company, we were required to periodically estimate
the fair value of our common stock with the assistance of an independent
third-party valuation firm, as discussed above, when issuing stock options and
computing our estimated stock-based compensation expense. The assumptions
underlying these valuations represented our best estimates, which involved
inherent uncertainties and the application of significant levels of our
judgment. In order to determine the fair value of our common stock, we
considered, among other items, previous transactions involving the sale of our
securities, our business, financial condition and results of operations,
economic and industry trends, the market performance of comparable publicly
traded companies, and the lack of marketability of our common stock.

After the business combination, we now determine the fair value of our common stock based on the closing market price on the date of grant.

Compensation expense related to stock-based transactions is measured and
recognized in the financial statements at fair value of our post-merger common
stock based on the closing market price at closing on the date of grant.
Stock-based compensation expense is measured at the grant date based on the fair
value of the equity award and is recognized as expense over the requisite
service period, which is generally the vesting period, on the straight-line
method. We estimate the fair value of each stock option award on the date of
grant using the Black-Scholes option-pricing model. Determining the fair value
of stock option awards at the grant date requires judgment, including estimating
the expected volatility, expected term, risk-free interest rate, and expected
dividends.

Rental debts and rights of use

We are party to certain contractual arrangements for equipment, lab space, and
an animal facility, which meet the definition of leases under ASC 842. In
accordance with ASC 842, we, as of January 1, 2018 (the date of adoption),
recorded right-of-use assets and related lease liabilities for the present value
of the lease payments over the lease terms. We utilized the practical expedient
regarding lease and non-lease components and have combined such items into a
single combined component. Our incremental borrowing rate was used in the
calculation of our right-of-use assets and lease liabilities.

Recently issued accounting pronouncements

A description of recently issued accounting pronouncements that may potentially
impact our financial position and results of operations is disclosed in Note 3
to our consolidated financial statements, New Accounting Standards.

Impact of the COVID-19 pandemic

In March 2020, the World Health Organization declared the outbreak of a novel
coronavirus, or COVID-19, as a pandemic, which continues to spread throughout
the U.S. and worldwide. As with many companies around the world, our day-to-day
operations were disrupted with the imposition of work from home policies and
requirements for physical distancing for any personnel present in our offices
and laboratories. The pandemic has also disrupted our activities as
shelter-in-place orders, quarantines, supply chain disruptions, travel
restrictions and other public health safety measures have impacted our ability
to interact with our existing and potential partners for our activities.
However, the COVID-19 pandemic did not materially impact our business, operating
results, or financial condition. There is significant uncertainty as to the
trajectory of the pandemic and its impacts on our business in the future. We
could be materially and adversely affected by the risks, or the public
perception of the risks, related to the COVID-19 pandemic or similar public
health crises. Such crises could adversely impact our ability to conduct on-site
laboratory activities, expand our laboratory facilities, secure critical
supplies such as reagents, laboratory tools or immunized animals required for
discovery research activities, and hire and retain key personnel. The ultimate
extent of the impact of any epidemic, pandemic, outbreak, or other public health
crisis on our business, financial condition and results of operations will
depend on future developments, which are highly uncertain and cannot be
predicted, including new information that may emerge concerning the severity of
such epidemic, pandemic,

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outbreak, or other public health crisis and actions taken to contain or prevent
the further spread, among others. Accordingly, we cannot predict the extent to
which our business, financial condition and results of operations will be
affected. We remain focused on maintaining our operations, liquidity and
financial flexibility and continue to monitor developments as we deal with the
disruptions and uncertainties from the COVID-19 pandemic.

Accounting election of the JOBS law

We qualify as an "emerging growth company" as defined in the JOBS Act. An
emerging growth company may take advantage of reduced reporting requirements
that are not otherwise applicable to public companies. These provisions include,
but are not limited to:

be permitted to present only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations in this Form 10-Q;

not be required to comply with auditor certification requirements on the effectiveness of our internal controls over financial reporting;

not being required to comply with any requirement that may be adopted by the
PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's
report providing additional information about the audit and the financial
statements (auditor discussion and analysis);

reduced disclosure requirements regarding executive compensation arrangements; and

exemptions from the requirements for a non-binding advisory vote on executive compensation and shareholder approval of any previously unapproved golden parachute payments.

We may use these provisions until the last day of our fiscal year in which the
fifth anniversary of the completion of our initial public offering occurred.
However, if certain events occur prior to the end of such five-year period,
including if we become a "large accelerated filer," our annual gross revenue
exceeds $1.07 billion, or we issue more than $1.0 billion of non-convertible
debt in any three-year period, we will cease to be an emerging growth company
prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure
obligations in this Form 10-Q and may elect to take advantage of other reduced
reporting requirements in future filings. As a result, the information that we
provide to our shareholders may be different than the information you receive
from other public companies in which you hold stock.

The JOBS Act provides that an emerging growth company can take advantage of an
extended transition period for complying with new or revised accounting
standards, until those standards apply to private companies. We have elected to
take advantage of the benefits of this extended transition period and,
therefore, we will not be subject to the same new or revised accounting
standards as other public companies that are not emerging growth companies. Our
financial statements may therefore not be comparable to those of companies that
comply with such new or revised accounting standards. Until the date that we are
no longer an emerging growth company or affirmatively and irrevocably opt out of
the exemption provided by Section 7(a)(2)(B) of the Securities Act upon issuance
of a new or revised accounting standard that applies to our financial statements
and that has a different effective date for public and private companies, we
will disclose the date on which we will adopt the recently issued accounting
standard.

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