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Forian Inc. Announces Third Quarter 2022 Financial Results

Revenue grows to $7.2 million

On track to exceed 2022 revenue guidance

 


Newtown, PA - (NewMediaWire) - November 14, 2022 - Forian Inc. (Nasdaq: FORA), a provider of technology, analytics and data science driven solutions for the healthcare and cannabis industries, today announced results for the quarter ended September 30, 2022.

 

“Forian’s third quarter results demonstrate our business model’s ability to generate significant organic growth,” said Max Wygod, Forian Executive Chairman. “The strong results enable us to report that we are on track to exceed the high-end of our revenue range for full year 2022.”

 

Forian Chief Executive Officer Dan Barton continued, “Third quarter 2022 financial results continue to demonstrate significant revenue growth, especially in our healthcare information offerings. This strong revenue growth coupled with the consistency in our cannabis business and the success of our cost management efforts provide the blueprint to reduce Net Loss and become Adjusted EBITDA positive in the second half of 2023.”

 

Third Quarter 2022 Financial Results

 

      Forian delivered the following results for the third quarter of 2022:


Three Months Ended
September 30,

 

 

Year-over-Year % Change

 

 

2022

 

 

2021

 

 

 

Unaudited

 

 

Unaudited

 

Total revenue

$

7,176,328

 

$

4,961,755

 

45%

Net Loss

$

(5,127,624)

 

$

(7,021,722)

 

27%

Basic and diluted net loss per common share

$

(0.16)

 

$

(0.22)

 

29%

 

 

 

 

 

 

 

 

Adjusted EBITDA1

$

(2,145,180)

 

$

(4,122,830)

 

48%



      Revenue for the quarter was $7.2 million, an increase of $2.2 million versus the prior year and 10% sequentially over the second quarter of 2022.

      Net Loss for the quarter was $5.1 million, or $0.16 per share, compared to $7.0 million, or $0.22 per share, in the prior year.

      Adjusted EBITDA1 for the quarter was negative $2.2 million, compared to negative $4.1 million in the prior year.

      Cash, cash equivalents and marketable securities at the end of the quarter was $20.6 million.

 

1This release uses non-GAAP financial measures that are adjusted for the impact of various U.S. GAAP items. See the section titled “Non-GAAP Financial Measures” and the table entitled “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures” below for details.

 

Third Quarter 2022 Operational Highlights

 

·       Year-to-date healthcare information new customer wins on par with total new wins in 2021

·       Cross selling and upselling initiatives increased revenue from existing clients

·       Strong cannabis software sales continued through the third quarter

·       Successful implementation of cost management strategies

 

Quarterly Conference Call and Webcast

 

Forian will host a conference call and webcast at 4:30 p.m. ET on November 14, 2022 to discuss its financial results with the investment community. To register for the conference call, click here. The webcast will be available live at https://edge.media-server.com/mmc/p/8vfqfw2e. This information is also available on our website at www.forian.com/investors. To be included on the Company’s email distribution list, please sign up at www.forian.com/investors.

 

About Forian

 

Forian provides a unique suite of SaaS solutions, data management capabilities and proprietary data and analytics to optimize and measure operational, clinical and financial performance for customers within the traditional and emerging life sciences, healthcare payer and provider segments, as well as cannabis dispensaries, manufacturers, cultivators and regulators. For more information, please visit the Company’s website at www.forian.com.

 

Media and Investor Contact:

267-225-6263

forian.com/investors

ir@forian.com

 

Source: Forian Inc.

 

Cautionary Statements Regarding Forward-Looking Statements

 

This release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions and variations or negatives of these words. In particular, this release includes an estimate of our full year 2022 revenue outlook as of November 14, 2022. Estimating financial performance accurately for future periods is difficult as it involves assumptions and internal estimates that may prove to be incorrect and is based on plans and circumstances that may change. There is therefore a significant risk that actual results could differ materially from the outlook we have provided in this release, and we have no obligation to update such outlook except as may be required under applicable law. Forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond the control of Forian, and are not guarantees of future results, such as statements about the anticipated benefits of the business combination transaction involving Forian, Medical Outcomes Research Analytics, LLC and Helix Technologies, Inc. (“Helix”), future financial and operating results, company strategy and intended product offerings and market positioning. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, those risks and uncertainties associated with: the impact of the COVID-19 pandemic on Forian’s business, operations, strategy and goals; Forian’s ability to execute on its strategy; the timing of the introduction of new product offerings; and the additional risks and uncertainties set forth more fully under the caption “Risk Factors” in Forian's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 31, 2022, and elsewhere in Forian’s filings and reports with the SEC. Forward-looking statements contained in this announcement are made as of the date hereof, and Forian undertakes no duty to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

 

FORIAN INC.

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2022

 

 

 

2021

 

 

 

 

(UNAUDITED)

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

1,585,594

 

 

$

18,663,805

 

 

 

Marketable securities

 

19,046,961

 

 

 

12,399,361

 

 

 

Accounts receivable, net

 

3,553,323

 

 

 

1,947,540

 

 

 

Contract assets

 

1,978,181

 

 

 

1,056,891

 

 

 

Prepaid expenses

 

1,205,630

 

 

 

1,017,927

 

 

 

Other assets

 

436,101

 

 

 

900,242

 

 

 

Total current assets

 

27,805,790

 

 

 

35,985,766

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

2,870,667

 

 

 

1,531,959

 

 

 

Intangible assets, net

 

7,344,677

 

 

 

9,051,184

 

 

 

Goodwill

 

9,099,372

 

 

 

9,099,372

 

 

 

Right of use assets, net

 

706,272

 

 

 

859,637

 

 

 

Deposits and other assets

 

274,532

 

 

 

314,443

 

 

 

Total assets

$

48,101,310

 

 

$

56,842,361

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

896,916

 

 

$

1,125,067

 

 

 

Accrued expenses

 

4,557,385

 

 

 

4,068,109

 

 

 

Short-term operating lease liabilities

 

265,474

 

 

 

247,325

 

 

 

Notes payable

 

-

 

 

 

13,122

 

 

 

Warrant liability

 

26,079

 

 

 

369,234

 

 

 

Deferred revenues

 

2,685,027

 

 

 

976,268

 

 

 

Total current liabilities

 

8,430,881

 

 

 

6,799,125

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

Long-term operating lease liabilities

 

444,996

 

 

 

611,523

 

 

 

Convertible notes payable, net of debt issuance costs ($6,000,000 in principal is held by a related party)

 

24,893,488

 

 

 

24,260,448

 

 

 

Total long-term liabilities

 

25,338,484

 

 

 

24,871,971

 

 

 

 

 

 

 

 

 

Total liabilities

 

33,769,365

 

 

 

31,671,096

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Preferred Stock; par value $0.001; 5,000,000 Shares authorized; 0 issued and outstanding as of September 30, 2022 and December 31, 2021

 

-

 

 

 

-

 

 

 

Common Stock; par value $0.001; 95,000,000 Shares authorized; 32,138,000 issued and outstanding as of September 30, 2022 and 31,773,154 issued and outstanding as of December 31, 2021

 

32,138

 

 

 

31,773

 

 

 

Additional paid-in capital

 

69,535,194

 

 

 

57,959,622

 

 

 

Accumulated deficit

 

(55,235,387

)

 

 

(32,820,130

)

 

 

Total stockholders' equity

 

14,331,945

 

 

 

25,171,265

 

 

 

Total liabilities and stockholders' equity

$

48,101,310

 

 

$

56,842,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 





FORIAN INC.

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

Information and Software

$ 6,780,680

 

$ 4,489,177

 

$ 18,674,213

 

$ 9,661,826

 

 

 

Services

341,173

 

269,753

 

1,168,034

 

858,400

 

 

 

Other

54,475

 

202,825

 

259,618

 

610,123

 

 

 

Total revenues

7,176,328

 

4,961,755

 

20,101,865

 

11,130,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

Cost of revenues

1,839,996

 

1,337,981

 

5,154,353

 

3,028,657

 

 

 

Research and development

3,259,511

 

2,612,184

 

9,869,435

 

6,059,948

 

 

 

Sales and marketing

1,525,286

 

1,088,203

 

4,455,269

 

2,864,213

 

 

 

General and administrative

4,659,959

 

6,673,723

 

15,618,570

 

16,035,981

 

 

 

Separation expenses

-

 

-

 

5,611,857

 

-

 

 

 

Gain on sale of assets

-

 

-

 

(202,159)

 

-

 

 

 

Depreciation and amortization

842,933

 

598,565

 

2,052,729

 

1,381,637

 

 

 

Transaction related expenses

-

 

-

 

-

 

1,210,279

 

 

 

Total costs and expenses

12,127,685

 

12,310,656

 

42,560,054

 

30,580,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss From Operations

(4,951,357)

 

(7,348,901)

 

(22,458,189)

 

(19,450,366)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liability

8,539

 

251,778

 

343,155

 

746,605

 

 

 

Interest and investment income

89,160

 

1,903

 

112,602

 

4,601

 

 

 

Interest expense

(198,738)

 

(79,422)

 

(659,425)

 

(101,325)

 

 

 

Foreign currency related (losses) gains

(65,228)

 

152,920

 

266,600

 

298,170

 

 

 

Total other income (expense), net

(166,267)

 

327,179

 

62,932

 

948,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income taxes

(5,117,624)

 

(7,021,722)

 

(22,395,257)

 

(18,502,315)

 

 

 

Income tax expense

(10,000)

 

-

 

(20,000)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

(5,127,624)

 

(7,021,722)

 

(22,415,257)

 

(18,502,315)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

$ (0.16)

 

$ (0.22)

 

$ (0.70)

 

$ (0.64)

 

 

 

Weighted-average shares outstanding

32,088,358

 

31,332,735

 

31,978,719

 

28,814,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 


FORIAN INC.

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(22,415,257

)

 

$

(18,502,315

)

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,052,729

 

 

 

1,381,637

 

 

 

 

 

 

 

Amortization on right of use asset

 

 

153,365

 

 

 

166,489

 

 

 

 

 

 

 

Gain on sale of assets

 

 

(202,159

)

 

 

-

 

 

 

 

 

 

 

Amortization of debt issuance costs

 

 

3,999

 

 

 

444

 

 

 

 

 

 

 

Accrued interest on Convertible Notes

 

 

629,041

 

 

 

70,000

 

 

 

 

 

 

 

Realized and unrealized gain on marketable securities

 

 

(110,914

)

 

 

(3,295

)

 

 

 

 

 

`

Provision for doubtful accounts

 

 

142,846

 

 

 

89,130

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

11,634,022

 

 

 

6,245,679

 

 

 

 

 

 

 

Change in fair value of warrant liability

 

 

(343,155

)

 

 

(746,605

)

 

 

 

 

 

 

Foreign currency related (gains) losses

 

 

14,803

 

 

 

(15,030

)

 

 

 

 

 

 

Issuance of warrants in connection with transaction expenses

 

 

-

 

 

 

389,976

 

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,761,038

)

 

 

(1,757,660

)

 

 

 

 

 

 

Contract assets

 

 

(921,290

)

 

 

(147,651

)

 

 

 

 

 

 

Prepaid expenses

 

 

(187,703

)

 

 

(576,836

)

 

 

 

 

 

 

Changes in lease liabilities during the period

 

 

(148,378

)

 

 

(186,383

)

 

 

 

 

 

 

Deposits and other assets

 

 

504,052

 

 

 

(120,732

)

 

 

 

 

 

 

Accounts payable

 

 

(228,151

)

 

 

(234,152

)

 

 

 

 

 

 

Accrued expenses

 

 

481,159

 

 

 

559,770

 

 

 

 

 

 

 

Deferred revenues

 

 

1,708,759

 

 

 

202,337

 

 

 

 

 

 

 

Net cash used in operating activities

 

 

(8,993,270

)

 

 

(13,185,197

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(1,695,937

)

 

 

(640,080

)

 

 

 

 

 

 

Proceeds from sale of assets

 

 

225,575

 

 

 

-

 

 

 

 

 

 

 

Purchase of marketable securities

 

 

(42,929,102

)

 

 

(24,903,107

)

 

 

 

 

 

 

Sale of marketable securities

 

 

36,392,416

 

 

 

24,009,003

 

 

 

 

 

 

 

Cash acquired as part of business combination

 

 

-

 

 

 

1,310,977

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(8,007,048

)

 

 

(223,207

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of MOR Class B options

 

 

-

 

 

 

292,830

 

 

 

 

 

 

 

Payments on notes payable and financing arrangements

 

 

(13,122

)

 

 

(5,551

)

 

 

 

 

 

 

Payment of employee withholding tax related to restricted stock units

 

 

(58,085

)

 

 

-

 

 

 

 

 

 

 

Proceeds from exercise of common stock options

 

 

-

 

 

 

48,570

 

 

 

 

 

 

 

Proceeds from sale of common stock

 

 

-

 

 

 

11,968,652

 

 

 

 

 

 

 

Proceeds from issuance of convertible notes

 

 

-

 

 

 

23,978,670

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

 

 

(71,207

)

 

 

36,283,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange rate changes on cash

 

 

(6,686

)

 

 

(5,132

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(17,078,211

)

 

 

22,869,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

18,663,805

 

 

 

665,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

1,585,594

 

 

$

23,535,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

-

 

 

$

724

 

 

 

 

 

 

 

Cash paid for taxes

 

$

2,550

 

 

$

-

 

 

 

 

 

 

 

Non-cash Investing Activities:

 

 

 

 

 

 

 

 

 

 

Non-cash consideration for Helix acquisition

 

$

-

 

 

$

18,454,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Non-GAAP Financial Measures

 

In this press release, we have provided certain non-GAAP measures, 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”), 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 loss”).

 

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

 

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

 

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

 

       Depreciation and Amortization. Depreciation and amortization expense is a non-cash expense relating to capital expenditures and intangible assets arising from acquisitions that are expensed on a straight-line basis over the estimated useful life of the related assets. We exclude depreciation and amortization expense from Adjusted EBITDA because we believe that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired tangible and intangible assets. Accordingly, we believe that this exclusion assists management and investors in making period-to-period comparisons of operating performance. Investors should note that the use of tangible and intangible assets contributed to revenue in the periods presented and will contribute to future revenue generation and should also note that such expense will recur in future periods.

 

       Stock-Based Compensation Expense. Stock-based compensation expense is a non-cash expense arising from the grant of stock-based awards to employees. We believe that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period comparisons in our Company’s operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (ii) such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Additionally, we believe that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between our Company’s operating performance and the operating performance of other companies that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.

 

       Interest Expense. Interest expense is associated with the 3.5% Convertible Notes due 2025 entered into on September 1, 2021, in the amount of $24,000,000. 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.

 

       Foreign Currency Related Gains (Losses). Foreign currency related gains (losses) result from foreign currency transactions and translation gains (losses) related to Engeni S.A., a former subsidiary of our Company acquired as part of the acquisition of Helix. We exclude foreign currency related gains (losses) 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 foreign currency related gains (losses) may 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.

 

       Gain on sale of assets. On March 3, 2022, we sold certain assets consisting of customer contracts, accounts receivable and other property related to our security monitoring services for $225,575 resulting in a gain of $202,159, which is included in operating expenses in the condensed consolidated statements of operations.

 

       Separation expenses. During March 2022, we transferred certain development activities from our former Engeni S.A. subsidiary to outsourced development facilities. As a result, we incurred $194,814 in severance and related costs to be recorded as a charge to operating expenses in 2022. Additionally, 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 our common stock will continue to vest according to their original terms through March 2, 2023, and unvested stock options to purchase 732,332 shares of our common stock were forfeited. The advisors are not required to perform services to our Company beyond the non-renewal date of March 2, 2022. As a result, we recorded $5,417,043 of stock compensation expenses related to the options that will vest over the twelve months ending March 2, 2023 during March 2022. We exclude these other items from Adjusted EBITDA because we believe these costs 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 separation expenses are non-recurring.

 

       Income tax expense. Medical Outcomes Research Analytics, LLC was organized as a limited liability company until the completion of the Helix acquisition. As a result, we were treated as a partnership for federal and state income tax purposes through March 2, 2021, and our taxable income and losses are reported by our members on their individual tax returns for such period. Therefore, we did not record any income tax expense or benefit through March 2, 2021. We incurred 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.

 

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.

 

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


FORIAN INC.

 

RECONCILIATION OF US GAAP TO NON-GAAP FINANCIAL MEASURES

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

 

Revenues:

 

 

 

 

 

 

Information and Software

$

6,780,680

 

$

4,489,177

 

 

$

18,674,213

 

$

9,661,826

 

 

Services

 

341,173

 

 

269,753

 

 

 

1,168,034

 

 

858,400

 

 

Other

 

54,475

 

 

202,825

 

 

 

259,618

 

 

610,123

 

 

Total revenues

$

7,176,328

 

$

4,961,755

 

 

$

20,101,865

 

$

11,130,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(5,127,624

)

$

(7,021,722

)

 

$

(22,415,257

)

$

(18,502,315

)

 

 

 

 

 

 

 

 

Depreciation and amortization

 

842,933

 

 

598,565

 

 

 

2,052,729

 

 

1,381,637

 

 

Stock based compensation expense

 

1,963,244

 

 

2,627,506

 

 

 

11,634,022

 

 

6,245,679

 

 

Change in fair value of warrant liability

 

(8,539

)

 

(251,778

)

 

 

(343,155

)

 

(746,605

)

 

Transaction related expenses

 

-

 

 

-

 

 

 

-

 

 

1,210,279

 

 

Interest and investment income (expense)

 

109,578

 

 

77,519

 

 

 

546,823

 

 

96,724

 

 

Foreign currency related (gains) losses

 

65,228

 

 

(152,920

)

 

 

(266,600

)

 

(298,170

)

 

Gain on sale of security monitoring assets

 

-

 

 

-

 

 

 

(202,159

)

 

-

 

 

Severance expense

 

-

 

 

-

 

 

 

194,814

 

 

-

 

 

Income tax expense

 

10,000

 

 

-

 

 

 

20,000

 

 

-

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

(2,145,180

)

$

(4,122,830

)

 

$

(8,778,783

)

$

(10,612,771

)

 

 

 

 

 

 























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