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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Forian Inc | NASDAQ:FORA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.18 | -6.43% | 2.62 | 1.13 | 7.95 | 2.85 | 2.61 | 2.69 | 21,117 | 05:00:01 |
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(State of Other Jurisdiction of incorporation or Organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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||
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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PART I
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FINANCIAL INFORMATION
|
|
Item 1.
|
1 |
|
1 |
||
2 |
||
3 |
||
5 | ||
6 |
||
Item 2.
|
30 |
|
Item 3.
|
42 |
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Item 4.
|
42 |
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PART II
|
43 |
|
Item 1.
|
43 |
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Item 1A.
|
44 |
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Item 2.
|
44 |
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Item 3.
|
44 |
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Item 4.
|
44 |
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Item 5.
|
44 |
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Item 6.
|
44 |
|
45 |
September 30,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
Unaudited
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Marketable securities
|
|
|
||||||
Accounts receivable, net
|
|
|
||||||
Proceeds receivable from sale of discontinued operations, net
|
||||||||
Contract assets
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Other assets
|
|
|
||||||
Current assets of discontinued operations
|
||||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Right of use assets, net
|
||||||||
Deposits and other assets
|
|
|
||||||
Non-current assets of discontinued operations
|
||||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
|
|
||||||
Accrued expenses
|
|
|
||||||
Short-term operating lease liabilities |
||||||||
Warrant liability
|
|
|
||||||
Deferred revenues
|
|
|
||||||
Current liabilities of discontinued operations
|
||||||||
Total current liabilities
|
|
|
||||||
Long-term liabilities:
|
||||||||
Long-term operating lease liabilities
|
|
|
||||||
Convertible notes payable, net of debt issuance costs (Note 10) ($
|
||||||||
Non-current liabilities of discontinued operations
|
||||||||
Total long-term liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 16)
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred Stock; par value $
|
|
|
||||||
Common Stock; par value $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023 |
2022 |
|||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of revenues
|
|
|
||||||||||||||
Research and development
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Separation expenses | ||||||||||||||||
Depreciation and amortization
|
|
|
||||||||||||||
Total costs and expenses
|
|
|
||||||||||||||
Operating loss From Continuing Operations
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Other Income (Expense):
|
||||||||||||||||
Change in fair value of warrant liability
|
|
|
||||||||||||||
Interest and investment income
|
|
|
||||||||||||||
Gain on sale of investment |
|
|
|
|
||||||||||||
Interest expense
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Gain on debt redemption |
|
|
|
|
||||||||||||
Total other income, net
|
|
(
|
)
|
( |
) | |||||||||||
Income (loss) from continuing operations before income taxes
|
|
(
|
)
|
( |
) | |||||||||||
Income tax expense
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Income (loss) from continuing operations, net of tax |
( |
) | ( |
) | ||||||||||||
Loss from discontinued operations | ( |
) | ( |
) | ( |
) | ||||||||||
Gain on sale of discontinued operations | ||||||||||||||||
Income tax effect on discontinued operations | ( |
) | ( |
) | ||||||||||||
(Loss) Income from discontinued operations, net of tax | $ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | ||||||
Net Income (Loss)
|
$
|
|
$
|
(
|
)
|
$ | $ | ( |
) | |||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
||||||||||||||||
Continuing operations
|
$ |
$ |
( |
) | $ |
$ |
( |
) | ||||||||
Discontinued operations
|
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | ||||||
Net income (loss) per share - basic
|
$ |
$ |
( |
) | $ |
$ |
( |
) | ||||||||
Diluted |
||||||||||||||||
Continuing operations
|
$ |
$ |
( |
) | $ |
$ |
( |
) | ||||||||
Discontinued operations
|
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) |
||||||
Net income (loss) per share - diluted | $ |
$ |
( |
) | $ |
$ |
( |
) | ||||||||
Weighted-average shares outstanding - basic
|
||||||||||||||||
Weighted-average shares outstanding - diluted
|
|
Preferred Stock
|
Common Stock
|
||||||||||||||||||||||||||
|
Shares
|
Par Value @ $0.001 per share
|
Shares
|
Par Value @ $0.001 per share
|
Additional Paid In Capital
|
Accumulated Deficit
|
Stockholders’ Equity
|
|||||||||||||||||||||
Balance at January 1, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
Issuance of Forian common stock upon exercise of stock options
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
Stock based compensation expense
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net income
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||
Balance at September 30, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
Preferred Stock
|
Common Stock
|
||||||||||||||||||||||||||
|
Shares
|
Par Value @ $0.001 per share
|
Shares
|
Par Value @ $0.001 per share
|
Additional Paid In Capital
|
Accumulated Deficit
|
Stockholders’ Equity
|
|||||||||||||||||||||
Balance at January 1, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes
|
( |
) | ( |
) | ||||||||||||||||||||||||
Issuance of Forian common stock upon exercise of stock options
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
Issuance of Forian common stock upon exercise of warrants
|
( |
) | ||||||||||||||||||||||||||
Stock based compensation expense
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance at September 30, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
Preferred Stock
|
Common Stock
|
||||||||||||||||||||||||||
|
Shares
|
Par Value @ $0.001 per share
|
Shares
|
Par Value @ $0.001 per share
|
Additional Paid In Capital
|
Accumulated Deficit
|
Stockholders’ Equity
|
|||||||||||||||||||||
Balance at July 1, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock based compensation expense
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
—
|
|
—
|
|
|
|
|
|||||||||||||||||||||
Balance at September 30, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
Preferred Stock
|
Common Stock
|
||||||||||||||||||||||||||
|
Shares
|
Par Value @ $0.001 per share
|
Shares
|
Par Value @ $0.001 per share
|
Additional Paid In Capital
|
Accumulated Deficit
|
Stockholders’ Equity
|
|||||||||||||||||||||
Balance at July 1, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
Issuance of Forian common stock upon exercise of stock options
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
Stock based compensation expense
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
—
|
|
—
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balance at September 30, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
For the Nine Months Ended September 30,
|
||||||||
2023
|
2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$
|
|
$
|
(
|
)
|
|||
Less: Income (loss) from discontinued operations
|
( |
) | ||||||
Income (loss) from continuing operations
|
( |
) | ||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities - continuing operations:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Amortization on right of use asset
|
||||||||
Amortization of debt issuance costs
|
||||||||
Amortization of discount - proceeds from sale of discontinued operations
|
( |
) | ||||||
Accrued interest on convertible notes
|
||||||||
Realized and unrealized gain on marketable securities
|
(
|
)
|
(
|
)
|
||||
Gain on sale of investment
|
( |
) | ||||||
Gain on debt redemption
|
( |
) | ||||||
Stock-based compensation expense
|
|
|
||||||
Change in fair value of warrant liability
|
(
|
)
|
(
|
)
|
||||
Change in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(
|
)
|
(
|
)
|
||||
Contract assets
|
|
(
|
)
|
|||||
Prepaid expenses
|
(
|
)
|
(
|
)
|
||||
Changes in lease liabilities during the year |
( |
) | ||||||
Deposits and other assets
|
|
|
||||||
Accounts payable
|
(
|
)
|
|
|||||
Accrued expenses |
||||||||
Deferred revenues
|
|
|
||||||
Net cash provided by (used in) operating activities - continuing operations
|
( |
) | ||||||
Net cash used in operating activities - discontinued operations
|
( |
) | ( |
) | ||||
Net cash provided by (used in) operating activities
|
|
(
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Additions to property and equipment
|
(
|
)
|
(
|
)
|
||||
Purchase of marketable securities
|
(
|
)
|
(
|
)
|
||||
Sale of marketable securities
|
||||||||
Proceeds from sale of investment
|
||||||||
Net cash from sale of discontinued operations
|
|
|
||||||
Net cash provided by (used in) investing activities - continuing operations
|
( |
) | ||||||
Net cash used in investing activities - discontinued operations
|
( |
) | ||||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments on notes payable and financing arrangements
|
|
(
|
)
|
|||||
Payment of employee withholding tax related to restricted stock units
|
( |
) | ( |
) | ||||
Cash used to redeem convertible notes
|
( |
) | ||||||
Net cash used in financing activities - continuing operations
|
( |
) | ( |
) | ||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
Net change in cash
|
|
(
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for taxes
|
$ | $ |
Note 1
|
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS
|
Note 2
|
BASIS OF PRESENTATION
|
Note 3
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
|
Contract Assets
|
Contract
Liability
|
||||||||||||||
|
Costs of
obtaining
contracts
|
Unbilled
revenue
|
Total
|
Deferred
Revenue
|
||||||||||||
Balance at January 1, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Beginning deferred revenue balance recognized
during the period
|
|
|
|
(
|
)
|
|||||||||||
Net change due to timing of billings, payments
and recognition
|
|
|
|
|
||||||||||||
Balance at December 31, 2022
|
|
|
|
|
||||||||||||
Beginning deferred revenue balance recognized
during the period
|
|
|
|
(
|
)
|
|||||||||||
Net change due to timing of billings, payments
and recognition
|
|
(
|
)
|
(
|
)
|
|
||||||||||
Balance at September 30, 2023
|
$
|
|
$
|
|
$
|
|
$
|
|
|
September 30,
2023
|
December 31, 2022
|
||||||
Estimated next
|
$
|
|
$
|
|
||||
|
|
|
||||||
Total
|
$
|
|
$
|
|
Note 4
|
DISCONTINUED OPERATIONS
|
December 31, 2022
|
||||
Carrying amounts of assets associated with Helix Businesses included as part of discontinued operations:
|
||||
Cash and cash equivalents
|
$
|
|
||
Accounts receivable, net
|
|
|||
Prepaid expenses
|
|
|||
Current assets of discontinued operations
|
$
|
|
||
Property and equipment, net
|
$ |
|
||
Intangible assets, net
|
|
|||
Goodwill
|
|
|||
Right of use assets, net
|
|
|||
Deposits and other assets
|
|
|||
Non-current assets of discontinued operations
|
$
|
|
||
Carrying amounts of liabilities associated with Helix Businesses included as part of discontinued operations:
|
||||
Accounts payable
|
$
|
|
||
Accrued expenses
|
|
|||
Short-term operating lease liabilities
|
|
|||
Deferred revenues
|
|
|||
Current liabilities of discontinued operations
|
$
|
|
||
Long-term operating lease liabilities
|
|
|||
Non-current liabilities of discontinued operations
|
$
|
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
Income and expense line items related to Helix Businesses:
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Information and Software
|
$
|
|
$
|
|
$ | $ | ||||||||||
Services
|
|
|
||||||||||||||
Other
|
|
|
||||||||||||||
Total revenues
|
|
|
||||||||||||||
Costs and Expenses:
|
||||||||||||||||
Cost of revenues
|
|
|
||||||||||||||
Research and development
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Depreciation and amortization
|
|
|
||||||||||||||
Total costs and expenses
|
|
|
||||||||||||||
Loss from discontinued operations for Helix Businesses
|
|
(
|
)
|
( |
) | ( |
) | |||||||||
Other Income (Expense):
|
||||||||||||||||
Interest and investment income
|
|
(
|
)
|
( |
) | |||||||||||
Interest expense
|
|
|
( |
) | ||||||||||||
Foreign currency related gains, net
|
|
(
|
)
|
|||||||||||||
Total other income, net
|
|
(
|
)
|
|||||||||||||
Net loss from discontinued operations for Helix Businesses before income taxes
|
|
(
|
)
|
( |
) | ( |
) | |||||||||
Gain on sale of discontinued operations
|
|
|||||||||||||||
Income tax expense
|
(
|
)
|
|
( |
) | |||||||||||
Net gain (loss) from discontinued operations, net of tax for Helix Businesses
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | $ | ( |
) |
Note 5
|
MARKETABLE SECURITIES
|
September 30,
2023
|
December 31, 2022
|
|||||||
United States Treasury Bills
|
||||||||
Amortized Cost
|
$
|
|
$
|
|
||||
Fair Market Value
|
$
|
|
$
|
|
Note 6
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
Note 7
|
PROPERTY AND EQUIPMENT, NET
|
September 30,
2023
|
December 31, 2022
|
|||||||
Personal computing equipment
|
$
|
|
$
|
|
||||
Office equipment and capitalized software
|
|
|
||||||
Total
|
|
|
||||||
Less: Accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Property and equipment, net
|
$
|
|
$
|
|
Note 8
|
ACCRUED EXPENSES
|
September 30,
2023
|
December 31,
2022
|
|||||||
Employee compensation
|
$ | $ | ||||||
Income taxes payable | ||||||||
Accrued expenses
|
|
|
||||||
Total
|
$
|
|
$
|
|
Note 9
|
WARRANT LIABILITY
|
As of September 30, 2023
|
As of December 31, 2022 | |||||||
Fair value of Company's common stock
|
$
|
|
$ | |||||
Dividend yield
|
|
%
|
% | |||||
Expected volatility
|
|
%
|
% | |||||
Risk free interest rate
|
|
%
|
% | |||||
Expected life (years)
|
|
|||||||
Exercise price
|
$
|
|
$ | |||||
Fair value of financial instruments - warrants
|
$
|
|
$ |
Amount
|
||||
Balance as of January 1, 2023
|
$
|
|
||
Change in fair value of warrant liability
|
(
|
)
|
||
Balance as of September 30, 2023
|
$
|
|
Amount
|
||||
Balance as of January 1, 2022
|
$
|
|
||
Change in fair value of warrant liability
|
(
|
)
|
||
Balance as of September 30, 2022
|
$
|
|
Amount
|
||||
Balance as of July 1, 2023
|
$
|
|
||
Change in fair value of warrant liability
|
(
|
)
|
||
Balance as of September 30, 2023
|
$
|
|
Amount
|
||||
Balance as of July 1, 2022
|
$
|
|
||
Change in fair value of warrant liability
|
(
|
)
|
||
Balance as of September 30, 2022
|
$
|
|
Note 10
|
CONVERTIBLE NOTES
|
September 30, 2023
|
December 31, 2022
|
|||||||
Principal outstanding
|
$
|
|
$
|
|
||||
Add: accrued interest
|
|
|
||||||
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Convertible note payable, net of debt issuance costs
|
$
|
|
$
|
|
Note 11
|
STOCK-BASED COMPENSATION
|
Number of Restricted
Shares and Units
|
Weighted Average
Grant Date Fair
Value Per Share
|
|||||||
Unvested at January 1, 2022
|
|
$
|
|
|||||
Issued
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Canceled
|
(
|
)
|
|
|||||
Unvested at December 31, 2022
|
|
|
||||||
Issued
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Canceled
|
(
|
)
|
|
|||||
Unvested at September 30, 2023
|
|
$
|
|
September 30,
2023
|
December 31,
2022
|
|||||||
Exercise Price
|
$
|
|
$ | |||||
Fair value of Company common stock
|
$
|
|
$ | |||||
Dividend yield
|
|
|
||||||
Expected volatility
|
|
|||||||
Risk Free interest rate
|
|
|||||||
Expected life (years) remaining
|
|
Shares
Underlying
Options
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
(in years)
|
||||||||||
Outstanding at January 1, 2022
|
|
$
|
|
|
||||||||
Granted
|
|
$
|
|
|
||||||||
Exercised
|
(
|
)
|
$
|
|
|
|||||||
Forfeited and expired
|
(
|
)
|
$
|
|
|
|||||||
Outstanding at December 31, 2022
|
|
$
|
|
|
||||||||
Granted | $ | |||||||||||
Exercised | ( |
) | $ | |||||||||
Forfeited and expired | ( |
) | $ | |||||||||
Outstanding at September 30, 2023 | $ | |||||||||||
Vested options at September 30, 2023
|
|
$
|
|
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
Services
|
$
|
|
$
|
|
$ | $ | ||||||||||
Research and development
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
General and administrative
|
|
|
||||||||||||||
Separation expenses |
||||||||||||||||
Subtotal |
||||||||||||||||
Discontinued operations |
( |
) | ||||||||||||||
Total | $ | $ | $ | $ |
Note 12
|
NET INCOME (LOSS) PER SHARE
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net income (loss):
|
||||||||||||||||
Income (loss) from continuing operations
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||
Income (loss) from discontinued operations
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
Net Income (loss)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||
|
||||||||||||||||
Basic income (loss) from continuing operations per share attributable to common shareholders:
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||
Basic income (loss) from discontinued operations per share:
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
Net income (loss) per common share
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||
|
||||||||||||||||
Diluted net loss per share:
|
||||||||||||||||
Income (loss) from continuing operations
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Effect of assumed conversions:
|
||||||||||||||||
Add back: net expenses related to convertible notes
|
|
|
|
|
||||||||||||
Income from continuing operation after the effect of assumed conversions
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
||||||
|
||||||||||||||||
Income (loss) from discontinued operations
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
||||||||||||||||
Weighted average common shares outstanding - basic and diluted
|
|
|
|
|
||||||||||||
Plus: Dilutive effect of convertible notes - as if converted method
|
|
|
|
|
||||||||||||
Plus: Dilutive effect of restricted stock awards and stock options – treasury stock method
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding assuming dilution
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Diluted income (loss) from continuing operations per common share
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Diluted income (loss) from discontinued operations per common share
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||
Net income (loss) per common share
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
For the Three Months Ended
September 30,
|
For the Nine
Months Ended
September 30, |
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Potentially dilutive securities:
|
||||||||||||||||
Warrants
|
|
|
|
|
||||||||||||
Stock options
|
|
|
|
|
||||||||||||
Convertible notes
|
|
|
|
|
||||||||||||
Unvested Restricted Stock Awards and Units
|
|
|
|
|
||||||||||||
Total
|
|
|
|
|
Note 13
|
RELATED PARTY TRANSACTIONS
|
Note
14
|
SEGMENT
RESULTS
|
Note 15
|
LEASES
|
|
For the Nine
Months Ended September 30,
|
|||||||
|
2023
|
2022
|
||||||
Cash used in operating leases
|
$ | $ |
|
September 30,
2023
|
December 31,
2022
|
||||||
Right of use assets, net
|
$
|
|
$
|
|
||||
Short-term operating lease liabilities
|
$
|
|
$
|
|
||||
Long-term operating lease liabilities
|
|
|
||||||
Total lease liabilities
|
$
|
|
$
|
|
||||
Weighted average remaining lease term (in years)
|
|
|
||||||
Weighted average discount rate
|
|
|
|
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023 | 2022 | |||||||||||||
Operating lease expense
|
$
|
|
$
|
|
$ | $ | ||||||||||
Short-term lease expense |
||||||||||||||||
Total operating lease costs
|
$ | $ | $ | $ |
September 30, 2023
|
||||
2023 (remaining)
|
$
|
|
||
2024
|
|
|||
Total future minimum lease payments
|
$
|
|
||
Less imputed interest
|
(
|
)
|
||
Total
|
$
|
|
Note 16 |
COMMITMENTS AND CONTINGENCIES
|
September 30,
2023
|
||||
Year ending December 31, 2023
|
$
|
|
||
Year ending December 31, 2024
|
|
|||
Year ending December 31, 2025 | ||||
Year ending December 31, 2026 | ||||
$
|
|
Note 17
|
SUBSEQUENT EVENTS
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Revenues
|
$
|
5,348,469
|
$
|
4,310,694
|
$
|
15,112,398
|
$
|
11,448,468
|
||||||||
Costs and Expenses
|
||||||||||||||||
Cost of revenues
|
1,362,555
|
1,339,054
|
3,891,482
|
3,853,486
|
||||||||||||
Research and development
|
264,781
|
806,108
|
1,100,657
|
3,315,506
|
||||||||||||
Sales and marketing
|
1,313,212
|
1,080,660
|
3,746,731
|
2,904,358
|
||||||||||||
General and administrative
|
3,204,591
|
3,908,462
|
10,393,016
|
13,003,158
|
||||||||||||
Separation expenses
|
—
|
—
|
599,832
|
5,417,043
|
||||||||||||
Depreciation and amortization
|
10,598
|
16,916
|
64,285
|
48,599
|
||||||||||||
Operating loss from continuing operations
|
$
|
(807,268
|
)
|
$
|
(2,840,506
|
)
|
$
|
(4,683,605
|
)
|
$
|
(17,093,682
|
)
|
• |
Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that
are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period
may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and
intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed
to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.
|
• |
Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. We believe that excluding the
effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our Company’s operating performance because (i) the amount of such expenses in any specific period may not
directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with
acquisitions. Stock-based compensation expense includes certain separation expenses related to the vesting of stock options. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of
Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based
compensation expense for the three months ended March 31, 2023 includes $349,832 related to the accelerated vesting of stock. On March 2, 2022, we and the former chief executive officer and the former chief financial officer of Helix mutually
agreed not to renew special advisor agreements. Per the terms of the agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through March 2, 2023, and unvested stock options to
purchase 732,332 shares of common stock were forfeited. The advisors were not required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, we recorded $5,417,043 of stock compensation expenses during
March 2022 related to the options that vested through the twelve months ending March 2, 2023. We believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between
our Company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that
stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note
that such expenses will recur in the future.
|
• |
Interest Expense. Interest expense is associated with the convertible notes entered into on September 1, 2021 in the amount of $24,000,000 (the “Notes”). The Notes are due on
September 1, 2025 and accrue interest at an annual rate of 3.5%. We exclude interest expense from Adjusted EBITDA (i) because it is not directly attributable to the performance of our business operations and, accordingly, its exclusion
assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that
interest expense associated with the Notes will recur in future periods.
|
• |
Investment Income. Investment income is associated with the level of marketable debt securities and other interest-bearing accounts in which we invest. Interest and investment
income can vary over time due to a variety of financing transactions, changes in interest rates, cash used to fund operations and capital expenditures and acquisitions that we have entered into or may enter into in the future. We exclude
interest and investment income from Adjusted EBITDA (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making
period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income will recur in future periods.
|
• |
Other Items. We engage in other activities and transactions that can impact our net loss. In the periods being reported, these other items included (i) change in fair value of
warrant liability which related to warrants assumed in the acquisition of Helix; (ii) gain on sale of investment which relates to the sale of a minority equity interest; and (iii) gain on debt redemption which relates to a gain on the early
retirement of a portion of our convertible notes. We exclude these other items from Adjusted EBITDA because we believe these activities or transactions are not directly attributable to the performance of our business operations and,
accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that some of these other items may recur in future periods.
|
• |
Severance expenses. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the
resignation, the Company entered into a separation agreement providing for, among other things, (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656 unvested restricted shares of the Company common stock.
Severance expenses for the nine months ended September 30, 2023 includes $250,000 related to the salary continuation. We exclude these other items from Adjusted EBITDA because we believe these costs are not recurring and not directly
attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. In addition, the Company records normal course of
business severance expenses in the operating expense line item related to our employees’ activities.
|
• |
Income tax expense. We exclude the income tax expense from Adjusted EBITDA (i) because we believe that the income tax expense is not directly attributable to the underlying
performance of our business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to
companies with different tax attributes.
|
For the Three Months Ended September 30,
|
For the Nine Months Ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Revenue
|
$
|
5,348,469
|
$
|
4,310,694
|
$
|
15,112,398
|
$
|
11,448,468
|
||||||||
Net Income (loss) from continuing operations
|
5,453,643
|
(2,966,053
|
)
|
2,114,444
|
(17,291,885
|
)
|
||||||||||
Depreciation and amortization
|
10,598
|
16,916
|
64,285
|
48,599
|
||||||||||||
Stock based compensation expense
|
1,551,997
|
1,592,848
|
4,920,572
|
10,581,021
|
||||||||||||
Change in fair value of warrant liability
|
(1,594
|
)
|
(8,539
|
)
|
(4,088
|
)
|
(343,155
|
)
|
||||||||
Interest and investment income
|
(646,832
|
)
|
(88,972
|
)
|
(1,666,786
|
)
|
(111,683
|
)
|
||||||||
Interest expense
|
211,333
|
213,060
|
630,547
|
633,041
|
||||||||||||
Gain on sale of investment
|
(5,805,858
|
)
|
—
|
(5,805,858
|
)
|
—
|
||||||||||
Gain on debt redemption
|
(111,151
|
)
|
—
|
(111,151
|
)
|
—
|
||||||||||
Severance expense
|
—
|
—
|
250,000
|
—
|
||||||||||||
Income tax expense
|
93,191
|
10,000
|
159,287
|
20,000
|
||||||||||||
Adjusted EBITDA - continuing operations
|
$
|
755,327
|
$
|
(1,230,740
|
)
|
$
|
551,252
|
$
|
(6,464,062
|
)
|
For the Nine Months Ended September 30,
|
||||||||
2023
|
2022
|
|||||||
Net cash provided by (used in) operating activities - continuing operations
|
$
|
1,387,350
|
$
|
(6,775,497
|
)
|
|||
Net cash provided by (used in) investing activities - continuing operations
|
2,361,052
|
(6,356,478
|
)
|
|||||
Net cash used in financing activities - continuing operations
|
(1,107,991
|
)
|
(71,207
|
)
|
||||
Net increase in cash and cash equivalents - continuing operations
|
$
|
2,640,411
|
$
|
(13,203,182
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company’s Form S-4 (Reg. No. 333-250938) filed with the SEC on November 24, 2020, as amended on December 31, 2020,
January 19, 2021, February 1, 2021 and February 9, 2021).
|
|
Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Form S-4 (Reg. No. 333-250938) filed with the SEC on November 24, 2020, as amended on December 31, 2020, January 19, 2021,
February 1, 2021 and February 9, 2021).
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
* |
Filed with this Quarterly Report on Form 10‑Q.
|
FORIAN INC.
|
||
By:
|
/s/ Max Wygod
|
|
Max Wygod
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
By:
|
/s/ Michael Vesey
|
|
Michael Vesey
|
||
Chief Financial Officer
|
||
(Principal Financial Officer and Principal Accounting Officer)
|
Date: November 9, 2023
|
|
By: /s/ Max Wygod
|
|
Name: Max Wygod
|
|
Title: Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: November 9, 2023
|
By: /s/ Michael Vesey
|
Name: Michael Vesey
|
|
Title: Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Date: November 9, 2023
|
By: /s/ Max Wygod
|
Name: Max Wygod
|
|
Title: Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: November 9, 2023
|
|
By: /s/ Michael Vesey
|
|
Name: Michael Vesey
|
|
Title: Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Long-term liabilities: | ||
Convertible note payable, net of debt issuance costs | $ 24,665,944 | $ 25,106,547 |
Stockholders' equity: | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized (in shares) | 95,000,000 | 95,000,000 |
Common Stock, shares issued (in shares) | 32,488,811 | 32,251,326 |
Common Stock, shares outstanding (in shares) | 32,488,811 | 32,251,326 |
Related Party [Member] | ||
Long-term liabilities: | ||
Convertible note payable, net of debt issuance costs | $ 6,000,000 | $ 6,000,000 |
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS |
9 Months Ended | ||
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Sep. 30, 2023 | |||
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS [Abstract] | |||
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS |
Forian Inc. (the
“Company” or “Forian”) was incorporated in Delaware on October 15, 2020 as a wholly owned subsidiary of Medical Outcomes Research Analytics, LLC (“MOR”) for the purpose of effecting the business combination with Helix Technologies Inc.
(“Helix”). Forian provides a unique suite of data management capabilities and proprietary information and analytics solutions to optimize and measure operational, clinical and financial performance for customers within the healthcare and
related industries.
The business
combination with Helix was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations
(“ASC 805”), with the Company deemed the accounting acquirer for financial reporting purposes. Helix provides software and analytics solutions to state governments and licensed operators in the cannabis industry, primarily through its
subsidiary, Bio-Tech Medical Software, Inc. (“BioTrack”), until its sale of BioTrack in 2023.
On February 10,
2023, Helix completed the sale of 100% of the outstanding capital stock of BioTrack, on March 3, 2022, Helix completed the sale of
the assets of its security monitoring business, and on October 31, 2022, Helix completed the sale of 100% of the outstanding
membership interest of its Engeni LLC subsidiary (these businesses together are referred to as the “Helix Businesses”). As a result of these transactions, Helix has no remaining active operations and the Company no longer provides products or
services to the cannabis industry. The results of the Helix Businesses are presented as discontinued operations in the Condensed Consolidated Statements of Operations and, as such, have been excluded from continuing operations. Further, the
Company reclassified the assets and liabilities of the Helix Businesses to discontinued operations in the Consolidated Balance Sheet as of December 31, 2022. The Company will continue to provide analytics solutions to customers within the
healthcare and related industries. For further discussion on the discontinued operations, refer to Note 4.
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BASIS OF PRESENTATION |
9 Months Ended | ||
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Sep. 30, 2023 | |||
BASIS OF PRESENTATION [Abstract] | |||
BASIS OF PRESENTATION |
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”). Certain footnotes and other financial information normally required by U.S. GAAP have been condensed or omitted in accordance with instructions to Form 10-Q and Article 8 of Regulation S-X. In
the opinion of management, such statements include all adjustments which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2023. The operating results
presented herein are not necessarily an indication of the results that may be expected for the year. The condensed consolidated financial statements should be read in conjunction with the Company’s audited Consolidated Financial Statements
included in its Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Principles of Consolidation
The condensed consolidated financial statements of the Company include the accounts of (i) Medical Outcomes Research
Analytics, LLC and (ii) Helix Technologies, Inc. and its wholly owned subsidiaries including Helix TCS, LLC (through December 31, 2022), Security Consultants Group, LLC (through December 31, 2022), Helix Legacy, Inc. (f/k/a Security Grade
Protective Services, Ltd.), Bio-Tech Medical Software, Inc. (through February 10, 2023), and Engeni, LLC (including Engeni S.A. (“Engeni SA”), which is 99% owned by Engeni, LLC) (through October 31, 2022). Effective October 31, 2022, 100%
of the outstanding membership interest of Engeni, LLC held by Helix was sold. Effective December 31, 2022, (i) Security Consultants Group, LLC was merged with and into Helix TCS, LLC and (ii) Helix TCS, LLC was merged with and into Helix
Legacy, Inc. On February 10, 2023, 100% of the outstanding capital stock of Bio-Tech Medical Software, Inc. was sold. All
intercompany transactions have been eliminated in consolidation.
Discontinued Operations
On February 10, 2023, Helix completed the sale of 100% of the outstanding capital stock of its wholly owned subsidiary, BioTrack.
On March 3, 2022, the Company sold certain assets,
consisting of customer contracts, accounts receivable, and other property related to its security monitoring services. On October 31, 2022, the Company sold 100% of its outstanding membership interest of Engeni, LLC for a note with payments of up to $100,000 if certain conditions are met.
As the sale of BioTrack, the security monitoring
business and Engeni, LLC, together, represented a strategic shift that will have a major effect on the Company’s operations and financial results, they have been presented in discontinued operations separate from continuing operations for
the three and nine months ended September 30, 2023 and 2022, as applicable. The results from operations and gain (loss) on sale of the security monitoring business and Engeni LLC, net was previously classified as part of continuing
operations as their disposition individually did not have a major impact on the business prior to the sale of BioTrack. For further discussion, refer to Note 4.
Foreign Currency
ASC Topic 830-10, Foreign Currency Matters (“ASC 830-10”), requires the use of highly inflationary accounting when a country has experienced a cumulative inflation of approximately 100% or more over a 3-year period. Under
highly inflationary accounting, financial statements are remeasured into the reporting currency with resulting gains and losses included in earnings. The Company acquired a subsidiary as part of the Helix acquisition that operates in
Argentina, which has been designated a highly inflationary economy. Accordingly, the Company has remeasured the financial statements of the subsidiary under ASC 830-10 as if the US dollar is its functional currency with resulting gains or
losses recorded as other income or expense. The Company sold all of the assets of its operations in Argentina, Engeni LLC and Engeni SA, during October 2022. The financial results of the Company’s Argentina operations are included in
discontinued operations for the three and nine months ended September 30, 2022. During the three and nine months ended September 30, 2022, sales in
Argentina, which are included in discontinued operations, were less than 1% of the Company’s consolidated sales. The
hyperinflationary conditions did not have a material impact on the Company’s business during the three and nine months ended September 30, 2022.
Use of Estimates
Preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses together with amounts disclosed in related notes to the financial statements. The significant areas of
estimation include but are not limited to accounting for the allowance for doubtful accounts, income taxes, depreciation, amortization of intangible assets, contingencies, discontinued operations and stock-based compensation. Certain of the
Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that the external factors could have an effect on the Company’s estimates and could cause
actual results to differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior period financial
statements to conform to the current period financial statement presentation. Certain personnel, information licensing and data processing costs that were previously classified in research and development expenses when the Company’s
healthcare information business was in its start-up stage were reclassified to cost of revenues and general and administrative expenses in the condensed consolidated statements of operations.
Fair Value of Financial Instruments
The Company measures the fair value of financial assets
and liabilities based on the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. ASC 820
also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to
measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities;
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and
Level 3 — inputs that are unobservable.
The carrying value of the Company’s financial instruments, such as cash, marketable securities, accounts receivable and
accrued liabilities and other liabilities approximate fair values due to the short-term nature of these instruments. The estimated fair value of the Company’s warrant liabilities as of September 30, 2023 and December 31, 2022 was $459 and $4,547, respectively,
based on Level 3 inputs. Refer to Note 9.
Cash and Cash Equivalents and Credit Risk
The Company considers all cash accounts that are not subject to withdrawal
restrictions and highly liquid investments with a maturity of three months or less, when purchased, as cash and cash equivalents.
The Company maintains cash with major financial institutions. Cash held at
U.S. bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each
institution. The portion of deposits in excess of FDIC coverage is not protected by such insurance and represents a credit risk to the Company. At times, the Company’s deposits exceed this coverage.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced
amount, net of an allowance for doubtful accounts. The Company determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.
Outstanding account balances are reviewed individually
for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Allowance for doubtful accounts was $0 and $78,422 at September 30, 2023
and December 31, 2022, respectively.
Management charges account balances against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Proceeds Receivable From Sale of Discontinued Operations, Net
Proceeds from sale of discontinued operations consists of five remaining monthly payments due through February 10, 2024 resulting from the sale of BioTrack, aggregating $4,166,667, less an unamortized discount of $68,795. The Company recognized $96,164 and $341,205 of amortization of the $410,000 discount in interest
and investment income for the three and nine months ended September 30, 2023.
Long-Lived Assets, Including Definite Lived Intangible
Assets
Long-lived assets, other than goodwill and other indefinite-lived
intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
Definite-lived intangible assets primarily consist of customer relationships, software technology and trade names. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When
an impairment exists, the related assets are written down to fair value. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully
recoverable, or at least annually.
Goodwill
Goodwill consists of the excess of cost over the fair value of net assets
acquired in business combinations. Goodwill is not amortized. Instead, it is tested annually for impairment, or more frequently if events occur or circumstances change that would more likely than not reduce its fair value below its carrying
amount.
Goodwill is evaluated for impairment annually or whenever events or changes
in circumstances indicate the carrying value of goodwill may not be recoverable. The qualitative factors considered by Forian may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the
Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less
than its carrying amount. Otherwise, no further impairment testing is required. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair
value of a reporting unit is less than its carrying amount and to determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair
value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. An impairment charge is recognized when the fair value of the Company’s goodwill is less than its carrying amount. No impairment losses have been recognized during the periods presented.
All of the Company’s previously reported goodwill related to discontinued
operations and has been classified as non-current assets of discontinued operations at December 31, 2022. See Note 4 – Discontinued Operations.
Revenue Recognition
The Company recognizes revenue in accordance with
Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).
Under ASC 606, the Company recognizes revenue when (or
as) customers obtain control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model
prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in
the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. The Company applies the provisions of ASC 606 to an arrangement when a substantive contract exists, and collectability is probable.
The Company derives revenue primarily from license fees
for the Company’s information products. Information products contracts are generally for a period of one month to five years. Information products’ customers may access data analytics products through the use of tools provided by the Company or by utilizing
their own tools per the contract. Data products may consist of historical information as it exists at the time of delivery or information that will be updated over a period of time as agreed with the customer. In most cases, the provision of
information products is considered a single performance obligation. In cases where the Company is not obligated to update information over the access period, and control over the use of the products passes to the customer when delivered,
revenue is recognized when the information products are made available to the customer. In cases where information updates are provided over the contract term, they are considered highly interrelated with the information product delivered
upon contract inception, and revenue is recognized ratably over the life of the contract. Customers are generally invoiced according to monthly, quarterly or annual amounts specified in the contract. Any amounts invoiced in excess of revenue
recognized are recorded as deferred revenue. Revenue recognized in excess of amounts invoiced is recorded as a contract asset.
In some cases, contracts provide for variable
consideration that is contingent upon the occurrence of uncertain future events, which can either increase or decrease the transaction price, including sales of products by customers derived from data analytics products the Company provides.
Variable consideration based on sales of products by customers is recognized in the period of sales, subject to minimum amounts specified in contracts. Variable consideration is estimated at the expected value or at the most likely amount
depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the
variable consideration is resolved. The estimate of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information
(historical, current and forecasted) that is reasonably available to the Company and reevaluated each reporting period. The effect of revisions in recognized estimated variable consideration in excess of minimums are recorded beginning in the
period in which the estimates are revised. Actual results could differ from periodic estimates.
Significant judgments and estimates are sometimes
necessary for the determination of whether performance obligations in a contract are distinct and whether they are delivered at a point in time or over time. Judgement is also necessary to assess revenue recognized under contingent revenue
arrangements.
Contract acquisition costs, which consist of sales
commissions paid or payable, are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the
contract term.
During November 2020, the Company entered into a Master Services Agreement (the “November 2020 Agreement”) with a customer to provide
information services described in certain statements of work under the November 2020 Agreement. As part of the November 2020 Agreement, the Company was granted shares of restricted stock representing approximately 23.4% of the outstanding common stock of the customer at the time of issuance, vesting in quarterly increments specified in the November 2020
Agreement through December 2023. Concurrently, the Company entered into a Stockholders Agreement specifying its voting and other rights as a stockholder. As a result, the Company determined that it does not exert influence over the
customer. ASC 606-10-32-21 requires an entity to measure the fair value of noncash consideration at contract inception. The fair value of the restricted stock was determined to be $0 on the date of inception. The Company recorded revenue from the customer of $647,131, $1,953,382, $391,429, and $1,145,896 for the three and nine months
ended September 30, 2023 and 2022, respectively. The Company has outstanding accounts receivable from this customer of $678,405
and $469,786 at September 30, 2023 and December 31, 2022, respectively. See Note 17.
On July 21, 2023 the customer merged with Vox Merger Sub, Inc. As a result of the merger, Forian received $5,805,858 of cash proceeds, net of holdbacks, in consideration for all of its equity interest in the customer. Forian may receive additional earnout payments in 2025 and 2026 in an aggregate amount of up to approximately $3,600,000 if certain conditions are met. Contract assets and deferred revenues consist of the following as of September 30, 2023:
Transaction price allocated to remaining performance
obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. The majority of the Company’s noncurrent remaining
performance obligations will be recognized over the next 36 months.
The transaction price allocated to remaining performance
obligations consisted of the following:
Segment Information
FASB ASC 280, Segment Reporting
(“ASC 280”), establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer, who reviews the financial performance
and the results of operations of the segments prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company.
Customer Concentration
During the three months ended
September 30, 2023, the Company had two customers representing 12.1% and 11.5% of revenue. During the nine months
ended September 30, 2023, the Company had two customers representing 12.9% and 12.2% of revenue. At September 30, 2023
the Company had four customers representing 23.2%, 14.0%, 13.3%, and 10.9% of
accounts receivable.
During the three months ended
September 30, 2022, the Company had two customers representing 14.3% and 16.4% of revenue. During the nine months
ended September 30, 2022, the Company had three customers representing 15.2%, 10.6% and 10.0% of revenue. At December 31, 2022 the Company had three customers representing 25.9%, 14.8% and 14.6% of accounts receivable.
Concentration of Vendors
The Company licenses certain information assets from third parties as a key input to certain Information and Software products. Any disruptions associated with these suppliers could have a material short-term impact on the business
while alternate sources are secured.
Property and Equipment, Net
Property and equipment are stated at cost, net of
accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which are 1 to 7 years. Maintenance and
repairs are charged to operations as incurred.
The Company reviews for the impairment of long-lived assets annually and whenever events and or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Such indicators
include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. An impairment loss would be recognized when the value of the
undiscounted estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. There were no impairment losses recognized during the three and nine months ended September 30, 2023 and 2022.
Software Development Costs
The Company accounts for costs incurred in the development of computer software in accordance with ASC Subtopic 350-40, Intangibles – Goodwill and Other –
Internal-Use Software and ASC Subtopic 985-20, Software Costs of Software to be Sold, Leased
or Marketed. Product development costs are primarily related to Company personnel and contractors for design and evaluating software development,
testing, bug fixes, and other maintenance activities. Product development costs incurred in the application development stage for internal use software are subject to capitalization and subsequent amortization, and possible impairment.
The Company begins to capitalize these costs when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software
would be used as intended. Capitalization ceases upon completion of all substantial testing. Such costs are amortized when placed in service, on a straight-line basis over the estimated useful life of the related asset, generally
estimated to be three years. Product
development costs not pertaining to the application development stage are expensed as incurred.
Contingencies
Occasionally, the Company may be involved in claims
and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably
estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments
of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
Advertising
Advertising costs are expensed as incurred and included in sales and marketing expenses and amounted to $9,655, $45,075, $300 and $2,250 for the three and nine months ended September 30, 2023 and 2022, respectively.
Net Income (Loss) per Share
The calculation of earnings per share is based on
the weighted average number of ordinary shares or ordinary stock equivalents outstanding during the applicable period. The dilutive effect of ordinary stock equivalents is excluded from basic earnings per share and is included in the
calculation of diluted earnings per share, unless their impact is antidilutive to the “control number”, which is loss from continuing operations. Convertible notes, employee stock options, employee restricted stock awards and similar
equity instruments granted by the Company are treated as potential ordinary shares outstanding in computing diluted earnings per share. Diluted shares outstanding are calculated using the as if converted method for convertible notes and
the treasury stock method for other potentially dilutive securities. Under the as if converted method, the dilutive impact of securities is calculated as if conversion occurred at the beginning of the reporting period. Under the treasury
stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of benefits that would be recorded in ordinary shares
when the award becomes deductible for tax purposes are assumed to be used to repurchase shares.
Distinguishing Liabilities from Equity
The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”), to classify certain redeemable
and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily
redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.
Once the Company determines that a financial instrument should not be
classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary
equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
Initial Measurement
The Company records its financial instruments classified as liability,
temporary equity or permanent equity at issuance at the fair value, or cash received.
Subsequent Measurement – Financial instruments classified as liabilities
The Company records the fair value of its financial instruments
classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.
Stock-based Compensation
The Company’s 2020 Equity Incentive Plan (“2020
Plan”) permits the grant of stock options, restricted stock awards and/or restricted stock units. A total of 4,000,000 shares
of Company common stock were originally authorized and reserved for issuance under the 2020 Plan. On June 15, 2022, the Company’s stockholders approved an amendment to the 2020 Plan, which amended the 2020 Plan to increase the number of
shares available for issuance by 2,400,000 shares to a total of 6,400,000 shares. Stock options represent the right to purchase Company common stock at the exercise price on the date of grant of the stock option at a future date. Restricted
stock awards are grants of shares of Company common stock. Restricted stock units represent the right to receive shares of Company common stock on future specified dates. Stock options, restricted stock awards and restricted stock units
granted contain restrictions that cause them to be subject to substantial risk of forfeiture and restrict their exercise, sale or other transfer by the grantee until they vest. The terms of the stock options, restricted stock awards and
units granted under the 2020 Plan are determined by the Board of Directors in the agreement evidencing the award, including the number of shares, period of restriction or vesting schedule and other terms. The fair value of the stock
options, restricted stock awards and restricted stock units is based on the underlying grant date fair value of Company common stock. The fair value is then expensed over the requisite service periods of the awards, net of forfeitures,
which is generally the service period and the related amount is recognized in the condensed consolidated statements of operations.
Income Taxes
The Company accounts for income taxes in accordance
with FASB ASC 740 (“ASC 740”). Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The provision for income taxes represents Federal
and state and local income taxes. The effective rate differs from statutory rates due to the effect of state and local income taxes, tax benefit of R&D credits, and certain nondeductible expenses. Our effective tax rate will change
from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation and state and local income taxes. In addition, changes in judgment from the
evaluation of new information resulting in the recognition, derecognition, or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.
For the three and nine months ended September 30,
2023 and 2022, the Company recognized net income tax expense of $93,191, $159,287, $10,000 and $20,000, respectively. The Company claims R&D tax credits on eligible R&D expenditures. The R&D tax credits are recognized as a
reduction to income tax expense.
The Company recognized a taxable gain on sale of
discontinued operations during the for the nine months ended September 30, 2023 which resulted in utilization of certain available federal and state net operating loss carryforwards. As a result, the Company recorded income taxes related
to discontinued operations of $3,834,122 after utilization of federal and state net operating losses during the nine months
ended September 30, 2023. Income taxes related to discontinued operations for the three months ended September 30, 2023 result from adjustments to estimates impacting intraperiod tax allocations.
The Company files a consolidated U.S. income tax
return and tax returns in certain state and local jurisdictions. As of September 30, 2023, the Company is not subject to examination in any tax jurisdictions.
Tax contingencies are recorded, if needed, to
address potential exposure involving tax positions the Company has taken that could be challenged by tax authorities. These potential exposures could result from applications of various statutes, rules, regulations and interpretations.
Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision. The
Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.
On August 16, 2022, the Inflation Reduction Act of
2022 (the “IRA”) was enacted and signed into law. Regarded as the reduced version of the proposed Build Back Better Act, the IRA contains two main corporate income tax provisions, including a 15% minimum tax on the average annual adjusted financial statement income of corporations with profits over $1 billion over a three-year period, as well as a 1% excise tax on the corporate stock buybacks by domestic publicly traded corporations. The Company is currently evaluating the impact of the
IRA on its financial statements for tax year 2023 but does not expect a material impact to the Company’s tax position.
Separation Expenses
Effective February 10, 2023, the Company’s Chief Executive Officer,
President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656
unvested restricted shares of Company common stock. Separation expenses for the nine months ended September 30, 2023 include $250,000 related to the salary continuation and $349,832
related to the accelerated vesting of stock.
On March 2, 2022, the Company and two advisors agreed not to renew special advisor agreements between the advisors and the Company. The advisors were the former chief executive
officer and chief financial officer of Helix who were granted stock options in conjunction with their respective advisory agreements that were entered into upon the completion of the Helix acquisition. The Company and the advisors
mutually agreed not to renew the advisory agreements. The services provided by these advisors included transition planning and consulting services related to integration of the business operations of Helix and Forian. Per the terms of the
agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through
March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not
required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, the Company recorded $5,417,043
of stock compensation expense during March 2022 related to the options that vested through March 2, 2023.
In addition, the Company records normal course of business severance
expenses in the operating expense line item related to its employees’ activities.
Recent Accounting Pronouncements
In October 2021, the FASB issued Accounting Standards Update No.
2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The FASB issued ASU 2021-08 to improve the accounting for acquired revenue contracts
with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.
The amendment is effective for financial statements for interim and annual periods beginning after December 15, 2022. ASU 2021-08 was adopted on January 1, 2023. The adoption of ASU 2021-08 did not have a material impact on the condensed
consolidated financial statements.
The Company has considered all other recently issued accounting
pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.
|
DISCONTINUED OPERATIONS |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS |
Helix Businesses Discontinued Operations
On February 10, 2023, Helix completed the sale of 100% of the outstanding capital stock of its wholly owned subsidiary, BioTrack in exchange for $30.0
million, consisting of $20.0 million paid at closing and $10.0 million paid in twelve unconditional monthly installments thereafter. In
March 2022, Helix sold its security monitoring business and in October 2022, sold its Argentinian subsidiary Engeni LLC. The security monitoring business, BioTrack and Engeni are collectively referred to as the “Helix Businesses.” As a result of
these transactions, as of February 10, 2023, the Company no longer provides products or services to the cannabis industry. The Company continues to provide analytics solutions to customers in the healthcare and related industries.
The Company recognized a gain on sale of BioTrack of $11,531,849 and a loss from discontinued operations of $94,427
during the nine months ended September 30, 2023 which is included as part of discontinued operations. The Company also recorded income taxes related to discontinued operations of $1,111,552 and $3,834,122 during the three and nine months ended September 30,
2023, respectively.
The Company recorded a gain on the sale of assets related to its security monitoring business of $202,159 during the nine months ended September 30, 2022. The amount was reclassified to discontinued operations in 2023 as it was part of a strategic
shift which became significant to the Company’s operations upon the sale of BioTrack.
The following table summarizes the major classes of assets and liabilities of the Helix Businesses as
reported on the consolidated balance sheets as of December 31, 2022:
The following table summarizes the major income and expense line items of the Helix Businesses as
reported in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022:
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MARKETABLE SECURITIES |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES |
Marketable securities are stated at estimated fair value based upon current market quotes (level 1 inputs) and are classified as available-for-sale. Realized gains
and losses are included in investment income. Unrealized gains and losses are immaterial and therefore the Company has presented such amounts within investment income in the condensed consolidated statements of operations. The Company invests in short-term U.S. Treasuries and money market mutual funds. As of September 30, 2023 and December
31, 2022, marketable securities consisted of the following:
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS |
9 Months Ended | ||
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Sep. 30, 2023 | |||
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | |||
PREPAID EXPENSES AND OTHER CURRENT ASSETS |
The Company has various agreements which require upfront and periodic payments. The Company records the expenses related to these agreements ratably over the
annual terms. As of September 30, 2023 and December 31, 2022, the Company’s balance sheet reflected prepaid expenses of $870,328 and
$835,786, respectively, primarily relating to various software licenses and insurance policies with durations ranging from 3 months to 1 year.
Included in other current assets as of September 30, 2023 and December 31, 2022 are amounts receivable from employees totaling $258,422 and $432,338, respectively.
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PROPERTY AND EQUIPMENT, NET |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET |
As of September 30, 2023 and December 31, 2022, property and equipment were comprised of the following:
|
ACCRUED EXPENSES |
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ACCRUED EXPENSES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES |
As of September 30, 2023 and December 31, 2022, accrued expenses were comprised of the following:
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WARRANT LIABILITY |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANT LIABILITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANT LIABILITY |
In conjunction with the
business combination with Helix, outstanding warrants to purchase Helix common stock were converted to warrants to purchase Company common stock. As the warrant holders have the option to receive cash in lieu of common stock in certain
circumstances, the Company determined that the warrants require classification as a liability pursuant to ASC 815-40. In accordance with the applicable accounting guidance, the outstanding warrants are recognized as a warrant liability on the
condensed consolidated balance sheet and were measured at their inception date fair value (the closing date of the business combination with Helix) and subsequently re-measured at each reporting period with changes being recorded in the
condensed consolidated statements of operations. As of September 30, 2023 and 2022, the Company had 55,121 and 92,058 warrants outstanding classified as liabilities, respectively. During the nine months ended September 30, 2023, 46,935 warrants expired.
The fair value of the Company’s warrant liability, measured at Level 3 in the
fair value hierarchy, was calculated using the Black-Scholes model using the following inputs:
The change in fair value of the Company’s financial instruments – warrants,
measured at Level 3 in the fair value hierarchy, was calculated using the Black-Scholes model and the following inputs:
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CONVERTIBLE NOTES |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES |
On September 1,
2021, the Company entered into a Note Purchase Agreement with certain accredited investors and a director of the Company, pursuant to which the Company issued at 100% of par value $24,000,000 in aggregate principal balance of 3.5% Convertible Promissory Notes due September 1, 2025 (the “Notes”), convertible into (i) shares of Company common stock, and (ii) warrants to
purchase shares of Company common stock equal to 20% of the principal amount of the Notes divided by the conversion price of the Notes
(the “Warrants”). The Notes will mature on the fourth-year anniversary of the date of issuance, which time is also the termination date of the Warrants if issued. The conversion price of the Notes and the exercise price of the Warrants is $11.98 per share, which was the consolidated closing bid price of the Company common stock as reported by Nasdaq on August 31, 2021, the most recently
completed trading day preceding the Company entering into the Note Purchase Agreement with investors with respect to the Notes. The holders of the Notes may, at any time, convert all or a portion of the Notes plus accrued interest (subject to a
minimum principal amount of $100,000) at the conversion price. The Company may redeem all or a portion of any Notes then outstanding at
any time after the first anniversary of issuance at a price of 112.5% of par value plus accrued interest. In the event of a change of
control of the Company, the Company may redeem all Notes then outstanding at a price of 108% of par value plus accrued interest.
Interest expense on the Notes is payable upon maturity or earlier redemption unless the Notes are converted prior to such time. In the event the holders of the Note convert all or a portion of the Notes, the related accrued interest is converted
at the conversion price. Interest expense related to the Notes was $210,000, $626,548, $211,726 and $629,041 for the three and nine months ended September 30, 2023 and 2022, respectively.
The Company evaluated the embedded features in accordance with ASC 815-15-25 and
determined embedded features are all clearly and closely related to the debt host instrument and therefore are not required to be bifurcated and separately measured at fair value. The Warrants were not issued in connection with the Notes, and
issuance of the Warrants is contingent upon conversion of the Notes at the option of the Holder, therefore no portion of the proceeds are allocated to the Warrants.
The Company incurred debt issuance costs associated with the Notes in the amount
of $21,330, which were deferred and are being amortized over the term of the Notes. During the three and nine months ended September 30,
2023 and 2022, the Company recognized $1,333, $3,999, $1,333 and $3,999 in amortization of debt issuance costs, respectively.
On September 12, 2023, the Company redeemed $1,000,000 in principal and $71,151 of
accrued interest thereon for an aggregate redemption price of $960,000 resulting in a gain of $111,151, which is included in other income and expense.
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STOCK-BASED COMPENSATION |
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STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION |
Restricted Stock Awards and Restricted Stock Units
The table below includes issuances of restricted stock awards and units under
the 2020 Plan and unvested equity interests of MOR which were converted into restricted Company common stock.
The 820,480 of unvested awards at September 30, 2023 consisted of 93,482 restricted stock units and 726,998 shares of restricted stock.
Stock Options
As part of the business combination with Helix, the Company assumed the Helix
TCS, Inc. Omnibus Stock Incentive Plan and the Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan, each as amended, pursuant to which options exercisable at prices between $2.00 and $51.80 per share for 455,089 shares of Company common stock were outstanding. The value attributable to service subsequent to the business combination is recognized as compensation cost by the
Company.
The fair value of the stock options was estimated at Level 3 in the fair value
hierarchy using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s
judgement. The
assumptions used to calculate the grant date fair value of the options outstanding at September 30, 2023 and December 31, 2022 are as follows:
Stock option activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 is as
follows:
The weighted average exercise price and remaining contractual life of exercisable options as of September 30, 2023
is $7.27 and 8.31
years, respectively. The total aggregate intrinsic value of the exercisable options as of September 30, 2023 was approximately $19,461.
Stock Compensation Expense
The weighted-average grant date fair value per share for the stock options granted was $3.24 and $3.66 for the nine months
ended September 30, 2023 and 2022, respectively.
On February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the
Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based compensation expense for the nine months ended September 30, 2023 includes $349,832 related to the accelerated vesting of stock.
On March 2, 2022, the Company and the former chief executive officer and the
former chief financial officer of Helix mutually agreed not to renew special advisor agreements between the advisors and the Company. Per the terms of the agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result,
the Company recorded $5,417,043 of stock compensation expense during March 2022 related to the options that vested through March 2,
2023.
At September 30, 2023, the total unrecognized stock compensation expense related
to unvested stock option awards and restricted stock awards and restricted stock units granted was $12,255,487, which the Company
expects to recognize over a weighted-average period of approximately 2.93 years. Stock compensation expense for the three and nine months ended September
30, 2023 and 2022 is as follows:
Total intrinsic value of options exercised during the period ended September
30, 2023 was $74. The total fair value of restricted shares vested during the period ended September 30, 2023 was $100,640.
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NET INCOME (LOSS) PER SHARE |
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NET INCOME (LOSS) PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE |
The following table sets forth the computation of the basic and diluted net income (loss) per share:
The following table sets forth all outstanding potentially
dilutive securities at September 30, 2023 and 2022, which were not included in the calculation of diluted earnings per share because their impact would have been antidilutive.
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RELATED PARTY TRANSACTIONS |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
RELATED PARTY TRANSACTIONS [Abstract] | |||
RELATED PARTY TRANSACTIONS |
Adam Dublin, the Company’s
Chief Strategy Officer, was previously a consultant for a current vendor of the Company. Mr. Dublin’s consultancy with the vendor ended on December 11, 2020, and the parties agreed not to renew the consulting agreement. Pursuant to Mr.
Dublin’s consulting agreement with the vendor, Mr. Dublin received payments from the vendor for the three and nine months ended
September 30, 2023 and 2022 of $28,215, $204,297, $50,813 and $285,448, respectively.
On September 1, 2021, the Company issued at 100% of par value $24,000,000 in aggregate principal balance of 3.5%
Convertible Promissory Notes due 2025 convertible into (i) shares of Company common stock and (ii) warrants to purchase shares of Company common stock equal to 20% of the principal amount of the Notes divided by the conversion price to a select group of institutional and accredited investors, which included a director of the Company who holds $6,000,000 of the Notes. See Note 10 for additional information.
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SEGMENT RESULTS |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
SEGMENT RESULTS [Abstract] | |||
SEGMENT RESULTS |
The Company provides innovative solutions,
proprietary data and predictive analytics to optimize the operational, clinical and financial performance of its customers.
ASC 280 requires that public companies report
profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess
performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer. The CODM evaluates financial performance based on revenues and operating income.
As discussed above, the Company disposed of its businesses servicing the cannabis industry in 2023, and has reclassified
their historical results as discontinued operations. As such, the Company’s continuing operations are comprised of a reportable
segment providing analytic and information services to the healthcare and related industries.
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LEASES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
Operating Leases
The Company accounts for leases in accordance with ASC Topic 842, Leases (“ASC 842”). All contracts are
evaluated to determine whether or not they represent a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has operating leases primarily consisting of
facilities with remaining lease terms of 1-5 years. The lease term represents the period up to the early termination date unless it is reasonably certain that the Company will not exercise the early termination option. Certain leases include rental payments that are
adjusted periodically based on changes in consumer price and other indices.
Leases are classified
as finance or operating in accordance with the guidance in ASC 842. The Company does not hold any finance leases.
The Company is obligated under two
short-term leases related to offices in Pennsylvania and Massachusetts. These short-term leases are currently leased on a month-to-month basis. A short-term lease is a lease with a term of 12 months or less and does not include the option to
purchase the underlying asset that we would expect to exercise. The Company has elected to adopt the short-term lease exemption in ASC 842 and as such has not recognized a “right of use” asset or lease liability for these short-term leases.
The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore an internal incremental borrowing rate is determined
based on information available at lease commencement date for purposes of determining the present value of lease payments.
Supplemental cash flow information and non-cash activity related to leases for the nine months ended September 30, 2023 and 2022 are as follows:
ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows:
The components of lease
expense were as follows for each of the periods presented, which are included in operating expenses in the condensed consolidated statements of operations:
Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of September 30, 2023, were as follows:
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COMMITMENTS AND CONTINGENCIES |
9 Months Ended | ||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES |
Service and License Agreements
The Company
entered into certain service and license agreements that provide for future minimum payments. The terms of these agreements vary in length. The following table shows the remaining payment obligations under these agreements as of
September 30, 2023:
Legal Proceedings
From time to
time the Company may be involved in claims that arise during the ordinary course of business. For any matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss
can be reasonably estimated, the Company records reserves in the condensed consolidated financial statements based on its best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or
the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any. Regardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business
matters and initiatives, negatively impacting the Company’s overall operations. Although the results of litigation and claims cannot be predicted with certainty, the Company does not currently have any pending litigation to which it is a
party or to which its property is subject that we believe to be material, except for the below.
Audet v. Green Tree International, et. al. On February 14,
2020, John Audet filed a complaint in 15th Judicial Circuit in and for Palm Beach County, Florida against multiple parties, including Green Tree International (“GTI”), an indirect subsidiary of the Company, claiming that he owned 10%
of GTI. The complaint seeks unspecified monetary damages equivalent to the value a 10% shareholder of GTI would have received in the subsequent Helix and Forian transactions, along with an equitable accounting and constructive trust to determine if Audet suffered any loss
of profit distributions. The case is in the process of discovery and trial is currently anticipated to occur between January and March of 2024. Each of the
parties’ motions for summary judgment were denied. The Company believes the lawsuit is wholly without merit and intends to defend vigorously against the claims in the lawsuit.
Grant Whitus et al. v. Forian Inc., Zachary Venegas and Scott Ogur
On July 30, 2021, four
former Helix employees filed a lawsuit in the Arapahoe County, Colorado District Court against the Company and Helix’s former managers asserting claims of breach of contract, promissory estoppel, breach of the covenant of good faith and
fair dealing, civil theft and conversion, fraudulent misrepresentation, civil conspiracy, and unjust enrichment/quantum meruit, all relating to the plaintiffs’ claims that they were promised equity interest in Helix or compensation that
they never received. The original complaint was never served, and in November 2021 the plaintiffs filed and served an amended complaint adding a fifth plaintiff, and seeking over $27.5 million in damages as well as attorneys’ fees and costs. The Company removed the
matter to the United States District Court for the District of Colorado in December 2021, and both the Company and the individual defendants filed
motions to dismiss on January 20, 2022. Plaintiffs subsequently
amended their complaint on April 21, 2022, adding Helix TCS LLC and
Helix Technologies, Inc. as defendants and advancing additional claims for breach of fiduciary duty and violation of the Colorado Wage Claims Act. The Company and the individual defendants filed separate motions to dismiss on June 1, 2022, which were granted in part and denied in part by the Court on February 28, 2023. Plaintiffs supplemented their complaint on March 3, 2023, consistent with the Court’s ruling. Discovery has been completed, and
dispositive motions are currently due in December 2023. The Company believes the lawsuit is wholly without merit and intends to defend vigorously against
the claims in the lawsuit.
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SUBSEQUENT EVENTS |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
SUBSEQUENT EVENTS [Abstract] | |||
SUBSEQUENT EVENTS |
On
October 3, 2023, the Company repurchased 1,604,676 shares of its common stock from a group of affiliated investors in a
privately negotiated transaction at a redemption price of $2.15 per share for an aggregate purchase price of $3,450,053. The shares were cancelled and retired and returned to authorized and unissued shares.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation |
Principles of Consolidation
The condensed consolidated financial statements of the Company include the accounts of (i) Medical Outcomes Research
Analytics, LLC and (ii) Helix Technologies, Inc. and its wholly owned subsidiaries including Helix TCS, LLC (through December 31, 2022), Security Consultants Group, LLC (through December 31, 2022), Helix Legacy, Inc. (f/k/a Security Grade
Protective Services, Ltd.), Bio-Tech Medical Software, Inc. (through February 10, 2023), and Engeni, LLC (including Engeni S.A. (“Engeni SA”), which is 99% owned by Engeni, LLC) (through October 31, 2022). Effective October 31, 2022, 100%
of the outstanding membership interest of Engeni, LLC held by Helix was sold. Effective December 31, 2022, (i) Security Consultants Group, LLC was merged with and into Helix TCS, LLC and (ii) Helix TCS, LLC was merged with and into Helix
Legacy, Inc. On February 10, 2023, 100% of the outstanding capital stock of Bio-Tech Medical Software, Inc. was sold. All
intercompany transactions have been eliminated in consolidation.
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Discontinued Operations |
Discontinued Operations
On February 10, 2023, Helix completed the sale of 100% of the outstanding capital stock of its wholly owned subsidiary, BioTrack.
On March 3, 2022, the Company sold certain assets,
consisting of customer contracts, accounts receivable, and other property related to its security monitoring services. On October 31, 2022, the Company sold 100% of its outstanding membership interest of Engeni, LLC for a note with payments of up to $100,000 if certain conditions are met.
As the sale of BioTrack, the security monitoring
business and Engeni, LLC, together, represented a strategic shift that will have a major effect on the Company’s operations and financial results, they have been presented in discontinued operations separate from continuing operations for
the three and nine months ended September 30, 2023 and 2022, as applicable. The results from operations and gain (loss) on sale of the security monitoring business and Engeni LLC, net was previously classified as part of continuing
operations as their disposition individually did not have a major impact on the business prior to the sale of BioTrack. For further discussion, refer to Note 4.
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Foreign Currency |
Foreign Currency
ASC Topic 830-10, Foreign Currency Matters (“ASC 830-10”), requires the use of highly inflationary accounting when a country has experienced a cumulative inflation of approximately 100% or more over a 3-year period. Under
highly inflationary accounting, financial statements are remeasured into the reporting currency with resulting gains and losses included in earnings. The Company acquired a subsidiary as part of the Helix acquisition that operates in
Argentina, which has been designated a highly inflationary economy. Accordingly, the Company has remeasured the financial statements of the subsidiary under ASC 830-10 as if the US dollar is its functional currency with resulting gains or
losses recorded as other income or expense. The Company sold all of the assets of its operations in Argentina, Engeni LLC and Engeni SA, during October 2022. The financial results of the Company’s Argentina operations are included in
discontinued operations for the three and nine months ended September 30, 2022. During the three and nine months ended September 30, 2022, sales in
Argentina, which are included in discontinued operations, were less than 1% of the Company’s consolidated sales. The
hyperinflationary conditions did not have a material impact on the Company’s business during the three and nine months ended September 30, 2022.
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Use of Estimates |
Use of Estimates
Preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses together with amounts disclosed in related notes to the financial statements. The significant areas of
estimation include but are not limited to accounting for the allowance for doubtful accounts, income taxes, depreciation, amortization of intangible assets, contingencies, discontinued operations and stock-based compensation. Certain of the
Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that the external factors could have an effect on the Company’s estimates and could cause
actual results to differ from those estimates.
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Reclassifications |
Reclassifications
Certain reclassifications have been made to the prior period financial
statements to conform to the current period financial statement presentation. Certain personnel, information licensing and data processing costs that were previously classified in research and development expenses when the Company’s
healthcare information business was in its start-up stage were reclassified to cost of revenues and general and administrative expenses in the condensed consolidated statements of operations.
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Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The Company measures the fair value of financial assets
and liabilities based on the guidance of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that
would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. ASC 820
also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to
measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities;
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and
Level 3 — inputs that are unobservable.
The carrying value of the Company’s financial instruments, such as cash, marketable securities, accounts receivable and
accrued liabilities and other liabilities approximate fair values due to the short-term nature of these instruments. The estimated fair value of the Company’s warrant liabilities as of September 30, 2023 and December 31, 2022 was $459 and $4,547, respectively,
based on Level 3 inputs. Refer to Note 9.
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Cash and Cash Equivalents and Credit Risk |
Cash and Cash Equivalents and Credit Risk
The Company considers all cash accounts that are not subject to withdrawal
restrictions and highly liquid investments with a maturity of three months or less, when purchased, as cash and cash equivalents.
The Company maintains cash with major financial institutions. Cash held at
U.S. bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each
institution. The portion of deposits in excess of FDIC coverage is not protected by such insurance and represents a credit risk to the Company. At times, the Company’s deposits exceed this coverage.
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Accounts Receivable and Allowance for Doubtful Accounts |
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced
amount, net of an allowance for doubtful accounts. The Company determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.
Outstanding account balances are reviewed individually
for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Allowance for doubtful accounts was $0 and $78,422 at September 30, 2023
and December 31, 2022, respectively.
Management charges account balances against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
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Proceeds Receivable from Sale of Discontinued Operations, Net |
Proceeds Receivable From Sale of Discontinued Operations, Net
Proceeds from sale of discontinued operations consists of five remaining monthly payments due through February 10, 2024 resulting from the sale of BioTrack, aggregating $4,166,667, less an unamortized discount of $68,795. The Company recognized $96,164 and $341,205 of amortization of the $410,000 discount in interest
and investment income for the three and nine months ended September 30, 2023.
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Long-Lived Assets, Including Definite Lived Intangible Assets |
Long-Lived Assets, Including Definite Lived Intangible
Assets
Long-lived assets, other than goodwill and other indefinite-lived
intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
Definite-lived intangible assets primarily consist of customer relationships, software technology and trade names. The Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When
an impairment exists, the related assets are written down to fair value. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully
recoverable, or at least annually.
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Goodwill |
Goodwill
Goodwill consists of the excess of cost over the fair value of net assets
acquired in business combinations. Goodwill is not amortized. Instead, it is tested annually for impairment, or more frequently if events occur or circumstances change that would more likely than not reduce its fair value below its carrying
amount.
Goodwill is evaluated for impairment annually or whenever events or changes
in circumstances indicate the carrying value of goodwill may not be recoverable. The qualitative factors considered by Forian may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the
Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less
than its carrying amount. Otherwise, no further impairment testing is required. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair
value of a reporting unit is less than its carrying amount and to determine whether further action is needed. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair
value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary. An impairment charge is recognized when the fair value of the Company’s goodwill is less than its carrying amount. No impairment losses have been recognized during the periods presented.
All of the Company’s previously reported goodwill related to discontinued
operations and has been classified as non-current assets of discontinued operations at December 31, 2022. See Note 4 – Discontinued Operations.
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Revenue Recognition |
Revenue Recognition
The Company recognizes revenue in accordance with
Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).
Under ASC 606, the Company recognizes revenue when (or
as) customers obtain control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model
prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in
the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. The Company applies the provisions of ASC 606 to an arrangement when a substantive contract exists, and collectability is probable.
The Company derives revenue primarily from license fees
for the Company’s information products. Information products contracts are generally for a period of one month to five years. Information products’ customers may access data analytics products through the use of tools provided by the Company or by utilizing
their own tools per the contract. Data products may consist of historical information as it exists at the time of delivery or information that will be updated over a period of time as agreed with the customer. In most cases, the provision of
information products is considered a single performance obligation. In cases where the Company is not obligated to update information over the access period, and control over the use of the products passes to the customer when delivered,
revenue is recognized when the information products are made available to the customer. In cases where information updates are provided over the contract term, they are considered highly interrelated with the information product delivered
upon contract inception, and revenue is recognized ratably over the life of the contract. Customers are generally invoiced according to monthly, quarterly or annual amounts specified in the contract. Any amounts invoiced in excess of revenue
recognized are recorded as deferred revenue. Revenue recognized in excess of amounts invoiced is recorded as a contract asset.
In some cases, contracts provide for variable
consideration that is contingent upon the occurrence of uncertain future events, which can either increase or decrease the transaction price, including sales of products by customers derived from data analytics products the Company provides.
Variable consideration based on sales of products by customers is recognized in the period of sales, subject to minimum amounts specified in contracts. Variable consideration is estimated at the expected value or at the most likely amount
depending on the type of consideration. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the
variable consideration is resolved. The estimate of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information
(historical, current and forecasted) that is reasonably available to the Company and reevaluated each reporting period. The effect of revisions in recognized estimated variable consideration in excess of minimums are recorded beginning in the
period in which the estimates are revised. Actual results could differ from periodic estimates.
Significant judgments and estimates are sometimes
necessary for the determination of whether performance obligations in a contract are distinct and whether they are delivered at a point in time or over time. Judgement is also necessary to assess revenue recognized under contingent revenue
arrangements.
Contract acquisition costs, which consist of sales
commissions paid or payable, are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the
contract term.
During November 2020, the Company entered into a Master Services Agreement (the “November 2020 Agreement”) with a customer to provide
information services described in certain statements of work under the November 2020 Agreement. As part of the November 2020 Agreement, the Company was granted shares of restricted stock representing approximately 23.4% of the outstanding common stock of the customer at the time of issuance, vesting in quarterly increments specified in the November 2020
Agreement through December 2023. Concurrently, the Company entered into a Stockholders Agreement specifying its voting and other rights as a stockholder. As a result, the Company determined that it does not exert influence over the
customer. ASC 606-10-32-21 requires an entity to measure the fair value of noncash consideration at contract inception. The fair value of the restricted stock was determined to be $0 on the date of inception. The Company recorded revenue from the customer of $647,131, $1,953,382, $391,429, and $1,145,896 for the three and nine months
ended September 30, 2023 and 2022, respectively. The Company has outstanding accounts receivable from this customer of $678,405
and $469,786 at September 30, 2023 and December 31, 2022, respectively. See Note 17.
On July 21, 2023 the customer merged with Vox Merger Sub, Inc. As a result of the merger, Forian received $5,805,858 of cash proceeds, net of holdbacks, in consideration for all of its equity interest in the customer. Forian may receive additional earnout payments in 2025 and 2026 in an aggregate amount of up to approximately $3,600,000 if certain conditions are met. Contract assets and deferred revenues consist of the following as of September 30, 2023:
Transaction price allocated to remaining performance
obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. The majority of the Company’s noncurrent remaining
performance obligations will be recognized over the next 36 months.
The transaction price allocated to remaining performance
obligations consisted of the following:
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Segment Information |
Segment Information
FASB ASC 280, Segment Reporting
(“ASC 280”), establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer, who reviews the financial performance
and the results of operations of the segments prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company.
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Customer Concentration |
Customer Concentration
During the three months ended
September 30, 2023, the Company had two customers representing 12.1% and 11.5% of revenue. During the nine months
ended September 30, 2023, the Company had two customers representing 12.9% and 12.2% of revenue. At September 30, 2023
the Company had four customers representing 23.2%, 14.0%, 13.3%, and 10.9% of
accounts receivable.
During the three months ended
September 30, 2022, the Company had two customers representing 14.3% and 16.4% of revenue. During the nine months
ended September 30, 2022, the Company had three customers representing 15.2%, 10.6% and 10.0% of revenue. At December 31, 2022 the Company had three customers representing 25.9%, 14.8% and 14.6% of accounts receivable.
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Concentration of Vendors |
Concentration of Vendors
The Company licenses certain information assets from third parties as a key input to certain Information and Software products. Any disruptions associated with these suppliers could have a material short-term impact on the business
while alternate sources are secured.
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Property and Equipment, Net |
Property and Equipment, Net
Property and equipment are stated at cost, net of
accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which are 1 to 7 years. Maintenance and
repairs are charged to operations as incurred.
The Company reviews for the impairment of long-lived assets annually and whenever events and or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Such indicators
include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. An impairment loss would be recognized when the value of the
undiscounted estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. There were no impairment losses recognized during the three and nine months ended September 30, 2023 and 2022.
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Software Development Costs |
Software Development Costs
The Company accounts for costs incurred in the development of computer software in accordance with ASC Subtopic 350-40, Intangibles – Goodwill and Other –
Internal-Use Software and ASC Subtopic 985-20, Software Costs of Software to be Sold, Leased
or Marketed. Product development costs are primarily related to Company personnel and contractors for design and evaluating software development,
testing, bug fixes, and other maintenance activities. Product development costs incurred in the application development stage for internal use software are subject to capitalization and subsequent amortization, and possible impairment.
The Company begins to capitalize these costs when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software
would be used as intended. Capitalization ceases upon completion of all substantial testing. Such costs are amortized when placed in service, on a straight-line basis over the estimated useful life of the related asset, generally
estimated to be three years. Product
development costs not pertaining to the application development stage are expensed as incurred.
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Contingencies |
Contingencies
Occasionally, the Company may be involved in claims
and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably
estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments
of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
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Advertising |
Advertising
Advertising costs are expensed as incurred and included in sales and marketing expenses and amounted to $9,655, $45,075, $300 and $2,250 for the three and nine months ended September 30, 2023 and 2022, respectively.
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Net Income (Loss) per Share |
Net Income (Loss) per Share
The calculation of earnings per share is based on
the weighted average number of ordinary shares or ordinary stock equivalents outstanding during the applicable period. The dilutive effect of ordinary stock equivalents is excluded from basic earnings per share and is included in the
calculation of diluted earnings per share, unless their impact is antidilutive to the “control number”, which is loss from continuing operations. Convertible notes, employee stock options, employee restricted stock awards and similar
equity instruments granted by the Company are treated as potential ordinary shares outstanding in computing diluted earnings per share. Diluted shares outstanding are calculated using the as if converted method for convertible notes and
the treasury stock method for other potentially dilutive securities. Under the as if converted method, the dilutive impact of securities is calculated as if conversion occurred at the beginning of the reporting period. Under the treasury
stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of benefits that would be recorded in ordinary shares
when the award becomes deductible for tax purposes are assumed to be used to repurchase shares.
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Distinguishing Liabilities from Equity |
Distinguishing Liabilities from Equity
The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”), to classify certain redeemable
and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily
redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.
Once the Company determines that a financial instrument should not be
classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary
equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
Initial Measurement
The Company records its financial instruments classified as liability,
temporary equity or permanent equity at issuance at the fair value, or cash received.
Subsequent Measurement – Financial instruments classified as liabilities
The Company records the fair value of its financial instruments
classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.
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Stock-based Compensation |
Stock-based Compensation
The Company’s 2020 Equity Incentive Plan (“2020
Plan”) permits the grant of stock options, restricted stock awards and/or restricted stock units. A total of 4,000,000 shares
of Company common stock were originally authorized and reserved for issuance under the 2020 Plan. On June 15, 2022, the Company’s stockholders approved an amendment to the 2020 Plan, which amended the 2020 Plan to increase the number of
shares available for issuance by 2,400,000 shares to a total of 6,400,000 shares. Stock options represent the right to purchase Company common stock at the exercise price on the date of grant of the stock option at a future date. Restricted
stock awards are grants of shares of Company common stock. Restricted stock units represent the right to receive shares of Company common stock on future specified dates. Stock options, restricted stock awards and restricted stock units
granted contain restrictions that cause them to be subject to substantial risk of forfeiture and restrict their exercise, sale or other transfer by the grantee until they vest. The terms of the stock options, restricted stock awards and
units granted under the 2020 Plan are determined by the Board of Directors in the agreement evidencing the award, including the number of shares, period of restriction or vesting schedule and other terms. The fair value of the stock
options, restricted stock awards and restricted stock units is based on the underlying grant date fair value of Company common stock. The fair value is then expensed over the requisite service periods of the awards, net of forfeitures,
which is generally the service period and the related amount is recognized in the condensed consolidated statements of operations.
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Income Taxes |
Income Taxes
The Company accounts for income taxes in accordance
with FASB ASC 740 (“ASC 740”). Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The provision for income taxes represents Federal
and state and local income taxes. The effective rate differs from statutory rates due to the effect of state and local income taxes, tax benefit of R&D credits, and certain nondeductible expenses. Our effective tax rate will change
from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation and state and local income taxes. In addition, changes in judgment from the
evaluation of new information resulting in the recognition, derecognition, or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.
For the three and nine months ended September 30,
2023 and 2022, the Company recognized net income tax expense of $93,191, $159,287, $10,000 and $20,000, respectively. The Company claims R&D tax credits on eligible R&D expenditures. The R&D tax credits are recognized as a
reduction to income tax expense.
The Company recognized a taxable gain on sale of
discontinued operations during the for the nine months ended September 30, 2023 which resulted in utilization of certain available federal and state net operating loss carryforwards. As a result, the Company recorded income taxes related
to discontinued operations of $3,834,122 after utilization of federal and state net operating losses during the nine months
ended September 30, 2023. Income taxes related to discontinued operations for the three months ended September 30, 2023 result from adjustments to estimates impacting intraperiod tax allocations.
The Company files a consolidated U.S. income tax
return and tax returns in certain state and local jurisdictions. As of September 30, 2023, the Company is not subject to examination in any tax jurisdictions.
Tax contingencies are recorded, if needed, to
address potential exposure involving tax positions the Company has taken that could be challenged by tax authorities. These potential exposures could result from applications of various statutes, rules, regulations and interpretations.
Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision. The
Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.
On August 16, 2022, the Inflation Reduction Act of
2022 (the “IRA”) was enacted and signed into law. Regarded as the reduced version of the proposed Build Back Better Act, the IRA contains two main corporate income tax provisions, including a 15% minimum tax on the average annual adjusted financial statement income of corporations with profits over $1 billion over a three-year period, as well as a 1% excise tax on the corporate stock buybacks by domestic publicly traded corporations. The Company is currently evaluating the impact of the
IRA on its financial statements for tax year 2023 but does not expect a material impact to the Company’s tax position.
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Separation Expenses |
Separation Expenses
Effective February 10, 2023, the Company’s Chief Executive Officer,
President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656
unvested restricted shares of Company common stock. Separation expenses for the nine months ended September 30, 2023 include $250,000 related to the salary continuation and $349,832
related to the accelerated vesting of stock.
On March 2, 2022, the Company and two advisors agreed not to renew special advisor agreements between the advisors and the Company. The advisors were the former chief executive
officer and chief financial officer of Helix who were granted stock options in conjunction with their respective advisory agreements that were entered into upon the completion of the Helix acquisition. The Company and the advisors
mutually agreed not to renew the advisory agreements. The services provided by these advisors included transition planning and consulting services related to integration of the business operations of Helix and Forian. Per the terms of the
agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through
March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not
required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, the Company recorded $5,417,043
of stock compensation expense during March 2022 related to the options that vested through March 2, 2023.
In addition, the Company records normal course of business severance
expenses in the operating expense line item related to its employees’ activities.
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Recent Accounting Pronouncements |
Recent Accounting Pronouncements
In October 2021, the FASB issued Accounting Standards Update No.
2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The FASB issued ASU 2021-08 to improve the accounting for acquired revenue contracts
with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.
The amendment is effective for financial statements for interim and annual periods beginning after December 15, 2022. ASU 2021-08 was adopted on January 1, 2023. The adoption of ASU 2021-08 did not have a material impact on the condensed
consolidated financial statements.
The Company has considered all other recently issued accounting
pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Balances |
Contract assets and deferred revenues consist of the following as of September 30, 2023:
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Transaction Price Allocated to Remaining Performance Obligations |
The transaction price allocated to remaining performance
obligations consisted of the following:
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DISCONTINUED OPERATIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations |
The following table summarizes the major classes of assets and liabilities of the Helix Businesses as
reported on the consolidated balance sheets as of December 31, 2022:
The following table summarizes the major income and expense line items of the Helix Businesses as
reported in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022:
|
MARKETABLE SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||
Marketable Securities | As of September 30, 2023 and December
31, 2022, marketable securities consisted of the following:
|
PROPERTY AND EQUIPMENT, NET (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
As of September 30, 2023 and December 31, 2022, property and equipment were comprised of the following:
|
ACCRUED EXPENSES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
As of September 30, 2023 and December 31, 2022, accrued expenses were comprised of the following:
|
WARRANT LIABILITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANT LIABILITY [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Warrant Liability Assumptions |
The fair value of the Company’s warrant liability, measured at Level 3 in the
fair value hierarchy, was calculated using the Black-Scholes model using the following inputs:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Fair Value of Financial Instruments |
The change in fair value of the Company’s financial instruments – warrants,
measured at Level 3 in the fair value hierarchy, was calculated using the Black-Scholes model and the following inputs:
|
CONVERTIBLE NOTES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Convertible Note Payable |
|
STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information Regarding Equity Incentive Plan |
The table below includes issuances of restricted stock awards and units under
the 2020 Plan and unvested equity interests of MOR which were converted into restricted Company common stock.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Stock Option Assumptions | The
assumptions used to calculate the grant date fair value of the options outstanding at September 30, 2023 and December 31, 2022 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity |
Stock option activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 is as
follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation Expense | Stock compensation expense for the three and nine months ended September
30, 2023 and 2022 is as follows:
|
NET INCOME (LOSS) PER SHARE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME (LOSS) PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net (Income) Loss Per Share |
The following table sets forth the computation of the basic and diluted net income (loss) per share:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive Securities Excluded from Computation of Income (Loss) Per Share |
The following table sets forth all outstanding potentially
dilutive securities at September 30, 2023 and 2022, which were not included in the calculation of diluted earnings per share because their impact would have been antidilutive.
|
LEASES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information and Non-Cash Activity Related to Leases |
Supplemental cash flow information and non-cash activity related to leases for the nine months ended September 30, 2023 and 2022 are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ROU Lease Assets and Lease Liabilities |
ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expenses |
The components of lease
expense were as follows for each of the periods presented, which are included in operating expenses in the condensed consolidated statements of operations:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Lease Payments Included in Measurement of Lease Liabilities |
Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of September 30, 2023, were as follows:
|
COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||
Remaining Payment Obligations under these Licenses | The following table shows the remaining payment obligations under these agreements as of
September 30, 2023:
|
BUSINESS ORGANIZATION AND NATURE OF OPERATIONS (Details) |
Feb. 10, 2023 |
Oct. 31, 2022 |
Mar. 02, 2022 |
---|---|---|---|
Engeni LLC [Member] | |||
Business Organization and Nature of Operations Description [Abstract] | |||
Ownership percentage in subsidiary sold | 100.00% | 100.00% | |
Bio Track [Member] | |||
Business Organization and Nature of Operations Description [Abstract] | |||
Ownership percentage in subsidiary sold | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Principles of Consolidation (Details) |
Sep. 30, 2023 |
Feb. 10, 2023 |
Oct. 31, 2022 |
Mar. 02, 2022 |
---|---|---|---|---|
Bio-Tech Medical Software, Inc. [Member] | ||||
Principles of Consolidation [Abstract] | ||||
Ownership percentage in subsidiary sold | 100.00% | |||
Engeni LLC [Member] | ||||
Principles of Consolidation [Abstract] | ||||
Percentage of owned subsidiaries | 99.00% | |||
Percentage of outstanding interest in subsidiaries | 100.00% | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Discontinued Operations (Details) - USD ($) |
Oct. 31, 2022 |
Feb. 10, 2023 |
Mar. 02, 2022 |
---|---|---|---|
Engeni LLC [Member] | |||
Discontinued Operations [Abstract] | |||
Percentage of outstanding interest subsidiaries | 100.00% | 100.00% | |
Maximum amount to be received from sale of equity interest | $ 100,000 | ||
Bio-Tech Medical Software, Inc. [Member] | |||
Discontinued Operations [Abstract] | |||
Ownership percentage in subsidiary sold | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Foreign Currency (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2022 |
|
Engeni LLC [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | ||
Foreign Currency [Abstract] | ||
Percentage of consolidated net sales | 1.00% | 1.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Fair Value of Financial Instruments (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Warrant Liability [Member] | Level 3 Inputs [Member] | ||
Debt Instrument, Fair Value Disclosure [Abstract] | ||
Estimated fair value of Convertible Note | $ 459 | $ 4,547 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cash and Cash Equivalents and Credit Risk (Details) |
Sep. 30, 2023
USD ($)
|
---|---|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Cash, FDIC insured amount | $ 250,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts Receivable and Allowance for Doubtful Accounts [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 78,422 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Proceeds Receivable from Sale of Discontinued Operations, Net (Details) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
USD ($)
MonthlyPayment
|
Sep. 30, 2022
USD ($)
|
|
Proceeds from Sale of Discontinued Operations [Abstract] | |||
Number of monthly payments pending | MonthlyPayment | 5 | ||
Receivables from sale of discontinued operations amount | $ 4,166,667 | $ 4,166,667 | |
Unamortized discount | 68,795 | 68,795 | |
Amortization | 96,164 | 341,205 | $ 0 |
Discount in interest and investment income | $ 410,000 | $ 410,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Goodwill (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Goodwill [Abstract] | |
Impairment losses | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment, Net (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property and Equipment, Net [Abstract] | ||||
Impairment losses | $ 0 | $ 0 | $ 0 | $ 0 |
Minimum [Member] | ||||
Property and Equipment, Net [Abstract] | ||||
Estimated useful lives | 1 year | 1 year | ||
Maximum [Member] | ||||
Property and Equipment, Net [Abstract] | ||||
Estimated useful lives | 7 years | 7 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Software Development Costs (Details) |
Sep. 30, 2023 |
---|---|
Software Development Costs [Member] | |
Software Development Costs [Abstract] | |
Asset estimated useful life | 3 years |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Advertising (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Advertising [Abstract] | ||||
Advertising costs | $ 9,655 | $ 300 | $ 45,075 | $ 2,250 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Stock-Based Compensation (Details) - shares |
Jun. 15, 2022 |
Jun. 14, 2022 |
---|---|---|
Stock-based Compensation [Abstract] | ||
Number of shares authorized and reserved for issuance under 2020 Plan (in shares) | 6,400,000 | 4,000,000 |
Increase in number of shares authorized and reserved for issuance under 2020 Plan (in shares) | 2,400,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Income Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 16, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Taxes [Abstract] | |||||
Net income tax expense | $ 93,191 | $ 10,000 | $ 159,287 | $ 20,000 | |
Income tax effect on discontinued operations | $ (1,111,552) | $ 0 | $ (3,834,122) | $ 0 | |
Corporate income tax rate | 15.00% | ||||
Percentage of excise tax rate | 1.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Separation Expenses (Details) |
9 Months Ended | |||
---|---|---|---|---|
Feb. 10, 2023
USD ($)
shares
|
Mar. 02, 2022
USD ($)
Advisor
shares
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Separation Expenses [Abstract] | ||||
Amount of accelerated vesting stock | $ 349,832 | |||
Number of advisors | Advisor | 2 | |||
Options to purchase shares of common stock (in shares) | shares | 366,166 | |||
Shares of common stock forfeited (in shares) | shares | 732,332 | |||
Stock compensation expenses | $ 5,417,043 | $ 4,920,572 | $ 10,581,021 | |
Separation Agreement [Member] | Mr. Daniel Barton [Member] | ||||
Separation Expenses [Abstract] | ||||
Period for continuation of Salary | 12 months | |||
Unvested restricted shares (in shares) | shares | 106,656 | |||
Salary | $ 250,000 | |||
Amount of accelerated vesting stock | $ 349,832 |
DISCONTINUED OPERATIONS, Summary (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Feb. 10, 2023
USD ($)
Installment
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Disposal Group Discontinued Operation Disposal Disclosures [Abstract] | |||||
Loss from discontinued operations | $ 0 | $ (2,161,571) | $ (94,427) | $ (5,325,531) | |
Income tax effect on discontinued operations | 1,111,552 | $ 0 | 3,834,122 | 0 | |
Bio-Tech Medical Software, Inc. [Member] | |||||
Disposal Group Discontinued Operation Disposal Disclosures [Abstract] | |||||
Ownership percentage in subsidiary sold | 100.00% | ||||
Consideration paid by buyer | $ 30,000,000 | ||||
Cash paid by buyer | 20,000,000 | ||||
Pending consideration receivable | $ 10,000,000 | ||||
Number of monthly installment payments | Installment | 12 | ||||
Gain on sale of discontinued operations | 11,531,849 | $ 202,159 | |||
Loss from discontinued operations | (94,427) | ||||
Income tax effect on discontinued operations | $ 1,111,552 | $ 3,834,122 |
MARKETABLE SECURITIES (Details) - US Treasury Bill Securities [Member] - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Marketable Securities, Classification [Abstract] | ||
Amortized Cost | $ 43,584,395 | $ 17,392,503 |
Fair Market Value | $ 43,585,724 | $ 17,396,487 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Prepaid Expense [Abstract] | ||
Other prepaid expenses | $ 870,328 | $ 835,786 |
Employee [Member] | Other Current Assets [Member] | ||
Prepaid Expense [Abstract] | ||
Receivable from employees | $ 258,422 | $ 432,338 |
Minimum [Member] | ||
Prepaid Expense [Abstract] | ||
Prepaid expense related to software licenses and insurance policies period | 3 months | |
Maximum [Member] | ||
Prepaid Expense [Abstract] | ||
Prepaid expense related to software licenses and insurance policies period | 1 year |
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment | $ 167,781 | $ 168,070 |
Less: Accumulated depreciation | (81,543) | (93,040) |
Property and equipment, net | 86,238 | 75,030 |
Personal Computing Equipment [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment | 94,521 | 160,079 |
Office Equipment and Capitalized Software [Member] | ||
Property, Plant and Equipment, Net, by Type [Abstract] | ||
Property and equipment | $ 73,260 | $ 7,991 |
ACCRUED EXPENSES (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
ACCRUED EXPENSES [Abstract] | ||
Employee compensation | $ 2,245,743 | $ 2,112,482 |
Income taxes payable | 740,713 | 0 |
Accrued expenses | 1,444,716 | 1,654,307 |
Total | $ 4,431,172 | $ 3,766,789 |
SEGMENT RESULTS (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
Segment
| |
SEGMENT RESULTS [Abstract] | |
Number of reportable segments | 1 |
COMMITMENTS AND CONTINGENCIES (Details) |
Jul. 30, 2021
USD ($)
Employee
|
Sep. 30, 2023
USD ($)
|
Feb. 14, 2020 |
---|---|---|---|
Remaining payment obligations [Abstract] | |||
Year ending December 31, 2023 | $ 350,000 | ||
Year ending December 31, 2024 | 2,066,300 | ||
Year ending December 31, 2025 | 1,600,000 | ||
Year ending December 31, 2026 | 400,000 | ||
Total payment obligations | $ 4,416,300 | ||
Audet v. Green Tree International, et. al. [Member] | John Audet [Member] | |||
Loss Contingency [Abstract] | |||
Ownership percentage | 10.00% | ||
Grant Whitus et al. v. Forian Inc., Zachary Venegas and Scott Ogur [Member] | |||
Loss Contingency [Abstract] | |||
Number of former employees to file lawsuit | Employee | 4 | ||
Loss contingency, damages, attorneys' fees and costs | $ 27,500,000 |
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Common Stock [Member] |
Oct. 03, 2023
USD ($)
$ / shares
shares
|
---|---|
Subsequent Event [Abstract] | |
Common stock repurchased (in shares) | shares | 1,604,676 |
Redemption price per share (in dollars per share) | $ / shares | $ 2.15 |
Common stock repurchased | $ | $ 3,450,053 |
1 Year Forian Chart |
1 Month Forian Chart |
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