Exhibit 99.1
Forian Inc.
Announces Second Quarter 2024 Financial Results
Newtown, PA, August 14, 2024 (GLOBE NEWSWIRE) – Forian Inc. (Nasdaq: FORA), a provider of data science driven information and analytics solutions to the healthcare and life sciences industries, today announced results for
the quarter ended June 30, 2024.
“We continued to invest in our information assets in the second quarter to further differentiate our offerings and the insights they power for our
customers. We remain confident that our combination of thoughtful productization, diversification of data sources and prudent cost containment put us in solid position to manage through recent industry challenges and to continue our contribution to
our customers’ success,” stated Max Wygod, Chairman and Chief Executive Officer of Forian.
Second Quarter 2024 Financial Results
|
● |
Forian delivered the following results for the second quarter of 2024:
|
| |
|
Three Months Ended
June 30,
|
|
|
Period-over- |
|
| |
|
2024
Unaudited
|
|
|
2023
Unaudited
|
|
|
Period %
Change
|
|
|
Revenue
|
|
$
|
4,777,101
|
|
|
$
|
4,893,542
|
|
|
|
-2%
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations, net of tax
|
|
$
|
(2,553,259
|
)
|
|
$
|
(1,090,400
|
)
|
|
|
-134%
|
|
|
(Loss) income from discontinued operations, net of tax
|
|
$
|
-
|
|
|
$
|
(32,426
|
)
|
|
|
-100%
|
|
|
Net (loss) income
|
|
$
|
(2,553,259
|
)
|
|
$
|
(1,122,826
|
)
|
|
|
-127%
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations, net of tax per share – basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
|
-167%
|
|
|
Income from discontinued operations, net of tax per share – basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
0%
|
|
|
(Loss) Income per share – basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
|
-167%
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a non-GAAP financial measure defined below)
|
|
$
|
78,202
|
|
|
$
|
417,368
|
|
|
|
-81%
|
|
|
● |
Revenue for the quarter was $4.8 million, a $0.1 million decrease from $4.9 million in the prior year
|
|
● |
Net loss from continuing operations for the quarter was $2.6 million, or $0.08 per share, compared to a net loss of $1.1 million, or $0.03 per share, in the prior year
|
|
● |
Adjusted EBITDA for the quarter was $0.08 million, compared to $0.4 million in the prior year
|
|
● |
Cash, cash equivalents and marketable securities at June 30, 2024 totaled $48.0 million
|
Highlights
|
● |
Continued expansion of Chronos™ data lake through license of additional data to offset the reduction and expected 2025 loss of certain data from one data supplier
|
|
● |
Maintained positive Adjusted EBITDA despite revenue impact resulting from financing challenges of two early-stage customers
|
Full Year 2024 Outlook
Based on information as of August 14, 2024, the Company is updating its outlook for the year ending December 31, 2024 as follows:
|
● |
Revenue is expected to be in the range of $19 to $20 million
|
|
● |
Adjusted EBITDA is expected to be in the range of negative $0.5 million to $0.5 million
|
This 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.
Quarterly Conference Call and Webcast
Forian will host a conference call and webcast at 4:30 p.m. ET on August 14, 2024 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/c5ot6k5y. 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.
Forian provides a unique suite of data management capabilities and proprietary information and analytics
solutions to optimize and measure operational, clinical and financial performance for customers within the traditional and emerging life sciences and healthcare payer and provider segments. Forian has industry leading expertise in
acquiring, integrating, normalizing and commercializing large scale healthcare data assets. Forian’s information products overlay sophisticated data management and data science capabilities on top of a comprehensive clinical data lake to identify
unique relationships, create distinctive information assets and generate proprietary insights. For more information, please visit the Company’s website at www.forian.com.
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 of 1933, as amended,
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, which may include GAAP and non-GAAP
financial measures, 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. Forward-looking statements by their
nature address matters that involve risks and uncertainties, many of which are beyond our control and are not guarantees of future results, such as statements about 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. Our updated 2024 outlook contained in this release is based on current estimates as of today’s date that are subject to such factors. Factors that could cause
actual results to differ include, but are not limited to, those risks and uncertainties associated with operations, strategy and goals, our ability to execute on our strategy 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, 2023, as filed with the SEC on March 29, 2024, and elsewhere in Forian’s filings and reports with the SEC. Forward-looking statements contained in
this release are made as of the date hereof, and we undertake 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.
Media and Investor Contact:
forian.com/investors
ir@forian.com
267-225-6263
SOURCE: Forian Inc.
FORIAN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
|
June 30,
|
|
|
December 31,
|
|
| |
|
2024
|
|
|
2023
|
|
| |
|
(UNAUDITED)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,999,118
|
|
|
$
|
6,042,986
|
|
|
Marketable securities
|
|
|
46,011,230
|
|
|
|
42,296,589
|
|
|
Accounts receivable, net
|
|
|
3,670,368
|
|
|
|
2,572,931
|
|
|
Proceeds receivable from sale of discontinued operation, net
|
|
|
-
|
|
|
|
1,645,954
|
|
|
Contract assets
|
|
|
955,355
|
|
|
|
1,126,713
|
|
|
Prepaid expenses
|
|
|
1,015,985
|
|
|
|
1,077,233
|
|
|
Other assets
|
|
|
2,783,185
|
|
|
|
2,515,509
|
|
|
Total current assets
|
|
|
56,435,241
|
|
|
|
57,277,915
|
|
| |
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
59,309
|
|
|
|
76,085
|
|
|
Right of use assets, net
|
|
|
46,876
|
|
|
|
10,664
|
|
|
Deposits and other assets
|
|
|
1,828,425
|
|
|
|
1,523,948
|
|
|
Total assets
|
|
$
|
58,369,851
|
|
|
$
|
58,888,612
|
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,489,766
|
|
|
$
|
161,590
|
|
|
Accrued expenses
|
|
|
3,320,571
|
|
|
|
4,252,257
|
|
|
Short-term operating lease liabilities
|
|
|
22,872
|
|
|
|
10,664
|
|
|
Warrant liability
|
|
|
20
|
|
|
|
563
|
|
|
Deferred revenues
|
|
|
3,202,703
|
|
|
|
2,413,551
|
|
|
Total current liabilities
|
|
|
8,035,932
|
|
|
|
6,838,625
|
|
| |
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
524,004
|
|
|
|
1,000,000
|
|
|
Convertible notes payable, net of debt issuance costs ($6,000,000 in principal is held by a related
party)
|
|
|
24,175,094
|
|
|
|
24,870,181
|
|
|
Total long-term liabilities
|
|
|
24,699,098
|
|
|
|
25,870,181
|
|
| |
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
32,735,030
|
|
|
|
32,708,806
|
|
| |
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
Preferred Stock; par value $0.001; 5,000,000 Shares authorized; 0 issued and outstanding as of June
30, 2024 and December 31, 2023
|
|
|
-
|
|
|
|
-
|
|
|
Common Stock; par value $0.001; 95,000,000 Shares authorized; 31,110,187 issued and outstanding as
of March 31, 2024 and 30,920,450 issued and outstanding as of December 31, 2023
|
|
|
31,110
|
|
|
|
30,920
|
|
|
Additional paid-in capital
|
|
|
77,054,999
|
|
|
|
73,834,300
|
|
|
Accumulated deficit
|
|
|
(51,451,288
|
)
|
|
|
(47,685,414
|
)
|
|
Total stockholders' equity
|
|
|
25,634,821
|
|
|
|
26,179,806
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
58,369,851
|
|
|
$
|
58,888,612
|
|
FORIAN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
|
For the Three Months Ended
June 30,
|
|
|
For the Six Months Ended
June 30,
|
|
| |
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
4,777,101
|
|
|
$
|
4,893,542
|
|
|
$
|
9,654,479
|
|
|
$
|
9,763,929
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
1,806,918
|
|
|
|
1,276,712
|
|
|
|
3,510,275
|
|
|
|
2,528,927
|
|
|
Research and development
|
|
|
307,201
|
|
|
|
304,187
|
|
|
|
697,090
|
|
|
|
835,876
|
|
|
Sales and marketing
|
|
|
1,017,659
|
|
|
|
1,237,327
|
|
|
|
2,072,800
|
|
|
|
2,433,519
|
|
|
General and administrative
|
|
|
3,665,601
|
|
|
|
3,198,290
|
|
|
|
6,949,090
|
|
|
|
6,753,765
|
|
|
Separation expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
599,832
|
|
|
Depreciation and amortization
|
|
|
7,889
|
|
|
|
15,257
|
|
|
|
16,776
|
|
|
|
53,687
|
|
|
Litigation settlements and related expenses
|
|
|
942,311
|
|
|
|
350,309
|
|
|
|
1,151,276
|
|
|
|
434,660
|
|
|
Total costs and expenses
|
|
|
7,747,579
|
|
|
|
6,382,082
|
|
|
|
14,397,307
|
|
|
|
13,640,266
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss From Continuing Operations
|
|
|
(2,970,478
|
)
|
|
|
(1,488,540
|
)
|
|
|
(4,742,828
|
)
|
|
|
(3,876,337
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liability
|
|
|
430
|
|
|
|
8,053
|
|
|
|
543
|
|
|
|
2,494
|
|
|
Interest and investment income
|
|
|
618,316
|
|
|
|
637,032
|
|
|
|
1,293,473
|
|
|
|
1,019,954
|
|
|
Gain on sale of investment
|
|
|
-
|
|
|
|
-
|
|
|
|
48,612
|
|
|
|
-
|
|
|
Interest expense
|
|
|
(193,306
|
)
|
|
|
(210,758
|
)
|
|
|
(392,269
|
)
|
|
|
(419,214
|
)
|
|
Gain on debt redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
137,356
|
|
|
|
-
|
|
|
Total other income (expense), net
|
|
|
425,440
|
|
|
|
434,327
|
|
|
|
1,087,715
|
|
|
|
603,234
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(2,545,038
|
)
|
|
|
(1,054,213
|
)
|
|
|
(3,655,113
|
)
|
|
|
(3,273,103
|
)
|
|
Income taxes
|
|
|
(8,221
|
)
|
|
|
(36,187
|
)
|
|
|
(110,761
|
)
|
|
|
(66,096
|
)
|
|
Loss from continuing operations, net of tax
|
|
|
(2,553,259
|
)
|
|
|
(1,090,400
|
)
|
|
|
(3,765,874
|
)
|
|
|
(3,339,199
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(94,427
|
)
|
|
Gain on sale of discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,531,849
|
|
|
Income tax effect on discontinued operations
|
|
|
-
|
|
|
|
(32,426
|
)
|
|
|
-
|
|
|
|
(2,722,570
|
)
|
|
Income from discontinued operations, net of tax
|
|
|
-
|
|
|
|
(32,426
|
)
|
|
|
-
|
|
|
|
8,714,852
|
|
|
Net (loss) income
|
|
$
|
(2,553,259
|
)
|
|
$
|
(1,122,826
|
)
|
|
$
|
(3,765,874
|
)
|
|
$
|
5,375,653
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.10
|
)
|
|
Discontinued operations
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
0.27
|
|
|
Net (loss) income per share - basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
0.17
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding
|
|
|
31,098,497
|
|
|
|
32,260,992
|
|
|
|
31,049,647
|
|
|
|
32,369,904
|
|
FORIAN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
|
For the Period Ended June 30,
|
|
| |
|
2024
|
|
|
2023
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(3,765,874
|
)
|
|
$
|
5,375,653
|
|
|
Less: Income from discontinued operations
|
|
|
-
|
|
|
|
8,714,852
|
|
|
Loss from continuing operations
|
|
|
(3,765,874
|
)
|
|
|
(3,339,199
|
)
|
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities - continuing
operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
16,776
|
|
|
|
53,687
|
|
|
Amortization on right of use asset
|
|
|
10,664
|
|
|
|
11,724
|
|
|
Amortization of debt issuance costs
|
|
|
2,667
|
|
|
|
2,667
|
|
|
Accrued interest on convertible Notes
|
|
|
389,602
|
|
|
|
416,548
|
|
|
Amortization of discount - proceeds from sale of discontinued operations
|
|
|
(20,712
|
)
|
|
|
(245,041
|
)
|
|
Accretion of discount - marketable securities
|
|
|
(1,237,337
|
)
|
|
|
(767,533
|
)
|
|
Gain on sale of investment
|
|
|
(48,612
|
)
|
|
|
-
|
|
|
Gain on debt redemption
|
|
|
(137,356
|
)
|
|
|
-
|
|
|
Provision for doubtful accounts
|
|
|
168,750
|
|
|
|
-
|
|
|
Stock-based compensation expense
|
|
|
3,321,551
|
|
|
|
3,368,575
|
|
|
Change in fair value of warrant liability
|
|
|
(543
|
)
|
|
|
(2,494
|
)
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(1,266,187
|
)
|
|
|
(2,030,800
|
)
|
|
Contract assets
|
|
|
171,358
|
|
|
|
442,616
|
|
|
Prepaid expenses
|
|
|
61,248
|
|
|
|
(132,344
|
)
|
|
Changes in lease liabilities during the period
|
|
|
(21,624
|
)
|
|
|
(11,724
|
)
|
|
Deposits and other assets
|
|
|
(572,153
|
)
|
|
|
(235,656
|
)
|
|
Accounts payable
|
|
|
1,328,176
|
|
|
|
605,437
|
|
|
Accrued expenses
|
|
|
(931,686
|
)
|
|
|
(236,088
|
)
|
|
Deferred revenues
|
|
|
789,152
|
|
|
|
681,476
|
|
|
Other liabilities
|
|
|
(489,040
|
)
|
|
|
-
|
|
|
Net cash used in operating activities - continuing operations
|
|
|
(2,231,180
|
)
|
|
|
(1,418,149
|
)
|
|
Net cash used in operating activities - discontinued operations
|
|
|
-
|
|
|
|
(59,075
|
)
|
|
Net cash used in operating activities
|
|
|
(2,231,180
|
)
|
|
|
(1,477,224
|
)
|
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
-
|
|
|
|
(75,493
|
)
|
|
Purchase of marketable securities
|
|
|
(87,732,380
|
)
|
|
|
(61,573,237
|
)
|
|
Sale of marketable securities
|
|
|
85,255,076
|
|
|
|
41,392,821
|
|
|
Proceeds from sale of investment
|
|
|
48,612
|
|
|
|
-
|
|
|
Cash from sale of discontinued operations
|
|
|
1,666,666
|
|
|
|
21,967,193
|
|
|
Net cash (used in) provided by investing activities - continuing operations
|
|
|
(762,026
|
)
|
|
|
1,711,284
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(762,026
|
)
|
|
|
1,711,284
|
|
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Cash used to redeem convertible notes
|
|
|
(950,000
|
)
|
|
|
-
|
|
|
Tax payments related to shares withheld for vested restricted stock units
|
|
|
(100,662
|
)
|
|
|
(127,357
|
)
|
|
Net cash used in financing activities- continuing operations
|
|
|
(1,050,662
|
)
|
|
|
(127,357
|
)
|
|
Net cash used in financing activities
|
|
|
(1,050,662
|
)
|
|
|
(127,357
|
)
|
| |
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(4,043,868
|
)
|
|
|
106,703
|
|
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
6,042,986
|
|
|
|
2,795,743
|
|
| |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,999,118
|
|
|
$
|
2,902,446
|
|
| |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash for paid for taxes
|
|
$
|
48,492
|
|
|
$
|
1,423,000
|
|
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. The Company excludes depreciation and
amortization expense from Adjusted EBITDA because management believes that (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of the 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, management believes 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. Management believes that excluding the effect of stock-based compensation from Adjusted EBITDA assists management and investors in making period-to-period
comparisons in the Company’s operating performance because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of 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 2023 includes $349,832 related to the accelerated vesting of stock, which is recognized in separation
expenses in the condensed consolidated statements of operations. These expenses were incurred during the three months ended March 31, 2023, and there were no additional related expenses incurred during the three months ended June 30, 2023.
Management believes that excluding stock-based compensation from Adjusted EBITDA assists management and investors in making meaningful comparisons between the Company’s operating performance and the operating performance of other companies
that may use different forms of employee compensation or different valuation methodologies for their stock-based compensation. Investors should note that stock-based compensation is a key incentive offered to employees whose efforts
contributed to the operating results in the periods presented and are expected to contribute to operating results in future periods. Investors should also note that such expenses will recur in the future.
|
|
● |
Interest Expense. Interest expense is associated with the convertible
notes entered into on September 1, 2021 in the amount of $24,000,000. The Notes are due on September 1, 2025, and accrue interest at an annual rate of 3.5%. Management excludes interest expense from Adjusted EBITDA (i) because it is not
directly attributable to the performance of 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 the Company invests. Interest and investment income can vary over time due to changes in interest rates and level of investments. Management excludes interest and
investment income from Adjusted EBITDA (i) because these items are not directly attributable to the performance of 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. The Company engages in other activities and transactions
that can impact net income (loss). In the periods reported, these other items included (i) change in fair value of warrant liability relating to warrants assumed in the acquisition of Helix; (ii) gain on sale of investment relating to the
sale of a minority equity interest; and (iii) gain on debt redemption which relates to a gain on the early retirement of a portion of the convertible notes. Management excludes these other items from Adjusted EBITDA because management
believes these activities or transactions are not directly attributable to the performance of 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 six months ended June 30, 2023
includes $250,000 related to the salary continuation. Managements excludes these other items from Adjusted EBITDA because management believes these costs are not recurring and not directly attributable to the performance of 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 its employees’ activities.
|
|
● |
Litigation related expenses. Management excludes litigation expenses that are extraordinary in nature and are unrelated to the Company’s day-to-day business operations. The nature of these expenses is primarily related
to direct and incremental third-party legal expenses associated with such litigation, which pertains to entities acquired in the Helix merger.
|
|
● |
Strategic review related expenses. Management excludes certain
professional expenses that are extraordinary in nature and are unrelated to the Company’s day-to-day business operations. The nature of these expenses is primarily related to a strategic review of the Company’s operations.
|
|
● |
Income tax expense. Management excludes the income tax expense from
Adjusted EBITDA (i) because management believes that the income tax expense is not directly attributable to the underlying performance of 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 June 30,
|
|
|
For the Six Months Ended June 30,
|
|
| |
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
4,777,101
|
|
|
$
|
4,893,542
|
|
|
$
|
9,654,479
|
|
|
$
|
9,763,929
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
$
|
(2,553,259
|
)
|
|
$
|
(1,090,400
|
)
|
|
$
|
(3,765,874
|
)
|
|
$
|
(3,339,199
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
7,889
|
|
|
|
15,257
|
|
|
|
16,776
|
|
|
|
53,687
|
|
|
Stock based compensation expense
|
|
|
1,662,636
|
|
|
|
1,540,342
|
|
|
|
3,321,551
|
|
|
|
3,368,575
|
|
|
Change in fair value of warrant liability
|
|
|
(430
|
)
|
|
|
(8,053
|
)
|
|
|
(543
|
)
|
|
|
(2,494
|
)
|
|
Interest and investment income
|
|
|
(618,316
|
)
|
|
|
(637,032
|
)
|
|
|
(1,293,473
|
)
|
|
|
(1,019,954
|
)
|
|
Interest expense
|
|
|
193,306
|
|
|
|
210,758
|
|
|
|
392,269
|
|
|
|
419,214
|
|
|
Gain on sale of investment
|
|
|
-
|
|
|
|
-
|
|
|
|
(48,612
|
)
|
|
|
-
|
|
|
Gain on debt redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
(137,356
|
)
|
|
|
-
|
|
|
Severance expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
|
Litigation settlement and related expenses
|
|
|
942,311
|
|
|
|
350,309
|
|
|
|
1,151,276
|
|
|
|
434,660
|
|
|
Strategic review related expenses
|
|
|
435,844
|
|
|
|
|
|
|
|
435,844
|
|
|
|
|
|
|
Income tax expense
|
|
|
8,221
|
|
|
|
36,187
|
|
|
|
110,761
|
|
|
|
66,096
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA - continuing operations
|
|
$
|
78,202
|
|
|
$
|
417,368
|
|
|
$
|
182,619
|
|
|
$
|
230,585
|
|