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 ☒ |
PART I | FINANCIAL INFORMATION | |
Item 1. | 1 | |
1 | ||
2 | ||
3 | ||
4 | ||
Item 2. | 28 | |
Item 3. | 37 | |
Item 4. | 37 | |
PART II | 38 | |
Item 1. | 38 | |
Item 1A. | 38 | |
Item 2. | 39 | |
Item 3. | 39 | |
Item 4. | 39 | |
Item 5. | 39 | |
Item 6. | 39 | |
| ||
40 |
March, 31 | December 31, | March 31, | December 31, | |||||||||||||
2021 | 2020 | 2023 | 2022 | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 2,595,747 | $ | 665,463 | $ | 839,715 | $ | 2,795,743 | ||||||||
Marketable securities | 7,504,000 | 11,501,844 | 39,164,720 | 17,396,487 | ||||||||||||
Accounts receivable, net | 501,427 | 22,996 | 3,795,284 | 1,809,028 | ||||||||||||
Proceeds receivable from sale of discontinued operations, net | 8,811,708 | — | ||||||||||||||
Contract assets | 426,954 | 196,701 | 1,840,714 | 2,252,958 | ||||||||||||
Prepaid expenses | 584,862 | 120,979 | 425,986 | 835,786 | ||||||||||||
Other receivable | 450,000 | — | ||||||||||||||
Other assets | 435,736 | 432,338 | ||||||||||||||
Current assets of discontinued operations | — | 1,393,688 | ||||||||||||||
Total current assets | 12,062,990 | 12,507,983 | 55,313,863 | 26,916,028 | ||||||||||||
Property and equipment, net | 246,247 | 46,358 | 112,093 | 75,030 | ||||||||||||
Intangible assets, net | 10,731,127 | — | ||||||||||||||
Goodwill | 9,016,886 | — | ||||||||||||||
Right of use assets, net | 27,346 | 32,560 | ||||||||||||||
Deposits and other assets | 1,327,651 | — | 181,436 | 196,675 | ||||||||||||
Non-current assets of discontinued operations | — | 19,037,874 | ||||||||||||||
Total assets | $ | 33,384,901 | $ | 12,554,341 | $ | 55,634,738 | $ | 46,258,167 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 1,951,803 | 647,601 | 350,784 | 316,105 | ||||||||||||
Accrued expenses | 2,637,442 | 480,741 | 6,423,536 | 3,766,789 | ||||||||||||
Notes payable, current portion | 20,119 | — | ||||||||||||||
Short-term operating lease liabilities | 21,952 | 21,600 | ||||||||||||||
Warrant liability | 624,088 | — | 10,106 | 4,547 | ||||||||||||
Deferred revenues | 671,184 | 158,884 | 3,100,682 | 2,581,287 | ||||||||||||
Current liabilities of discontinued operations | — | 1,662,247 | ||||||||||||||
Total current liabilities | 5,904,636 | 1,287,226 | 9,907,060 | 8,352,575 | ||||||||||||
Long-term liabilities: | ||||||||||||||||
Other long-term liabilities | 724,587 | — | ||||||||||||||
Long-term operating lease liabilities | 5,394 | 10,960 | ||||||||||||||
Convertible notes payable, net of debt issuance costs (Note 10) ($6,000,000 in principal is held by a related party. Refer to Note 14) | 25,315,003 | 25,106,547 | ||||||||||||||
Non-current liabilities of discontinued operations | — | 365,609 | ||||||||||||||
Total long-term liabilities | 724,587 | — | 25,320,397 | 25,483,116 | ||||||||||||
Total liabilities | 6,629,223 | 1,287,226 | 35,227,457 | 33,835,691 | ||||||||||||
Commitments and contingencies (Note 15) | ||||||||||||||||
Commitments and contingencies (Note 17) | — | — | ||||||||||||||
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 March 31, 2023 and December 31, 2022 | — | — | ||||||||||||||
Common Stock; par value $0.001; 95,000,000 Shares authorized; 32,418,842 issued and outstanding as of March 31, 2023 and 32,251,326 issued and outstanding as of December 31, 2022 | 32,419 | 32,251 | ||||||||||||||
Additional paid-in capital | 37,510,532 | 17,514,907 | 72,668,484 | 71,182,326 | ||||||||||||
Accumulated other comprehensive loss | (24,006 | ) | — | |||||||||||||
Accumulated deficit | (10,760,672 | ) | (6,269,025 | ) | (52,293,622 | ) | (58,792,101 | ) | ||||||||
Total stockholders’ equity | 26,755,678 | 11,267,115 | 20,407,281 | 12,422,476 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 33,384,901 | $ | 12,554,341 | $ | 55,634,738 | $ | 46,258,167 |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Revenue | $ | 4,870,387 | 3,534,861 | |||||
Costs and Expenses: | ||||||||
Cost of revenues | 1,252,215 | 1,243,030 | ||||||
Research and development | 531,689 | 1,089,879 | ||||||
Sales and marketing | 1,196,192 | 820,594 | ||||||
General and administrative | 3,639,826 | 5,273,968 | ||||||
Separation expenses | 599,832 | 5,417,043 | ||||||
Depreciation and amortization | 38,430 | 15,349 | ||||||
Total costs and expenses | 7,258,184 | 13,859,863 | ||||||
Loss From Continuing Operations | (2,387,797 | ) | (10,325,002 | ) | ||||
Other Income (Expense): | ||||||||
Change in fair value of warrant liability | (5,559 | ) | 219,840 | |||||
Interest and investment income | 382,922 | 3,795 | ||||||
Interest expense | (208,456 | ) | (211,333 | ) | ||||
Total other income, net | 168,907 | 12,302 | ||||||
Loss from continuing operations before income taxes | (2,218,890 | ) | (10,312,700 | ) | ||||
Income tax expense | (29,909 | ) | (5,000 | ) | ||||
Loss from continuing operations, net of tax | (2,248,799 | ) | (10,317,700 | ) | ||||
Loss from discontinued operations | (94,427 | ) | (1,738,547 | ) | ||||
Gain on sale of discontinued operations | 11,531,849 | 202,159 | ||||||
Income tax effect on discontinued operations | (2,690,144 | ) | — | |||||
Income (loss) from discontinued operations, net of tax | 8,747,278 | (1,536,388 | ) | |||||
Net Income (Loss) | $ | 6,498,479 | $ | (11,854,088 | ) | |||
Net income (loss) per share: | ||||||||
Basic and diluted | ||||||||
Continuing operations | $ | (0.08 | ) | $ | (0.32 | ) | ||
Discontinued operations | 0.27 | (0.05 | ) | |||||
Net income (loss) per share - basic and diluted | $ | 0.19 | $ | (0.37 | ) | |||
Weighted-average shares outstanding: | 32,300,237 | 31,857,685 |
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Unaudited | Unaudited | |||||||
Revenues: | ||||||||
Information and Software | $ | 1,408,978 | $ | 66,667 | ||||
Services | 96,311 | — | ||||||
Other | 115,320 | — | ||||||
Total revenues | 1,620,609 | 66,667 | ||||||
Costs and Expenses: | ||||||||
Cost of revenue | 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 | — | ||||||
Total costs and expenses | 6,737,124 | 746,766 | ||||||
Loss From Operations | (5,116,515 | ) | (680,099 | ) | ||||
Other Income (Expense): | ||||||||
Change in fair value of warrant liability | 623,627 | — | ||||||
Interest and investment income, net | 1,241 | 4,963 | ||||||
Total other income, net | 624,868 | 4,963 | ||||||
Net loss before income taxes | (4,491,647 | ) | (675,136 | ) | ||||
Income tax expense | — | — | ||||||
Net Loss | $ | (4,491,647 | ) | $ | (675,136 | ) | ||
Other comprehensive loss: | ||||||||
Changes in foreign currency translation adjustment | (24,006 | ) | — | |||||
Total other comprehensive loss | $ | (24,006 | ) | $ | — | |||
Total comprehensive loss | $ | (4,515,653 | ) | $ | (675,136 | ) | ||
Basic and diluted net loss per common share | $ | (0.19 | ) | $ | (0.08 | ) | ||
Weighted-average shares outstanding: | 24,033,512 | 8,213,527 |
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 December 31, 2020 | $ | — | 21,233,039 | $ | 21,233 | $ | 17,514,907 | — | $ | (6,269,025 | ) | $ | 11,267,115 | |||||||||||||||||||
Issuance of Forian Common stock in Helix Acquisition | 8,408,383 | 8,408 | 18,446,376 | 18,454,784 | ||||||||||||||||||||||||||||
Forian Restricted Stock Vesting from MOR unvested restricted stock | 172,835 | 173 | 2,570 | 2,743 | ||||||||||||||||||||||||||||
Forian shares issued upon exercise of MOR Class B options | 10,167 | 10 | 292,820 | 292,830 | ||||||||||||||||||||||||||||
Net loss | (4,491,647 | ) | (4,491,647 | ) | ||||||||||||||||||||||||||||
Stock based compensation expense | 863,883 | 863,883 | ||||||||||||||||||||||||||||||
Issuance of common stock warrants | 389,976 | 389,976 | ||||||||||||||||||||||||||||||
Foreign currency translation | (24,006 | ) | (24,006 | ) | ||||||||||||||||||||||||||||
Balance at March 31, 2021 | — | $ | — | 29,824,424 | $ | 29,824 | $ | 37,510,532 | $ | (24,006 | ) | $ | (10,760,672 | ) | $ | 26,755,678 |
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 Income | Accumulated Deficit | Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||
Balance at December 31, 2019 | $ | — | 7,713,528 | $ | 7,714 | $ | 1,000,097 | — | $ | (1,288,842 | ) | $ | (281,031 | ) | |||||||||||||||||
Issuance of MOR Series S Units in March 2020 | 5,316,284 | 5,316 | 3,310,384 | 3,315,700 | |||||||||||||||||||||||||||
Conversion of Promissory notes for MOR Series S Units in March 2020 | 295,501 | 296 | 184,005 | 184,300 | |||||||||||||||||||||||||||
Vested MOR Class B Profit Interest Units | 329,438 | 329 | 4,899 | 5,228 | |||||||||||||||||||||||||||
Net loss | (675,136 | ) | (675,136 | ) | |||||||||||||||||||||||||||
Balance at March 31, 2020 | — | $ | — | 13,654,750 | $ | 13,655 | $ | 4,499,384 | $ | — | $ | (1,963,978 | ) | $ | 2,549,061 |
Preferred Stock | Common Stock | |||||||||||||||||||||||||||
Shares | Par Value @ $0.001 per share | Shares | Par Value @ $0.001 per share | Additional Paid In Capital | Accumulated Deficit | Stockholders’ Equity | ||||||||||||||||||||||
Balance at January 1, 2023 | — | $ | — | 32,251,326 | $ | 32,251 | $ | 71,182,326 | $ | (58,792,101 | ) | $ | 12,422,476 | |||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes | — | — | 166,615 | 167 | (94,766 | ) | — | (94,599 | ) | |||||||||||||||||||
Issuance of Forian common stock upon exercise of stock options | — | — | 901 | 1 | (1 | ) | — | — | ||||||||||||||||||||
Stock based compensation expense | — | — | — | — | 1,580,925 | — | 1,580,925 | |||||||||||||||||||||
Net income | — | — | — | — | — | 6,498,479 | 6,498,479 | |||||||||||||||||||||
Balance at March 31, 2023 | — | $ | — | 32,418,842 | $ | 32,419 | $ | 72,668,484 | $ | (52,293,622 | ) | $ | 20,407,281 |
Preferred Stock | Common Stock | |||||||||||||||||||||||||||
Shares | Par Value @ $0.001 per share | Shares | Par Value @ $0.001 per share | Additional Paid In Capital | Accumulated Deficit | Stockholders’ Equity | ||||||||||||||||||||||
Balance at January 1, 2022 | — | $ | — | 31,773,154 | $ | 31,773 | $ | 57,959,622 | $ | (32,820,130 | ) | $ | 25,171,265 | |||||||||||||||
Vesting of Restricted Stock and Stock Awards, net of shares surrendered for taxes | — | — | 155,547 | 156 | 1,900 | — | 2,056 | |||||||||||||||||||||
Stock based compensation expense | — | — | — | — | 7,902,528 | — | 7,902,528 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (11,854,088 | ) | (11,854,088 | ) | |||||||||||||||||||
Balance at March 31, 2022 | — | $ | — | 31,928,701 | $ | 31,929 | $ | 65,864,050 | $ | (44,674,218 | ) | $ | 21,221,761 |
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Unaudited | Unaudited | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (4,491,647 | ) | $ | (675,136 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 187,584 | 454 | ||||||
Realized and unrealized gain on marketable securities | (2,156 | ) | (4,951 | ) | ||||
Provision for doubtful accounts | 14,632 | — | ||||||
Stock-based compensation expense | 863,883 | 5,228 | ||||||
Change in fair value of warrant liability | (623,627 | ) | — | |||||
Non-cash transaction expenses | 389,976 | — | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (4,610 | ) | (200,000 | ) | ||||
Contract assets | 33,502 | — | ||||||
Prepaid expenses | (235,486 | ) | (84,007 | ) | ||||
Right of use assets and lease liabilities, net | (8,657 | ) | — | |||||
Deposits and other assets | (301,208 | ) | — | |||||
Accounts payable and accrued expense | 717,632 | 166,361 | ||||||
Deferred revenues | (124,610 | ) | 333,333 | |||||
Other long-term liabilities | (2 | ) | — | |||||
Net cash used in operating activities | (3,584,794 | ) | (458,718 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Additions to property and equipment | (64,041 | ) | (2,350 | ) | ||||
Purchase of marketable securities | — | (2,888,648 | ) | |||||
Sale of marketable securities | 4,000,000 | 569,452 | ||||||
Cash acquired as part of business combination | 1,310,977 | — | ||||||
Net cash provided by (used in) investing activities | 5,246,936 | (2,321,546 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of MOR Series S units | — | 3,315,700 | ||||||
Proceeds from exercise of MOR Class B options | 292,830 | — | ||||||
Payments on notes payable and financing arrangements | (682 | ) | — | |||||
Net cash provided by financing activities | 292,148 | 3,315,700 | ||||||
Effect of foreign exchange rate changes on cash | (24,006 | ) | — | |||||
Net change in cash | 1,930,284 | 535,436 | ||||||
Cash and cash equivalents, beginning of period | 665,463 | 494 | ||||||
Cash and cash equivalents, end of period | $ | 2,595,747 | $ | 535,930 | ||||
Supplemental disclosure of cash and non-cash transactions: | ||||||||
Cash paid for interest and taxes | $ | 724 | $ | — | ||||
Conversion of promissory notes to Series S units | $ | — | $ | 184,300 | ||||
Non-cash consideration for Helix acquisition | $ | 18,454,784 | $ | — |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 6,498,479 | $ | (11,854,088 | ) | |||
Less: Income (loss) from discontinued operations | 8,747,278 | (1,536,388 | ) | |||||
Loss from continuing operations | (2,248,799 | ) | (10,317,700 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 38,430 | 15,349 | ||||||
Amortization on right of use asset | 5,214 | 398 | ||||||
Amortization of debt issuance costs | 1,333 | 1,333 | ||||||
Amortization of discount - proceeds from sale of discontinued operations | (55,041 | ) | — | |||||
Accrued interest on convertible notes | 208,456 | 210,000 | ||||||
Realized and unrealized gain on marketable securities | (320,530 | ) | (3,399 | ) | ||||
Provision for doubtful accounts | — | 22,210 | ||||||
Stock-based compensation expense | 1,828,233 | 7,613,978 | ||||||
Change in fair value of warrant liability | 5,559 | (219,840 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (1,986,256 | ) | (1,864,910 | ) | ||||
Contract assets | 412,244 | (630,922 | ) | |||||
Prepaid expenses | 409,800 | 6,435 | ||||||
Changes in lease liabilities during the year | (5,214 | ) | (398 | ) | ||||
Deposits and other assets | 11,841 | 523,814 | ||||||
Accounts payable | 33,346 | 619,192 | ||||||
Accrued expenses | (59,788 | ) | (227,294 | ) | ||||
Deferred revenues | 519,395 | 1,852,302 | ||||||
Net cash used in operating activities - continuing operations | (1,201,777 | ) | (2,399,452 | ) | ||||
Net cash used in operating activities - discontinued operations | (26,649 | ) | (1,426,426 | ) | ||||
Net cash used in operating activities | (1,228,426 | ) | (3,825,878 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Additions to property and equipment | (75,493 | ) | (74,527 | ) | ||||
Purchase of marketable securities | (39,704,579 | ) | (12,390,670 | ) | ||||
Net cash from sale of discontinued operations | 20,890,193 | 225,575 | ||||||
Sale of marketable securities | 18,256,876 | 12,400,000 | ||||||
Net cash provided by (used in) used in investing activities - continuing operations | (633,003 | ) | 160,378 | |||||
Net cash provided by (used in) investing activities - discontinued operations | — | (827,893 | ) | |||||
Net cash used in investing activities | (633,003 | ) | (667,515 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payments on notes payable and financing arrangements | — | (13,122 | ) | |||||
Payment of employee withholding tax related to restricted stock units | (94,599 | ) | — | |||||
Net cash used in financing activities - continuing operations | (94,599 | ) | (13,122 | ) | ||||
Net cash used in financing activities | (94,599 | ) | (13,122 | ) | ||||
Net change in cash | (1,956,028 | ) | (4,506,515 | ) | ||||
Cash and cash equivalents, beginning of period | 2,795,743 | 17,938,490 | ||||||
Cash and cash equivalents, end of period | $ | 839,715 | $ | 13,431,975 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | — | $ | — | ||||
Cash paid for taxes | $ | — | $ | — |
Note 2 | BASIS OF PRESENTATION |
Note 3 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Contract assets | ||||
Balance at January 1, 2021 | $ | 196,701 | ||
Contract assets acquired from Helix | 263,755 | |||
Add: Revenue recognized from related contract assets | 218,333 | |||
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 | ||
Contract liabilities (Deferred Revenue) | ||||
Balance at January 1, 2021 | $ | 158,884 | ||
Contract liabilities assumed from Helix | 636,910 | |||
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 |
Contract Assets | Contract Liability | |||||||||||||||
Costs of obtaining contracts | Unbilled revenue | Total | Deferred Revenue | |||||||||||||
Balance at January 1, 2022 | $ | 70,278 | $ | 986,613 | $ | 1,056,891 | $ | 637,563 | ||||||||
Beginning deferred revenue balance recognized during the period | — | — | — | (637,562 | ) | |||||||||||
Net change due to timing of billings, payments and recognition | 87,738 | 1,108,329 | 1,196,067 | 2,581,286 | ||||||||||||
Balance at December 31, 2022 | 158,016 | 2,094,942 | 2,252,958 | 2,581,287 | ||||||||||||
Beginning deferred revenue balance recognized during the period | — | — | — | (1,667,028 | ) | |||||||||||
Net change due to timing of billings, payments and recognition | 7,373 | (419,617 | ) | (412,244 | ) | 2,186,423 | ||||||||||
Balance at March 31, 2023 | $ | 165,389 | $ | 1,675,325 | $ | 1,840,714 | $ | 3,100,682 |
March 31, 2023 | December 31, 2022 | |||||||
Estimated next twelve months | $ | 16,677,597 | $ | 15,790,233 | ||||
Thereafter | 20,637,969 | 22,192,028 | ||||||
$ | 37,315,566 | $ | 37,982,261 |
Note 4 |
Total purchase price | $ | 18,454,784 | ||
Assets acquired: | ||||
Cash | 1,310,977 | |||
Accounts receivable, net | 488,453 | |||
Prepaid expenses and other current assets | 228,397 | |||
Contract assets | 263,755 | |||
Other receivables | 450,000 | |||
Property and equipment, net | 146,559 | |||
Software Technology | 5,279,000 | |||
Trade Names and Trademarks | 386,000 | |||
Customer Relationships | 5,243,000 | |||
Deposits and other assets | 1,083,266 | |||
Total assets acquired | $ | 14,879,407 | ||
Liabilities assumed: | ||||
Accounts payable and accrued liabilities | $ | 2,755,341 | ||
Deferred revenues | 636,910 | |||
Warrant liability | 1,247,715 | |||
Notes payable and financing arrangements | 20,801 | |||
Other long-term liabilities | 780,742 | |||
Total liabilities assumed | $ | 5,441,509 | ||
Estimated fair value of net assets acquired: | $ | 9,437,898 | ||
Goodwill | $ | 9,016,886 |
December 31, 2022 | ||||
Carrying amounts of assets associated with Helix Businesses included as part of discontinued operations: | ||||
Cash and cash equivalents | $ | 524,155 | ||
Accounts receivable, net | 738,510 | |||
Prepaid expenses | 131,023 | |||
Current assets of discontinued operations | $ | 1,393,688 | ||
Property and equipment, net | 2,500,376 | |||
Intangible assets, net | 6,775,841 | |||
Goodwill | 9,099,372 | |||
Right of use assets, net | 603,636 | |||
Deposits and other assets | 58,649 | |||
Non-current assets of discontinued operations | $ | 19,037,874 | ||
Carrying amounts of liabilities associated with Helix Businesses included as part of discontinued operations: | ||||
Accounts payable | $ | 258,960 | ||
Accrued expenses | 661,981 | |||
Short-term operating lease liabilities | 243,888 | |||
Deferred revenues | 497,418 | |||
Current liabilities of discontinued operations | $ | 1,662,247 | ||
Long-term operating lease liabilities | 365,609 | |||
Non-current liabilities of discontinued operations | $ | 365,609 |
For the Three Months Ended March 31, | ||||||||
Description | 2021 | 2020 | ||||||
Revenues | $ | 3,810,039 | $ | 3,123,835 | ||||
Net loss | 7,137,674 | 3,233,906 | ||||||
Net loss per share: | ||||||||
Basic and diluted-as pro forma (unaudited) | $ | 0.24 | $ | 0.14 |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Income and expense line items related to Helix Businesses: | ||||||||
Revenues: | ||||||||
Information and Software | 1,121,677 | 2,274,233 | ||||||
Services | 179,798 | 428,706 | ||||||
Other | — | 153,479 | ||||||
Total revenues | 1,301,475 | 2,856,418 | ||||||
Costs and Expenses: | ||||||||
Cost of revenues | 699,015 | 1,365,227 | ||||||
Research and development | 160,164 | 990,036 | ||||||
Sales and marketing | 35,005 | 559,344 | ||||||
General and administrative | 129,283 | 1,142,924 | ||||||
Depreciation and amortization | 372,435 | 590,325 | ||||||
Total costs and expenses | 1,395,902 | 4,647,856 | ||||||
Loss from discontinued operations for Helix Businesses | (94,427 | ) | (1,791,438 | ) | ||||
Other Income (Expense): | ||||||||
Interest and investment income | — | 693 | ||||||
Interest expense | — | (25,778 | ) | |||||
Foreign currency related gains, net | — | 77,976 | ||||||
Total other income, net | — | 52,891 | ||||||
Net loss from discontinued operations for Helix Businesses before income taxes | (94,427 | ) | (1,738,547 | ) | ||||
Gain on sale of discontinued operations | 11,531,849 | 202,159 | ||||||
Income tax expense | (2,690,144 | ) | — | |||||
Net gain (loss) from discontinued operations, net of tax for Helix Businesses | $ | 8,747,278 | $ | (1,536,388 | ) |
Note 5 | MARKETABLE SECURITIES |
March 31, 2023 | December 31, 2022 | |||||||
United States Treasury Bills | ||||||||
Cost | $ | 38,854,166 | $ | 17,234,633 | ||||
Fair Market Value | $ | 39,164,720 | $ | 17,396,487 |
Note 6 | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Note 7 | PROPERTY AND EQUIPMENT, NET |
March 31, 2021 | December 31, 2020 | |||||||||||||||
Unaudited | March 31, 2023 | December 31, 2022 | ||||||||||||||
Personal computing equipment | $ | 66,525 | $ | 55,767 | $ | 101,466 | $ | 160,079 | ||||||||
Furniture and equipment | 123,738 | — | — | 7,991 | ||||||||||||
Software development costs | 50,228 | — | 73,260 | — | ||||||||||||
Vehicles | 25,876 | — | ||||||||||||||
Total | 266,367 | 55,767 | 174,726 | 168,070 | ||||||||||||
Less: Accumulated depreciation | (20,120 | ) | (9,409 | ) | (62,633 | ) | (93,040 | ) | ||||||||
Property and equipment, net | $ | 246,247 | $ | 46,358 | $ | 112,093 | $ | 75,030 |
Note 8 |
Estimated Useful Life (Years) | Gross Carrying Amount at March 2, 2021 | Accumulated Amortization | Net Book Value at 3/31/2021 | |||||||||||||
Customer Relationships | 5 | $ | 5,243,000 | $ | (81,746 | ) | $ | 5,161,254 | ||||||||
Software Technology | 2 | 1,170,000 | (45,605 | ) | 1,124,395 | |||||||||||
Software Technology | 7 | 4,109,000 | (45,761 | ) | 4,063,239 | |||||||||||
Tradenames and Trademarks | 8 | 386,000 | (3,761 | ) | 382,239 | |||||||||||
$ | 10,908,000 | $ | (176,873 | ) | $ | 10,731,127 |
Years Ending December 31, | Future amortization expense | |||
2021 | $ | 1,701,638 | ||
2022 | 2,268,850 | |||
2023 | 1,784,495 | |||
2024 | 1,683,850 | |||
2025 | 1,683,850 | |||
Thereafter | 1,608,444 | |||
Total | $ | 10,731,127 |
ACCRUED EXPENSES |
March 31, 2021 | December 31, 2020 | |||||||
Employee compensation | 936,515 | 346,720 | ||||||
Accrued expenses | 1,075,969 | 8,825 | ||||||
Transaction-related | 365,985 | 125,196 | ||||||
Lease obligation - current | 258,973 | — | ||||||
Total | $ | 2,637,442 | $ | 480,741 |
March 31, 2023 | December 31, 2022 | |||||||
Accrued salary, commission and bonus | $ | 1,659,762 | $ | 2,112,482 | ||||
Income taxes payable | 2,746,515 | — | ||||||
Accrued expenses | 2,017,259 | 1,654,307 | ||||||
Total | $ | 6,423,536 | $ | 3,766,789 |
Note 9 | WARRANT LIABILITY |
As of March 31, 2021 | ||||
Fair value of company’s common stock | $ | 10.11 | ||
Dividend yield | 0 | % | ||
Expected volatility | 85% - 168 | % | ||
Risk Free interest rate | 0.16% - 0.26 | % | ||
Expected life (years) | 2.58 | |||
Exercise price | $ | 8.00 - $28.00 | ||
Fair value of financial instruments - warrants | $ | 624,088 |
As of March 31, 2023 | As of December 31, 2022 | |||||||
Fair value of Company's common stock | $ | 3.81 | $ | 2.73 | ||||
Dividend yield | 0 | % | 0 | % | ||||
Expected volatility | 79% - 95 | % | 76% - 92 | % | ||||
Risk free interest rate | 4.21% - 4.93 | % | 4.34% - 4.75 | % | ||||
Expected life (years) | 0.71 | 0.91 | ||||||
Exercise price | $ | 8.00 - $28.00 | $ | 8.00 - $28.00 | ||||
Fair value of financial instruments - warrants | $ | 10,106 | $ | 4,547 |
Amount | ||||
Balance as of January 1, 2021 | $ | — | ||
Fair value of warrant liability assumed in connection with Helix Merger | 1,247,715 | |||
Change in fair value of warrant liability | (623,627 | ) | ||
Balance as of March 31, 2021 | $ | 624,088 |
Amount | ||||
Balance as of January 1, 2023 | $ | 4,547 | ||
Change in fair value of warrant liability | 5,559 | |||
Balance as of March 31, 2023 | $ | 10,106 |
Amount | ||||
Balance as of January 1, 2022 | $ | 369,234 | ||
Change in fair value of warrant liability | (219,840 | ) | ||
Balance as of March 31, 2022 | $ | 149,394 |
Note 10 | CONVERTIBLE NOTES |
March 31, 2023 | December 31, 2022 | |||||||
Principal outstanding | $ | 24,000,000 | $ | 24,000,000 | ||||
Add: accrued interest | 1,327,890 | 1,120,767 | ||||||
Less: unamortized debt issuance costs | (12,887 | ) | (14,220 | ) | ||||
Convertible note payable, net of debt issuance costs | $ | 25,315,003 | $ | 25,106,547 |
Note 11 | STOCK-BASED COMPENSATION |
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 | ||||||||||||
Unvested at January 1, 2022 | 1,146,131 | $ | 1.28 | |||||||||||||
Issued | 2,191,869 | 1.21 | — | 11.71 | ||||||||||||
Vested | 1,729,589 | 0.72 | (474,768 | ) | 0.03 | |||||||||||
Canceled | — | — | (120,105 | ) | 12.18 | |||||||||||
Unvested at December 31, 2020 | 1,699,676 | 1.28 | ||||||||||||||
Unvested at December 31, 2022 | 551,258 | 3.28 | ||||||||||||||
Issued | 344,000 | 12.18 | 570,000 | 3.79 | ||||||||||||
Vested | 172,836 | 0.03 | (189,885 | ) | 4.39 | |||||||||||
Canceled | — | — | (20,653 | ) | 0.16 | |||||||||||
Unvested at March 31, 2021 | $ | 1,870,840 | $ | 2.27 | ||||||||||||
Unvested at March 31, 2023 | 910,720 | $ | 5.78 |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Exercise Price | $ | 2.00 to $51.80 | $ | 2.00 to $51.80 | ||||
Fair value of Company common stock | $ | 2.98 to $15.61 | $ | 2.98 to $15.61 | ||||
Dividend yield | 0% | 0% | ||||||
Expected volatility | 79% to 188% | 83% to 188% | ||||||
Risk Free interest rate | 0.27% to 4.52% | 0.27% to 4.52% | ||||||
Expected life (years) remaining | 0.01 to 9.62 | 0.01 to 9.62 |
Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | ||||||||||
Outstanding at January 1, 2021 | — | $ | — | — | ||||||||
Options assumed in Helix Merger | 456,464 | $ | 15.151 | 3.96 | ||||||||
Granted | 2,623,664 | $ | 14.095 | 9.93 | ||||||||
Exercised | — | $ | — | — | ||||||||
Forfeited and expired | — | $ | — | — | ||||||||
Outstanding at March 31, 2021 | 3,080,128 | $ | 14.251 | 9.05 | ||||||||
Vested options at March 31, 2021 | 456,464 | $ | 15.151 | 3.96 |
Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | ||||||||||
Outstanding at January 1, 2022 | 4,046,973 | $ | 14.25 | 8.75 | ||||||||
Granted | 1,203,250 | $ | 4.02 | 9.14 | ||||||||
Exercised | (33,334 | ) | $ | 2.47 | 2.55 | |||||||
Forfeited and expired | (1,233,081 | ) | $ | 13.87 | 8.12 | |||||||
Outstanding at December 31, 2022 | 3,983,808 | $ | 10.53 | 8.23 | ||||||||
Granted | 1,097,500 | $ | 3.79 | 8.70 | ||||||||
Exercised | (2,452 | ) | $ | 8.09 | 8.09 | |||||||
Forfeited and expired | (444,554 | ) | $ | 11.09 | 8.13 | |||||||
Outstanding at March 31, 2023 | 4,634,302 | $ | 8.89 | 8.36 | ||||||||
Vested options at March 31, 2023 | 2,076,200 | $ | 12.59 | 6.94 |
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Cost of revenue | — | — | ||||||
Research and development | 54,890 | 2,576 | ||||||
Sales and marketing | 31,744 | 901 | ||||||
General and administrative | 777,249 | 1,751 |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Services | $ | 37,926 | $ | 19,629 | ||||
Research and development | 38,192 | 47,441 | ||||||
Sales and marketing | 54,002 | 51,821 | ||||||
General and administrative | 1,348,281 | 2,078,044 | ||||||
Separation expenses | 349,832 | 5,417,043 | ||||||
Subtotal | 1,828,233 | 7,613,978 | ||||||
Discontinued operations | (247,308 | ) | 290,606 | |||||
Total | $ | 1,580,925 | $ | 7,904,584 |
Note | NET |
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Net loss attributable to common shareholders | $ | (4,491,647 | ) | $ | (675,136 | ) | ||
Net loss per share attributable to common shareholders: | ||||||||
Basic | $ | (0.19 | ) | $ | (0.08 | ) | ||
Diluted | $ | (0.19 | ) | $ | (0.08 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic | 24,033,512 | 8,213,527 | ||||||
Diluted | 24,033,512 | 8,213,527 |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income (loss): | ||||||||
Loss from continuing operations | $ | (2,248,799 | ) | $ | (10,317,700 | ) | ||
Income (loss) from discontinued operations | 8,747,278 | (1,536,388 | ) | |||||
Net Income (Loss) | $ | 6,498,479 | $ | (11,854,088 | ) | |||
Basic and diluted loss from continuing operations per share attributable to common shareholders: | $ | (0.08 | ) | $ | (0.32 | ) | ||
Basic and diluted income (loss) from discontinued operations per share: | 0.27 | (0.05 | ) | |||||
Net loss per common share | $ | 0.19 | $ | (0.37 | ) | |||
Weighted average common shares outstanding - basic and diluted | 32,300,237 | 31,857,685 |
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Potentially dilutive securities: | ||||||||
Warrants | 124,087 | — | ||||||
Stock options | 3,080,128 | — | ||||||
Unvested Restricted Stock Awards and Units | 1,870,840 | 2,258,577 |
As of March 31, | ||||||||
2023 | 2022 | |||||||
Potentially dilutive securities: | ||||||||
Warrants | 96,500 | 119,087 | ||||||
Stock options | 4,634,302 | 3,467,891 | ||||||
Convertible notes | 2,514,849 | 2,453,088 | ||||||
Unvested Restricted Stock Awards and Units | 910,720 | 990,584 | ||||||
Total | 8,156,371 | 7,030,650 |
Note | RELATED PARTY TRANSACTIONS |
Note 14 | SEGMENT RESULTS |
Note 15 | LEASES |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash used in operating leases | $ | 5,931 | $ | 450 | ||||
ROU assets obtained in exchange for new operating lease liabilities | $ | — | $ | 398 |
March 31, 2023 | December 31, 2022 | |||||||
Right of use assets, net | $ | 27,346 | $ | 32,560 | ||||
Short-term operating lease liabilities | $ | 21,952 | $ | 21,600 | ||||
Long-term operating lease liabilities | 5,394 | 10,960 | ||||||
Total lease liabilities | $ | 27,346 | $ | 32,560 | ||||
Weighted average remaining lease term (in years) | 1.23 | 1.48 | ||||||
Weighted average discount rate | 9.3% | 9.3% |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating lease expense | $ | 5,931 | $ | 450 | ||||
Short-term lease expense | $ | 4,812 | $ | — | ||||
Total operating lease costs | $ | 10,743 | $ | 450 |
March 31, 2023 | ||||
2023 (remaining) | $ | 17,794 | ||
2024 | 11,262 | |||
Total future minimum lease payments | $ | 29,056 | ||
Less imputed interest | (1,710 | ) | ||
Total | $ | 27,346 |
Note | COMMITMENTS AND CONTINGENCIES |
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 | $ | — |
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 | % |
As of March 31, 2021 | ||||
2021 | $ | 250,824 | ||
2022 | 308,470 | |||
2023 | 286,670 | |||
2024 | 291,161 | |||
2025 | 85,726 | |||
Thereafter | 14,288 | |||
Total future minimum lease payments | $ | 1,237,139 | ||
Less imputed interest | (253,579 | ) | ||
Total | $ | 983,560 |
March 31, 2021 | December 31, 2020 | |||||||
Unaudited | ||||||||
Year ending December 31, 2021 | $ | 272,188 | $ | 533,488 | ||||
Year ending December 31, 2022 | 272,187 | 272,188 | ||||||
$ | 544,375 | $ | 805,676 |
March 31, 2023 | ||||
Year ending December 31, 2023 | $ | 1,137,595 | ||
Year ending December 31, 2024 | 1,887,595 | |||
Year ending December 31, 2025 | 1,600,000 | |||
Year ending December 31, 2026 | 400,000 | |||
$ | 5,025,190 |
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 | ) |
Note 17 | SUBSEQUENT EVENTS |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Revenues | $ | 4,870,387 | $ | 3,534,861 | ||||
Costs and Expenses | ||||||||
Cost of revenues | 1,252,215 | 1,243,030 | ||||||
Research and development | 531,689 | 1,089,879 | ||||||
Sales and marketing | 1,196,192 | 820,594 | ||||||
General and administrative | 3,639,826 | 5,273,968 | ||||||
Separation expenses | 599,832 | 5,417,043 | ||||||
Depreciation and amortization | 38,430 | 15,349 | ||||||
Loss from continuing operations | $ | (2,387,797 | ) | $ | (10,325,002 | ) |
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 | ) |
• | Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods. |
• | Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our Company’s operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Stock-based compensation expense includes certain separation expenses related to the vesting of stock options. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based compensation expense for the three months ended March 31, 2023 includes $349,832 related to the accelerated vesting of stock. On March 2, 2022, we and the former chief executive officer and the former chief financial officer of Helix mutually agreed not to renew special advisor agreements. Per the terms of the agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, we recorded $5,417,043 of stock compensation expenses during March 2022 related to the options that vested through the twelve months ending March 2, 2023. We believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our Company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future. |
• | Interest Expense. Interest expense is associated with the convertible notes entered into on September 1, 2021 in the amount of $24,000,000, (the “Notes”). The Notes are due on September 1, 2025 and accrue interest at an annual rate of 3.5%. We exclude interest expense from Adjusted EBITDA (i) because it is not directly attributable to the performance of our business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest expense associated with the Notes will recur in future periods. |
• | Investment Income. Investment income is associated with the level of marketable debt securities and other interest-bearing accounts in which we invest. Interest and investment income can vary over time due to a variety of financing transactions, changes in interest rates, cash used to fund operations and capital expenditures and acquisitions that we have entered into or may enter into in the future. We exclude interest and investment income from Adjusted EBITDA (i) because these items are not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different capital structures. Investors should note that interest income will recur in future periods. |
• | Other Items. We engage in other activities and transactions that can impact our net loss. In the periods being reported, these other items included (i) change in fair value of warrant liability which related to warrants assumed in the acquisition of Helix; and (ii) 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. |
• | Severance expenses. Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Severance expenses for the three months ended March 31, 2023 includes $250,000 related to the salary continuation. We exclude these other items from Adjusted EBITDA because we believe these costs are not recurring and not directly attributable to the performance of our business operations and, accordingly, their exclusion assists management and investors in making period-to-period comparisons of operating performance. In addition, the Company records normal course of business severance expenses in the operating expense line item related to the employee’s activities. |
• | Income tax expense. We exclude the income tax expense from Adjusted EBITDA (i) because we believe that the income tax expense is not directly attributable to the underlying performance of our business operations and, accordingly, its exclusion assists management and investors in making period-to-period comparisons of operating performance and (ii) to assist management and investors in making comparisons to companies with different tax attributes. |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Revenue | $ | 4,870,387 | $ | 3,534,861 | ||||
Net loss from continuing operations | $ | (2,248,799 | ) | $ | (10,317,700 | ) | ||
Depreciation and amortization | 38,430 | 15,349 | ||||||
Stock based compensation expense | 1,828,233 | 7,613,978 | ||||||
Change in fair value of warrant liability | 5,559 | (219,840 | ) | |||||
Interest and investment income | (382,922 | ) | (3,795 | ) | ||||
Interest expense | 208,456 | 211,333 | ||||||
Severance expense | 250,000 | — | ||||||
Income tax expense | 29,909 | 5,000 | ||||||
Adjusted EBITDA - continuing operations | $ | (271,134 | ) | $ | (2,695,675 | ) |
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 | ) |
For the Three Months Ended, | ||||||||
March 31, 2021 | March 31, 2020 | |||||||
Net cash used in operating activities | $ | (3,584,794 | ) | $ | (458,718 | ) | ||
Net cash provided by (used in) investing activities | 5,246,936 | (2,321,546 | ) | |||||
Net cash provided by financing activities | 292,148 | 3,315,700 | ||||||
Effect of foreign exchange rate changes on cash | (24,006 | ) | — | |||||
Net increase in cash and cash equivalents | $ | 1,930,284 | $ | 535,436 |
For the Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net cash used in operating activities - continuing operations | $ | (1,201,777 | ) | $ | (2,399,452 | ) | ||
Net cash provided by (used in) used in investing activities - continuing operations | (633,003 | ) | 160,378 | |||||
Net cash used in financing activities - continuing operations | (94,599 | ) | (13,122 | ) | ||||
Net increase in cash and cash equivalents - continuing operations | $ | (1,929,379 | ) | $ | (2,252,196 | ) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 5. | Other Information |
Item 6. | Exhibits |
Stock Purchase Agreement, | |
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Company’s Form S-4 (Reg. No. 333-250938) filed with the SEC on November 24, 2020, as amended on December 31, 2020, January 19, 2021, February 1, 2021 and February 9, 2021). | |
Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Company’s Form S-4 (Reg. No. 333-250938) filed with the SEC on November 24, 2020, as amended on December 31, 2020, January 19, 2021, February 1, 2021 and February 9, 2021). | |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Certification of Chief Executive Officer | |
101.INS | Inline XBRL Instance |
Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
101.CAL | |
Inline XBRL Taxonomy | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
101.LAB | Inline XBRL Taxonomy Extension Label |
Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
FORIAN INC. | ||
By: | /s/ | |
Max Wygod | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
By: | /s/ | |
Michael Vesey | ||
Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |