Forian Inc. - Annual Report: 2021 (Form 10-K)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2021

OR

Commission file number: 001-40146

FORIAN INC.

(Exact name of registrant as specified in its charter)

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

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐   No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐   No ☒

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 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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

As of March 25, 2022, there are 32,601,287 shares outstanding of the registrant’s common stock, including shares of unvested restricted stock.

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	Page
PART I
Item 1. Business	4
Item 1A. Risk Factors	15
Item 1B. Unresolved Staff Comments	27
Item 2. Properties	28
Item 3. Legal Proceedings	28
Item 4. Mine Safety Disclosures	29
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6. Selected Financial Data	29
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	40
Item 8. Financial Statements and Supplementary Data	40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A. Controls and Procedures	67
Item 9B. Other Information	69
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	69
PART III
Item 10. Directors, Executive Officers and Corporate Governance	70
Item 11. Executive Compensation	70
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	70
Item 13. Certain Relationships and Related Transactions, and Director Independence	70
Item 14. Principal Accounting Fees and Services	70
PART IV
Item 15. Exhibits and Financial Statement Schedules	70
Item 16. Form 10-K Summary	71

Item 1.

Business

•

the delivery of evidence-based insight into the safety and efficacy of ethical pharmaceuticals and emerging therapies to pharmaceutical manufacturers, physicians, caregivers, payers and patients with credible evidence to improve patient care and health outcomes;

•

the empowerment of regulators to more-granularly assess the safety, health, social and economic outcomes associated with all therapeutic options as the cannabis market scales and emerging therapies are adopted as mainstream therapeutic alternatives; and

•

the creation of new standards for product and treatment classification in emerging therapeutic markets where no existing or widely adopted standards exist today.

•

Flexible and scalable approach to privacy-focused analytics software and solutions. Our solutions are purpose built to address the analytic needs of healthcare and cannabis stakeholders across the product or patient journey. We are developing scalable, data driven analytics solutions in cannabis to drive evidence-based decisions where none exist today. We can provide client-centric deliverables that address a specific need that may be satisfied with healthcare data, cannabis data or an integrated offering.

•

Deep domain expertise. Our knowledge base in large transactional database platforms, commercial analytics, consumer marketing and pharmacoeconomics in healthcare enables us to develop solutions that address the unique demands of the healthcare and cannabis industries. Through the incorporation of industry best practices into solutions that are curated for stakeholders within healthcare and cannabis, our customers enjoy enhanced analytical solutions to drive their informed business decisions. Across various disciplines our team has deep industry expertise in life sciences and cannabis that translates into solutions by design that enable our clients to solve problems unique to their sector.

•

Diverse customer base. Our customer base extends throughout the complete cannabis vertical, including dispensaries, cultivators, manufacturers, distributors and governments, across to a broad range of stakeholders within the healthcare industry carrying the mission to better understand and improve the patient journey. This diverse customer set offers us a uniquely informed point of view from each customer vantage point of how our solutions can best assist in optimizing performance. Through BioTrackÔ we enjoy the established reputation of delivering stable and reliable solutions to leading cannabis stakeholders. Our information services team is defined by the innovative spirit of allowing the problems our healthcare customers face to shape the solutions that are best for our customers.

•

Large integrated longitudinal database. Our proprietary database processes, integrates, deidentifies and standardizes medical, hospital and pharmacy claims datasets along with cannabis point of sale data, consumer behavior and demographic-level data and other datasets to produce a longitudinal database that encompass the vast majority of the U.S. population. We will continue to invest in and integrate unique data sources to further strengthen and differentiate our solutions.

•

First mover in cannabis value proposition. Our large proprietary integrated database and HIPAA-certified analytic solutions provide us the opportunity to create the standard for cannabis data product classification, to integrate cannabis user data at scale and be the center of the analytics’ infrastructure in cannabis as cannabinoid products become mainstream therapeutics in healthcare. Additionally, our cultivator, manufacturing and retail dispensary customers can leverage our analytics to obtain a granular understanding of their customers, prospective customers, competitors and target markets while regulators gain insights on tax revenue potential, cannabis related health outcomes, adverse events, product safety, efficacy and quality.

•

Innovate and advance our platform and services. We have a history of technological innovation, and plan to release new features and upgrades on a regular basis. We intend to continue making significant investments in all platform products, architecture and teams to further differentiate our products and increase sales. In improving our ability to integrate with partners, we enable ourselves to capitalize on new data and services that add value to our customers and create further differentiation of our proprietary data assets.

•

Drive growth by acquiring new commercial and government customers. We believe that nearly all organizations that discover, develop, produce and market therapeutic and cannabis products must embrace data driven analytics to compete effectively. As such, the opportunity to continue growing our customer base is significant.

•

Increase usage and upsell within our existing customer base. We plan to continue investing in sales and marketing, with a focus on driving greater use of our newer SaaS, DaaS and RWE offerings to deliver more value to and expand our relationships with our customers, leading to scale and operating leverage for our business.

•

Leverage our scalable platform into new markets. Our platform provides innovative benefits to the life science, payer, provider, government and legal cannabis markets. We believe there is significant opportunity to deploy the use of our platform in adjacent industries, such as the legal psychedelic and emerging therapeutics markets as well as the financial services markets.

•

Expand our data and strategic partner network. Our business intelligence is derived partly from data generated through our commercial products as well as acquired from strategic data partners. As part of our growth strategy, we may seek to acquire assets, data-driven products or companies that are synergistic with our business and add value to our data assets and offering sets.

Item 1A.

Risk Factors

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latent impacts resulting from the diversion of our management team’s attention from ongoing business concerns as a result of the devotion of management’s attention to the transactions and performance shortfalls at one or both of the companies;

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difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;

•

the possibility of faulty assumptions underlying expectations regarding the integration process, including with respect to the intended tax efficient transactions;

•

unanticipated issues in integrating information technology, communications programs, financial procedures and operations and other systems, procedures and policies;

•

difficulties in managing a larger combined company, addressing differences in business culture and retaining key personnel;

•

unanticipated changes in applicable laws and regulations;

•

managing tax costs or inefficiencies associated with integrating the operations of the combined company and any contemplated tax efficient separation transaction; and

•

coordinating geographically separate organizations.

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The failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion;

•

Product defects, errors or failures or our inability to satisfy customer service level requirements;

•

Negative publicity or negative private statements about the security, performance or effectiveness of our platforms or product enhancements;

•

Delays in releasing to the market new offerings or enhancements to existing offerings;

•

Introduction or anticipated introduction of competing platforms or functionalities by competitors;

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Inability of our platforms or product enhancements to scale and perform to meet customer demands;

•

Receiving qualified or adverse opinions in connection with security or penetration testing, certifications or audits, such as those related to IT controls and security standards and frameworks or compliance;

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Reluctance of customers to purchase proprietary software products; and

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Reluctance of customers to purchase products incorporating open source software.

•

changes in stock market analyst recommendations or earnings estimates regarding our common stock, other companies comparable to us or companies in the industries we serve;

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actual or anticipated fluctuations in our operating results or future prospects;

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reaction to our public announcements;

•

strategic actions taken by us or our competitors, such as any contemplated business separation, acquisitions or restructurings;

•

failure of the combined company to achieve the perceived benefits of the transactions, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;

•

adverse conditions in the financial market or general U.S. or international economic conditions, including those resulting from war, incidents of terrorism and responses to such events; and

•

sales of common stock by us, members of our management team or significant stockholders.

Item 1B.

Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosure

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6.

Selected Financial Data

Item 7.

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

		For the Years Ended,
		December 31, 2021				December 31, 2020
Revenues		$	16,879,715			$	544,871
Costs and Expenses
Cost of Revenues			4,717,175				38,293
Research and development			8,975,745				2,509,666
Sales and marketing			4,142,190				573,851
General and administrative			23,464,267				1,534,854
Depreciation and amortization			1,986,816				8,555
Transaction related expenses			1,210,279				863,409
Loss from operations		$	(27,616,757	)		$	(4,983,757	)

•

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 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%. 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 and losses related Engeni, S.A., a subsidiary of the 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 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; (ii) transaction related expenses which consist of professional fees and other expenses incurred in connection with the acquisition of Helix; (iii) other income which consists of profits on marketable security investments; and (iv) loss on impairment of goodwill. 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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Income tax expense. MOR was organized as a limited liability company until the completion of the Helix acquisition. As a result, we were treated as a partnership for federal and state income tax purposes through March 2, 2021, and our taxable income and losses are reported by our members on their individual tax returns for such period. Therefore, we did not record any income tax expense or benefit through March 2, 2021. We 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.

		Historical (Unaudited)
		Year Ended December 31,
		2021				2020
Revenues:
Information and Software		$	14,952,247			$	544,871
Services			1,122,528				—
Other			804,940				—
Total revenues		$	16,879,715			$	544,871
Net loss		$	(26,551,105	)		$	(4,980,183	)
Depreciation & amortization			1,986,816				8,555
Stock based compensation expense			9,300,443				28,329
Change in fair value of warrant liability			(878,481	)			—
Transaction related expenses			1,210,279				863,409
Interest and investment income (expense)			315,570				(3,574	)
Foreign currency related gains			(525,252	)			—
Income tax expense			22,511				—
Adjusted EBITDA		$	(15,119,219	)		$	(4,083,464	)

		Pro Forma (Unaudited)
		Year Ended December 31,
		2021				2020
Revenues:
Information and Software		$	16,581,325			$	9,953,647
Services			1,356,218				1,344,824
Other			951,482				1,024,862
Total revenues		$	18,889,025			$	12,323,333
Net loss		$	(28,980,168	)		$	(50,001,000	)
Depreciation & amortization			2,547,585				3,821,000
Stock based compensation expense			9,463,386				1,773,000
Change in fair value of warrant liability			(270,369	)			(132,000	)
Gain on asset disposal			—				(240,000	)
Loss on impairment of goodwill			—				41,333,000
Transaction related expenses			2,096,054				—
Interest and investment income (expense)			325,712				218,000
Foreign currency related gains			(525,252	)			—
Other income			(55,006	)			(31,000	)
Income tax expense			22,511				—
Adjusted EBITDA		$	(15,375,547	)		$	(3,259,000	)

		Year Ended
		December 31,				December 31,
		2021				2020
Net cash used in operating activities		$	(17,257,546	)		$	(4,250,734	)
Net cash used in investing activities			(1,025,155	)			(11,399,997	)
Net cash provided by financing activities			36,281,043				16,315,700
Net increase in cash and cash equivalents		$	17,998,342			$	664,969

•

future expected cash flows from sales, maintenance agreements, and acquired developed technologies;

•

the acquired company’s trade name and customer relationships as well as assumptions about the period of time the acquired trade name and customer relationships will continue to be used in our product portfolio;

•

expected costs to develop the in-process research and development into commercially viable software and estimated cash flows from the projects when completed; and

•

discount rates used to determine the present value of estimated future cash flows.

Report of Independent Registered Accounting Firm (PCAOB ID# 688)	41
Consolidated Balance Sheets as of December 31, 2021 and 2020	42
Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020	43
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020	44
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020	45
Notes to Consolidated Financial Statements	46

 

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

 

		For the Years Ended December 31,
		2021				2020
Revenues:
Information and Software		$	14,952,247			$	544,871
Services			1,122,528				—
Other			804,940				—
Total revenues			16,879,715				544,871
Costs and Expenses:
Cost of revenues			4,717,175				38,293
Research and development			8,975,745				2,509,666
Sales and marketing			4,142,190				573,851
General and administrative			23,464,267				1,534,854
Depreciation and amortization			1,986,816				8,555
Transaction related expenses			1,210,279				863,409
Total costs and expenses			44,496,472				5,528,628
Loss From Operations			(27,616,757	)			(4,983,757	)
Other Income (Expense):
Change in fair value of warrant liability			878,481				—
Interest and investment income			6,809				3,574
Interest expense			(322,379	)			—
Foreign currency related gains			525,252				—
Total other income, net			1,088,163				3,574
Net loss before income taxes			(26,528,594	)			(4,980,183	)
Income tax expense			(22,511	)			—
Net Loss		$	(26,551,105	)		$	(4,980,183	)
Basic and diluted net loss per common share		$	(0.90	)		$	(0.38	)
Weighted-average shares outstanding			29,527,608				13,189,623

Forian Inc.

Notes to Consolidated Financial Statements

 

 

 

Principles of Consolidation

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses together with amounts disclosed in related notes to the financial statements. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that the external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820, Fair Value Measurements and 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:

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 convertible notes as of December 31, 2021 was $22,258,000, based on Level 3 inputs. The estimated fair value of the Company’s warrant liability as of December 31, 2021 was $369,234, based on Level 3 inputs.

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.

Revenue Recognition

 

Software revenue is primarily comprised of subscriptions to point of sale and business intelligence products and related hosting services. Subscription revenue is considered a single performance obligation recognized ratably over the term of the contract, beginning when access to the applicable software is provided to the customer. Customers are typically billed at the beginning of each month under agreements, which the customer may cancel with 30 days’ notice. When collection of fees occurs in advance of service delivery, revenue recognition is deferred until such services commence. Revenue for implementation fees is recognized as training and installation services are performed.

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

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.

In some cases, contracts provide for variable consideration that is contingent upon the 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 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 included in the 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 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 under contingent revenue arrangements.

Contract acquisition costs, which consist of sales commissions paid or payable, are 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.

		Contract Assets												Contract Liability
		Costs of obtaining contracts				Unbilled revenue				Total				Deferred Revenue
Balance at January 1, 2021		$	53,784			$	142,917			$	196,701			$	158,884
Acquired from Helix			—				20,128				20,128				320,937
Acquired balances recognized during period			—				(20,128	)			(20,128	)			(263,787	)
Beginning deferred revenue balance recognized during the period			—				—				—				(158,884	)
Net change due to timing of billings, payments and recognition			16,494				843,696				860,190				919,118
Balance at December 31, 2021		$	70,278			$	986,613			$	1,056,891			$	976,268

		December 31, 2021				December 31, 2020
Estimated next twelve months		$	8,525,736			$	460,208
Thereafter			11,424,934				622,916
Total		$	19,950,670			$	1,083,124

		December 31, 2021				December 31, 2020
Healthcare Information		$	7,138,907			$	544,871
Software Subscriptions			7,813,340				—
Services			1,122,528				—
Other			804,940				—
Total		$	16,879,715			$	544,871

Customer Concentration

For the year ended December 31, 2020, the Company had a single customer that accounted for $450,000 of revenue, which represented 83% of revenues generated from customer sales. The contracts assets balance related to this customer at December 31, 2020 was $142,917. The concentration with this customer declined in 2021 as the Company added more customers and sources of revenue.

The Company did not have any customers that exceeded 10% of total revenue for the year ended December 31, 2021.

The Company licenses certain information assets from third parties as a key input to certain Information and Software Products. While information licensing fees represented less than 10% of the Company’s operating expenses for the years ended December 31, 2021, and 2020, any disruption associated with these suppliers could have a material short-term impact on the business while alternate sources are secured.

Property and Equipment, Net

The Company reviews for the impairment of long-lived assets annually and whenever events and or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when the present value of estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. There were no impairment losses recognized during the years ended December 31, 2021 and 2020.

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 and ASC Subtopic 985-20, Software - Costs of Software to be Sold, Leased or Marketed. Costs incurred in the application development stage are subject to capitalization and subsequent amortization and possible impairment. Product development costs are primarily related to Company personnel and contractors for design and evaluating software development, testing, bug fixes, and other maintenance activities. Product development costs not pertaining to the application development stage are expensed as incurred.  The Company capitalized software development costs of $1,360,836 and $0 as of December 31, 2021 and 2020, respectively.

Net Loss per Share

Net loss per share of common stock is computed by dividing net loss by the weighted average number of common shares outstanding during the period. At December31, 2021, the Company had potentially dilutive securities that could be exercised or converted into common stock. Refer to Note 14 for the Company’s disclosure on such potential dilution. Further, as the Company has incurred net losses for the years ended December 31, 2021 and 2020, the diluted loss per share is the same as basic loss per share for the periods presented.

 

Total purchase price		$	18,454,784
Assets acquired:
Cash			1,310,977
Accounts receivable, net			488,453
Prepaid expenses			215,064
Contract assets			20,128
Other assets			450,000
Property and equipment			146,559
Software Technology			5,279,000
Trade Names and Trademarks			386,000
Customer Relationships			5,269,000
Right of use assets			1,082,684
Deposits and other assets			58,950
Total assets acquired		$	14,706,815
Liabilities assumed:
Accounts payable and accrued liabilities		$	681,879
Accrued expenses			1,972,663
Short-term lease liabilities			295,364
Deferred revenues			320,936
Warrant liability			1,247,715
Notes payable and financing arrangements			20,801
Other long-term liabilities			812,045
Total liabilities assumed		$	5,351,403
Estimated fair value of net assets acquired:		$	9,355,412
Goodwill		$	9,099,372

		For the Years Ended December 31,
Description		2021				2020
Revenues		$	18,889,025			$	12,323,000
Net loss		$	(28,980,168	)		$	(50,001,000	)
Net loss per share:
Basic and diluted-as pro forma (unaudited)		$	(0.94	)		$	(1.87	)

 

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 December 31, 2021 and December 31, 2020, the Company’s balance sheet reflected other prepaid expenses of $1,017,927 and $120,979, respectively, primarily relating to various software and information licenses and insurance policies with durations ranging from 3 months to 1 year.

 

 

As of December 31, 2021 and 2020, property and equipment were comprised of the following:

 

		December 31, 2021				December 31, 2020
Personal computing equipment		$	131,137			$	55,767
Furniture and equipment			119,381				—
Software development costs			1,338,044				—
Vehicles			25,876				—
Total			1,614,438				55,767
Less: Accumulated depreciation and amortization			(82,479	)			(9,409	)
Property and equipment, net		$	1,531,959			$	46,358

 

		Estimated Useful Life (Years)				Gross Carrying Amount at March 2, 2021				Accumulated Amortization				Net Book Value at December 31, 2021
Customer Relationships			5			$	5,269,000			$	(872,501	)		$	4,396,499
Software Technology			2				1,170,000				(484,355	)			685,645
Software Technology			7				4,109,000				(486,011	)			3,622,989
Tradenames and Trademarks			8				386,000				(39,949	)			346,051
						$	10,934,000			$	(1,882,816	)		$	9,051,184

Years Ending December 31,		Future amortization expense
2022		$	2,274,050
2023			1,789,695
2024			1,689,050
2025			1,689,050
2026			816,549
Thereafter			792,790
Total		$	9,051,184

 

As of December 31, 2021 and December 31, 2020, accrued expenses were comprised of the following:

 

 

		As of December 31, 2021
Fair value of company's common stock		$	9.02
Dividend yield			0	%
Expected volatility			118% - 149	%
Risk Free interest rate			0.06% - 0.97	%
Expected life (years)			1.82
Exercise price		$	8.00 - $28.00
Fair value of financial instruments - warrants		$	369,234

		Amount
Balance at January 1, 2021		$	—
Fair value of warrant liability assumed in connection with Helix Merger			1,247,715
Change in fair value of warrant liability			(878,481	)
Balance at December 31, 2021		$	369,234