UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Unless the context otherwise requires, the “Company” refers to Forian Inc., a Delaware corporation, and “Kyber” refers to Kyber Data Science LLC, a Delaware limited liability company.
Description of the Business Combination
On October 31, 2024, Forian Inc. (the “Company”) entered into a Membership Interest Assignment Agreement (the “Assignment Agreement”), by and among ▇▇▇▇▇ Inc. (“▇▇▇▇▇”), IMcK Holdings LLC
(“Minority Seller” and together with ▇▇▇▇▇, the “Sellers”), Kyber Data Science, LLC (“Kyber”) and the Company, pursuant to which the Company acquired all outstanding equity interests of Kyber (the “Transferred Interests”) from the Sellers,
effective October 31, 2024 (the “Transaction”).
Pursuant to the terms of the Assignment Agreement, at the closing, Sellers transferred and assigned all of the Transferred Interests to the Company in consideration of the Company’s assumption of
Kyber’s ordinary course liabilities. The Assignment Agreement also contains a customary post-closing working capital adjustment, if applicable. All outstanding Class B Units of Kyber were cancelled prior to the closing of the Transaction and no
consideration was paid to the Class B Unit holders.
The Assignment Agreement contains customary representations, warranties and covenants, as well as customary indemnification provisions and post-closing covenants, including regarding employees,
the preparation of post-closing financial statements and the Company’s commitment to continue to support existing customers of Kyber.
The Company is considered to be the accounting acquirer, as further discussed in “Note 1 — Basis of Presentation” of this unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial statements are presented for informational purposes only, in accordance with Article 11 of Regulation S-X and are not intended to represent or
to be indicative of the income or financial position that the Company would have reported had the Transaction been completed as of the dates set forth in the unaudited pro forma condensed combined financial statements due to various factors. The
unaudited pro forma condensed combined statement of financial position does not purport to represent the future financial position of the Company and the unaudited pro forma condensed combined statements of operations do not purport to represent
the future results of operations of the Company. The Company has not completed a formal valuation of Kyber’s assets and liabilities, including identifiable intangible assets as of the date of this Current Report on Form 8-K/A. As a result,
estimates of fair value are based upon certain currently available information. Accordingly, actual adjustments to the combined company’s financial statements following the Transaction will differ, perhaps materially, from those reflected in the
unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined balance sheet as of September 30, 2024 combines the historical unaudited condensed balance sheet of the Company as of September 30, 2024 and the
historical unaudited balance sheet of Kyber as of September 30, 2024 on a pro forma basis as if the Transaction had been consummated on September 30, 2024. The unaudited pro forma condensed combined statement of operations for the nine months ended
September 30, 2024 and the unaudited pro forma condensed statement of operations for the year ended December 31, 2023 combine the historical condensed statement of operations of the Company for the nine months ended September 30, 2024 and the year
ended December 31, 2023 and the historical statement of operations of Kyber for the same periods on a pro forma basis as if the Transaction had been consummated immediately prior to January 1, 2023.
The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Transaction.
The unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the Transaction, and should be read in conjunction with the following:
| • |
the audited financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2024;
|
| • |
the unaudited financial statements of the Company for the nine months ended September 30, 2024, included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed with the SEC on November 13, 2024;
|
| • |
the audited financial statements of Kyber as of and for the year ended December 31, 2023 and the unaudited financial statements of Kyber as of and for the nine months ended September 30, 2024, included in this Current Report on Form
8-K/A; and
|
| • |
the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and Quarterly Report on Form 10-Q
for the quarter ended September 30, 2024, as filed with the SEC on March 29, 2024, and November 13, 2024, respectively.
|
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS AS OF SEPTEMBER 30, 2024
|
Transcaction
|
||||||||||||||||||||||||
|
Forian Inc
|
Kyber
|
Accounting
|
Management
|
Pro Forma
|
||||||||||||||||||||
|
(Historical)
|
(Historical)
|
Adjustments
|
Adjustments
|
Notes
|
Combined
|
|||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||||||
|
Current assets:
|
||||||||||||||||||||||||
|
Cash and cash equivalents
|
$
|
2,707,688
|
$
|
6,898,789
|
$
|
(3,910,156
|
)
|
$
|
-
|
B |
|
$
|
5,696,321
|
|||||||||||
|
Marketable securities
|
46,650,200
|
-
|
-
|
-
|
46,650,200
|
|||||||||||||||||||
|
Accounts receivable, net
|
3,546,582
|
665,497
|
-
|
-
|
4,212,079
|
|||||||||||||||||||
|
Contract assets
|
875,032
|
875,032
|
||||||||||||||||||||||
|
Prepaid expenses
|
697,780
|
697,780
|
||||||||||||||||||||||
|
Other assets
|
1,349,364
|
11,536
|
-
|
-
|
1,360,900
|
|||||||||||||||||||
|
Total current assets
|
55,826,646
|
7,575,822
|
(3,910,156
|
)
|
-
|
59,492,312
|
||||||||||||||||||
|
Property and equipment, net
|
52,680
|
52,680
|
||||||||||||||||||||||
|
Right of use assets, net
|
41,244
|
41,244
|
||||||||||||||||||||||
|
Intangible assets
|
8,607,455
|
(8,607,455
|
)
|
-
|
A |
|
-
|
|||||||||||||||||
|
1,295,000
|
-
|
A |
|
1,295,000
|
||||||||||||||||||||
|
Deposits and other assets
|
1,591,420
|
-
|
-
|
1,591,420
|
||||||||||||||||||||
|
Total assets
|
$
|
57,511,990
|
$
|
16,183,277
|
$
|
(11,222,611
|
)
|
$
|
-
|
$
|
62,472,656
|
|||||||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||
|
Current liabilities:
|
||||||||||||||||||||||||
|
Accounts payable
|
$
|
843,829
|
$
|
843,829
|
||||||||||||||||||||
|
Accrued expenses and other liabilities
|
2,618,108
|
1,988,167
|
-
|
(1,864,988
|
)
|
C |
|
4,418,786
|
||||||||||||||||
|
-
|
1,677,499
|
C |
|
|||||||||||||||||||||
|
Payable to seller
|
250,000
|
250,000
|
||||||||||||||||||||||
|
Compensation payale
|
1,677,499
|
-
|
(1,677,499
|
)
|
C |
|
-
|
|||||||||||||||||
|
Short-term operating lease liabilities
|
23,146
|
23,146
|
||||||||||||||||||||||
|
Deferred revenues
|
2,243,719
|
-
|
1,864,988
|
C |
|
4,108,707
|
||||||||||||||||||
|
Payable to affiliates
|
38,457,447
|
(38,457,447
|
)
|
-
|
B |
|
-
|
|||||||||||||||||
|
Convertible notes payable, net of debt issuance costs ($6,000,000 in principal is held by a related party)
|
24,370,509
|
-
|
-
|
-
|
24,370,509
|
|||||||||||||||||||
|
Total current liabilities
|
30,099,311
|
42,123,113
|
(38,207,447
|
)
|
-
|
34,014,977
|
||||||||||||||||||
|
Long-term liabilities:
|
||||||||||||||||||||||||
|
Other liabilities
|
518,098
|
518,098
|
||||||||||||||||||||||
|
Total long-term liabilities
|
518,098
|
-
|
-
|
-
|
518,098
|
|||||||||||||||||||
|
Total liabilities
|
30,617,409
|
42,123,113
|
(38,207,447
|
)
|
-
|
34,533,075
|
||||||||||||||||||
|
Commitments and contingencies
|
||||||||||||||||||||||||
|
Stockholders’ equity:
|
||||||||||||||||||||||||
|
Preferred Stock; par value $0.001; 5,000,000 Shares authorized; 0 issued and outstanding as of September 30, 2024 and December 31, 2023
|
-
|
-
|
||||||||||||||||||||||
|
Common Stock; par value $0.001; 95,000,000 Shares authorized; 31,092,695 issued and outstanding as of September 30, 2024 and 30,920,450
issued and outstanding as of December 31, 2023
|
31,093
|
31,093
|
||||||||||||||||||||||
|
Additional paid-in capital
|
78,519,683
|
-
|
-
|
-
|
78,519,683
|
|||||||||||||||||||
|
Members equity
|
(25,939,836
|
)
|
(16,427,767
|
)
|
-
|
B |
|
-
|
||||||||||||||||
|
42,367,603
|
-
|
B |
|
|||||||||||||||||||||
|
Accumulated deficit
|
(51,656,195
|
)
|
-
|
1,045,000
|
-
|
A |
|
(50,611,195
|
)
|
|||||||||||||||
|
Total stockholders’ equity
|
26,894,581
|
(25,939,836
|
)
|
26,984,836
|
-
|
27,939,581
|
||||||||||||||||||
|
Total liabilities and stockholders’ equity
|
$
|
57,511,990
|
$
|
16,183,277
|
$
|
(11,222,611
|
)
|
$
|
-
|
$
|
62,472,656
|
|||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
|
Transcaction
|
|||||||||||||||||||||
|
Forian Inc
|
Kyber
|
Accounting
|
Management
|
Pro Forma
|
|||||||||||||||||
|
(Historical)
|
(Historical)
|
Adjustments
|
Adjustments
|
Notes
|
Combined
|
||||||||||||||||
|
Revenue
|
$
|
14,340,791
|
$
|
3,428,880
|
$
|
-
|
$
|
-
|
$
|
17,769,671
|
|||||||||||
|
Costs and Expenses:
|
|||||||||||||||||||||
|
Cost of revenue
|
4,913,195
|
6,174,240
|
BB
|
11,087,435
|
|||||||||||||||||
|
Research and development
|
989,052
|
-
|
-
|
523,845
|
BB
|
1,512,897
|
|||||||||||||||
|
Sales and marketing
|
3,029,783
|
-
|
-
|
1,026,375
|
BB
|
4,056,158
|
|||||||||||||||
|
General and administrative
|
9,771,343
|
-
|
3,913,558
|
BB
|
13,684,901
|
||||||||||||||||
|
Kyber operating expenses
|
11,638,018
|
(11,638,018
|
)
|
BB
|
0
|
||||||||||||||||
|
Litigation Settlements and related expenses
|
1,152,670
|
1,152,670
|
|||||||||||||||||||
|
Depreciation and amortization
|
23,405
|
-
|
151,667
|
AA
|
175,072
|
||||||||||||||||
|
Total costs and expenses
|
19,879,448
|
11,638,018
|
151,667
|
-
|
31,669,133
|
||||||||||||||||
|
Operating loss From Continuing Operations
|
(5,538,657
|
)
|
(8,209,138
|
)
|
(151,667
|
)
|
-
|
(13,899,462
|
)
|
||||||||||||
|
Other Income (Expense):
|
|||||||||||||||||||||
|
Change in fair value of warrant liability
|
563
|
-
|
-
|
-
|
563
|
||||||||||||||||
|
Interest and investment income
|
1,951,812
|
-
|
-
|
-
|
1,951,812
|
||||||||||||||||
|
Gain on sale of investment
|
80,694
|
-
|
-
|
-
|
80,694
|
||||||||||||||||
|
Interest expense
|
(587,684
|
)
|
-
|
-
|
-
|
(587,684
|
)
|
||||||||||||||
|
Gain on debt redemption
|
137,356
|
-
|
-
|
-
|
137,356
|
||||||||||||||||
|
Total other income (expense), net
|
1,582,741
|
-
|
-
|
-
|
1,582,741
|
||||||||||||||||
|
(Loss) from continuing operations before income taxes
|
(3,955,916
|
)
|
(8,209,138
|
)
|
(151,667
|
)
|
-
|
(12,316,721
|
)
|
||||||||||||
|
Income taxes
|
(14,865
|
)
|
(14,865
|
)
|
|||||||||||||||||
|
Net income (loss)
|
$
|
(3,970,781
|
)
|
$
|
(8,209,138
|
)
|
$
|
(151,667
|
)
|
$
|
-
|
$
|
(12,331,586
|
)
|
|||||||
|
Net loss per share - basic and diluted
|
$
|
(0.13
|
)
|
$
|
(0.26
|
)
|
$
|
(0.00
|
)
|
$
|
-
|
$
|
(0.40
|
)
|
|||||||
|
Weighted-average shares outstanding- basic and diluted
|
31,064,418
|
31,064,418
|
31,064,418
|
31,064,418
|
31,064,418
|
||||||||||||||||
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2023
|
Forian Inc
(Historical)
|
Kyber
(Historical)
|
Transcaction
Accounting
Adjustments
|
Management
Adjustments
|
Notes
|
Pro Forma
Combined
|
||||||||||||||||
|
Revenue
|
$
|
20,481,330
|
$
|
4,166,374
|
$
|
-
|
$
|
(6,230
|
)
|
BB
|
$
|
24,641,474
|
|||||||||
|
|
|||||||||||||||||||||
|
Costs and Expenses:
|
|||||||||||||||||||||
|
Cost of revenue
|
5,477,032
|
-
|
8,511,754
|
BB
|
13,988,786
|
||||||||||||||||
|
Research and development
|
1,407,580
|
-
|
-
|
872,901
|
BB
|
2,280,481
|
|||||||||||||||
|
Sales and marketing
|
4,884,267
|
-
|
-
|
1,826,634
|
BB
|
6,710,901
|
|||||||||||||||
|
General and administrative
|
13,633,193
|
-
|
-
|
5,270,056
|
BB
|
18,903,249
|
|||||||||||||||
|
Kyber operating expenses
|
16,486,603
|
-
|
(16,486,603
|
)
|
BB
|
||||||||||||||||
|
Separation expenses
|
599,832
|
-
|
-
|
-
|
599,832
|
||||||||||||||||
|
Depreciation and amortization
|
74,438
|
-
|
202,222
|
-
|
AA
|
276,660
|
|||||||||||||||
|
Total costs and expenses
|
26,076,342
|
16,486,603
|
202,222
|
(5,257
|
)
|
42,759,910
|
|||||||||||||||
|
|
|||||||||||||||||||||
|
Operating loss From Continuing Operations
|
(5,595,012
|
)
|
(12,320,229
|
)
|
(202,222
|
)
|
(973
|
)
|
(18,118,436
|
)
|
|||||||||||
|
|
|||||||||||||||||||||
|
Other Income (Expense):
|
|||||||||||||||||||||
|
Change in fair value of warrant liability
|
3,984
|
-
|
-
|
-
|
3,984
|
||||||||||||||||
|
Interest and investment income
|
2,327,974
|
-
|
-
|
6,230
|
BB
|
2,334,204
|
|||||||||||||||
|
Gain on sale of investment
|
5,805,858
|
-
|
-
|
-
|
5,805,858
|
||||||||||||||||
|
Interest expense
|
(834,785
|
)
|
-
|
-
|
(5,257
|
)
|
BB
|
(840,042
|
)
|
||||||||||||
|
Gain on debt redemption
|
111,151
|
-
|
-
|
-
|
111,151
|
||||||||||||||||
|
Total other income (expense), net
|
7,414,182
|
-
|
-
|
973
|
7,415,155
|
||||||||||||||||
|
|
|||||||||||||||||||||
|
Income (loss) from continuing operations before income taxes
|
1,819,170
|
(12,320,229
|
)
|
(202,222
|
)
|
-
|
(10,703,281
|
)
|
|||||||||||||
|
Income taxes
|
(85,740
|
)
|
(85,740
|
)
|
|||||||||||||||||
|
Income (loss) from continuing operations, net of tax
|
$
|
1,733,430
|
$
|
(12,320,229
|
)
|
$
|
(202,222
|
)
|
$
|
-
|
$
|
(10,789,021
|
)
|
||||||||
|
|
|||||||||||||||||||||
|
|
|||||||||||||||||||||
|
Income (loss) from continuing operations per share
|
|||||||||||||||||||||
|
Basic
|
$
|
0.05
|
$
|
(0.38
|
)
|
$
|
(0.01
|
)
|
$
|
-
|
$
|
(0.34
|
)
|
||||||||
|
Diluted
|
$
|
0.05
|
$
|
(0.38
|
)
|
$
|
(0.01
|
)
|
$
|
-
|
$
|
(0.33
|
)
|
||||||||
|
|
|||||||||||||||||||||
|
Weighted-average shares outstanding- basic
|
32,030,855
|
32,030,855
|
32,030,855
|
32,030,855
|
32,030,855
|
||||||||||||||||
|
|
|||||||||||||||||||||
|
Weighted-average shares outstanding- diluted
|
32,230,845
|
32,230,845
|
32,230,845
|
32,230,845
|
32,230,845
|
||||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1. Basis of Presentation
In accordance with ASC 805 – Business Combination, the Company will be considered as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the
Company will record the assets and identifiable intangibles acquired and liabilities assumed in the Transaction at their fair values at the date of acquisition. Any excess of the fair value of the net assets acquired over the purchase price will be
recorded as a bargain purchase gain.
The unaudited pro forma condensed combined balance sheet as of September 30, 2024, gives pro forma effect to the Transaction as if it had occurred on September 30, 2024. The unaudited pro forma condensed combined
statements of operations for the nine months ended September 30, 2024, and for the year ended December 31, 2023, give pro forma effect to the Transaction as if it had been completed immediately prior to January 1, 2023. These periods are presented
on the basis of the Company as the accounting acquirer.
The pro forma adjustments reflecting the consummation of the Transaction and related transactions are based on certain currently available information and certain assumptions and methodologies that the Company
believes are reasonable under the circumstances. The Company has not completed a formal valuation of Kyber’s assets and liabilities, including identifiable intangible assets, as of the date of this Current Report on Form 8-K/A. As a result, the
unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro
forma adjustments, and it is possible the differences may be material. The Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Transaction and related transactions
based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The Company obtained control of Kyber for no consideration other than payment of certain professional fees incurred by Kyber resulting from the transaction. The Company recorded an estimated gain on bargain purchase
representing the excess of the acquisition date fair value of assets acquired over the acquisition date fair value of the consideration transferred. The bargain purchase was a result of the Sellers’ plan to wind down and terminate Kyber’s
operations if a sale were not completed by October 31, 2024.
The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Transaction.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transaction and related transactions taken place on the dates
indicated, nor are they indicative of the future consolidated results of operations or financial position of the Company. They should be read in conjunction with the historical financial statements and notes thereto of the Company and Kyber.
Note 2. Accounting Policies
In connection with the consummation of the Transaction, management is performing a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between
the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Company. Based on its initial analysis, management did not identify any differences that would have a material impact
on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.
Note 3. Preliminary Purchase Price Allocation and Intangible Assets
The following table summarizes the components of the purchase consideration.
|
Consideration transferred at closing
|
$
|
-
|
||
|
Payment for Sellers’ professional fees
|
250,000
|
|||
|
Total consideration
|
$
|
250,000
|
A preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed by the Company in connection with the Transaction is as follows:
|
Estimated useful life
|
|||||
|
Assets Acquired
|
|||||
|
Cash
|
$
|
2,988,633
|
|||
|
Accounts receivable, net
|
665,497
|
||||
|
Prepaid expenses and other assets
|
11,536
|
||||
|
Customer relationship intangible
|
1,050,000
|
6 years
|
|||
|
Trademark intangible
|
245,000
|
9 years
|
|||
|
4,960,666
|
|||||
|
Liabilities Assumed
|
|||||
|
Accrued expenses
|
1,800,678
|
||||
|
Deferred revenues
|
1,864,988
|
||||
|
3,665,666
|
|||||
|
Gain on bargain purchase
|
(1,045,000
|
)
|
|||
|
Fair value of consideration transferred
|
$
|
250,000
|
|||
The pro forma purchase price allocation presented above is preliminary and, as a result, the amounts presented could change materially when the purchase price allocation is finalized.
Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Financial Statements
The adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2024, are as follows:
| A. |
Reflects preliminary purchase price allocation and elimination of Kyber’s historical members’ equity.
|
| B. |
Reflects elimination of assets not included in the Transaction and elimination of historical balance of Kyber intangibles, which were recorded at fair value in A above.
|
| C. |
Reflects reclassification of ▇▇▇▇▇’s historical balances to be consistent with the Company’s historical presentation.
|
The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for year ended December 31, 2023 and for the nine month period ended September 30, 2024 are as follows:
| AA. |
Represents the amortization of the identifiable intangibles acquired in the Transaction.
|
| BB. |
Reflects reclassification of Kyber’s historical balances to be consistent with the Company’s historical presentation.
|
The Company’s net deferred tax assets as of September 30, 2024, are subject to a full valuation allowance, therefore the Condensed Combined Statements of Operation do not reflect any income tax benefit that may arise
from the adjustments in AA above.
Note 5. Loss per Share
Loss per share was calculated using the Company’s historical weighted average basic and diluted shares outstanding for the periods ended December 31, 2023, and September 30, 2024.