Note 3

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 its wholly owned subsidiaries COR Analytics, LLC and MOR Analytics, LLC, and (ii) Helix Technologies, Inc. and its wholly owned subsidiaries Helix TCS, LLC, Security Consultants Group, LLC, Boss Security Solutions, LLC, Security Grade Protective Services, Ltd., Bio-Tech Medical Software, Inc, BT UCS, Inc., Engeni LLC (including Engeni S.A., which is 99% owned by Engeni LLC) ~~and~~, Green Tree International, Inc. and AIE Exchange Canada, Inc. All intercompany transactions have been eliminated in consolidation. The financial results of Helix and its subsidiaries are included in the condensed consolidated financial statements ~~only for~~beginning on March 2, 2021, the ~~29-day period ended March 31, 2021.~~Merger Closing Date.

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. 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.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ~~Accounting Standards Codification (“ASC”)~~ASC 820, ~~“Fair~~Fair Value Measurements and ~~Disclosures”~~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:

Table of Contents

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

~~Table of Contents~~

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.

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 ~~$280,176~~$269,325 and $0 at ~~March 31,~~June 30, 2021 and December 31, 2020, respectively.

Management charges account balances against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

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. For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted, probability-weighted future cash flows. 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.

Table of Contents

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. The Company reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

The impairment model prescribes a two-step method for determining goodwill impairment. However, an entity is permitted to first assess qualitative factors to determine whether the two-step goodwill impairment test is necessary.

~~Table of Contents~~

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. In the first step, the Company determines the fair value of its reporting unit using a discounted cash flow analysis. If the net book value of the reporting unit exceeds its fair value, the Company then performs the second step of the impairment test, which requires allocation of the reporting unit’s fair value to all of its assets and liabilities using the acquisition method prescribed under authoritative guidance for business combinations with any residual fair value being allocated to goodwill. An impairment charge is recognized when the implied fair value of the Company’s goodwill is less than its carrying amount. NoNaN impairment losses have been recognized during the periods presented.

Business Combinations

The Company accounts for its business combinations under the provisions of ~~Accounting Standards Codification (“ASC”)~~ASC Topic 805-10, Business Combinations (“ASC 805-10”), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. If the business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date and any changes in fair value after the acquisition date are accounted for as measurement-period adjustments. Changes in fair value of contingent consideration resulting from events after the acquisition date, such as earn-outs, are recognized as follows: 1) if the contingent consideration is classified as equity, the contingent consideration is not re-measured and its subsequent settlement is accounted for within equity, or 2) if the contingent consideration is classified as a liability, the changes in fair value are recognized in earnings.

Revenue Recognition

The Company recognizes revenue in accordance with ~~FASB~~Financial Accounting Standards Board (“FASB”) Topic 606 - Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, the Company recognizes revenue when the customer obtains 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. ASC 606-10-32-32 requires the determination of the price at which the Company would sell individual products or services to a customer. The Company does not always have sufficient data or experience related to the terms and pricing for products and services when components are sold on a standalone basis. In instances where insufficient data exists, the Company recognizes the contractual fees ratably over the term of the arrangement. In instances where a customer has limited operating history or the customer has recently been formed, management may determine that it is prudent to recognize only the first year’s fees ratably over the first year of the term, more often than not resulting in the recognition of a lower amount of revenue during the first year. Performance obligations that are distinct and remain undelivered would not be recognized until the end of the contract provided that the consideration is guaranteed. No significant judgements affect the determination of the amount and timing of revenue.

1012

Table of Contents

The Company generates revenue from ~~three~~3 categories of product offerings: Information and Software, Services and Other.

In 2020, the revenue generated by the Company was exclusively from Information and Software relating to MOR. In 2021, the Company also began to recognize Information and Software, Services and Other revenues related to its acquisition of Helix on March 2, 2021.

In most Information and Software contracts, payments are scheduled throughout the term and the contract may include one or more of the following performance obligations: (i) the provision of historical and/or current information as agreed upon, (ii) access to the information through a hosting provider, (iii) access to and use of software products (iv) installation and training and (v) access to the Company’s analytical team throughout the term of the agreement, as agreed upon.

Information and Software contracts do not always have distinct pricing assigned to each performance obligation; rather, the price is bundled and the total bundled pricing is invoiced throughout the term of the agreement, with the exception of contracts for software products which provide separate pricing for implementation and training of such products.

The Company recognizes revenue resulting from Information and Software pursuant to agreements under which the Company receives payments for providing the customer access to its products over the contract period. The Company satisfies its performance obligations throughout the term of the contract. Any payments received prior to satisfying performance obligations are deferred and recognized as the performance obligations are satisfied. There are no variable considerations or financing component under such contracts. Prices are typically fixed, but certain contracts can also include royalties in excess of fixed fees. There were $62,500 of royalties in excess of fixed fees for the ~~three~~six months ended ~~March 31,~~June 30, 2021. Invoicing under contracts is set forth in an invoicing schedule as part of the contract and payments are typically due within 30 days.

Services ~~Revenue~~revenues are primarily from contracts with government agencies and revenue is recognized upon completion of the various milestones within the contract. In the event that a contract does not specifically allocate revenue to the satisfaction of specific performance obligations or milestones, the purchase price of the contracts is allocated based on the percentage of time spent, or expected to be spent, to meet each performance obligation. Initial customization of the software to meet state specific requirements and the training to appropriately utilize the software are generally recognized upon completion of the customization and acceptance by the state agency. Support and service revenues are then recognized over a predetermined period of time as defined in the contract. Contract renewals may include an annual service fee that is recognized over the time period defined in the contract.

Table of Contents

Other revenues are primarily from security monitoring services offerings and the provision of web marketing services. Contracts for these services have a stated transaction price for monthly services and are recognized as the services are provided.

Contract acquisition costs, which consist of sales commissions paid or payable, isare 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. ~~$8,298~~$8,162 and $53,784 of such costs were capitalized as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. There are no significant judgements affecting the determination of the amount and timing of the related revenue.

~~Table of Contents~~

In the event the Company has not satisfied all performance obligations on its contracts with customers, any amounts of unbilled revenue or excess costs are recorded as contract assets and contract liabilities.

Contract assets result when the cumulative revenue recognized exceeds the cumulative invoicing under a contract. The value of the differential is reflected in Contract assets and represents the value of the revenue that was not billed to customers as of the balance sheet date.

Contract liabilities (“Deferred Revenue”) result when cumulative receipts under a contract for the same performance obligation exceeds the total revenue recognition and such excess is reflected in Deferred Revenue and represents the value of the performance obligations to be satisfied after ~~March 31,~~June 30, 2021.

The following are the contract balances as of and for the ~~three~~six months ended ~~March 31,~~June 30, 2021:

Contract assets
Balance at January 1, 2021	$	196,701		$	196,701
Contract assets acquired from Helix		263,755			277,088
Add: Revenue recognized from related contract assets		218,333			879,097
Less: Contract acquisition costs amortized during the three months ended March 31, 2021		(45,486	)
Less: Payments received during the three months ended March 31, 2021		(206,349	)
Balance at March 31, 2021	$	426,954
Less: Contract acquisition costs amortized during the six months ended June 30, 2021					(45,622	)
Less: Payments received during the six months ended June 30, 2021					(724,667	)
Balance at June 30, 2021				$	582,597

Contract liabilities (Deferred Revenue)
Balance at January 1, 2021	$	158,884		$	158,884
Contract liabilities assumed from Helix		636,910			320,936
Add: Payments received during the three months ended March 31, 2021		378,533
Less: Revenue recognized during the three months ended March 31, 2021		(503,143	)
Balance at March 31, 2021	$	671,184
Add: Payments received during the six months ended June 30, 2021					1,410,760
Less: Revenue recognized during the six months ended June 30, 2021					(1,231,686	)
Balance at June 30, 2021				$	658,894

Segment Information

~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic~~

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.

1214

Table of Contents

Customer Concentration

~~For~~The Company did 0t have any customers that exceeded 10% of total revenue for the three and six months ended ~~March 31, 2021, the~~June 30, 2021. The Company had a single customer that accounted for ~~$237,500~~46% and 48% of total revenue ~~which represented 15% of revenues generated from customer sales.~~for the three and six months ended June 30, 2020, respectively. The Company believes that this customer is ultimately replaceable, and any disruption associated with this customer would only have a short-term impact on the business. ~~The contract assets balance for this customer at March 31, 2021 was $125,000.~~

Concentration of Vendors

The Company has licensed certain information assets from a third party as a key input to certain of the Company’s Information and Software Products. Licensing fees to this vendor represented ~~29% and 43%~~less than 10% of the Company’s operating expenses for the three and six months ended ~~March 31,~~June 30, 2021, respectively, and the three and six months ended June 30, 2020, respectively. This vendor is critical to the business. The Company believes that while this vendor is ultimately replaceable, any disruption associated with this vendor could have a material short-term impact on the business.

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 31 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. An impairment loss would be recognized when the present value of 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 no0 impairment losses recognized during the three and six months ended ~~March 31,~~June 30, 2021 and ~~2020.~~2020, respectively.

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.~~Software. Costs incurred in the application development stage are subject to capitalization and subsequent amortization and possible impairment. Application development stage costs were not material for the Company. Product development costs are primarily personnel related to activities for design and evaluating software development, testing, bug fixes, and other maintenance activities. Product development costs are expensed as incurred. The ~~company~~Company capitalized software development costs of ~~$50,228~~$266,410 and $0, ~~respectively, for the three months ended March 31,~~as of June 30, 2021 and ~~2020.~~December 31, 2020, respectively.

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.

1315

Table of Contents

Advertising

Advertising costs are expensed as incurred and included in sales and marketing expenses and amounted to ~~$4,935~~$16,063 and $20,998 for the three and six months ended June 30, 2021, respectively, and $0 and $0 for the three and six months ended ~~March 31, 2021 and~~June 30, 2020, respectively.

Foreign Currency

The local currency is the functional currency for one entity’s operations outside the United States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within stockholders’ equity. Gains and losses from foreign currency transactions are included in net loss for the period.

Net Loss per Share

Net loss per share of common stock is computed by dividing net loss by the weighted average number of common shares outstanding during the period. At ~~March 31,~~June 30, 2021, the Company had potentially dilutive securities that could be exercised or converted into common stock. Refer to Note 13 for the Company’s disclosure on such potential dilution. Further, as the Company has incurred net losses for the three and six months ended ~~March 31,~~June 30, 2021 and 2020, respectively, the diluted loss per share is the same as basic loss per share for the periods presented.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from ~~Equit~~yEquity and ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, 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.

Table of Contents

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.

~~Table of Contents~~

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 the Company’s common stock are authorized and reserved for issuance under the 2020 Plan. Stock options represent the right to purchase the Company’s 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 our common stock. Restricted stock units represent the right to receive shares of our common stock on future specified dates. Stock options, restricted stock awards and 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 units is based on the underlying grant date fair value of the Company’s 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

MOR was organized as ~~an LLC~~a limited liability company and became a wholly owned subsidiary of the Company upon completion of the Merger with Helix on March 2, 2021. As a result, the Company was treated as a partnership for federal and state income tax purposes through March 2, 2021. Accordingly, the Company’s taxable income, deductions, assets and liabilities are reported by the members on their respective income tax returns. Therefore, no0 provision for federal or state income tax has been made by the Company for all business activity from its inception through March 2, 2021.

After March 2, 2021, the Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which 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 Company has an incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset for the period since March 2, 2021.

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.

Table of Contents

Recent Accounting Pronouncements

The Company has considered all recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

Note 8

INTANGIBLE ASSETS, NET

The following table summarizes the Company’s intangible assets as of ~~March 31,~~June 30, 2021:

	Estimated Useful Life (Years)		Gross Carrying Amount at March 2, 2021		Accumulated Amortization			Net Book Value at 3/31/2021		Estimated Useful Life (Years)		Gross Carrying Amount at March 2, 2021		Accumulated Amortization			Net Book Value at 6/30/2021
Customer Relationships		5	$	5,243,000	$	(81,746	)	$	5,161,254		5	$	5,243,000	$	(343,896	)	$	4,899,104
Software Technology		2		1,170,000		(45,605	)		1,124,395		2		1,170,000		(191,855	)		978,145
Software Technology		7		4,109,000		(45,761	)		4,063,239		7		4,109,000		(192,511	)		3,916,489
Tradenames and Trademarks		8		386,000		(3,761	)		382,239		8		386,000		(15,824	)		370,176
			$	10,908,000	$	(176,873	)	$	10,731,127			$	10,908,000	$	(744,086	)	$	10,163,914

The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. Amortization expense related to the purchased intangible assets was ~~$176,873~~$567,213 and $744,086 for the three and six months ended June 30, 2021, respectively, and $0 for the three and six months ended ~~March 31, 2021 and the year ended December 31,~~June 30, 2020 ~~respectively.~~.

The estimated future amortization expense for the next five years and thereafter is as follows:

Years Ending December 31,	Future amortization expense		Future amortization expense
2021	$	1,701,638	$	1,134,425
2022		2,268,850		2,268,850
2023		1,784,495		1,784,495
2024		1,683,850		1,683,850
2025		1,683,850		1,683,850
Thereafter		1,608,444		1,608,444
Total	$	10,731,127	$	10,163,914

1820

Table of Contents

Note 9

ACCRUED EXPENSES

As of ~~March 31,~~June 30, 2021 and December 31, 2020, accrued expenses were comprised of the following:

	March 31, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Employee compensation		936,515		346,720		1,376,218		346,720
Accrued expenses		1,075,969		8,825		970,349		8,825
Transaction-related		365,985		125,196		0		125,196
Lease obligation - current		258,973		—
Total	$	2,637,442	$	480,741	$	2,346,567	$	480,741

Transaction-related accrued expenses are associated with the Merger. See Note 4.

Note 10

WARRANT LIABILITY

In conjunction with the Merger, 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, Derivatives and Hedging: Contracts in Entity’s Own ~~Equity.~~Equity. In accordance with the applicable accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and are measured at their inception date fair value (the closing date of the Merger) and subsequently re-measured at each reporting period with changes being recorded in the condensed consolidated statement of operations. As of ~~March 31,~~June 30, 2021, the Company had 97,058 warrants outstanding classified as liabilities.

The fair value of the Company’s warrant liability was calculated using the Black-Scholes model and the following assumptions:

	As of March 31, 2021			As of June 30, 2021
Fair value of company’s common stock	$	10.11		$	12.57
Dividend yield		0	%		0	%
Expected volatility		85% - 168	%		121% - 153	%
Risk Free interest rate		0.16% - 0.26	%		0.06% - 0.56	%
Expected life (years)		2.58			2.33
Exercise price	$	8.00 - $28.00			$8.00 - $28.00
Fair value of financial instruments - warrants	$	624,088		$	752,888

1921

Table of Contents

The change in fair value of the financial instruments – warrants is as follows:

	Amount			Amount
Balance as of January 1, 2021	$	—		$	0

Fair value of warrant liability assumed in connection with Helix Merger		1,247,715			1,247,715

Change in fair value of warrant liability		(623,627	)		(494,827	)

Balance as of March 31, 2021	$	624,088
Balance as of June 30, 2021				$	752,888

	Amount
Balance as of April 1, 2021	$	624,088
Change in fair value of warrant liability		128,800
Balance as of June 30, 2021	$	752,888

Note 11

STOCK-BASED COMPENSATION

Restricted Stock Awards and Restricted Stock Units

Unvested equity interests of MOR were converted ~~to Forian Restricted Stock Awards~~into restricted common stock of the Company based upon the Exchange Ratio of 1.7776 Forian shares for each 1 MOR unit, subject to any adjustments required under the Contribution Agreement. The information regarding the 2020 Plan below is presented as though the combination occurred as of the beginning of the periods presented.

	Number of Restricted Awards and Units		Weighted Average Grant Date Fair Value Per Share		Number of Restricted Shares and Units		Weighted Average Grant Date Fair Value Per Share
Unvested at January 1, 2020	$	1,237,396	$	0.62		1,237,396	$	0.62
Issued		2,191,869		1.21		2,191,869		1.21
Vested		1,729,589		0.72		1,729,589		0.72
Canceled		—		—		0		0
Unvested at December 31, 2020		1,699,676		1.28
Unvested at December 31, 2020						1,699,676		1.28
Issued		344,000		12.18		404,000		11.86
Vested		172,836		0.03		343,125		0.03
Canceled		—		—		0		0
Unvested at March 31, 2021	$	1,870,840	$	2.27
Unvested at June 30, 2021						1,760,551	$	2.73

The ~~1,870,840~~1,760,551 of unvested awards at ~~March 31,~~June 30, 2021 ~~consist~~consists of ~~344,000~~404,000 restricted stock units and ~~1,526,840~~1,356,551 shares of restricted ~~stock awards.~~stock.

Table of Contents

Stock Options

As part of the Merger (see Note 4), 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 ~~456,465~~455,089 shares of Company common stock were outstanding. The value attributable to service subsequent to the Merger will be recognized as compensation cost by the Company.

~~Table of Contents~~

The fair value of the stock options was estimated 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 at the inception date are as follows:

	~~March 31,~~June 30, 2021
Exercise Price	$	2.00 to $51.80
Fair value of Company common stock	$	~~10.11~~9.39 to $22.90
Dividend yield		0%0	%
Expected volatility	~~133% to 188%~~126.0		%
Risk Free interest rate	~~0.27%~~1.0% to ~~1.59%~~1.1		%
Expected life (years) remaining	0 to ~~9.93~~9.72

Stock option activity for the period ended ~~March 31,~~June 30, 2021 is as follows:

	Shares Underlying Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Outstanding at January 1, 2021		—	$	—		—		0		$	0		—
Options assumed in Helix Merger		456,464	$	15.151		3.96		455,089		$	15.13		3.69
Granted		2,623,664	$	14.095		9.93		3,264,714		$	13.21		9.72
Exercised		—	$	—		—		(12,437	)	$	3.02		1.77
Forfeited and expired		—	$	—		—		(4,037	)	$	14.91		6.13
Outstanding at March 31, 2021		3,080,128	$	14.251		9.05
Vested options at March 31, 2021		456,464	$	15.151		3.96
Outstanding at June 30, 2021								3,703,329		$	14.25		8.96
Vested options at June 30, 2021								455,089		$	15.13		3.69

Stock Compensation Expense

The grant date fair value per share for the stock options granted was ~~$13.36~~$12.39 and $0.02 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, respectively.

At ~~March 31,~~June 30, 2021, the total unrecognized stock compensation expense related to unvested stock option awards and restricted stock awards and units granted was ~~$38,598,196,~~$41,878,995, which the Company expects to recognize over a weighted-average period of approximately ~~3.92~~3.69 years. Stock ~~Compensation Expense~~compensation expense for the ~~period~~three and six months ended ~~March 31,~~June 30, 2021 and 2020 is as follows:

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020		2021		2020
Cost of revenue		—		—		4,656		0		4,656		0
Research and development		54,890		2,576		83,099		3,222		137,989		5,798
Sales and marketing		31,744		901		174,919		1,128		206,663		2,029
General and administrative		777,249		1,751		2,488,873		2,192		3,268,865		3,943
Total						2,751,547		6,542		3,618,173		11,770

Table of Contents

Note 12

STOCKHOLDERS’ EQUITY

The Condensed Consolidated Statement of Stockholders’ Equity reflects the exchange of MOR Members Equity for Company common stock as of the beginning of the periods presented. See Note 2.

~~Table of Contents~~

All of MOR’s Class A, Class B vested profit interests’ units, Series S, Series S-1, and vested Restricted Class B units were converted to Forian common stock on March 2, 2021 based upon the exchange ratio of 1.7776 Forian shares to 1 MOR member unit, subject to adjustment pursuant to the Contribution Agreement. Unvested Class B profit interest units, unvested restricted Class B units and options to acquire Restricted Class B Units were converted to unvested restricted Company common stock on March 2, 2021 based upon the exchange ratio of 1.7776 Forian shares to 1 MOR member unit, subject to adjustment pursuant to the Contribution Agreement. The applicable vesting provisions of such MOR units carried over to the restricted Company common stock.

In December 2020, MOR completed a Series S-1 financing with cash proceeds of $13,000,000 in exchange for 3,388,947 Series S-1 preferred units.

In March 2020, MOR completed a Series S financing with cash proceeds of $3,300,000 and converted a promissory note of $184,300 in exchange for 3,078,276 Series S preferred units.

In 2019 and 2020, Class B profit interest units, restricted Class B units and options to acquire Class B units were issued to employees, consultants and advisors.

In March 2021, the Company issued warrants to purchase 17,031 shares of the Company’s common stock at a per-share purchase price equal to $0.01. The warrants terminate after a period of 2 years from the issuance date. The warrants were issued in exchange for services provided with a fair value of $389,976 included in transaction related expenses for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

On April 16, 2021, the Company raised proceeds of $11,968,652, net of transaction expenses of $31,348, resulting from the sale of 1,194,743 shares of Company common stock at an average purchase price equal to $10.21 per share to a select group of institutional and accredited investors. Investors included both unaffiliated investors as well as directors of the Company. Directors purchased 560,461 shares of common stock at a purchase price of $11.33 per share, which amount represented the consolidated closing bid price of Company common stock as reported by the Nasdaq Stock Market LLC on April 9, 2021, the last trading day prior to execution of the securities purchase agreement. Unaffiliated investors purchased 631,282 shares of Company common stock at a purchase price of $8.95 per share, which price was negotiated on April 9, 2021, and represents an approximately 15% discount to the preceding day’s volume weighted average price.

See Note 4 for additional details on shares issued pursuant to the Merger.

Table of Contents

Note 13

NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share:

	For the Three Months Ended March 31,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020			2021			2020
Net loss attributable to common shareholders	$	(4,491,647	)	$	(675,136	)	$	(7,134,196	)	$	(791,639	)	$	(11,625,843	)	$	(1,466,775	)

Net loss per share attributable to common shareholders:
Basic	$	(0.19	)	$	(0.08	)	$	(0.23	)	$	(0.06	)	$	(0.42	)	$	(0.13	)
Diluted	$	(0.19	)	$	(0.08	)	$	(0.23	)	$	(0.06	)	$	(0.42	)	$	(0.13	)

Weighted average common shares outstanding:
Basic		24,033,512			8,213,527			30,996,735			13,797,652			27,534,359			11,066,456
Diluted		24,033,512			8,213,527			30,996,735			13,797,652			27,534,359			11,066,456

~~Table of Contents~~

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:

	For the Three Months Ended March 31,				For the Three and Six Months Ended June 30,
	2021		2020		2021		2020
Potentially dilutive securities:
Warrants		124,087		—		124,087		0
Stock options		3,080,128		—		3,703,329		0
Unvested Restricted Stock Awards and Units		1,870,840		2,258,577		1,760,551		1,846,338
Total						5,587,967		1,846,338

Note 14

RELATED PARTY TRANSACTIONS

On May 6, 2019, MOR entered into an arrangement with family trusts controlled by Max Wygod and Martin Wygod, directors of MOR, to issue ~~two~~2 separate promissory notes (“Note” or “Notes”) entitling MOR to secure up to $100,000 per Note to fund operations. The Notes had no interest rate and were due on the sooner of the initial closing of MOR’s Series S Preferred Unit financing or December 31, 2020. In March 2020, in connection with MOR’s Series S Preferred Unit financing, the aggregate outstanding balance of the Notes of $184,300, was converted, at the option of the holders, into 295,501 shares of Company common stock.

Adam Dublin, Chief Strategy Officer, was previously a consultant for a current vendor of MOR. Mr. Dublin’s consultancy with the vendor ended on December 11, 2020 and the parties have not agreed to renew the agreement. Pursuant to Mr. Dublin’s consulting agreement with the vendor, Mr. Dublin received payments from the vendor for the three and six months ended ~~March 31,~~June 30, 2021 and 2020 of ~~$106,084~~$90,065 and ~~$61,050,~~$196,149, and $183,675 and $244,725, respectively.

On April 16, 2021, the Company raised ~~gross~~net proceeds of ~~$12,000,000~~$11,968,652 resulting from the sale of Company common stock to a select group of institutional and accredited investors, which included ~~officers and~~ directors of the Company. See Note 1712 for additional information.

2325

Table of Contents

Note 15

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company accounts for leases in accordance with 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 one year to five 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 operating lease agreements for office facilities in (i) Florida ~~(two)~~(2), (ii) Washington, (iii) Colorado and (iv) Argentina that expire in (i) December 2021 and 2024, (ii) December 2022, (iii) February 2026 and (iv) December 2021, respectively. The Company also has ~~three~~3 short-term leases related to offices in Pennsylvania, Massachusetts and Virginia. 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 have not recognized a “right of use” asset or lease liability for these ~~three~~3 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 six months ended June 30, 2021 and 2020 were as follows:

	Six Months Ended June 30,
	2021		2020
Cash used in operating leases	$	120,615	$	0
ROU assets obtained in exchange for lease obligations	$	94,010	$	0

ROU lease assets and lease liabilities for the Company’s operating leases were recorded in the condensed consolidated balance sheet as follows:

Three Months Ended March 31,
2021 2020
Operating lease expense $ 27,312 $ —
Cash paid for amounts included in the measurement of operating lease liabilities $ 30,154 $ —
ROU assets obtained in exchange for operating lease obligations $ 967,493 $ —

	As of June 30, 2021			As of December 31, 2020
Right of use assets, net	$	988,674		$	0
Short-term operating lease liabilities		264,330			0
Long-term operating lease liabilities	$	737,701		$	0
Total lease liabilities	$	1,002,031		$	0
Weighted average remaining lease term (in years)		3.47			—
Weighted average discount rate		8.5	%		0.0	%

March 31, 2021 December 31, 2020
Deposits and other assets $ 967,493 $ —
Accounts payable and accrued liabilities $ 258,973 $ —
Other long-term liabilities $ 724,587 $ —
Total lease liabilities $ 983,560 $ —
Weighted average remaining lease term (in years) 3.58 —
Weighted average discount rate 8.50 % 0.0 %

The total rent expense was $108,476 and $3,152 for the three months ended ~~March 31,~~June 30, 2021 and 2020, ~~was $21,078~~respectively, and ~~$4,994,~~$129,554 and 8,146 for the six months ended June 30, 2021 and 2020, respectively.

Table of Contents

The components of lease expense were as follows for each of the period presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating lease expense	$	81,935	$	0	$	109,247	$	0
Short-term lease expense	$	26,541	$	3,152	$	34,493	$	8,146
Total operating lease costs	$	108,476	$	3,152	$	143,740	$	8,146

Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of ~~March 31,~~June 30, 2021, for the following five fiscal years and thereafter were as follows:

	As of March 31, 2021			As of June 30, 2021
2021	$	250,824		$	160,363
2022		308,470			308,470
2023		286,670			286,670
2024		291,161			291,161
2025		85,726			85,726
Thereafter		14,288			14,288
Total future minimum lease payments	$	1,237,139		$	1,146,678
Less imputed interest		(253,579	)		(144,647	)
Total	$	983,560		$	1,002,031

~~Table of Contents~~

Service Agreements

The Company entered into certain service agreements that provide for future minimum payments. The ~~term~~terms of these agreements vary in length. The following table shows the remaining payment obligations under these licenses as of ~~March 31,~~June 30, 2021:

	March 31, 2021		December 31, 2020		June 30, 2021		December 31, 2020
	Unaudited				Unaudited
Year ending December 31, 2021	$	272,188	$	533,488	$	0	$	533,488
Year ending December 31, 2022		272,187		272,188		272,188		272,188
	$	544,375	$	805,676	$	272,188	$	805,676

From time to time, wethe Company may be involved in claims that arise during the ordinary course of business. 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 our overall operations. Although the results of litigation and claims cannot be predicted with certainty, ~~we do~~the Company does not currently have any pending litigation to which ~~we are~~it is a party or to which ~~our~~its property is subject that we believe to be material, except for:

Legal Proceedings

Kenney, et al. v. Helix TCS, Inc.

On July 20, 2017, ~~one~~1 former employee of Helix filed a lawsuit in the United States District Court for the District of Colorado alleging violations of the Fair Labor Standards Act on behalf of himself and other employees. The plaintiff seeks damages for Helix’s alleged failure to compensate employees appropriately for the overtime hours they worked as purported “non-exempt” employees. The matter has been conditionally certified as a collective action and the court has authorized the plaintiff to send notice and consent forms to putative class members. Notice and consent forms have ~~not yet~~ been ~~sent nor~~sent. The period for returning consent forms has ~~any~~ended. No decision has been made on the merits of the claim. Helix filed a motion to dismiss the claim, which motion was denied. Helix, on an interlocutory basis, appealed that denial. The U.S. Court of Appeals for the Tenth Circuit affirmed the decision of the District Court and remanded the matter. The case is in the early stages of discovery. The Company will vigorously defend the claims in the lawsuit.

Table of Contents

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 Forian, claiming that he owned 10% of GTI. ~~We believe~~The Company believes the lawsuit is wholly without merit and will vigorously defend ~~ourselves from these~~the claims ~~vigorously.~~in the lawsuit. As of ~~March 31,~~June 30, 2021, the case is in the process of ~~discovery.~~

~~Arapaho Dispute~~

~~Zachary Venegas (“Venegas”),~~discovery, with several depositions set for August 2021. Pursuant to a recent hearing, the ~~former Chief Executive Officer of Helix, Scott Ogur (“Ogur”),~~case is currently set for trial on an eight-week trial docket beginning on January 17, 2022. The parties are working on a proposed scheduling order to reflect the ~~former Chief Financial Officer of Helix and a current board member of Forian, and Helix Opportunities, LLC, a Delaware limited liability company (“HOF” and collectively with Venegas and Ogur,~~Court’s recent ruling as to the “HOF Parties”) and stockholder of Helix were involved in a dispute involving a claim by Arapaho Foundation, LLC (“Arapaho”) alleging that Arapaho was entitled to an ownership interest in certain shares of Helix’s common stock, which have now been converted into shares of Company common stock in connection with the Merger, currently held by one or morerescheduling of the ~~HOF Parties (the “Arapaho Dispute”).~~trial. In ~~connection with~~addition, mediation is in the dispute, on February 23, 2021, the HOF Parties and Forian, Merger Sub and MOR (collectively, the “Merger Parties”) entered into an Indemnification Agreement pursuant to which the HOF Parties have agreed to indemnify the Merger Parties for certain losses and expenses arising from the Arapaho Dispute. On April 10, 2021, the HOF Parties, Arapaho and the membersprocess of Arapaho entered into a Final Settlement Agreement and Mutual Releases (the “Settlement Agreement”) with respect to the Arapaho Dispute. Helix Technologies, Inc. and Helix TCS, LLC were party to the Settlement Agreement for purposes of mutual releases, pursuant to which the parties to the Settlement Agreement released each other from any and all claims, whether known or unknown, as of the date of the Settlement Agreement. The release of the Helix parties included a release of Forian, Merger Sub and MOR.being scheduled.

~~Table of Contents~~

Helix Stockholder Lawsuits

Beginning on February 16, 2021, ~~four~~4 lawsuits were filed by purported Helix stockholders (captioned Dillion v. Helix Technologies, Inc., et al., No. 1:21-cv-01365 (filed February 16, 2021 in the United States District Court for the Southern District of New York) (the “Dillion Complaint”); Baros v. Helix Technologies, Inc., et al., No. 1:21-cv-01425 (filed February 17, 2021 in the United States District Court for the Southern District of New York) (the “Baros Complaint”); Anderson v. Helix Technologies, Inc., et al., No. 1:21-cv-00464 (filed February 17, 2021 in the United States District Court for the District of Colorado) (the “Anderson Complaint”); and Robinson v. Helix Technologies, Inc., et al., No. 1:21-cv-00484 (filed February 18, 2021 in the United States District Court for the District of Colorado) (the “Robinson Complaint” and, together with the Dillion Complaint, the Anderson Complaint and the Baros Complaint, the “Stockholder Complaints”)). The Stockholder Complaints were filed against (a) Helix and (b) the members of Helix’s board of directors (the “Individual Defendants”) and the Baros Complaint was also filed against Forian, MOR and Merger Sub. The Stockholder Complaints generally allege that the defendants violated Section 14(a) of the Exchange Act, by, among other things, failing to disclose material information in the Proxy Statement regarding the sales process, reconciliation of certain financial projections regarding Helix certain inputs underlying Management Planning, Inc.’s financial analysis, and potential conflicts of interest of involving Helix’s insiders. The Stockholder Complaints also allege the Individual Defendants (and the Baros Complaint alleges Forian, Merger Sub and MOR) violated Section 20(a) of the Exchange Act as controlling persons who had the ability to prevent the Proxy Statement from being materially false and misleading. The Stockholder Complaints seek, among other things, an injunction against the consummation of the transactions contemplated by the Merger Agreement and an award of costs and expenses, including a reasonable allowance for attorneys’ and experts’ fees. Despite seeking an injunction in the complaints, none of the plaintiffs followed up with a motion to enjoin the transactions. On March 11, 2021, the Robinson Complaint was voluntarily dismissed. The remaining ~~three~~3 complaints have not been served, and there has been no activity on any of them since the complaints were filed.

Nykiah Thomas v. Security Consultants Group, LLC d/b/a Helix TCS, Helix Technologies, Inc. and Shamson Sundra

On July 16, 2021, Nykiah Thomas, individually and on behalf of M’Seiya Thomas, a minor, filed a complaint in the District Court, City and County of Denver, Colorado, against Security Consultants Group, LLC d/b/a Helix TCS and Helix Technologies, Inc., subsidiaries of Forian, and Shamson Sundra, a former employee of Security Consultants Group, LLC, alleging negligence in the performance of security services in connection with a school shooting at STEM School Highlands Ranch that occurred on May 7, 2019. The case is in the early stages of discovery. The Company will vigorously defend the claims in the lawsuit.

Note 16

SEGMENT RESULTS

ASC 280-10-50 requires use of the “management approach” model for segment reporting. The management approach is based on the way a company’s management organized segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

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-making group is composed of the chief executive officer and the chief financial officer. The Company operates in ~~three~~3 segments, Information & Software, Services and Other.

Table of Contents

Asset information by operating segment is not presented below since the chief operating decision maker does not review this information by segment. The reporting segments follow the same accounting policies used in the preparation of the Company’s unaudited condensed consolidated financial statements.

~~Table of Contents~~

The following represents selected information for the Company’s reportable segments:

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Information and Software
Revenue	$	3,763,671		$	108,750		$	5,172,649		$	175,417
Costs and expenses		6,514,714			598,220			10,152,316		$	1,169,773
Loss from operations		(2,751,043	)		(489,470	)		(4,979,667	)		(994,356	)
Total other income/(expense)		0			0			0			0
Net loss before income taxes		(2,751,043	)		(489,470	)		(4,979,667	)		(994,356	)

Services
Revenue	$	492,336		$	0		$	588,647		$	0
Costs and expenses		305,830			0			386,120			0
Loss from operations		186,506			0			202,527			0
Total other income/(expense)		0			0			0			0
Net loss before income taxes		186,506			0			202,527			0


Other
Revenue	$	291,978		$	0		$	407,298		$	0
Costs and expenses		390,100			0			469,987			0
Loss from operations		(98,122	)		0			(62,689	)		0
Total other income/(expense)		(244	)		0			(332	)		0
Net income before income taxes		(98,366	)		0			(63,021	)		0

Centrally Managed Costs
Revenue	$	0		$	0		$	0		$	0
Costs and expenses		4,322,291			302,913			7,261,636			478,126
Loss from operations		(4,322,291	)		(302,913	)		(7,261,636	)		(478,126	)
Total other income/(expense)		(149,002	)		744			475,954			5,707
Net loss before income taxes		(4,471,293	)		(302,169	)		(6,785,682	)		(472,419	)

Totals
Revenue	$	4,547,985		$	108,750		$	6,168,594		$	175,417
Costs and expenses		11,532,935			901,133			18,270,059			1,647,899
Loss from operations		(6,984,950	)		(792,383	)		(12,101,465	)		(1,472,482	)
Total other income/(expense)		(149,246	)		744			475,622			5,707
Net loss	$	(7,134,196	)	$	(791,639	)	$	(11,625,843	)	$	(1,466,775	)

Three months ended March 31, 2021
2021 2020
Information and Software

Revenue $ 1,408,978 $ 66,667
Costs and expenses 3,637,602 571,553
Loss from operations (2,228,624 ) (504,886 )
Total other income/(expense) — —
Net loss before income taxes (2,228,624 ) (504,886 )

Services

Revenue $ 96,311 $ —
Costs and expenses 80,290 —
Loss from operations 16,021 —
Total other income/(expense) — —
Net loss before income taxes 16,021 —

Other

Revenue $ 115,320 $ —
Costs and expenses 79,887 —
Loss from operations 35,433 —
Total other income/(expense) (88 ) —
Net income before income taxes 35,345 —

Centrally Managed Costs

Revenue
Costs and expenses $ 2,939,345 $ 175,213
Loss from operations (2,939,345 ) (175,213 )
Total other income/(expense) 624,956 4,963
Net loss before income taxes (2,314,389 ) (170,250 )

Totals

Revenue $ 1,620,609 $ 66,667
Costs and expenses 6,737,124 746,766
Loss from operations (5,116,515 ) (680,099 )
Total other income/(expense) 624,868 4,963
Net loss $ (4,491,647 ) $ (675,136 )

Approximately 98% of revenues were attributable to customers in the United States for the three and six months ended ~~March 31,~~June 30, 2021. All of the Company’s revenues were attributable to customers in the United States for the three and six months ended ~~March 31,~~June 30, 2020.

Note 17

SUBSEQUENT EVENTS

~~On April 16, 2021,~~

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company ~~raised gross proceeds of $12,000,000 resulting from~~did not identify any subsequent events that would have required adjustment or disclosure in the sale of 1,194,743 shares of Company common stock at an average purchase price equal to $10.21 per share to a select group of institutional and accredited investors. Investors include both unaffiliated investors as well as directors of the Company. Directors purchased 560,461 shares of common stock at a purchase price of $11.33 per share, which amount represents the consolidated closing bid price of Company common stock as reported by the Nasdaq Stock Market LLC on April 9, 2021, the last trading day prior to execution of the securities purchase agreement. Unaffiliated investors purchased 631,282 shares of Company common stock at a purchase price of $8.95 per share, which price was negotiated on April 9, 2021, and represents an approximately 15% discount to the preceding day’s volume weighted average price.financial statements.

2729

Table of Contents

Item 2.

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

Cautionary Statement for Forward-Looking Information

The following discussion of our financial condition and results of operations for the three and six months ended ~~March 31,~~June 30, 2021 and 2020, respectively, should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 31, ~~2021 with the SEC.~~2021. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “Forian”, the “Company”, “we”, “us”, and “our” refer to Forian Inc.

Overview

The Company was initially incorporated in Delaware on October 15, 2020 as a wholly owned subsidiary of Medical Outcomes Research Analytics, LLC (“MOR”), which was founded in Delaware on May 6, 2019, in connection with the Business Combination described below. On October 16, 2020, the Company entered into a definitive agreement with Helix Technologies, Inc. (“Helix”) and MOR, pursuant to which DNA Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), merged with and into Helix, with Helix surviving the merger as a wholly owned subsidiary of the Company (the “Merger”). On March 2, 2021, the Company entered into a definitive agreement with the equity holders of MOR, pursuant to which the equity holders of MOR contributed their interests in MOR to the Company in exchange for shares of Company common stock (the “Contribution” and together with the Merger, the “Business Combination”). Following consummation of the Business Combination on March 2, 2021, the Company became the parent company of both Helix and MOR. Helix provides traceability and point of sale technology, analytics solutions and other products to customers within each vertical of the cannabis industry to help them improve the performance of their business.

The Company provides innovative software solutions, proprietary data and predictive analytics to optimize the operational and financial performance of our customers. Given ~~our~~the prior experience of our management team, our initial focus is on stakeholders within the healthcare and cannabis industries. However, we believe the application of our offerings across other verticals to enhance the transparency and efficacy of our customers’ relationships with their communities and customers is equally compelling.

Table of Contents

The Company represents the unique convergence of proprietary healthcare, consumer and cannabis data, SaaS analytics, innovative data management capabilities and intelligent data science with a leading cannabis technology platform yielding the combined power to drive innovation and transparency across the industries we serve. In MOR, there was early recognition of the opportunity to bring the sophistication of proven data science technology and analytics solutions to a prominent cannabis technology platform provider, creating innovation in both the applications that are key to supporting customer success within the cannabis industry and to the data science powered insights that drive healthcare and other mature regulated growth industries. In Helix, there was realization that the capability set of a technology solutions provider within more evolved sectors together with the track record of the MOR management team offered a unique opportunity to enhance the value that Helix brings to its cannabis customers and to the industry generally.

~~Table of Contents~~

The Company’s mission is to provide ~~its~~our customers with the best-in-class critical technology services through a single integrated Forian platform that enables ~~its~~our customers within the healthcare and cannabis industries to operate their businesses more safely, efficiently and profitably and to serve ~~its~~our customers and ~~its~~our customers’ stakeholders and constituencies more comprehensively.

A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a pandemic by the World Health Organization. Our business has largely operated in a work-from-home environment since the inception of the pandemic and, as a result, has experienced limited business disruption to date. Our management team continues to focus on the highest level of safety measures to protect our employees. We have not experienced a material impact to our financial results to date, however, COVID-19 continues to present significant uncertainty in the future economic outlook for our customers and the markets we serve.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Revenues

Revenues are derived from Information and Software Products, Services and Other Products. Information and Software revenues are generated from licensing fees for our proprietary information and software products. The Company recognizes revenues from Information and Software products as performance obligations under customer contracts are satisfied. Services revenues are primarily from contracts with government agencies and revenue is recognized upon completion of the various milestones within the contract. Other revenues are primarily from security monitoring services offerings and the provision of web marketing services. Contracts for these services have a stated transaction price for monthly services and are recognized as the services are provided.

Cost of Revenues

Cost of revenue is generated from direct costs associated with the delivery orof our ~~Information~~products and ~~Software products~~services to our customers. The cost of revenue relates primarily to labor costs, hosting and infrastructure costs and client service team costs. We record the cost of direct fulfillment as cost of revenue. Infrastructure and licensed data costs, which are shared across all projects or groups of projects, are not charged to cost of revenue.

Table of Contents

Research and Development

Research and development expenses consist primarily of employee-related expenses, subcontractor and third-party consulting fees, and hosted infrastructure costs. We continue to focus our research and development efforts on adding new features and applications to our product offerings. Once our prototypes are proven, we begin to capitalize costs that qualify with the associated development rather than recording those costs as research and development.

Sales and Marketing

Sales and marketing expense is primarily salaries and related expenses, including commissions, for our sales, marketing and product management staff. Marketing program costs are also recorded as sales and marketing expense including advertising, market research and events (such as trade shows, corporate communications, brand building, etc.). The Company plans to continue to invest in marketing and sales by expanding our selling and marketing staff, building brand awareness, attracting new clients and sponsoring additional marketing events. The timing of these marketing events will affect our marketing costs in any particular quarter.

~~Table of Contents~~

General and Administrative Expenses

General and administrative expenses include salaries and benefits and other costs of departments serving administrative functions, such as executives, finance and accounting and human resources. In addition, general and administrative expense includes non-personnel costs, such as professional fees, legal fees, accounting and finance advisory fees and other supporting corporate expenses not allocated to cost of revenue, product and development or sales and marketing.

Depreciation and Amortization Expenses

Depreciation and Amortization relate to long lived assets used in our business. Depreciation expense relates primarily to furniture and equipment, computers and vehicles. Amortization expense relates primarily to ~~Identifiable Intangibles~~identifiable intangibles of acquired companies.

Transaction Related Expenses

Transaction related expenses relate to the acquisition of Helix on March 2, 2021 and include professional, legal, accounting and finance advisory fees and other direct expenses.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting ~~principles.~~principles (“U.S. GAAP”). We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates – which also would have been reasonable – could have been used. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies and estimates are further discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2020, as filed with the SEC on March 31, 2021.

3032

Table of Contents

Results of Operations for the three and six months ended June 30, 2021 and 2020

The following table summarizes our condensed results of operations for the periods indicated:

	For the Three Months Ended,						For the Six Months Ended,
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues	$	4,547,985		$	108,750		$	6,168,594		$	175,417
Costs and Expenses
Cost of Revenues		1,232,790			—			1,690,676			—
Research and development		1,949,926			426,398			3,447,764			815,391
Sales and marketing		1,177,035			55,978			1,776,010			111,044
General and administrative		6,577,696			326,832			9,362,258			629,085
Depreciation and amortization		595,488			1,419			783,072			1,873
Transaction related expenses		—			90,506			1,210,279			90,506
Loss from operations	$	(6,984,950	)	$	(792,383	)	$	(12,101,465	)	$	(1,472,482	)

Comparison of Three Months Ended June 30, 2021 and 2020

For the Three Months Ended,
March 31, 2021 March 31, 2020
Revenues $ 1,620,609 $ 66,667
Costs and Expenses
Cost of Revenues 457,886 —
Research and development 1,497,838 388,993
Sales and marketing 598,975 55,066
General and administrative 2,784,562 302,253
Depreciation and amortization 187,584 454
Transaction related expenses 1,210,279 —
Loss from operations $ (5,116,515 ) $ (680,099 )

Revenues

Revenues for the three months ended ~~March 31,~~June 30, 2021 were ~~$1,620,609,~~$4,547,985, which represented an increase of ~~$1,553,942~~$4,439,235, compared to total revenue of ~~$66,667~~$108,750 for the three months ended ~~March 31,~~June 30, 2020. These revenues were primarily from Information and Software products. The increase is due to the inclusion of revenues from the ~~Merger for 29 days of the period~~Helix acquisition, which contributed ~~67%~~71% of the increase, and ~~increased~~higher revenues from the Company’s Information products, which contributed ~~33%~~29% of the increase. Revenues from the Company’s Information products increased $1,286,881 or 1183% compared to the three months ended June 30, 2020.

Cost of Revenues

Cost of revenues increased by ~~$457,886~~$1,232,790 for the three months ended ~~March 31,~~June 30, 2021 from $0 for the three months ended ~~March 31,~~June 30, 2020. The increase related to direct costs related to the delivery of revenues. This increase was primarily from increased revenues of the Company’s Information and Software products. The increase is due to the inclusion of the Helix acquisition, ~~for 29 days of the quarter~~ which contributed ~~71%~~92% of the increase, and higher cost of revenues from the Company’s Information products, which contributed ~~29%~~8% of the increase.

Research and Development

Research and development expenses for the three months ended ~~March 31,~~June 30, 2021 were ~~$1,497,838,~~$1,949,926, which represented an increase of ~~$1,108,845~~$1,523,528 compared to total research and development expenses of ~~$388,993~~$426,398 for the three months ended ~~March 31,~~June 30, 2020. The increase is due to higher R&D expenses related to scaling the Company’s products, which contributed ~~87%~~80% of the increase, stock-based compensation expenses related to equity awards granted to new Company employees after we became a public company on March 2, 2021, which contributed approximately 5% of the increase, and the inclusion of the Helix acquisition, ~~for 29 days of the quarter~~ which contributed 8%15% of the increase.

Table of Contents

Sales and Marketing

Sales and marketing expenses for the three months ended ~~March 31,~~June 30, 2021 were ~~$598,975,~~$1,177,035, which represented an increase of ~~$543,909~~$1,121,057 compared to total sales and marketing expenses of ~~$55,066~~$55,978 for the three months ended ~~March 31,~~June 30, 2020. The increase is due to higher expenses related to scaling the Company’s products, which contributed ~~79%~~60% of the increase, stock-based compensation expenses related to equity awards granted to new Company employees after we became a public company on March 2, 2021, which contributed approximately 6%16% of the increase, and the inclusion of the Helix acquisition, ~~for 29 days of the quarter~~ which contributed ~~15%~~24% of the increase.

~~Table of Contents~~

General and Administrative

General and administrative expenses for the three months ended ~~March 31,~~June 30, 2021 were ~~$2,784,562,~~$6,577,696, which represented an increase of ~~$2,482,309~~$6,250,864 compared to general and administrative expenses of ~~$302,253~~$326,832 for the three months ended ~~March 31,~~June 30, 2020. The increase is due to higher expenses related to scaling the Company’s management organization, which contributed ~~56%~~40% of the increase, stock-based compensation expenses related to equity awards granted to key Helix employees and new Company hires after we became a public company on March 2, 2021, which contributed approximately ~~31%~~40% of the increase, and the inclusion of the Helix acquisition, ~~for 29 days of the quarter~~ which contributed ~~13%~~20% of the increase.

Transaction Related Expenses

Transaction related expenses for the three months ended ~~March 31,~~June 30, 2021 were ~~$1,210,279,~~$0, which represented ~~an increase~~a decrease of ~~$1,210,279, which included $389,976 which represents~~$90,506 compared to transaction related expenses of $90,506 for the ~~fair value of a warrant issued to an advisor.~~three months ended June 30, 2020. These expenses related to the acquisition of Helix, which was completed on March 2, 2021.

Comparison of Six Months Ended June 30, 2021 and 2020

Revenues

Revenues for the six months ended June 30, 2021 were $6,168,594, which represented an increase of $5,993,177 compared to total revenue of $175,417 for the six months ended June 30, 2020. These revenues were primarily from Information and Software products. The increase is due to the inclusion of revenues from the Helix acquisition since March 2, 2021, which contributed 70% of the increase, and higher revenues from the Company’s products, which contributed 30% of the increase. Revenues from the Company’s Information products increased $1,794,050 or 1023% compared to the six months ended June 30, 2020.

Cost of Revenues

Cost of revenues increased by $1,690,676 for the six months ended June 30, 2021 from $0 for the six months ended June 30, 2020. The increase related to direct costs related to the delivery of revenues. This increase was primarily from increased revenues of the Company’s Information and Software products. The increase is due to the inclusion of the Helix acquisition since March 2, 2021, which contributed 87% of the increase, and higher cost of revenues from the Company’s Information products, which contributed 13% of the increase.

Research and Development

Research and development expenses for the six months ended June 30, 2021 were $3,447,764, which represented an increase of $2,632,373 compared to total research and development expenses of $815,391 for the six months ended June 30, 2020. The increase is due to higher R&D expenses related to scaling the Company’s products, which contributed 83% of the increase, stock-based compensation expenses related to equity awards granted to new Company employees after we became a public company on March 2, 2021, which contributed approximately 5% of the increase, and the inclusion of the Helix acquisition since March 2, 2021, which contributed 12% of the increase.

Table of Contents

Sales and Marketing

Sales and marketing expenses for the six months ended June 30, 2021 were $1,776,010, which represented an increase of $1,664,966 compared to total sales and marketing expenses of $111,044 for the six months ended June 30, 2020. The increase is due to higher expenses related to scaling the Company’s products, which contributed 67% of the increase, stock-based compensation expenses related to equity awards granted to new Company employees after we became a public company on March 2, 2021, which contributed approximately 12% of the increase, and the inclusion of the Helix acquisition since March 2, 2021, which contributed 21% of the increase.

General and Administrative

General and administrative expenses for the six months ended June 30, 2021 were $9,362,258, which represented an increase of $8,733,173 compared to general and administrative expenses of $629,085 for the six months ended June 30, 2020. The increase is due to higher expenses related to scaling the Company’s management organization, which contributed 45% of the increase, stock-based compensation expenses related to equity awards granted to key Helix employees and new Company hires after we became a public company on March 2, 2021, which contributed approximately 37% of the increase, and the inclusion of the Helix acquisition since March 2, 2021, which contributed 18% of the increase.

Transaction Related Expenses

Transaction related expenses for the six months ended June 30, 2021 were $1,210,279, which represented an increase of $1,119,773 compared to transaction related expenses of $90,506 for the six months ended June 30, 2020. These expenses related to the acquisition of Helix, which was completed on March 2, 2021.

Non-GAAP Financial Measures

In this Quarterly Report on Form 10-Q, we have provided ~~certain~~a non-GAAP ~~measures,~~measure, which we define as financial information that has not been prepared in accordance with U.S. GAAP. The non-GAAP financial measure provided herein is earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”) presented on both a historical basis and a “pro forma” basis reflecting the acquisition of Helix as of the beginning of the periods presented. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for net income or loss calculated in accordance with U.S. GAAP (referred to below as “Net loss”).

Adjusted EBITDA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our Company’s financial results that may not be shown solely by period-to-period comparisons of net income. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to some of our employees in order to evaluate our Company’s performance. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income, as well as trends in those items contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Table of Contents

We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results for reasons similar to the reasons why our management finds it useful and because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of net loss to Adjusted EBITDA, helps investors make comparisons between our company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. However, Adjusted EBITDA is not intended as a substitute for comparisons based on net loss. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under applicable SEC rules.

~~Table of Contents~~

The following is an explanation of the items excluded by us from Adjusted EBITDA but included in net loss:

●

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. Additionally, 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.

~~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. Additionally, 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 and Investment Income and Expense.~~ Interest and investment income is associated with the level of marketable debt securities and other interest bearing accounts in which we invest, and interest expense is related to our debt assumed in our acquisition of Helix related to the financing certain of its fixed assets. Interest and investment income and expense 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 and expense 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 and expense 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) transaction related expenses which consist of professional fees and other expenses incurred in connection with the acquisition of Helix; and (iii) other income which consists of profits on marketable security investments. 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.

3336

Table of Contents

●

Interest and Investment Income and Expense. Interest and investment income is associated with the level of marketable debt securities and other interest bearing accounts in which we invest, and interest expense is related to our debt assumed in our acquisition of Helix related to the financing certain of its fixed assets. Interest and investment income and expense 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 and expense 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 and expense 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) transaction related expenses which consist of professional fees and other expenses incurred in connection with the acquisition of Helix; and (iii) other income which consists of profits on marketable security investments. 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.

~~Income tax expense.~~ MOR was organized as a limited liability company until the completion of the Helix acquisition. As a result, we were treated as a partnership for federal and state income tax purposes through March 2, 2021, and our taxable income and losses are reported by our members on their individual tax returns for such period. Therefore, we did not record any income tax expense or benefit through March 2, 2021. We expect to incur a net loss for financial reporting and income tax reporting purposes for this year. Accordingly, any benefit for federal and state income taxes benefit has been entirely offset by a valuation allowance against the related deferred tax net assets. 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.

●

Income tax expense. MOR was organized as a limited liability company until the completion of the Helix acquisition. As a result, we were treated as a partnership for federal and state income tax purposes through March 2, 2021, and our taxable income and losses are reported by our members on their individual tax returns for such period. Therefore, we did not record any income tax expense or benefit through March 2, 2021. We expect to incur a net loss for financial reporting and income tax reporting purposes for this year. Accordingly, any benefit for federal and state income taxes benefit has been entirely offset by a valuation allowance against the related deferred tax net assets. 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.

Limitations on the use of Non-GAAP financial measures

There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures provided by other companies.

The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which items are adjusted to calculate our non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a U.S. GAAP basis as well as a non-GAAP basis and also by providing U.S. GAAP measures in our public disclosures.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure to evaluate our business and to view our non-GAAP financial measures in conjunction with the most directly comparable U.S. GAAP financial measures.

3437

Table of Contents

The following ~~table~~tables reconciles the specific items excluded from U.S. GAAP metrics in the calculation of non-GAAP metrics for the periods shown ~~below:~~

below.

	Historical (Unaudited)						Historical (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues:
Information and Software	$	3,763,671		$	108,750		$	5,172,649		$	175,417
Services		492,336		$	—			588,647			—
Other		291,978		$	—			407,298			—
Total revenues	$	4,547,985		$	108,750		$	6,168,594		$	175,417

Net loss	$	(7,134,196	)	$	(791,639	)	$	(11,625,843	)	$	(1,466,775	)

Depreciation & amortization		595,488			1,419			783,072			1,873
Stock based compensation expense		2,751,547			6,542			3,618,173			11,770
Change in fair value of warrant liability		128,800			—			(494,827	)		—
Loss on impairment of goodwill		—			—			—			—
Transaction related expenses		—			90,506			1,210,279			90,506
Interest and investment income, net		20,446			(744	)		19,205			(5,707	)
Other income		—			—			—			—
Income tax expense		—			—			—			—

Adjusted EBITDA	$	(3,637,915	)	$	(693,916	)	$	(6,489,941	)	$	(1,368,333	)

Historical (Unaudited)
Three Months Ended March 31,

Pro Forma (Unaudited)
Three Months Ended March 31,

2021 2020 2021 2020

Revenues:
Information and Software $ 1,408,978 $ 66,667 $ 3,037,658 $ 2,405,768
Services 96,311 — 330,001 367,723
Other 115,320 — 442,380 350,344
Total revenues 1,620,609 66,667 3,810,039 3,123,835

Net loss (4,491,647 ) (675,136 ) (7,137,674 ) (3,233,906 )

Depreciation & amortization 187,584 454 633,580
595,160

Stock-based compensation expense
863,883
5,228
1,026,826
749,290
Change in fair value of warrant liability (623,627 ) — 592,597 (657,525 )
Loss on impairment of goodwill — — — 1,369,978
Transaction related expenses 1,210,279 — 2,096,054 34,425
Interest and investment income, net (1,241 ) (4,963 ) 12,508
497,843

Other income —
—

(55,006 ) —
Income tax expense — — — —

Adjusted EBITDA (2,854,769 ) (674,417 ) (2,831,115 ) (644,735 )

Three Months ended ~~March 31,~~June 30, 2021 (Historical)

Adjusted EBITDA

Adjusted EBITDA for the three months ended ~~March 31,~~June 30, 2021 was ~~$(2,854,769)~~a loss of $3,637,915 compared to ~~$(674,417)~~a loss of $693,916 for the three months ended ~~March 31,~~June 30, 2020, ~~a decrease~~an increase of ~~$2,180,352.~~$2,943,999. The ~~decrease~~increase is primarily due to investments in product development, customer service, infrastructure and human capital and the inclusion of the Helix acquisition since March 2, 2021.

Table of Contents

Six Months ended June 30, 2021 (Historical)

Adjusted EBITDA

Adjusted EBITDA for the ~~last 29 days~~six months ended June 30, 2021 was a loss of $6,489,941 compared to a loss of $1,368,333 for the six months ended June 30, 2020, an increase of $5,121,608. The increase is primarily due to investments in product development, customer service, infrastructure and human capital and the ~~quarter.~~inclusion of Helix.

	Pro Forma (Unaudited)						Pro Forma (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021 (1)			2020
Revenues:
Information and Software	$	3,763,671		$	2,378,605		$	6,801,326		$	4,784,373
Services		492,336			283,732			822,336			651,455
Other		291,978			286,544			553,840			636,888
Total revenues	$	4,547,985		$	2,948,881		$	8,177,502		$	6,072,716

Net loss	$	(7,134,196	)	$	(2,907,056	)	$	(14,388,547	)	$	(6,140,962	)

Depreciation & amortization		595,488			589,688			1,204,300			1,184,848
Stock based compensation expense		2,751,547			322,314			3,781,116			1,071,604
Change in fair value of warrant liability		128,800			41,847			721,397			(615,678	)
Loss on impairment of goodwill		—			—			—			1,369,978
Transaction related expenses		—			141,385			2,096,054			175,810
Interest and investment income, net		20,446			170,960			24,060			668,803
Other income		—			—			(55,006	)		—
Income tax expense		—			—			—			—

Adjusted EBITDA	$	(3,637,915	)	$	(1,640,862	)	$	(6,616,626	)	$	(2,285,597	)

(1) The Pro Forma information for the six months ended June 30, 2021 above include revisions to non-GAAP financial measure amounts included in our Quarterly Report on Form 10-Q for three months ended March 31, 2021, as filed with the SEC on May 17, 2021. The net impact of such revisions to Adjusted EBITDA was $(147,596).

Three Months ended ~~March 31,~~June 30, 2021 (Pro Forma)

Revenues

Pro forma revenues for the three months ended ~~March 31,~~June 30, 2021 were ~~$3,810,039,~~$4,547,985, which represented an increase of ~~$686,204~~$1,599,104 compared to total revenue of ~~$3,123,835~~$2,948,881 for the three months ended ~~March 31,~~June 30, 2020. The increase was primarily due to growth in the number of customers utilizing the Company’s Information products.

Adjusted EBITDA

Pro forma Adjusted EBITDA for the three months ended June 30, 2021 was a loss of $3,637,915 compared to a loss of $1,640,862 for the three months ended June 30, 2020, an increase of $1,997,053. The increase is primarily due to investments in product development, customer service, infrastructure and human capital.

Six Months ended June 30, 2021 (Pro Forma)

Revenues

Pro forma revenues for the six months ended June 30, 2021 were $8,177,502, which represented an increase of $2,104,786 compared to total revenue of $6,072,716 for the six months ended June 30, 2020. The increase was primarily due to growth in the number of customers utilizing these products.

Table of Contents

Adjusted EBITDA

Pro forma Adjusted EBITDA for the ~~three~~six months ended ~~March 31,~~June 30, 2021 was ~~$(2,831,115)~~a loss of $6,616,626 compared to ~~$(644,735)~~a loss of $2,285,597 for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~a decrease~~an increase of ~~$2,186,380.~~$4,331,029. The ~~decrease~~increase is primarily due to investments in product development, customer service, infrastructure and human capital.

~~Table of Contents~~

Liquidity and Capital Resources

Since the Company’s inception in 2019, most of ~~our cash~~the Company’s resources have been devoted to scaling ~~our~~its research and development, sales and marketing, and management infrastructure. The Company’s operations have been financed primarily from the cash proceeds received from equity issuances. The Company expects to continue to fund its operations and future acquisitions through a combination of cash flow generated from operating activities, debt financing, and/or additional equity issuances. To date, the Company has generated limited revenues from the licensing of information products. The Company has incurred losses and generated negative cash flows from operations since inception. As of ~~March 31,~~June 30, 2021, the Company’s principal source of liquidity was cash, which totaled ~~$2,595,747~~$4,763,324 and marketable securities which totaled ~~$7,504,000. Additionally, in April 2021, the Company raised an additional $12,000,000 in gross proceeds through the sale of its common stock to a group of institutional investors.~~$12,505,118.

Cash Flows

The following table summarizes selected information about our sources and uses of cash and cash equivalents for the periods presented:

	For the Three Months Ended,						For the Six Months Ended,
	March 31, 2021			March 31, 2020			June 30, 2021			June 30, 2020
Net cash used in operating activities	$	(3,584,794	)	$	(458,718	)	$	(8,248,764	)	$	(1,518,139	)
Net cash provided by (used in) investing activities		5,246,936			(2,321,546	)
Net cash used in investing activities								(18,269	)		(1,144,884	)
Net cash provided by financing activities		292,148			3,315,700			12,294,355			3,315,700
Effect of foreign exchange rate changes on cash		(24,006	)		—			70,539			—
Net increase in cash and cash equivalents	$	1,930,284		$	535,436		$	4,097,861		$	652,677

Net Cash Used in Operating Activities

Net cash used in operating activities increased by ~~$(3,126,076)~~$6,730,625 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020. The increase was primarily the result of scaling up the Company’s operations from the initial start-up phase.

Net Cash Used in Investing Activities

Net cash used in investing activities ~~increased~~decreased by ~~$7,568,482~~$1,126,615 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020. ~~The increase was primarily~~This is the result of an increase in additions to property and equipment of $314,366 and an increase in the purchase of marketable securities of $9,616,140, offset by an increase in the sale of marketable securities of ~~$4,000,0000~~$9,746,144 and cash acquired of $1,310,977 as part of the ~~Helix business combination.~~Business Combination.

Table of Contents

Net Cash Provided by Financing Activities

Net cash provided by financing activities ~~decreased~~increased by ~~$3,023,552~~$8,978,655 for the ~~three~~six months ended ~~March 31,~~June 30, 2021 compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020. The increase was primarily related to the cash proceeds received from the Company’s equity ~~issuances.~~issuance in April 2021.

Off Balance Sheet Arrangements

The Company does not have relationships with other organizations or process any transactions that would constitute off balance sheet arrangements.

~~Table of Contents~~

Recent Accounting Pronouncements

The Company has considered all recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

See Note 3 in the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~The Company maintains~~

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (who is also ~~the Company’s~~our principal executive officer), and our chief financial officer (who is also ~~the Company’s~~our principal financial and accounting officer), to allow for timely decisions regarding required disclosure. In accordance with Rules 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures as of ~~March 31,~~June 30, 2021, which is the end of the three-month period covered by this Quarterly Report on Form 10-Q.

~~The Company~~We identified material weaknesses in our internal controls over financial reporting as disclosed in Item 9A of ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2020, as filed with the SEC on March 31, 2021. Our chief executive officer and chief financial officer therefore concluded that our disclosure controls and procedures as of the fiscal quarter ended ~~March 31,~~June 30, 2021 remain ineffective to the extent of the material weaknesses identified.

We are committed to remediating the control deficiencies that gave rise to the material weaknesses, certain of which were the result of the evaluation of MOR as the financial successor to Helix for the twelve-months ended December 31, 2021. Our management is responsible for implementing changes and improvements to internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses we identified. With oversight from our Audit Committee, we have taken steps to remediate the internal control deficiencies and expect to implement further remediation actions during 2021 that we believe will improve our internal control over financial reporting. Certain improvements to our internal control over financial reporting occurred as a consequence of the Merger (e.g., additional finance resources and protocols employed by Helix), supplemented by ~~the Company’s~~our engagement of outside firms to assist ~~the Company~~us with additional accounting expertise and with the review of our internal controls framework for ~~the Company’s~~our compliance with the Sarbanes Oxley Act of 2002, as amended. Until the remediation actions are fully implemented and the operational effectiveness of related internal controls is validated through testing, the material weaknesses noted above will continue to exist.

Table of Contents

Notwithstanding the identified material weaknesses, ~~the Company’s~~our management, including our chief executive officer and chief financial officer, has determined, based on the procedures we have performed, that the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial condition, results of operations and cash flows at ~~March 31,~~June 30, 2021 and for the periods presented in accordance with U.S. GAAP.

~~Table of Contents~~

Changes in Internal Control Over Financial Reporting

Our remediation efforts for material weaknesses previously reported were ongoing during the three months ended ~~March 31,~~June 30, 2021, as described in Item 9A of our 2020 Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2020, as filed with the SEC on March 31, 2021. There were no other material changes in our internal control over financial reporting that occurred during the ~~three~~six months ended ~~March 31,~~June 30, 2021 that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time we may be involved in claims that arise during the ordinary course of business. 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 our overall operations. Although the results of litigation and claims cannot be predicted with certainty, we do not currently have any pending litigation to which we are a party or to which our property is subject that we believe to be material, except for:

Kenney, et al. v. Helix TCS, Inc.

On July 20, 2017, one former employee of Helix filed a lawsuit in the United States District Court for the District of Colorado alleging violations of the Fair Labor Standards Act on behalf of himself and other employees. The plaintiff seeks damages for Helix’s alleged failure to compensate employees appropriately for the overtime hours they worked as purported “non-exempt” employees. The matter has been conditionally certified as a collective action and the court has authorized the plaintiff to send notice and consent forms to putative class members. Notice and consent forms have ~~not yet~~ been ~~sent nor~~sent. The period for returning consent forms has ~~any~~ended. No decision has been made on the merits of the claim. Helix filed a motion to dismiss the claim, which motion was denied. Helix, on an interlocutory basis, appealed that denial. The U.S. Court of Appeals for the Tenth Circuit affirmed the decision of the District Court and remanded the matter. The case is in the early stages of discovery. WeThe Company will vigorously defend the claims in the lawsuit.

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 Forian, claiming that he owned 10% of GTI. We believe the lawsuit is wholly without merit and will vigorously defend ~~ourselves from these~~the claims ~~vigorously.~~in the lawsuit. As of ~~March 31,~~June 30, 2021, the case is in the process of ~~discovery.~~

~~Arapaho Dispute~~

3842

Table of Contents

Helix Stockholder Lawsuits

Beginning on February 16, 2021, four lawsuits were filed by purported Helix stockholders (captioned Dillion v. Helix Technologies, Inc., et al., No. 1:21-cv-01365 (filed February 16, 2021 in the United States District Court for the Southern District of New York) (the “Dillion Complaint”); Baros v. Helix Technologies, Inc., et al., No. 1:21-cv-01425 (filed February 17, 2021 in the United States District Court for the Southern District of New York) (the “Baros Complaint”); Anderson v. Helix Technologies, Inc., et al., No. 1:21-cv-00464 (filed February 17, 2021 in the United States District Court for the District of Colorado) (the “Anderson Complaint”); and Robinson v. Helix Technologies, Inc., et al., No. 1:21-cv-00484 (filed February 18, 2021 in the United States District Court for the District of Colorado) (the “Robinson Complaint” and, together with the Dillion Complaint, the Anderson Complaint and the Baros Complaint, the “Stockholder Complaints”)). The Stockholder Complaints were filed against (a) Helix and (b) the members of Helix’s board of directors (the “Individual Defendants”) and the Baros Complaint was also filed against Forian, MOR and Merger Sub. The Stockholder Complaints generally allege that the defendants violated Section 14(a) of the Exchange Act, by, among other things, failing to disclose material information in the Proxy Statement regarding the sales process, reconciliation of certain financial projections regarding Helix certain inputs underlying Management Planning, Inc.’s financial analysis, and potential conflicts of interest of involving Helix’s insiders. The Stockholder Complaints also allege the Individual Defendants (and the Baros Complaint alleges Forian, Merger Sub and MOR) violated Section 20(a) of the Exchange Act as controlling persons who had the ability to prevent the Proxy Statement from being materially false and misleading. The Stockholder Complaints seek, among other things, an injunction against the consummation of the transactions contemplated by the Merger Agreement and an award of costs and expenses, including a reasonable allowance for attorneys’ and experts’ fees. Despite seeking an injunction in the complaints, none of the plaintiffs followed up with a motion to enjoin the transactions. On March 11, 2021, the Robinson Complaint was voluntarily dismissed. The remaining three complaints have not been served, and there has been no activity on any of them since the complaints were filed. We will vigorously defend the claims in the remaining pending Stockholder Complaints.

Nykiah Thomas v. Security Consultants Group, LLC d/b/a Helix TCS, Helix Technologies, Inc. and Shamson Sundra

Item 1A.

Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~On April 12, 2021, we entered into a securities purchase agreement with certain accredited investors (the “Investors”) and certain of our directors (the “Affiliates”), pursuant to which we issued (i) 631,282 shares of our common stock to the Investors at a price of $8.95 per share, which represented a 15% discount to the volume weighted price of our common stock on April 8, 2021, and (ii) 560,461 shares of our common stock to the Affiliates at a price of $11.33 per share, which amount equals the consolidated closing bid price of our common stock on April 9, 2021, for aggregate gross proceeds to us of $12,000,000 (the “PIPE Offering”).

Table of Contents

In connection with the PIPE Offering, we agreed to use reasonable commercial efforts to file a Registration Statement on Form S-3 covering the resale of the shares of common stock sold in the PIPE Offering as soon as practicable after the date on which we become eligible to use a Registration Statement on Form S-3.

The offer, sale and issuance of these securities were exempt from registration in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(a)(2) under the Securities Act and/or under Regulation D of the Securities Act, relative to transactions by an issuer not involving a public offering.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

~~Table of Contents~~

Item 5.

Other Information

None.

Item 6.

Exhibits

~~2.1~~	Agreement and Plan of Merger, dated as of October 16, 2020, by and among Helix Technologies, Inc., Forian Inc., DNA Merger Sub, Inc. and Medical Outcomes Research Analytics, LLC (incorporated by reference to Appendix A 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).

~~2.2~~	Amendment to Agreement and Plan of Merger, dated as of October 16, 2020, by and among Helix Technologies, Inc., Forian Inc., DNA Merger Sub, Inc. and Medical Outcomes Research Analytics, LLC dated as of December 30, 2020 (incorporated by reference to Exhibit 2.2 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).

~~2.3~~	Amendment No. 2 to Agreement and Plan of Merger, dated as of October 16, 2020, as amended by Amendment to Agreement and Plan of Merger dated as of December 30, 2020, by and among Helix Technologies, Inc., Forian Inc., DNA Merger Sub, Inc. and Medical Outcomes Research Analytics, LLC dated as of February 9, 2021 (incorporated by reference to Exhibit 2.3 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).

~~2.4~~	~~Equity Interest Contribution Agreement (incorporated by reference to Exhibit 2.4 of the Company’s Current Report on Form 8-K filed with the SEC on March 3, 2021).~~

3.1	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).

3.2	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).

~~10.1+~~10.1	~~Employment~~Form of Securities Purchase Agreement, dated ~~March 1,~~April 12, 2021, by and between the Registrant and ~~Edward Spaniel, Jr.~~each of the investors and the affiliates (incorporated by reference to Exhibit ~~10.6~~10.1 to the Company’s ~~Annual~~Current Report on Form ~~10-K,~~8-K, filed with the SEC on ~~March 31,~~April 13, 2021).

~~10.2+~~	Special Advisor Agreement, dated January 26, 2021, by and between the Registrant and Scott Ogur (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2021).

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance ~~Document.~~
	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.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.

101.LAB	Inline XBRL Taxonomy Extension Label ~~Linkbase.~~
	Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

*104	~~Filed herewith.~~

+	~~Indicates management contract or compensatory plan.~~Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

4044

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on ~~May 17,~~August 16, 2021.

	FORIAN INC.

	By:	/s/ Daniel Barton
		Daniel Barton
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Clifford A. Farren
		Clifford A. Farren
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

41
45

Delaware		85-3467693
(State of Other Jurisdiction of incorporation or Organization)		(I.R.S. Employer Identification No.)

41 University Drive, Suite 400, Newtown, PA		18940
(Address of principal executive offices)		(Zip code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value per share		FORA		The Nasdaq Stock Market LLC

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
			Emerging growth company ☒

	March, 31			December 31,			June 30,			December 31,
	2021			2020			2021			2020
	Unaudited						Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	2,595,747		$	665,463		$	4,763,324		$	665,463
Marketable securities		7,504,000			11,501,844			12,505,118			11,501,844
Accounts receivable, net		501,427			22,996			1,390,277			22,996
Contract assets		426,954			196,701			582,597			196,701
Prepaid expenses		584,862			120,979			930,172			120,979
Other receivable		450,000			—
Other assets								450,000			0
Total current assets		12,062,990			12,507,983			20,621,488			12,507,983

Property and equipment, net		246,247			46,358			482,234			46,358
Intangible assets, net		10,731,127			—			10,163,914			0
Goodwill		9,016,886			—			8,700,912			0
Right of use assets, net								988,674			0
Deposits and other assets		1,327,651			—			344,920			0
Total assets	$	33,384,901		$	12,554,341		$	41,302,142		$	12,554,341

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable		1,951,803			647,601			1,977,152			647,601
Accrued expenses		2,637,442			480,741			2,346,567			480,741
Notes payable, current portion		20,119			—
Short-term operating lease liabilities								264,329			0
Notes payable								18,054			0
Warrant liability		624,088			—			752,888			0
Deferred revenues		671,184			158,884			658,894			158,884
Total current liabilities		5,904,636			1,287,226			6,017,884			1,287,226

Long-term liabilities:
Other long-term liabilities		724,587			—
Long-term operating lease liabilities								737,701			0
Total long-term liabilities		724,587			—			737,701			0

Total liabilities		6,629,223			1,287,226			6,755,585			1,287,226

Commitments and contingencies (Note 15)								0			0
Stockholders’ equity:
Preferred Stock; par value $0.001; 5,000,000 Shares authorized; 0 issued and outstanding as of March 31, 2021 and December 31, 2020		—			—
Common Stock; par value $0.001; 95,000,000 Shares authorized; 29,824,424 issued and outstanding as of March 31, 2021 and 21,233,039 issued and outstanding as of December 31, 2020		29,824			21,233
Preferred Stock; par value $0.001; 5,000,000 Shares authorized; 0 issued and outstanding as of June 30, 2021 and December 31, 2020								0			0
Common Stock; par value $0.001; 95,000,000 Shares authorized; 31,198,721 issued and outstanding as of June 30, 2021 and 21,233,039 issued and outstanding as of December 31, 2020								31,199			21,233
Additional paid-in capital		37,510,532			17,514,907			52,264,976			17,514,907
Accumulated other comprehensive loss		(24,006	)		—			145,250			0
Accumulated deficit		(10,760,672	)		(6,269,025	)		(17,894,868	)		(6,269,025	)
Total stockholders’ equity		26,755,678			11,267,115			34,546,557			11,267,115
Total liabilities and stockholders’ equity	$	33,384,901		$	12,554,341		$	41,302,142		$	12,554,341

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	3

	Condensed Consolidated ~~Balance Sheets at March 31,~~Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2021 ~~(unaudited)~~ and ~~December 31,~~ 2020 (unaudited)	3 4

	~~Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020 (unaudited)~~	4

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the ~~three months ended March 31,~~Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~three months ended March 31,~~Six Months Ended June 30, 2021 and 2020 (unaudited)	6 8

	Notes to Condensed Consolidated Financial Statements	79

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28 30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37 41

Item 4.	Controls and Procedures	37 41

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	38 42

Item 1A.	Risk Factors	39 43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39 43

Item 3.	Defaults Upon Senior Securities	39 44

Item 4.	Mine Safety Disclosures	39 44

Item 5.	Other Information	40 44

Item 6.	Exhibits	40 44

Signatures		41 45

	Preferred Stock			Common Stock
	Shares	Par Value @$0.001 per share		Shares		Par Value @$0.001 per share		Additional Paid In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Stockholders’ Equity
Balance at January 1, 2021		$	0		21,233,039	$	21,233	$	17,514,907	$	0	$	(6,269,025)	$	11,267,115
Issuance of Forian Common stock in Helix Acquisition					8,408,383		8,408		18,446,376		0		0		18,454,784
Forian Restricted Stock Vesting from MOR unvested restricted stock					343,123		343		5,102		0		0		5,445
Issuance of common stock warrants					0		0		389,976		0		0		389,976
Forian shares issued upon exercise of MOR Class B options					10,167		10		292,820		0		0		292,830
Stock based compensation expense					0		0		3,612,728		0		0		3,612,728
Issuance of Forian common stock					1,191,743		1,192		11,967,460		0		0		11,968,652
Issuance of Forian common stock upon exercise of stock options					12,266		13		35,607		0		0		35,620
Foreign currency translation					—		0		0		145,250		0		145,250
Net loss													(11,625,843)		(11,625,843)
Balance at June 30, 2021	0	$	0		31,198,721	$	31,199	$	52,264,976	$	145,250	$	(17,894,868)	$	34,546,557

	For the Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,625,843	)	$	(1,466,775	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		783,072			1,873
Amortization on right of use asset		94,010			0
Realized and unrealized gain on marketable securities		(2,331	)		(5,621	)
Provision for doubtful accounts		50,813			0
Stock-based compensation expense		3,618,173			11,770
Change in fair value of warrant liability		(494,827	)		0
Non-cash transaction expenses		389,976			0
Change in operating assets and liabilities:
Accounts receivable		(931,715	)		(200,000	)
Contract assets		(108,808	)		0
Prepaid expenses		(589,859	)		(387,845	)
Changes in lease liabilities during the period		(105,378)	)		0
Deposits and other assets		(344,338	)		0
Accounts payable		(1,105,422	)		268,876
Accrued expenses		1,944,639			0
Deferred revenues		179,074			259,583
Other long-term liabilities		0			0
Net cash used in operating activities		(8,248,764	)		(1,518,139	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(328,303	)		(13,937	)
Purchase of marketable securities		(12,504,788	)		(2,888,648	)
Sale of marketable securities		11,503,845			1,757,701
Cash acquired as part of business combination		1,310,977			0
Net cash used in investing activities		(18,269	)		(1,144,884	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of MOR Series S units		0			3,315,700
Proceeds from exercise of MOR Class B options		292,830			0
Payments on notes payable and financing arrangements		(2,747	)		0
Proceeds from exercise of common stock options		35,620			0
Proceeds from sale of common stock		11,968,652			0
Net cash provided by financing activities		12,294,355			3,315,700

Effect of foreign exchange rate changes on cash		70,539			0

Net change in cash		4,097,861			652,677

Cash and cash equivalents, beginning of period		665,463			494

Cash and cash equivalents, end of period	$	4,763,324		$	653,171

Supplemental disclosure of cash flow information:
Cash paid for interest	$	724		$	0
Cash paid for taxes	$	0		$	0
Non-cash Investing and Financing Activities:
Conversion of promissory notes to Series S units	$	0		$	184,300
Non-cash consideration for Helix acquisition	$	18,454,784		$	0

Total purchase price	$	18,454,784	$	18,454,784

Assets acquired:
Cash		1,310,977		1,310,977
Accounts receivable, net		488,453		488,453
Prepaid expenses and other current assets		228,397
Prepaid expenses				215,064
Contract assets		263,755		277,088
Other receivables		450,000
Property and equipment, net		146,559
Other assets				450,000
Property and equipment				146,559
Software Technology		5,279,000		5,279,000
Trade Names and Trademarks		386,000		386,000
Customer Relationships		5,243,000		5,243,000
Right of use assets				1,082,684
Deposits and other assets		1,083,266		582
Total assets acquired	$	14,879,407	$	14,879,407

Liabilities assumed:
Accounts payable and accrued liabilities	$	2,755,341	$	2,428,675
Short-term lease liabilities				295,364
Deferred revenues		636,910		320,936
Warrant liability		1,247,715		1,247,715
Notes payable and financing arrangements		20,801		20,801
Other long-term liabilities		780,742		812,044
Total liabilities assumed	$	5,441,509	$	5,125,535
Estimated fair value of net assets acquired:	$	9,437,898	$	9,753,872

Goodwill	$	9,016,886	$	8,700,912

	March 31, 2021			December 31, 2020			June 30, 2021			December 31, 2020
	Unaudited						Unaudited
Personal computing equipment	$	66,525		$	55,767		$	103,478		$	55,767
Furniture and equipment		123,738			—			131,065			0
Software development costs		50,228			—			266,410			0
Vehicles		25,876			—			25,876			0
Total		266,367			55,767			526,829			55,767
Less: Accumulated depreciation		(20,120	)		(9,409	)
Less: Accumulated depreciation and amortization								(44,595	)		(9,409	)
Property and equipment, net	$	246,247		$	46,358		$	482,234		$	46,358

	Three months ended March 31, 2021
	2021			2020
Information and Software
Revenue	$	1,408,978		$	66,667
Costs and expenses		3,637,602			571,553
Loss from operations		(2,228,624	)		(504,886	)
Total other income/(expense)		—			—
Net loss before income taxes		(2,228,624	)		(504,886	)

Services
Revenue	$	96,311		$	—
Costs and expenses		80,290			—
Loss from operations		16,021			—
Total other income/(expense)		—			—
Net loss before income taxes		16,021			—

Other
Revenue	$	115,320		$	—
Costs and expenses		79,887			—
Loss from operations		35,433			—
Total other income/(expense)		(88	)		—
Net income before income taxes		35,345			—

Centrally Managed Costs
Revenue
Costs and expenses	$	2,939,345		$	175,213
Loss from operations		(2,939,345	)		(175,213	)
Total other income/(expense)		624,956			4,963
Net loss before income taxes		(2,314,389	)		(170,250	)

Totals
Revenue	$	1,620,609		$	66,667
Costs and expenses		6,737,124			746,766
Loss from operations		(5,116,515	)		(680,099	)
Total other income/(expense)		624,868			4,963
Net loss	$	(4,491,647	)	$	(675,136	)

	Historical (Unaudited) Three Months Ended March 31,						Pro Forma (Unaudited) Three Months Ended March 31,
	2021			2020			2021			2020

Revenues:
Information and Software	$	1,408,978		$	66,667		$	3,037,658		$	2,405,768
Services		96,311			—			330,001			367,723
Other		115,320			—			442,380			350,344
Total revenues		1,620,609			66,667			3,810,039			3,123,835

Net loss		(4,491,647	)		(675,136	)		(7,137,674	)		(3,233,906	)

Depreciation & amortization		187,584			454			633,580			595,160
Stock-based compensation expense		863,883			5,228			1,026,826			749,290
Change in fair value of warrant liability		(623,627	)		—			592,597			(657,525	)
Loss on impairment of goodwill		—			—			—			1,369,978
Transaction related expenses		1,210,279			—			2,096,054			34,425
Interest and investment income, net		(1,241	)		(4,963	)		12,508			497,843
Other income		—			—			(55,006	)		—
Income tax expense		—			—			—			—

Adjusted EBITDA		(2,854,769	)		(674,417	)		(2,831,115	)		(644,735	)