UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, ~~2021~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-40146

FORIAN INC.

(Exact name of registrant as specified in its charter)

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)

Registrant’s telephone number, including area code: (267) ~~757-8707~~225-6263

Securities registered pursuant to Section 12(b) of the Act:

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b 2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Act). Yes ☐ No ☒

As of May ~~13, 2021,~~10, 2023, there were ~~32,543,008~~32,583,971 shares outstanding of the registrant’s common stock, including shares of unvested restricted stock.

FORIAN INC.

~~(formerly known as MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC)~~

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, ~~2021~~2023 AND DECEMBER 31, ~~2020~~2022

Item 1.

Financial Statements and Supplementary Unaudited Data

	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

The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

Table of Contents

FORIAN INC.

~~(formerly known as MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC)~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE LOSS~~

(UNAUDITED)

~~FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020~~

	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

The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

Table of Contents

FORIAN INC.

~~(formerly known as MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC)~~

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ~~(DEFICIT) (UNAUDITED)~~

~~FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020~~

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

~~The accompanying notes are an integral part of these condensed consolidated financial statements~~

~~Table of Contents~~(UNAUDITED)

~~FORIAN INC.~~

	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

~~(formerly known as MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020~~

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 $ —

The accompanying notes are an integral part of these unaudited condensed consolidated financial ~~statements~~statements.

Table of Contents

FORIAN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	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	$	—		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

~~Forian Inc.~~

FORIAN INC.

~~Notes to Condensed Consolidated Financial Statements~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1

BUSINESS ORGANIZATION AND NATURE OF OPERATIONS

Forian Inc. (the “Company” or “Forian”), was incorporated in Delaware on October 15, 2020 as a wholly owned subsidiary of Medical Outcomes Research Analytics, LLC (“MOR”) for the purpose of effecting the ~~Business Combination (as defined below)~~business combination with Helix Technologies Inc. (“Helix”). ~~All activity~~Forian provides a unique suite of ~~the Company through March 2, 2021 relates only to MOR. MOR was established on May 6, 2019 in Delaware. MOR Analytics, LLC~~data management capabilities and ~~COR Analytics, LLC are wholly owned subsidiaries of MOR. The Company provides innovative software~~proprietary information and analytics solutions ~~proprietary data and predictive analytics~~ to optimize ~~the~~and measure operational, clinical and financial performance ~~of its~~for customers within the healthcare and ~~cannabis~~related industries.

The Company’s mission is to provide its customers with the best-in-class critical technology services through a single integrated platform that enables its customers to operate their businesses more safely, efficiently and profitably and to serve its customers and its customers’ stakeholders and constituencies more comprehensively. The Company represents the unique convergence of proprietary healthcare and consumer data, 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 it serves.

On March 2, 2021 (the “Merger Closing Date”), pursuant to the 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, as further amended by Amendment No. 2 to Agreement and Plan of Merger, dated February 9, 2021 (together, the “Merger Agreement”), by and among Helix Technologies, Inc. (“Helix”), the Company and DNA Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), Merger Sub merged with and into Helix,business combination with Helix being the surviving corporation as a wholly owned subsidiary of the Company (the “Merger”). Each share of Helix common stock was exchanged for 0.05 shares of Company common stock in the Merger. Helix provides tracking 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.

Immediately prior to the Merger Closing Date, pursuant to the Equity Interest Contribution Agreement, dated March 2, 2021 (the “Contribution Agreement”), by and among the Company, MOR and each equity holder of MOR, such equity holders 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”). Upon the closing of the Contribution, MOR became a wholly owned subsidiary of the Company. Each unit of MOR was exchanged for 1.7776 shares of Company common stock in the Merger, subject to adjustments pursuant to the Contribution Agreement.

~~Pursuant to the Merger Agreement, while the Company is the legal acquirer, the Merger~~ was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, ~~“Business Combinations”~~Business Combinations (“ASC 805”)~~. As such, MOR is~~, with the Company deemed ~~to be~~ the accounting acquirer for financial reporting purposes. Helix provides software and analytics solutions to state governments and licensed operators in the cannabis industry, primarily through its subsidiary, Bio-Tech Medical Software, Inc. (“BioTrack”), until its sale of BioTrack in 2023.

On February 10, 2023, Helix completed the sale of 100% of the outstanding capital stock of BioTrack, on March 3, 2022 Helix completed the sale of the assets of its security monitoring business, and on October 31, 2022 Helix completed the sale of 100% of the outstanding membership interest of its Engeni LLC subsidiary (these businesses together are referred to as the “Helix Businesses”). As a result of these transactions, Helix has no remaining active operations and the Company no longer provides products or services to the cannabis industry. The results of the Helix Businesses are presented as discontinued operations in the Condensed Consolidated Statements of Operations and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Helix Businesses to discontinued operations in the Consolidated Balance Sheet as of December 31, 2022. The Company will continue to provide analytics solutions to customers within the healthcare and related industries. For further discussion on the discontinued operations, refer to Note 4.

Note 2

BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain footnotes and other financial information normally required by U.S. GAAP have been condensed or omitted in accordance with instructions to Form 10-Q and Article 8 of ~~Resolution~~Regulation S-X. In the opinion of management, such statements include all adjustments which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, ~~2021.~~2023. The operating results presented herein are not necessarily an indication of the results that may be expected for the year. The condensed consolidated financial statements should be read in conjunction with the Company’s audited Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2022, as filed with the Securities and Exchange Commission (“SEC”) on March ~~31, 2021.~~30, 2023.

The Contribution was completed on March 2, 2021 and the combination of MOR and Forian was accounted for as a transaction between entities under common control pursuant to ASC 805-50. Accordingly, the combination of Forian and MOR results in a change in reporting entity and the financial statements are presented as though the combination of Forian and MOR occurred as of the beginning of the periods presented. Additionally, the results of Helix are included in the accompanying condensed consolidated financial statements beginning on March 2, 2021, the Merger Closing Date, through the 29-day period ended March 31, 2021.

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 including Helix TCS, LLC (through December 31, 2022), Security Consultants Group, LLC ~~Boss Security Solutions, LLC,~~(through December 31, 2022), Helix Legacy, Inc. (f/k/a Security Grade Protective Services, Ltd.), Bio-Tech Medical Software, Inc (through February 10, 2023), Engeni, LLC (including Engeni S.A. (“Engeni SA”), which is 99% owned by Engeni, LLC) (through October 31, 2022). Effective October 31, 2022, 100% of the outstanding membership interest of Engeni, LLC held by Helix was sold. Effective December 31, 2022, (i) Security Consultants Group, LLC was merged with and ~~Green Tree International,~~into Helix TCS, LLC and (ii) Helix TCS, LLC was merged with and into Helix Legacy, Inc. On February 10, 2023, 100% of the capital stock of Bio-Tech Medical Software, Inc. was sold. All intercompany transactions have been eliminated in consolidation.

Discontinued Operations

On February 10, 2023, Helix completed the sale of 100% of the outstanding capital stock of its wholly owned subsidiary, BioTrack.

On March 3, 2022, the Company sold certain assets, consisting of customer contracts, accounts receivable and other property related to its security monitoring services. On October 31, 2022, the Company sold 100% of its outstanding membership interest of Engeni, LLC for a note with payments of up to $100,000 if certain conditions are met.

As the sale of BioTrack, the security monitoring business and Engeni, LLC, together, represented a strategic shift that will have a major effect on the Company’s operations and financial results, they have been presented in discontinued operations separate from continuing operations for the three months ended March 31, 2023 and 2022, as applicable. The results from operations and gain (loss) on sale of the security monitoring business and Engeni LLC, net, was previously classified as part of continuing operations as their disposition individually did not have a major impact on the business prior to the sale of BioTrack. For further discussion, refer to Note 4.

ASC Topic 830-10, Foreign Currency Matters (“ASC 830-10”), requires the use of highly inflationary accounting when a country has experienced a cumulative inflation of approximately 100% or more over a 3-year period. Under highly inflationary accounting, financial statements are remeasured into the reporting currency with resulting gains and losses included in earnings. The Company acquired a subsidiary as part of the Helix acquisition that operates in Argentina, which has been designated a highly inflationary economy. Accordingly, the Company has remeasured the financial statements of the subsidiary under ASC 830-10 as if the US dollar is its functional currency with resulting gains or losses as other income or expense. The Company sold all of the assets of its operations in Argentina, Engeni LLC and Engeni SA, during October 2022. The financial results of ~~Helix and its subsidiaries~~the Company’s Argentina operations are included in ~~the condensed consolidated financial statements only~~discontinued operations for the ~~29-day period~~three months ended March 31, ~~2021.~~2022. During the three months ended March 31, 2022, sales in Argentina, which are included in discontinued operations, were less than 1% of the Company’s consolidated sales. The hyperinflationary conditions did not have a material impact on the Company’s business during the three months ended March 31, 2022. On October 31, 2022 the Company sold 100% of its operations in Argentina.

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses together with amounts disclosed in related notes to the financial statements. The significant areas of estimation include but are not limited to accounting for the allowance for doubtful accounts, income taxes, depreciation, amortization of intangible assets, contingencies, discontinued operations and stock-based compensation. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that the external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. Certain personnel, information licensing and data processing costs that were previously classified in research and development expenses when the Company’s healthcare information business was in its start-up stage were reclassified to cost of revenues and general and administrative expenses in the condensed consolidated statements of operations.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ~~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:

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

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Level 3 — inputs that are unobservable.

The carrying value of the Company’s financial instruments, such as cash, marketable securities, accounts receivable and accrued liabilities and other liabilities approximate fair values due to the short-term nature of these instruments. The estimated fair value of the Company’s warrant liabilities as of March 31, 2023 and December 31, 2022 was $10,106 and $149,394, respectively, based on Level 3 inputs. Refer to Note 10.

Cash and Cash Equivalents and Credit Risk

The Company considers all cash accounts that are not subject to withdrawal restrictions and highly liquid investments with a maturity of three months or less, when purchased, as cash and cash equivalents.

The Company maintains cash with major financial institutions. Cash held at U.S. bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. The portion of deposits in excess of FDIC coverage is not protected by such insurance and represents a credit risk to the Company. At times, the Company’s deposits exceed this coverage.

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Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable 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~~$0 and $0$78,422 at March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, respectively.

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

Proceeds from sale of discontinued operations, net

Proceeds from sale of discontinued operations consists of eleven remaining monthly payments due through February 10, 2024 aggregating $9,166,667, less an unamortized discount of $354,959.

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.

Goodwill

Goodwill ~~which represents~~consists of the excess of ~~purchase price~~cost over the fair value of net assets acquired ~~is carried at cost.~~in business combinations. Goodwill is not ~~amortized; rather,~~amortized. Instead, it is ~~subject to a periodic assessment~~tested annually for impairment, ~~by applying a~~or more frequently if events occur or circumstances change that would more likely than not reduce its fair ~~value-based test. The Company reviews~~value below its carrying amount. All goodwill has been allocated to non-current assets of discontinued operations at December 31, 2022.

Goodwill is evaluated for ~~possible~~ impairment annually ~~during the fourth quarter,~~ or whenever events or changes in circumstances indicate ~~that~~ the carrying ~~amount~~value of goodwill 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.

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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. InThe Company has the option to first ~~step, the Company determines~~assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of ~~its~~a reporting unit ~~using a discounted cash flow analysis.~~is less than its carrying amount and to determine whether further action is needed. If, after assessing the ~~net book~~totality of events or circumstances, the Company determines it is not more likely than not that the fair value of ~~the~~a reporting unit ~~exceeds~~is less than its ~~fair value,~~carrying amount, then performing the ~~Company then performs the second step of the~~quantitative 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.is unnecessary. An impairment charge is recognized when the ~~implied~~ fair value of the Company’s goodwill is less than its carrying amount. No impairment losses have been recognized during the periods presented.

~~Business Combinations~~8

~~The Company accounts for its business combinations under the provisions~~

Table of Accounting Standards Codification (“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.Contents

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~~(or as) customers obtain control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation. ~~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~~applies the provisions of ASC 606 to ~~the terms~~an arrangement when a substantive contract exists 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 itcollectability 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.probable.

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The Company ~~generates~~derives revenue primarily from ~~three categories~~license fees for the Company’s information products. Information products contracts are generally for a period of ~~product offerings:~~one month to five years. Information ~~and Software, Services and Other.~~

~~In 2020,~~products’ customers may access data analytics products through the ~~revenue generated~~use of tools provided by the Company ~~was exclusively from Information and Software relating to MOR. In 2021,~~or by utilizing their own tools per the ~~Company also began to recognize Information and Software, Services and Other revenues related to its acquisition~~contract. Data products may consist of ~~Helix on March 2, 2021.~~

historical information as it exists at the time of delivery or information that will be updated over a period of time as agreed with the customer. In most ~~Information and Software contracts, payments are scheduled throughout the term and the contract may include one or more of the following performance obligations: (i)~~cases, the provision of ~~historical and/or current~~ information ~~as agreed upon, (ii)~~products is considered a single performance obligation. In cases where the Company is not obligated to update information over the access period and control over the use of the products passes to the customer when delivered, revenue is recognized when the information ~~through a hosting provider, (iii) access to and use of software~~ products ~~(iv) installation and training and (v) access~~are made available 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~~customer. In cases where information updates are provided over the contract ~~period. The Company satisfies its performance obligations throughout~~term, they are considered highly interrelated with 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 months ended March 31, 2021. Invoicing under contracts is set forth in an invoicing schedule as part of theinformation product delivered upon contract ~~and payments are typically due within 30 days.~~

~~Services Revenue are primarily from contracts with government agencies~~inception and revenue is recognized ~~upon completion~~ratably over the life 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 softwareCustomers 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~~invoiced according to monthly, quarterly or annual amounts specified in the contract. ~~Contract renewals may include an annual service fee~~Any amounts invoiced in excess of revenue recognized are recorded as deferred revenue. Revenue recognized in excess of amounts invoiced is recorded as a contract asset.

In some cases, contracts provide for variable consideration that is ~~recognized over~~contingent upon the ~~time period defined~~occurrence of uncertain future events, which can either increase or decrease the transaction price, including sales of products by customers derived from data analytics products the Company provides. Variable consideration based on sales of products by customers is recognized in the ~~contract.~~

~~Other revenues~~period of sales, subject to minimum amounts specified in contracts. Variable consideration is estimated at the expected value or at the most likely amount depending on the type of consideration. Estimated amounts are ~~primarily from security monitoring services offerings and~~included in the ~~provision of web marketing services. Contracts for these services have a stated~~ transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The estimate of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Company and reevaluated each reporting period. The effect of revisions in recognized estimated variable consideration in excess of minimums are recorded beginning in the period in which the estimates are revised. Actual results could differ from periodic estimates.

Significant judgments and estimates are sometimes necessary for ~~monthly services~~the determination of whether performance obligations in a contract are distinct and whether they are delivered at a point in time or over time. Judgement is also necessary to assess revenue recognized ~~as the services are provided.~~under contingent revenue arrangements.

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 and $53,784~~

Table of ~~such costs were capitalized as~~Contents

During November 2020, the Company entered into a Master Services Agreement (the “November 2020 Agreement”) with a customer to provide information services described in certain statements of ~~March 31, 2021 and December 31,~~work under the November 2020 ~~respectively. There are no significant judgements affecting the determination~~Agreement. As part of the ~~amount and timing~~November 2020 Agreement, the Company was granted shares of restricted stock representing approximately 23.4% of the ~~related revenue.~~

~~Table~~outstanding common stock of ~~Contents~~

In the ~~event~~customer at the time of issuance, vesting in quarterly increments specified in the November 2020 Agreement through December 2023. Concurrently, the Company ~~has~~entered into a Stockholders Agreement specifying its voting and other rights as a stockholder. As a result, the Company determined that it does not ~~satisfied all performance obligations on its contracts with customers, any amounts~~exert influence over the customer. ASC 606-10-32-21 requires an entity to measure the fair value of ~~unbilled revenue or excess costs are recorded as~~noncash consideration at contract ~~assets and contract liabilities.~~

~~Contract assets result when the cumulative revenue recognized exceeds the cumulative invoicing under a contract.~~inception. The fair value of the ~~differential is reflected in Contract assets and represents the value of the revenue that~~restricted stock 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 obligationsdetermined to be ~~satisfied after March 31, 2021.~~

$0 on the date of inception. The ~~following are~~Company recorded revenue from the ~~contract balances as~~customer of $651,762 and $377,190 for the three months ended March 31, ~~2021:~~2023 and 2022, respectively. The Company has outstanding accounts receivable of $1,134,941 and $469,786 at March 31, 2023 and December 31, 2022, respectively.

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 and deferred revenues consist of the following as of March 31, 2023:

	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

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes unearned revenue and unbilled amounts that will be recognized as revenue in future periods. The majority of the Company’s noncurrent remaining performance obligations will be recognized over the next 36 months.

The transaction price allocated to remaining performance obligations consisted of the following:

	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

Segment Information

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

FASB ASC 280, Segment Reporting (“ASC 280”), establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer, who reviews the financial performance and the results of operations of the segments prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Company.

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Customer Concentration

~~For~~

During the three months ended March 31, ~~2021,~~2023, the Company had ~~a single customer that accounted for $237,500~~two customers representing 13.4% and 12.6% of revenue, which represented 15% of revenues generated from customer sales. The Company believes that this customer is ultimately replaceable, and any disruption associated with this customer would only have a short-term impact onrevenue.

During the ~~business. The contract assets balance for this customer at~~three months ended March 31, ~~2021 was $125,000.~~

2022, the Company had four customers representing 14.5%, 14.4%, 11.7% and 10.7% of revenue.

Concentration of Vendors

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

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which are 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. Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. An impairment loss would be recognized when the ~~present~~ value of the undiscounted estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. There were no impairment losses recognized during the three months ended March 31, ~~2021~~2023 and ~~2020.~~2022.

Software Development Costs

The Company accounts for costs incurred in the development of computer software in accordance with ASC Subtopic 350-40, Intangibles – Goodwill and Other – Internal-Use ~~Software. Costs incurred in the application development stage are subject~~Software and ASC Subtopic 985-20, Software –Costs of Software to ~~capitalization and subsequent amortization and possible impairment. Application development stage costs were not material for the Company.~~be Sold, Leased or Marketed. Product development costs are primarily ~~personnel~~ related to ~~activities~~Company personnel and contractors for design and evaluating software development, testing, bug fixes and other maintenance activities. Product development costs incurred in the application development stage for internal use software are subject to capitalization and subsequent amortization and possible impairment. The Company begins to capitalize these costs when preliminary development efforts are successfully completed, management has authorized and committed project funding and it is probable that the project will be completed and the software would be used as intended. Capitalization ceases upon completion of all substantial testing. Such costs are amortized when placed in service, on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three years. Product development costs not pertaining to the application development stage are expensed as incurred. ~~The company capitalized software development costs of $50,228 and $0, respectively, for the three months ended March 31, 2021 and 2020.~~

Contingencies

Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

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Advertising

Advertising costs are expensed as incurred and included in sales and marketing expenses and amounted to ~~$4,935~~$15,125 and $0 $2,255for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, 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~~Income (Loss) per Share

~~Net loss~~

The calculation of earnings per share ~~of common stock~~ is ~~computed by dividing net loss by~~based on the weighted average number of ~~common~~ordinary shares or ordinary stock equivalents outstanding during the applicable period. ~~At March 31, 2021,~~The dilutive effect of ordinary stock equivalents is excluded from basic earnings per share and is included in the calculation of diluted earnings per share, unless their impact is antidilutive to the “control number”, which is loss from continuing operations. Employee equity share options and similar equity instruments granted by the Company ~~had potentially dilutive securities~~are treated as potential ordinary shares outstanding in computing diluted earnings per share. Diluted shares outstanding are calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service 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~~not yet recognized and the amount of benefits that would be recorded in ordinary shares when the award becomes deductible for ~~the three months ended March 31, 2021 and 2020, the diluted loss per share is the same as basic loss per share for the periods presented.~~tax purposes are assumed to be used to repurchase shares.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from ~~Equit~~yEquity and ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC 815-40”), to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”). The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Initial Measurement

The Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

Subsequent Measurement – Financial instruments classified as liabilities

The Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial instruments classified as liabilities are recorded as other expense/income.

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Stock-based Compensation

The Company’s 2020 Equity Incentive Plan (“2020 Plan”) permits the grant of stock options, restricted stock awards and/or restricted stock units. A total of 4,000,000 shares of Company common stock were originally authorized and reserved for issuance under the 2020 Plan. On June 15, 2022, the Company’s stockholders approved an amendment to the 2020 Plan, which amended the 2020 Plan to increase the number of shares available for issuance by 2,400,000 shares to a total of 6,400,000 shares. Stock options represent the right to purchase ~~the Company’s~~Company common stock at the exercise price on the date of grant of the stock option at a future date. Restricted stock awards are grants of shares of ~~our~~Company common stock. Restricted stock units represent the right to receive shares of ~~our~~Company common stock on future specified dates. Stock options, restricted stock awards and restricted stock units granted contain restrictions that cause them to be subject to substantial risk of forfeiture and restrict their exercise, sale or other transfer by the grantee until they vest. The terms of the stock options, restricted stock awards and units granted under the 2020 Plan are determined by the Board of Directors in the agreement evidencing the award, including the number of shares, period of restriction or vesting schedule and other terms. The fair value of the stock options, restricted stock awards and restricted stock units is based on the underlying grant date fair value of ~~the Company’s~~Company common stock. The fair value is then expensed over the requisite service periods of the awards, net of forfeitures, which is generally the service period and the related amount is recognized in the condensed consolidated statements of operations.

Income Taxes

MOR was organized as an LLC 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, no 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~~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~~accordance with FASB ASC 740 (“ASC 740”). Deferred income tax assets and liabilities are determined based ~~on the~~upon differences between ~~the~~ financial ~~statements~~reporting and tax ~~basis~~bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect ~~for the year in which~~when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The provision for income taxes represents Federal and state and local income taxes. The effective rate differs from statutory rates due to the effect of state and local income taxes, tax benefit of R&D credits and certain nondeductible expenses. Our effective tax rate will change from quarter to quarter based on recurring and non-recurring factors including, but not limited to, the geographical mix of earnings, enacted tax legislation and state and local income taxes. In addition, changes in judgment from the evaluation of new information resulting in the recognition derecognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the three months ended March 31, 2023 and March 31, 2022, the Company recognized net income tax expense of $29,909 and $5,000, respectively. The Company ~~has an incurred~~claims R&D tax credits on eligible R&D expenditures. The R&D tax credits are recognized as a reduction to income tax expense.

The Company recognized a taxable gain on sale of discontinued operations during the three months ended March 31, 2023, which resulted in utilization of certain available federal and state net operating loss ~~for financial-reporting and tax-reporting purposes. Accordingly, for~~carryforwards. As a result, the Company recorded income taxes related to discontinued operations of $2,690,144 after utilization of federal and state net operating losses during the three months ended March 31, 2023.

The Company files a consolidated U.S. income tax ~~purposes,~~return and tax returns in certain state and local jurisdictions. As of March 31, 2023, the ~~benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred~~Company is not subject to examination in any tax ~~asset for the period since March 2, 2021.~~jurisdictions.

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Tax contingencies are recorded, if needed, to address potential exposure involving tax positions the Company has taken that could be challenged by tax authorities. These potential exposures could result from applications of various statutes, rules, regulations and interpretations. Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision. The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted and signed into law. Regarded as the reduced version of the proposed Build Back Better Act, the IRA contains two main corporate income tax provisions, including a 15% minimum tax on the average annual adjusted financial statement income of corporations with profits over $1 billion over a three-year period as well as a 1% excise tax on the corporate stock buybacks by domestic publicly traded corporations. The Company is currently evaluating the impact of the IRA on its financial statements for tax year 2023 but does not expect a material impact to the Company’s tax position.

Separation Expenses

Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things (i) salary continuation for twelve months and (ii) accelerated vesting of 106,656 unvested restricted shares of Company common stock. Separation expenses for the three months ended March 31, 2023 include $250,000 related to the salary continuation and $349,832 related to the accelerated vesting of stock.

On March 2, 2022, the Company and two advisors agreed not to renew special advisor agreements between the advisors and the Company. The advisors were the former chief executive officer and chief financial officer of Helix who were granted stock options in conjunction with their respective advisory agreements that were entered into upon the completion of the Helix acquisition. The Company and the advisors mutually agreed not to renew the advisory agreements. The services provided by these advisors included transition planning and consulting services related to integration of the business operations of Helix and Forian. Per the terms of the agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, the Company recorded $5,417,043 of stock compensation expense during March 2022 related to the options that vested through March 2, 2023.

In addition, the Company records normal course of business severance expenses in the operating expense line item related to the employee’s activities.

Recent Accounting Pronouncements

In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The FASB issued ASU 2021-08 to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The amendment is effective for financial statements for interim and annual periods beginning after December 15, 2022. ASU 2021-08 was adopted on January 1, 2023. The adoption of ASU 2021-08 did not have a material impact on the condensed consolidated financial statements.

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

1514

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Note 4

~~BUSINESS COMBINATION~~DISCONTINUED OPERATIONS

Helix Businesses Discontinued Operations

On ~~March 2, 2021, pursuant to~~February 10, 2023, Helix completed the ~~Merger and the Merger Agreement, Forian acquired~~sale of 100% of the ~~issued and~~ outstanding capital stock ~~options~~of its wholly owned subsidiary, BioTrack, in exchange for $30.0 million, consisting of $20.0 million paid at closing and ~~warrants~~$10.0 million paid in twelve unconditional monthly installments thereafter. In March 2022, Helix sold its security monitoring business and in October 2022, sold its Argentinian subsidiary Engeni LLC. The security monitoring business, BioTrack and Engeni are collectively referred to as the “Helix Businesses.” As a result of ~~Helix.~~these transactions, as of February 10, 2023, the Company no longer provides products or services to the cannabis industry. The Company continues to provide analytics solutions to customers in the healthcare and related industries.

The ~~total purchase consideration for the Merger was $18,454,784. The purchase consideration is equal to the product~~Company recognized a gain on sale of ~~(i) the total outstanding Helix common shares~~BioTrack of $11,531,849 and ~~common share equivalents for in the money warrants to purchase Helix common stock and vested stock options multiplied by the merger exchange ratio~~a loss from discontinued operations of ~~0.05 shares of Company common stock for 1 share of Helix common stock and (ii) $2.158 per share which represented the fair value of Company common stock on the acquisition date.~~

The Merger is being accounted for as a business combination in accordance with ASC 805. The Company has determined preliminary fair values of the assets acquired and liabilities assumed in the Merger. These values are subject to change as the Company completes its determination of the fair value of assets acquired and liabilities assumed.

~~The following table summarizes the preliminary purchase price allocations relating to the Merger:~~

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

The preliminary estimates for useful lives of the identified intangibles are 8 years for Trade Names and Trademarks, 5 years for Customer Relationships and 2 and 7 years for Software Technology Intangibles with a weighted average useful life of 5.47 years.

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~~Transaction costs incurred in connection with this business combination amounted to approximately $1,210,279~~$94,427 during the three months ended March 31, ~~2021.~~

~~Unaudited Pro Forma Results~~

~~Helix contributed revenues~~2023, which is included as part of ~~$1,046,773 and~~discontinued operations. The Company also recorded income ~~from~~taxes related to discontinued operations of ~~$37,484 for~~$2,690,144 during the ~~period March 3, 2021 through~~three months ended March 31, ~~2021 included~~2023.

The Company recorded a gain on the sale of assets related to its security monitoring business of $202,159 during the three months ended March 31, 2022. The amount was reclassified to discontinued operations in 2023 as it was part of a strategic shift which became significant to the Company’s ~~consolidated condensed statements~~operations upon the sale of ~~operations.~~BioTrack.

The following table ~~represents~~summarizes the ~~revenue, net loss~~major classes of assets and ~~loss per share effect~~liabilities of the ~~acquired company,~~Helix Businesses as reported on the consolidated balance sheets as of December 31, 2022:

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	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

The following table summarizes the major income and expense line items of the Helix Businesses as reported in ~~our pro forma basis as if~~ the acquisition occurred on January 1, 2020. These pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the resultscondensed consolidated statements of operations for ~~future periods.~~the three months ended March 31, 2023 and 2022:

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

~~The Pro forma financial information for all periods presented above has been calculated after adjusting the results~~

Table of the Company and Helix to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets included in the Pro forma financial information presented above. The Forian historical condensed consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The Pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented.Contents

	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

Marketable securities are stated at estimated fair value based upon current market quotes (level 1 inputs) and are classified as available-for-sale. Realized gains and losses are included in investment income. Unrealized gains and losses are immaterial and therefore the Company has presented such amounts within ~~Investment~~investment income in the ~~Statement~~condensed consolidated statements of ~~Operations.~~ operations. The Company invests in short-term U.S. Treasuries and money market mutual funds. As of March 31, ~~2021~~2023 and ~~2020,~~December 31, 2022, marketable securities consisted of the ~~fair value~~following:

Table of ~~these investments approximated cost.~~Contents

	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

The Company has various agreements which require upfront and periodic payments. The Company records the expenses related to these agreements ratably over the annual terms. As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, the Company’s balance sheet reflected ~~other~~ prepaid expenses of ~~$584,862~~$425,986 and ~~$120,979,~~$835,786, respectively, primarily relating to various software licenses and insurance policies with durations ranging from 3 months to 1 year.

17Included in other current assets as of March 31, 2023 are amounts receivable from employees totaling $342,986.

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Note 7

PROPERTY AND EQUIPMENT, NET

As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, property and equipment were comprised of the following:

	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

Depreciation and amortization expense for the three months ended March 31, ~~2021~~2023 and ~~2020~~2022 was ~~$10,711~~$38,430 and ~~$454,~~ $15,349,respectively.

Note 8

~~INTANGIBLE ASSETS, NET~~

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

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

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 and $0 for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively.

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

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

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~~Note~~ 9

ACCRUED EXPENSES

As of March 31, ~~2021~~2023 and December 31, ~~2020,~~2022, accrued expenses were comprised of the following:

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

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

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Note 10
9

WARRANT LIABILITY

In conjunction with the ~~Merger,~~business combination with Helix, outstanding warrants to purchase Helix common stock were converted to warrants to purchase Company common stock. As the warrant holders have the option to receive cash in lieu of common stock in certain circumstances, the Company determined that the warrants require classification as a liability pursuant to ASC ~~815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity.~~815-40. In accordance with the applicable accounting guidance, the outstanding warrants are recognized as a warrant liability on the condensed consolidated balance sheet and ~~are~~were 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~~statements of operations. As of March 31, ~~2021,~~2023 and 2022, the Company had ~~97,058~~86,502 and 92,058 warrants outstanding classified as ~~liabilities.~~liabilities, respectively. During the three months ended March 31, 2023, 5,556 warrants expired.

The fair value of the Company’s warrant liability, measured at Level 3 in the fair value hierarchy, was calculated using the Black-Scholes model and the following ~~assumptions:~~

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

inputs:

	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

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The change in fair value of the Company’s financial instruments – warrants, ~~is as follows:~~measured at Level 3 in the fair value hierarchy, was calculated using the Black-Scholes model and the following inputs:

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

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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

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On September 1, 2021, the Company entered into a Note Purchase Agreement with certain accredited investors and a director of the Company, pursuant to which the Company issued at 100% of par value $24,000,000 in aggregate principal balance of 3.5% Convertible Promissory Notes due September 1, 2025 (the “Notes”), convertible into (i) shares of Company common stock, and (ii) warrants to purchase shares of Company common stock equal to 20% of the principal amount of the Notes divided by the conversion price of the Notes (the “Warrants”). The Notes will mature on the fourth-year anniversary of the date of issuance, which time is also the termination date of the Warrants if issued. The conversion price of the Notes and the exercise price of the Warrants is $11.98 per share, which was the consolidated closing bid price of the Company common stock as reported by Nasdaq on August 31, 2021, the most recently completed trading day preceding the Company entering into the Note Purchase Agreement with investors with respect to the Notes. The holders of the Notes may, at any time, convert all or a portion of the Notes plus accrued interest (subject to a minimum principal amount of $100,000) at the conversion price. The Company may redeem all or a portion of any Notes then outstanding at any time after the first anniversary of issuance at a price of 112.5% of par value plus accrued interest. In the event of a change of control of the Company, the Company may redeem all Notes then outstanding at a price of 108% of par value plus accrued interest. Interest expense on the Notes is payable upon maturity or earlier redemption unless the Notes are converted prior to such time. In the event the holders of the Note convert all or a portion of the Notes, the related accrued interest is converted at the conversion price. Interest expense related to the Notes was $208,456 and $210,000 for the three months ended March 31, 2023 and 2022, respectively.

The Company evaluated the embedded features in accordance with ASC 815-15-25 and determined embedded features are all clearly and closely related to the debt host instrument and therefore are not required to be bifurcated and separately measured at fair value. The Warrants were not issued in connection with the Notes and issuance of the Warrants is contingent upon conversion of the Notes at the option of the Holder, therefore no portion of the proceeds are allocated to the Warrants.

The Company incurred debt issuance costs associated with the Notes in the amount of $21,330, which will be deferred and amortized over the term of the Notes. During the three months ended March 31, 2023 and 2022, the Company recognized $1,333 and $1,333 in amortization of debt issuance costs, respectively.

Note 11

STOCK-BASED COMPENSATION

Restricted Stock Awards and Restricted Stock Units

~~Unvested~~

The table below includes issuances of restricted stock awards and units under the 2020 Plan and unvested equity interests of MOR which were converted to Forian Restricted Stock Awards 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.into restricted Company common stock.

	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

The ~~1,870,840~~910,720 of unvested awards at March 31, ~~2021 consist~~2023 consisted of ~~344,000~~163,720 restricted stock units and ~~1,526,840~~747,000 shares of restricted ~~stock awards.~~stock.

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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~~is recognized as compensation cost by the Company.

~~Table of Contents~~

The fair value of the stock options was estimated at Level 3 in the fair value hierarchy using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement. The assumptions used to calculate the grant date fair value of the options outstanding at ~~the inception date~~March 31, 2023 and December 31, 2022 are as follows:

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

	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

Stock option activity for the ~~period~~three months ended March 31, ~~2021~~2023 and 2022 is as follows:

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

The weighted average exercise price and remaining contractual life of exercisable options as of March 31, 2023 is $12.59 and 6.94 years, respectively. The total aggregate intrinsic value of the exercisable options as of March 31, 2023 was approximately $161,817.

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Stock Compensation Expense

The weighted-average grant date fair value per share for the stock options granted was ~~$13.36~~$3.42 and ~~$0.02~~$6.17 for the three months ended March 31, ~~2021~~2023 and ~~2020,~~2022, respectively.

On February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the Board of Directors resigned. In connection with the resignation, the Company entered into a separation agreement providing for, among other things, accelerated vesting of 106,656 unvested restricted shares of the Company common stock. Stock based compensation expense for the three months ended March 31, 2023 includes $349,832 related to the accelerated vesting of stock.

On March 2, 2022, the Company and the former chief executive officer and the former chief financial officer of Helix mutually agreed not to renew special advisor agreements between the advisors and the Company. Per the terms of the agreements, options to purchase 366,166 shares of common stock continued to vest according to their original terms through March 2, 2023, and unvested stock options to purchase 732,332 shares of common stock were forfeited. The advisors were not required to perform services to the Company beyond the non-renewal date of March 2, 2022. As a result, the Company recorded $5,417,043 of stock compensation expense during March 2022 related to the options that vested through March 2, 2023.

At March 31, ~~2021,~~2023, the total unrecognized stock compensation expense related to unvested stock option awards and restricted stock awards and restricted stock units granted was ~~$38,598,196,~~$15,390,535, which the Company expects to recognize over a weighted-average period of approximately ~~3.92~~2.83 years. Stock ~~Compensation Expense for the period ended March 31, 2021 and 2020 is as follows:~~

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

~~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.~~

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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 expensescompensation expense for the three months ended March 31, ~~2021.~~2023 and 2022 is as follows:

	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

~~See Note 4 for additional details on~~

Total intrinsic value of options exercised during the period ended March 31, 2023 was $3,948. The total fair value of restricted shares ~~issued pursuant to~~vested during the ~~Merger.~~period ended March 31, 2023 was $820,418.

Note 1312

NET ~~LOSS~~INCOME (LOSS) PER SHARE

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

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

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The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share for the three months ended March 31, 2023 and 2022 because their inclusion would be ~~anti-dilutive:~~anti-dilutive to the Company’s “control number”, which is loss from continuing operations.

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 1413

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 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, the Company’s Chief Strategy Officer, was previously a consultant for a current vendor of ~~MOR.~~the Company. Mr. Dublin’s consultancy with the vendor ended on December 11, 2020 and the parties have agreed not ~~agreed~~ to renew the consulting agreement. Pursuant to Mr. Dublin’s consulting agreement with the vendor, Mr. Dublin received payments from the vendor for the three months ended March 31, ~~2021~~2023 and ~~2020~~2022 of ~~$106,084~~$49,032 and ~~$61,050,~~$92,369, 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.

On September 1, 2021, the Company issued at 100% of par value $24,000,000 in aggregate principal balance of 3.5% Convertible Promissory Notes due 2025 convertible into (i) shares of Company common stock, and (ii) warrants to purchase shares of Company common stock equal to 20% of the principal amount of the Notes divided by the conversion price to a select group of institutional and accredited investors, which included a director of the Company who holds $6,000,000 of the Notes. See Note 1710 for additional information.

Note 14

SEGMENT RESULTS

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The Company provides innovative solutions, proprietary data and predictive analytics to optimize the operational, clinical and financial performance of its customers.

ASC 280 requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer. The CODM evaluates financial performance based on revenues and operating income.

As discussed above, the Company disposed of its businesses servicing the cannabis industry in 2023, and has reclassified their historical results as discontinued operations. As such, the Company’s continuing operations are comprised of a single reportable segment providing analytic and information services to the healthcare and other industries.

Note 15

LEASES

Operating Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases (“ASC 842”). All contracts are evaluated to determine whether or not they represent a lease. A lease conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has operating leases primarily consisting of facilities with remaining lease terms of 1-5 years. The lease term represents the period up to the early termination date unless it is reasonably certain that the Company will not exercise the early termination option. Certain leases include rental payments that are adjusted periodically based on changes in consumer price and other indices.

Leases are classified as finance or operating in accordance with the guidance in ASC 842. The Company does not hold any finance leases.

The Company is obligated under two short-term leases related to offices in Pennsylvania and Massachusetts. These short-term leases are currently leased on a month-to-month basis. A short-term lease is a lease with a term of 12 months or less and does not include the option to purchase the underlying asset that we would expect to exercise. The Company has elected to adopt the short-term lease exemption in ASC 842 and as such has not recognized a “right of use” asset or lease liability for these short-term leases.

The Company’s lease agreements generally do not provide an implicit borrowing rate, therefore an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments.

Supplemental cash flow information and non-cash activity related to leases for the three months ended March 31, 2023 and 2022 are as follows:

	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

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

	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%

The components of lease expense were as follows for each of the periods presented, which are included in operating expenses in the condensed consolidated statements of operations:

	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

Future lease payments included in the measurement of lease liabilities on the condensed consolidated balance sheet as of March 31, 2023, were as follows:

	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 1516

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

Service and ~~other indices.~~License Agreements

~~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), (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 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 short-term leases.

~~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 $ —

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 for the three months ended March 31, 2021 and 2020 was $21,078 and $4,994, respectively.~~

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

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

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~~Service Agreements~~

The Company entered into certain service and license 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~~agreements as of March 31, ~~2021:~~2023:

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

Legal Proceedings

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From time to time, wethe Company may be involved in claims that arise during the ordinary course of business. For any matters where management currently believes it is probable that the Company will incur a loss and that the probable loss or range of loss can be reasonably estimated, the Company records reserves in the condensed consolidated financial statements based on its best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any. Regardless of the outcome, litigation can be costly and time consuming and it can divert management’s attention from important business matters and initiatives, negatively impacting ~~our~~the Company’s 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 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 has any decision 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.below.

Audet v. Green Tree International, et. al.

On February 14, 2020, John Audet filed a complaint in 15th Judicial Circuit in and for Palm Beach County, Florida against multiple parties, including Green Tree International (“GTI”), an indirect subsidiary of ~~Forian,~~the Company, claiming that he owned 10% of GTI. ~~We believe~~The complaint seeks unspecified monetary damages equivalent to the value a 10% shareholder of GTI would have received in the subsequent Helix and Forian transactions, along with an equitable accounting and constructive trust to determine if Audet suffered any loss of profit distributions. The case is in the process of discovery and trial is scheduled for June 2023. Each of the parties’ motions for summary judgment were denied. The Company believes the lawsuit is wholly without merit and ~~will~~intends to defend ~~ourselves from these~~vigorously against the claims ~~vigorously. As~~in the lawsuit.

Grant Whitus et al. v. Forian Inc., Zachary Venegas and Scott Ogur

On July 30, 2021, four former Helix employees filed a lawsuit in the Arapahoe County, Colorado District Court against the Company and Helix’s former managers asserting claims of ~~March 31,~~breach of contract, promissory estoppel, breach of the covenant of good faith and fair dealing, civil theft and conversion, fraudulent misrepresentation, civil conspiracy and unjust enrichment/quantum meruit, all relating to the plaintiffs’ claims that they were promised equity interest in Helix or compensation that they never received. The original complaint was never served and in November 2021 the ~~case is~~plaintiffs filed and served an amended complaint adding a fifth plaintiff, and seeking over $27.5 million in damages as well as attorneys’ fees and costs. The Company removed the ~~process of discovery.~~

~~Arapaho Dispute~~

Zachary Venegas (“Venegas”), the former Chief Executive Officer of Helix, Scott Ogur (“Ogur”), 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, the “HOF Parties”) and stockholder of Helix were involved in a dispute involving a claim by Arapaho Foundation, LLC (“Arapaho”) alleging that Arapaho was entitledmatter 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 more of the HOF Parties (the “Arapaho Dispute”). In connection with 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 members 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.

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~~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”);~~Colorado in December 2021, and ~~Robinson v.~~both the Company and the individual defendants filed motions to dismiss on January 20, 2022. Plaintiffs subsequently amended their complaint on April 21, 2022, adding Helix TCS LLC and Helix Technologies, Inc.~~, et al., No. 1:21-cv-00484 (filed February 18, 2021~~ as defendants and advancing additional claims for breach of fiduciary duty and violation of the Colorado Wage Claims Act. The Company and the individual defendants filed their separate motions to dismiss on June 1, 2022, and briefing of those motions was completed on July 13, 2022. Although the motions are still pending, the Court ordered the parties to begin discovery. Written discovery, which commenced in July 2022, is ongoing. The Company believes the lawsuit is wholly without merit and intends to defend vigorously against the claims 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.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 segments, Information & Software, Services, and Other.

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.

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

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 months ended March 31, 2021. All of the Company’s revenues were attributable to customers in the United States for the three months ended March 31, 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.

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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 months ended March 31, ~~2021~~2023 and ~~2020~~2022 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,~~2022, as filed with the SEC on March ~~31, 2021 with the SEC.~~30, 2023. 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~~Forian Inc. (the “Company” or “Forian”) 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~~ for the ~~Business Combination described below. On October 16, 2020,~~purpose of effecting the ~~Company entered into a definitive agreement~~business combination with Helix Technologies Inc. (“Helix”) ~~and MOR, pursuant to which DNA Merger Sub, Inc.,~~. Forian provides a ~~wholly owned subsidiary~~unique suite 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 prior experience, 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.

~~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 technologyproprietary information 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~~optimize and ~~to the data science powered insights that drive healthcare~~measure operational, clinical 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.

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~~The Company’s mission is to provide its customers with the best-in-class critical technology services through a single integrated Forian platform that enables its~~financial performance for customers within the healthcare and related industries.

The business combination with Helix was accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), with the Company deemed the accounting acquirer for financial reporting purposes. Helix provides software and analytics solutions to state governments and licensed operators in the cannabis ~~industries to operate their businesses more safely, efficiently and profitably and to serve~~industry, primarily through its ~~customers and~~subsidiary, Bio-Tech Medical Software, Inc. (“BioTrack”), until its ~~customers’ stakeholders and constituencies more comprehensively.~~sale of BioTrack in 2023.

~~A novel strain~~On February 10, 2023, Helix completed the sale 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 inception100% of the ~~pandemic~~outstanding capital stock of BioTrack, on March 3, 2022 Helix completed the sale of the assets of its security monitoring business, and on October 31, 2022 Helix completed the sale of 100% of the outstanding membership interest of its Engeni LLC subsidiary (these businesses together are referred to as the “Helix Businesses”). As a result of these transactions, Helix has no remaining active operations and the Company no longer provides products or services to the cannabis industry. The results of the Helix Businesses are presented as discontinued operations in the Condensed Consolidated Statements of Operations and, as ~~a result, has experienced limited business disruption~~such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Helix Businesses 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 uncertaintydiscontinued operations in the ~~future economic outlook for our~~Consolidated Balance Sheet as of December 31, 2022. The Company will continue to provide analytics solutions to customers within the healthcare and ~~the markets we serve.~~related industries.

Financial Operations Overview

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

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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 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~~revenues is generated from direct costs associated with the delivery orof our ~~Information~~products and ~~Software products~~services to our customers. The cost of ~~revenue~~revenues relates primarily to labor costs, information licensing, 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.~~revenues.

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.

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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,~~revenues, 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 of acquired companies.~~computers.

~~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. 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.~~

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Results of Operations for the Three Months Ended March 31, 2023 and 2022:

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

	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 )

Comparison of Three Months Ended March 31, 2023 and 2022

Revenues

Revenues for the three months ended March 31, ~~2021~~2023 were ~~$1,620,609,~~$4,870,387, which represented an increase of ~~$1,553,942~~$1,335,526, or 37.8%, compared to total revenue of ~~$66,667~~$3,534,861 for the three months ended March 31, ~~2020. These revenues were primarily from Information and Software products.~~2022. The increase is primarily due to increased sales of information products to the ~~inclusion of revenues from the Merger for 29 days of the period which contributed 67% of the increase~~healthcare industry to new and ~~increased revenues from the Company’s products which contributed 33% of the increase.~~existing customers.

Cost of Revenues

Cost of revenues ~~increased by $457,886~~ for the three months ended March 31, ~~2021, from $0~~2023 was $1,252,215, which represented an increase of $9,185 compared to total cost of revenues of $1,243,030 for the three months ended March 31, ~~2020.~~2022. Cost of revenues increased at a lower rate than revenue, as many of our data infrastructure costs are fixed or semi-variable in nature. As a result, gross profit as a percentage of revenues increased to 74.3% for the three months ended March 31, 2023, compared to 64.8% for the same period in 2022.

Research and Development

Research and development expenses for the three months ended March 31, 2023 were $531,689, which represented an decrease of $558,190 compared to total research and development expenses of $1,089,879 for the three months ended March 31, 2022. The ~~increase related~~decrease is due to ~~direct~~lower personnel, subcontracted labor and infrastructure costs related to ~~the delivery of revenues. This increase was primarily~~new product development resulting from ~~increased revenues of~~ the Company’s ~~Information~~shift in focus to the healthcare analytics market.

Sales and ~~Software products.~~Marketing

Sales and marketing expenses for the three months ended March 31, 2023 were $1,196,192, which represented an increase of $375,598 compared to total sales and marketing expenses of $820,594 for the three months ended March 31, 2022. The increase is due to higher salary, commission and expenses related to scaling the ~~inclusion~~Company’s products.

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General and Administrative

General and administrative expenses for the three months ended March 31, 2023 were $3,639,826, which represented a decrease of $1,634,142 compared to general and administrative expenses of $5,273,968 for the three months ended March 31, 2022. The decrease is primarily due to lower personnel costs, consulting and professional fees resulting from cost synergies, including a decrease of $729,763 in stock-based compensation expenses related to the departure of the former chief executive officer and the former chief financial officer of Helix, ~~acquisition for 29 days~~who were advisors to the Company through March 2, 2022, partially offset by increased expenses related to grants to employees.

Separation Expenses

Effective February 10, 2023, the Company’s Chief Executive Officer, President and Class II member of the ~~quarter which contributed 71%~~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 12 months and (ii) accelerated vesting of 106,656 unvested restricted shares of the ~~increase and higher cost of revenues from the Company’s products which contributed 29% of the increase.~~

~~Research and Development~~

~~Research and development~~Company common stock. Separation expenses for the three months ended March 31, 2021 were $1,497,838, which represented an increase of $1,108,845 compared to total research and development expenses of $388,993 for the three months ended March 31, 2020. The increase is due to higher R&D expenses2023 includes $250,000 related to ~~scaling~~ the ~~Company’s products which contributed 87% of~~salary continuation, fully recognized during the ~~increase, stock-based compensation expenses~~quarter, and $349,832 related to ~~equity awards granted to new Company employees after we became a public company on~~the accelerated vesting of stock.

On March 2, ~~2021 which contributed approximately 5% of~~2022, the ~~increase,~~Company and two advisors agreed not to renew special advisor agreements between the advisors and the ~~inclusion~~Company. The advisors were the former chief executive officer and chief financial officer of Helix who were granted stock options in conjunction with their respective advisory agreements that were entered into upon the completion of the Helix ~~acquisition for 29 days~~acquisition. The Company and the advisors mutually agreed not to renew the advisory agreements. The services provided by these advisors included transition planning and consulting services related to integration of the ~~quarter which contributed 8%~~business operations of Helix and Forian. Per the terms of the ~~increase.~~

~~Sales and Marketing~~

~~Sales and marketing expenses for the three months ended March 31, 2021 were $598,975, which represented an increase~~agreements, options to purchase 366,166 shares of ~~$543,909 compared~~common stock continued to ~~total sales and marketing expenses of $55,066 for the three months ended March 31, 2020. The increase is due~~vest according to higher expenses related to scaling the Company’s products which contributed 79% of the increase, stock-based compensation expenses related to equity awards granted to new Company employees after we became a public company ontheir original terms through March 2, ~~2021 which contributed approximately 6%~~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 ~~increase, and~~Company beyond the ~~inclusion~~non-renewal date of ~~the Helix acquisition for 29 days of the quarter which contributed 15% of the increase.~~

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~~General and Administrative~~

General and administrative expenses for the three months ended March 31, 2021 were $2,784,562, which represented an increase of $2,482,309 compared to general and administrative expenses of $302,253 for the three months ended March 31, 2020. The increase is due to higher expenses related to scaling the Company’s management organization which contributed 56% 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%~~2022. As a result, the Company recorded $5,417,043 of ~~the increase, and the inclusion of the Helix acquisition for 29 days of the quarter which contributed 13% of the increase.~~

~~Transaction Related Expenses~~

~~Transaction related expenses for the three months ended~~stock compensation expense during March ~~31, 2021 were $1,210,279, which represented an increase of $1,210,279, which included $389,976 which represents the fair value of a warrant issued to an advisor. These expenses~~2022 related to the ~~acquisition of Helix which was completed on~~options that vested through March 2, ~~2021.~~2023.

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~~, which 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~~“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.~~loss. 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,~~loss, as well as trends in those items contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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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~~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:~~loss from continuing operations:

•

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.

~~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.

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•

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.

~~Income tax expense.~~ ~~MOR was organized as a limited liability company until the completion~~

Table 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.Contents

Limitations on the use of ~~Non-GAAP~~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.

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

	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~~Ended March 31, ~~2021 (Historical)~~2023

Adjusted EBITDA - continuing operations

Adjusted EBITDA for the three months ended March 31, ~~2021~~2023 was ~~$(2,854,769)~~a loss of $271,134 compared to ~~$(674,417)~~a loss of $2,695,675 for the three months ended March 31, ~~2020,~~2022, a decrease of ~~$2,180,352.~~$2,424,541. The decrease is ~~due to investments in product development, customer service, infrastructure, and human capital and the inclusion of Helix for the last 29 days in the quarter.~~

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

~~Revenues~~

Pro forma revenues for the three months ended March 31, 2021 were $3,810,039, which represented an increase of $686,204 compared to total revenue of $3,123,835 for the three months ended March 31, 2020. The increase was primarily due to ~~growth in~~higher revenues and the ~~number of customers utilizing these products.~~

lower research and development and general and administrative expenses discussed above.

~~Adjusted EBITDA~~

Pro forma Adjusted EBITDA for the three months ended March 31, 2021 was $(2,831,115) compared to $(644,735) for the three months ended March 31, 2020, a decrease of $2,186,380. The decrease is due to investments in product development, customer service, infrastructure, and human capital.

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Liquidity and Capital Resources

Since the Company’s inception in ~~2019,~~2020, most of ~~our cash~~the Company’s resources have been devoted to scaling our 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.~~issuances and the issuance of the Notes. The Company expects to continue to fund its operations and potential future acquisitions through a combination of cash flow generated from operating activities, debt financing and/or additional equity issuances. To date, the Company has not generated ~~limited~~sufficient revenues from the licensing of information ~~products. The~~products to fund all of its operating expenses and as a result the Company has incurred losses and generated negative cash flows from operations since inception. On February 10, 2023, the Company sold BioTrack for $30.0 million consisting of $20.0 million in cash at closing and twelve unconditional monthly payments aggregating $10.0 million thereafter. As of March 31, ~~2021,~~2023, the Company’s ~~principal source~~balance of ~~liquidity was~~ cash ~~which totaled $2,595,747~~ and marketable securities ~~which totaled $7,504,000.~~aggregated $40 million. Additionally, ~~in April 2021,~~ the Company ~~raised an additional $12,000,000 in gross~~has proceeds ~~through~~receivable from the BioTrack sale of ~~its common stock to a group~~$8.8 million and principal and accrued interest on the Notes, due September 1, 2025 of ~~institutional investors.~~$25.3 million outstanding at March 31, 2023.

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,
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	)

Net Cash Used in Operating Activities

Net cash used in operating activities ~~increased~~decreased by ~~$(3,126,076)~~$1,197,675 for the three months ended March 31, ~~2021~~2023 compared to the three months ended March 31, ~~2020.~~2022. The ~~increase~~decrease was primarily the result of ~~scaling up~~decreased Adjusted EBITDA loss, partially offset by changes in deferred revenue, accounts payable and other working capital accounts related to the ~~Company’s operations~~timing of cash flows from ~~the initial start-up phase.~~

operations.

Net Cash Used in Investing Activities

Net cash used in investing activities of $633,003 increased by ~~$7,568,482~~$793,381 for the three months ended March 31, ~~2021~~2023 compared to cash used in investing activities of $160,378 for the three months ended March 31, ~~2020. The increase was~~2022. This is primarily the result of ~~the sale~~an increase in net purchases of marketable securities of ~~$4,000,0000 and~~$21,447,703, offset by an increase in cash ~~acquired~~received from the sale of ~~$1,310,977 as part of the Helix business combination.~~

discontinued operations.

Net Cash ~~Provided by~~Used in Financing Activities

Net cash ~~provided by~~used in financing activities ~~decreased by $3,023,552~~of $94,599 for the three months ended March 31, ~~2021~~2023 increased by $81,477 compared to cash used in financing activities of $13,122 for the three months ended March 31, 2022. The increase was primarily related to cash used to fund income tax withholding payments on vesting of employee restricted stock which was settled by surrendering shares to the Company.

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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. 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. 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, 2022, as filed with the SEC on March 30, 2023. There have been no changes to these policies and estimates other than described below.

Discontinued Operations

In accordance with ASC 205-20 Discontinued Operations, the results of the Helix Businesses are presented as discontinued operations in the Condensed Consolidated Statements of Operations and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Helix Businesses as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2022, and recorded a gain on the sale of discontinued operations, net of tax during the three months ended March 31, ~~2020. The increase was primarily related to the cash proceeds received from the Company’s equity issuances.~~

~~Off Balance Sheet Arrangements~~

2023. The Company ~~does not have relationships~~evaluated the divestitures in accordance with ~~other organizations or process any~~ASC 205-20 and determined that transactions in aggregate represented a strategic shift that ~~would constitute off balance sheet arrangements.~~had a major impact on the Company. Accounting for discontinued operations and the related gain on sale of discontinued operations requires us to make estimates and judgements regarding the allocation of costs and net asset values to discontinued operations.

~~Table of Contents~~

Recent Accounting Pronouncements

In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The FASB issued ASU 2021-08 to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 was adopted on January 1, 2023. The adoption of ASU 2021-08 did not have a material impact on the condensed consolidated financial statements.

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

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth company,” the Company is electing to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards.

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Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” the Company is not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the business combination or until we no longer meet the requirements for being an “emerging growth company,” whichever occurs first.

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~~This item is not ~~required to provide the information under this item.~~required.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains 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 principal executive officer), and our chief financial officer (who is also the Company’s 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, ~~2021,~~2023, which is the end of the three-month period covered by this Quarterly Report on Form 10-Q.

The Company identified material weaknesses in our internal controls over financial reporting as disclosed in Item 9A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2022, as filed with the SEC on March 30, 2023. Our chief executive officer and chief financial officer therefore concluded that our disclosure controls and procedures as of the fiscal quarter ended March 31, ~~2021~~2023 remain ineffective to the extent of the material weaknesses identified.

We ~~are committed to remediating the~~have implemented several processes and 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 stepsprocedures in 2022, including those outlined below, to remediate the ~~internal control~~ deficiencies noted above.

We currently are assessing and improving the operating effectiveness of these controls to ensure they will operate at an acceptable level of assurance.

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We have hired additional personnel and outside consultants to fill accounting functions and expect to hire and train additional personnel. In addition, we are in the process of implementing upgraded accounting and finance systems, which we expect will enhance our ability to implement ~~further remediation actions during 2021 that we believe will improve our~~appropriate internal ~~control over financial reporting. Certain improvements~~controls.

We have contracted an outside consulting firm to ~~our internal control over financial reporting occurred as a consequence~~assist in the overall evaluation and documentation of the ~~Merger (e.g., additional finance resources~~design and ~~protocols employed by Helix), supplemented by the Company’s engagement of outside firms to assist the Company with additional accounting expertise and with the review~~operating effectiveness of our internal controls ~~framework~~over financial reporting. We are implementing newly designed controls and testing their operating effectiveness.

We believe these actions, when complete, will remediate the control weaknesses. However, the weaknesses will not be considered fully remediated until the applicable controls operate for a sufficient period of time for management to test the ~~Company’s compliance with~~results for operating effectiveness. Once implemented, we intend to continue periodic testing and reporting of 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.~~ensure continuity of compliance.

Notwithstanding the identified material weaknesses, the Company’s 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, 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, 2021, as described in Item 9A of our 2020 Annual Report on Form 10-K~~Except for the ~~fiscal year ended December 31, 2020. There were~~items described above, there has been no ~~other material changes~~change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act that occurred during the three months ended March 31, ~~2021~~2023, that has materially affected, or ~~that are~~is 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. For any matters where management currently believes it is probable that we will incur a loss and that the probable loss or range of loss can be reasonably estimated, we record reserves in our condensed consolidated financial statements based on our best estimates of such loss. In other instances, because of the uncertainties related to either the probable outcome or the amount or range of loss, management is unable to make a reasonable estimate of a liability, if any. Regardless of the outcome, litigation can be costly and time consuming and it can divert management’s attention from important business matters and initiatives, negatively impacting 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.~~

below.

Audet v. Green Tree International, et. al.

Grant Whitus et al. v. Forian Inc., Zachary Venegas and Scott Ogur

On July 30, 2021, four former Helix employees filed a lawsuit in the Arapahoe County, Colorado District Court against the Company and Helix’s former managers asserting claims of ~~March 31,~~breach of contract, promissory estoppel, breach of the covenant of good faith and fair dealing, civil theft and conversion, fraudulent misrepresentation, civil conspiracy and unjust enrichment / quantum meruit, all relating to the plaintiffs’ claims that they were promised equity interest in Helix or compensation that they never received. The original complaint was never served and in November 2021, the ~~case is~~plaintiffs filed and served an amended complaint adding a fifth plaintiff and seeking over $27.5 million in damages as well as attorneys’ fees and costs. The Company removed the ~~process of discovery.~~

~~Arapaho Dispute~~

~~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”);~~Colorado in December 2021, and ~~Robinson v.~~both the Company and the individual defendants filed motions to dismiss on January 20, 2022. Plaintiffs subsequently amended their complaint on April 21, 2022, adding Helix TCS LLC and Helix Technologies, Inc.~~, et al., No. 1:21-cv-00484 (filed February 18, 2021 in~~ as defendants and advancing additional claims for breach of fiduciary duty and violation of the ~~United States District Court for the District of Colorado) (the “Robinson Complaint” and, together with the Dillion Complaint, the Anderson Complaint~~Colorado Wage Claims Act. The Company and the ~~Baros Complaint,~~individual defendants filed their separate motions to dismiss on June 1, 2022, and briefing of those motions was completed on July 13, 2022. Although the ~~“Stockholder Complaints”)).~~motions are still pending, the Court ordered the parties to begin discovery. Written discovery, which commenced in July 2022, is ongoing. The ~~Stockholder Complaints were filed~~Company believes the lawsuit is wholly without merit and intends to defend vigorously 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.~~
lawsuit.

Item 1A.

Risk Factors

~~We are a smaller reporting company as defined by Rule 12b-2~~This item is not required.

Table of ~~the Securities Exchange Act of 1934 and are not required to provide the information under this item.~~Contents

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

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	Stock Purchase Agreement, ~~and Plan of Merger,~~ dated ~~as of October 16, 2020,~~February 10, 2023, by and among Helix Technologies, Inc., ~~Forian Inc., DNA Merger Sub,~~Bio-Tech Medical Software, 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,~~BT Assets Group, 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~~2.1 of the Company’s Current Report on Form 8-K filed with the SEC on ~~March 3, 2021)~~February 13, 2023).

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+	~~Employment~~Separation Agreement, dated ~~March 1, 2021,~~February 10, 2023, by and between the ~~Registrant~~Company and ~~Edward Spaniel, Jr.~~Daniel Barton (incorporated by reference to Exhibit ~~10.6 to~~10.2 of the Company’s ~~Annual~~Current Report on Form ~~10-K,~~8-K filed with the SEC on ~~March 31, 2021)~~February 13, 2023).

~~10.2+~~10.2	~~Special Advisor~~License Agreement, dated ~~January 26, 2021,~~February 10, 2023, by and ~~between~~among the ~~Registrant~~Company, Helix Technologies, Inc., BT Assets Group, Inc. and ~~Scott Ogur~~Bio-Tech Medical Software, Inc. (incorporated by reference to Exhibit ~~10.7 to~~10.1 of the Company’s ~~Annual~~Current Report on Form ~~10-K,~~8-K filed with the SEC on ~~March 31, 2021)~~February 13, 2023).

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~~and 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
~~101.PRE~~	Inline XBRL Taxonomy ~~Presentation Linkbase Document.~~

~~101.CAL~~	~~XBRL Taxonomy~~Extension Calculation Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label ~~Linkbase.~~
	Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*	~~Filed herewith.~~

* Filed with this Quarterly Report on Form10‑Q.

+	~~Indicates management contract or compensatory plan.~~

+ Indicates management contract or compensatory plan.

4039

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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, 2021.~~15, 2023.

	FORIAN INC.

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

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

4140

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	3 1

	Condensed Consolidated Balance Sheets atas of March 31, ~~2021~~2023 (unaudited) and December 31, ~~2020~~2022	3 1

	Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the ~~three months ended~~Three Months Ended March 31, ~~2021~~2023 and ~~2020~~2022 (unaudited)	4 2

	Condensed Consolidated Statements of Stockholders’ Equity ~~(Deficit)~~ for the ~~three months ended~~Three Months Ended March 31, ~~2021~~2023 and ~~2020~~2022 (unaudited)	5 3

	Condensed Consolidated Statements of Cash Flows for the ~~three months ended~~Three Months Ended March 31, ~~2021~~2023 and ~~2020~~2022 (unaudited)	6 4

	Notes to Unaudited Condensed Consolidated Financial Statements	75

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	37

PART II	OTHER INFORMATION	38

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	39 38

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

Item 3.	Defaults Upon Senior Securities	39

Item 4.	Mine Safety Disclosures	39

Item 5.	Other Information	40 39

Item 6.	Exhibits	40 39

Signatures		41 40

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

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

	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

	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

	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

	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

	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

	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

	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	)

	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	)

	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	)