Delaware | | | 7374 | | | 85-3467693 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) |
Dan Barton Chief Executive Officer Medical Outcomes Research Analytics, LLC 41 University Drive, Suite 400 Newtown, Pennsylvania 18940 (267) 757-8707 | | | Darrick M. Mix Peter D. Visalli Duane Morris LLP 30 South 17th Street Philadelphia, PA 19103-4196 (215) 979-1000 | | | Zachary L. Venegas Scott Ogur Helix Technologies, Inc. 5300 DTC Parkway, Suite 300 Greenwood Village, CO 80111 (720) 328-5372 | | | W. David Mannheim Gary M. Brown Nelson Mullins Riley & Scarborough LLP Glenlake One 4140 Parklake Avenue, Suite 200 Raleigh, NC 27612 (919) 329-3800 |
Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller reporting company | | | ☒ |
| | | | Emerging growth company | | | ☒ |
Title of each class of securities to be registered | | | Amount to be Registered(1) | | | Proposed Maximum Offering Price Per Share | | | Proposed Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee | | | Amount to be Registered(1) | | | Proposed Maximum Offering Price Per Share | | | Proposed Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee(3) |
Common Stock, par value $0.001 per share | | | 16,998,975 | | | N/A | | | $34,966,726.13 | | | $3,814.87 | | | 31,342,879 | | | N/A | | | $72,155,610 | | | $7,872.18 |
(1) | Represents the maximum number of shares of common stock, par value $0.001 per share, of the Registrant estimated to be issuable upon consummation of the merger and the contribution described herein, calculated by totaling (a) the product obtained by multiplying (x) |
(2) | Pursuant to Rules 457(f)(1), 457(f)(2) and 457(c) under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is the sum of (a) the product obtained by multiplying (x) |
(3) | The registrant previously sought to register 31,192,879 shares of its common stock for which the fee paid was $7,695.44. |
(1) | a proposal to adopt of the Agreement and Plan of Merger, dated as of October 16, 2020, as amended by Amendment to Agreement and Plan of Merger, dated as of December 30, 2020, by and among Helix, Forian Inc., DNA Merger Sub, Inc. (“Merger Sub”), as may be further amended from time to time, under which Merger Sub will merge with and into Helix , which we refer to as the merger agreement, the terms of which are described in, and a copy of which is included as Appendix A to, the accompanying prospectus/proxy statement; |
(2) | a proposal to approve, in a non-binding advisory vote, certain compensation that may become payable to Helix’s named executive officers in connection with the merger; and |
(3) | a proposal to approve the adjournment, postponement or continuance of the special meeting on one or more occasions, if necessary or appropriate, in order to further solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to adopt the merger agreement. |
| | By order of the Board of Directors, | |
| | ||
| | [Insert Signature here] | |
| | ||
Greenwood Village, Colorado | | | Zachary L. Venegas |
| | Chief Executive Officer |
(i) | the failure to complete the merger on anticipated terms and timing, including as a result of a delay in or failure to obtain Helix stockholder approval, and other conditions to the completion of the transaction; |
(ii) | failure to realize the anticipated benefits of the mergers, including as a result of delay in completing the transaction, integrating the businesses of Helix and MOR or implementing any contemplated business separation (if undertaken), receiving the anticipated tax treatment of the merger, unforeseen liabilities, future capital expenditures, revenues, expected cost savings, expected expenses, expected earnings, expected synergies, future prospects, and the failure to implement business and management strategies for the management, expansion and growth of Forian’s businesses following the merger; |
(iii) | pricing trends, including Helix’s and MOR’s ability to achieve economies of scale; |
(iv) | potential litigation relating to the merger that could be instituted against Helix, MOR or their respective directors; |
(v) | the risk that disruptions from the merger will harm Helix’s business, including current plans and operations; |
(vi) | the ability of Helix or MOR to retain and hire key personnel; |
(vii) | potential adverse reactions or changes to business relationships resulting from the completion of the mergers; |
(viii) | uncertainty as to the long-term value of shares of Forian common stock; |
(ix) | legislative, regulatory and economic developments affecting Helix’s and MOR’s businesses; |
(x) | general economic and market developments and conditions; |
(xi) | the evolving legal, regulatory and tax regimes under which Helix and MOR operate; |
(xii) | potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect Helix’s and/or MOR’s financial performance; |
(xiii) | certain restrictions during the pendency of the merger that may impact Helix’s and MOR’s ability to pursue certain business opportunities or strategic transactions; and |
(xiv) | unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, natural disasters, the outbreak of coronavirus or similar outbreaks or pandemics, and their effects on economic and business environments in which Helix and MOR operate, as well as Helix’s and MOR’s response to any of the aforementioned factors. |
Q: | Why are Helix stockholders receiving this proxy statement/prospectus? |
A: | On October 16, 2020, we entered into an Agreement and Plan of Merger with Helix Technologies, Inc., or “Helix,” Forian Inc., or “Forian,” DNA Merger Sub, Inc., or “Merger Sub,” and Medical Outcomes Research Analytics, LLC, or “MOR”, as amended by Amendment to Agreement and Plan of Merger, dated December 30, 2020 (which, as so amended and as it may be further amended, supplemented, or modified from time to time, we refer to as the “merger agreement”). A copy of the merger agreement is included in this proxy statement/prospectus as Appendix A. Under the merger agreement, Merger Sub will merge with and into Helix (which we refer to as the “merger”), with Helix, following the merger, to be the surviving corporation and a wholly-owned subsidiary of Forian. |
Q: | What vote is required to approve the Helix merger? |
A: | The affirmative vote of holders of a majority of all outstanding shares of Helix common and preferred stock (voting as a single class), entitled to vote on the Helix merger agreement is required for the approval of the Helix merger. As of January 15, 2021, the record date for the meeting, there were 147,124,996 outstanding shares of Helix common stock and 14,784,201 outstanding shares of Helix preferred stock. Each Helix stockholder may cast one vote for each share of Helix common or preferred stock owned on that date. Accordingly, the affirmative vote of holders of 80,954,599 shares of Helix common and preferred stock will be necessary to approve the Helix merger. Certain of Helix’s officers, directors and significant stockholders have entered into voting and support agreements voting agreements with Forian. These stockholders beneficially own approximately 42.8% of the issued and |
Q: | What will happen in the merger? |
A: |
Q: | When do you expect to complete the merger? |
A: | We currently expect to complete the merger during the first quarter of 2021. However, we cannot assure you when or if the merger will occur. Helix must, among other things, obtain the required approvals of Helix stockholders at its special meeting and satisfy the other conditions to the merger described below in “The Merger Agreement—Conditions of the Merger” beginning on page |
Q: | What happens if the merger is not completed? |
A: | If the merger is not completed, holders of Helix common stock will not receive any consideration for their shares in connection with the merger. Instead, Helix will remain an independent public company and its common stock would be expected to continue to be quoted on the OTCQB. In addition, in certain circumstances, a termination fee may be required to be paid by Helix. See “The Merger Agreement—Termination Fee” beginning on page |
Q: | Will Helix be required to submit the Helix merger proposal to its stockholders even if the Helix board of directors has withdrawn or modified its recommendation? |
A: | Yes. Unless the merger agreement is terminated before the Helix special meeting, Helix is required to submit the Helix merger proposal to its stockholders even if the Helix board of directors has withdrawn or modified its recommendation, consistent with the terms of the merger agreement. |
Q: | Is the merger expected to be taxable to Helix stockholders? |
A: | Generally, no. The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and holders of Helix common stock are not expected to recognize any gain or loss for U. S. federal income tax purposes on the exchange of shares of Helix common stock for shares of Forian common stock in the merger. You should read “Material U.S. Federal Income Tax Consequences of the Merger and the Contribution” beginning on page |
Q: | Who may access the virtual Helix special meeting? |
A: | Only stockholders and their proxy holders will be able to access the virtual special meeting. As indicated, we will not have an in-person special meeting. You will need to enter the 16-digit control number received with your proxy card to enter the special meeting via the online web portal. See “If I vote by proxy, can I still access the special meeting and vote there if I choose?” below. |
Q: | How many votes constitute a quorum in order to hold the Helix special meeting? Do abstentions and “broker non-votes” count? |
A: | Stockholders representing at least a majority of the shares of capital stock entitled to vote at a meeting must be present in present in person or represented by proxy in order to constitute a quorum. Stockholders who participate in the virtual special meeting will be deemed to be present in person. A quorum must exist to conduct any business at the special meeting. If a quorum is not present at the special meeting, any officer entitled to preside at or to act as Secretary of the special meeting will have power to adjourn the special meeting from time to time until a quorum is present. |
Q: | Who may vote at the Helix special meeting? |
A: | Only stockholders of record at the close of business on |
Q: | Do Helix preferred stockholders have the right to vote on the merger? |
A. | Yes; however, the owners of 100% of the shares of Helix preferred stock that are entitled to notice of and to vote at the Helix special meeting have signed voting and support agreements agreeing to vote in favor of adoption of the merger agreement and the Helix adjournment proposal. Accordingly, it will not be necessary to solicit their proxies in connection with the Helix special meeting. See “THE MERGER – Voting and Support Agreements” beginning on page |
Q: | Who may solicit proxies on Helix’s behalf? |
A: | In addition to solicitation of proxies by Helix by mail, proxies may also be solicited by Helix’s directors and employees personally, and by telephone, facsimile or other means. Helix |
Q: | Will a list of stockholders entitled to vote at the Helix special meeting be available? |
A: | In accordance with Delaware law, a list of Helix stockholders entitled to vote at the special meeting will be available for any purpose germane to the special meeting beginning [•], |
Q: | What am I voting on at the Helix special meeting? |
A: | Helix stockholders are being asked to vote on: |
Q: | What are my choices when voting on the Helix merger proposal and what vote is needed to approve it? |
A: | Regarding the vote to adopt the Helix merger proposal, Helix stockholders may: |
Q: | What are my choices when voting on the Helix merger-related compensation proposal and what vote is needed to approve it? |
A: | Regarding the vote to approve the Helix merger-related compensation proposal, Helix stockholders may: |
Q: | What are my choices when voting on the Helix abstention proposal and what vote is needed to approve it? |
A: | Regarding the vote to approve the Helix abstention proposal, Helix stockholders may: |
Q: | How does the Helix Board of Directors recommend that Helix stockholders vote? |
A: | Please see the information included in this proxy statement/prospectus relating to the proposals to be considered and voted on at the Helix special meeting. The Helix Board of Directors unanimously recommends that Helix stockholders vote: |
Q: | How do Helix stockholders vote? |
A: | If shares are registered with our transfer agent, Equiniti US. (“Equiniti”) directly in the name of a Helix stockholder, that stockholder is considered a stockholder of record with respect to those shares. This proxy statement/prospectus and a proxy card is being sent directly to record holders by Equiniti. Please carefully consider the information contained in this proxy statement/prospectus and, whether or not you plan to attend the special meeting, please vote by (i) accessing the Internet website specified on your proxy card, (ii) calling the toll-free number specified on your proxy card, if you requested |
Q: | How do Helix stockholders vote if their shares are held in “street name” by a broker, bank or other nominee? |
A: | If shares are held by a broker, bank or other nominee (this is called “street name”), the broker, bank or other nominee will send you instructions for voting those shares. Many (but not all) brokerage firms, banks and other nominees participate in a program provided through Broadridge that offers Internet and telephone voting options. |
Q: | If a stockholder votes by proxy, can that stockholder still access the Helix special meeting and vote there? |
A: | Yes. If you are a Helix stockholder of record, the method you use to vote will not limit your right to vote at the virtual special meeting if you decide to participate. As indicated, Helix is hosting the special meeting exclusively online at www.virtualshareholdermeeting.com/ |
Q: | If my Helix shares are held in “street name” by a broker, bank or other nominee, may a Helix stockholder still access the Helix special meeting? |
A: | Yes. Beneficial owners whose stock is held for them in street name by their brokers or other nominees may also attend the meeting by going to www.virtualshareholdermeeting.com/ |
Q: | May Helix stockholders ask questions during the special meeting? |
A: | Yes. Questions may be submitted in two ways. Stockholders who want to ask a question before the meeting may do so, beginning at [•] a.m., Eastern Standard Time, on February [•], |
Q: | Do Helix stockholders have appraisal or dissenters’ rights? |
A: | Yes. Under applicable Delaware law, Helix stockholders have the right to dissent from the Helix merger proposal and receive the “fair value” of their Helix shares in cash. Perfection of dissenters’ rights is complex. The procedures for exercising dissenters’ rights is described in “APPRAISAL RIGHTS OF HELIX STOCKHOLDERS ” beginning on page |
Q: | What are “broker votes” and “broker non-votes”? |
A: | On certain “routine” matters, brokerage firms have discretionary authority under applicable stock exchange rules to vote their customers’ shares if their customers do not provide voting instructions. When a brokerage firm votes its customers’ shares on a routine matter without receiving voting instructions (referred to as a “broker vote”), these shares are counted both for establishing a quorum to conduct business at the special meeting and in determining the number of shares voted “FOR” or “AGAINST” any “routine” matter. |
Q: | What if a Helix stockholder abstains from voting? |
A: | Helix stockholders have the option to “ABSTAIN” from voting with respect to Proposal 1 – the Helix merger proposal, Proposal 2 – the Helix merger-related compensation proposal and Proposal 3 – the Helix adjournment proposal. If a quorum is present, abstentions will have the same effect as a vote against Proposal 1 but will have no effect on Proposals 2 and 3, because, by abstaining, the stockholder will be deemed to not have cast a vote with respect to such proposals. |
Q: | May a proxy be revoked after it has been delivered? |
A: | Yes. A proxy may be revoked at any time before the polls close by submitting a subsequent proxy with a later date by using the Internet, by telephone or by mail or by sending our Corporate Secretary a written revocation. A proxy also will be considered revoked if the stockholder attends the special meeting and votes via the virtual portal. If shares are held in “street name” by a broker, bank or other nominee, the stockholder must contact their broker, bank or other nominee to change their vote or obtain a proxy to vote their shares if they wish to cast their vote during the virtual special meeting. |
Q: | How will my Helix shares be voted if a proxy card is returned or the stockholder votes via telephone or Internet? What if a proxy card is returned but does not provide voting instructions? What if a stockholder does not complete the telephone or Internet voting procedures without specifying how shares are to be voted? |
A: | The Helix Board of Directors has named Zachary L. Venegas, Helix’s Chief Executive Officer, and Scott Ogur, Helix’s Chief Financial Officer, as official proxy holders. They will vote all proxies, or record an abstention, in accordance with the directions on the proxy. |
Q: | Who will count the votes at the Helix special meeting? |
A: | A representative of Broadridge has been appointed as an inspector of elections for the special meeting. That person will tabulate votes cast by proxy or during the special meeting as well as determine whether a quorum is present. |
Q: | Where can I find voting results of the Helix special meeting? |
A: | Helix will announce preliminary voting results at the special meeting and publish final results on a Current Report on Form 8-K that would be expected to be filed with the SEC within four business days after the special meeting (a copy of which will be available on the “Investor Relations” section of the Helix website, www.helixtechnologies.com, under the link “SEC Filings”). If the final voting results are not available within four business days after the special meeting, Helix will file a Current Report on Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the Current Report on Form 8-K within four business days after the final voting results are known. |
Q: | Whom should Helix stockholders contact with questions about the Helix special meeting? |
A: | If a Helix stockholder has any questions about this proxy statement/prospectus or the special meeting, please contact Scott Ogur, Helix’s Chief Financial Officer, at 5300 DTC Parkway, Suite 300, Greenwood Village, CO 80111 or by telephone at (720) 328-5372. |
Q: | What information about Helix is available on the Internet? |
A: | A copy of this proxy statement/prospectus (which contains the official notice of the special meeting) and the proxy card or voting instructions is available for download free of charge at www.proxyvote.com. |
Q: | What do holders of Helix common stock need to do now? |
A: | After you have carefully read this document and have decided how you wish to vote your Helix shares, please vote your shares as soon as possible. If you are a stockholder of record, to vote by proxy card, indicate on your proxy card how you want your shares to be voted with respect to each of the matters indicated. When complete, sign, date and mail your proxy card in the enclosed postage-paid return |
Q: | Why is your vote as a Helix stockholder important? |
A: |
Q: | If you are a Helix stockholder, with shares represented by physical stock certificates, should you send in your Helix stock certificates now? |
A: | No. You should not send in your Helix stock certificates at this time. After completion of the merger, Forian will cause its exchange agent to send you instructions for exchanging Helix stock certificates for the merger consideration. The shares of Forian common stock that Helix stockholders will receive in the merger will be issued in book-entry form. Please do not send in your stock certificates with your proxy card. |
Q: | What should you do if you hold your Helix common stock in book-entry form? |
A: | After the completion of the merger, Forian will cause its exchange agent to send you instructions for receiving the merger consideration and exchanging shares of Helix common stock held in book-entry form for shares of Forian common stock in book-entry form. |
Q: | Can you place my Helix stock certificate(s) into book-entry form prior to the merger? |
A: | Yes. Helix stock certificates can be placed into book-entry form prior to the merger. For more information, please contact Helix’s transfer agent, Equiniti at (303) 282-4800. |
Q: | Who can you contact if you cannot locate your Helix stock certificate(s)? |
A: | If you are unable to locate your original Helix stock certificate(s), you should contact Helix’s transfer agent, Equiniti at (303) 282-4800. |
Q: | What will happen in the contribution? |
A: | Forian, MOR and each equity holder of MOR will enter into a contribution agreement, pursuant to which, immediately prior to the Merger, each equity holder of MOR will contribute their interests in MOR to Forian in exchange for shares of Forian common stock, following the contribution, MOR will become a wholly-owned subsidiary of Forian. A copy of the form of contribution agreement is included in this proxy statement/prospectus as Appendix B. Each |
Q: | When will the contribution be completed? |
A: | The contribution is to occur immediately prior to the merger. We currently expect to complete the merger during the first quarter of 2021. However, we cannot assure you when or if the merger will occur. Helix must, among other things, obtain the required approvals of Helix stockholders at its special meeting to satisfy the other conditions to the merger described below in “The Merger Agreement – Conditions of the Merger” beginning on page |
Q: | What happens if the contribution is not completed? |
A: | If the contribution is not completed, equity holders of MOR will not receive any consideration for their interests in MOR in connection with the proposed contribution. Instead, MOR will remain an independent private company. |
Q: | Is the contribution expected to be taxable to MOR equity holders? |
A: | Generally, no. The contribution is intended to qualify as a transaction described in Section 351(a) of the Code, and equity holders of MOR are not expected to recognize any gain or loss for U. S. federal income tax purposes on the exchange of equity interests in MOR for shares of Forian common stock in the contribution. You should read “Material U.S. Federal Income Tax Consequences of the Merger and the Contribution” beginning on page 81 for a more complete discussion of the U.S. federal income tax consequences of the contribution. Tax matters can be complicated and the tax consequences of the contribution to you will depend on your particular tax situation. You should consult your tax advisor to determine the specific tax consequences of the contribution to you. |
○ | if the Merger is not consummated on or before February 26, 2021, provided, that, the right to terminate the merger agreement will not be available to a party if its action or failure to act |
○ | if an applicable law, order, preliminary, temporary or permanent, or other legal restraint or prohibition and no action, proceeding, binding order, decree or determination by any governmental entity is in effect that prevents, enjoins, makes illegal or prohibits the consummation of the merger and the other transactions contemplated by the merger agreement; |
○ | if Helix stockholder approval of the merger is not obtained at the Helix special meeting or any adjournment or postponement thereof at which the vote was taken on the merger; or |
○ | if all of the conditions to closing have been satisfied or waived (other than those conditions that by their nature are to be satisfied (or waived) at the closing, which conditions would be reasonably capable of being satisfied at such time) and Forian is unable to satisfy its obligation to effect the closing at such time because a private offering by MOR of equity interests or other securities of MOR on terms and conditions reasonably acceptable to MOR in its sole discretion, resulting in net proceeds to MOR (after deducting applicable fees, expenses, charges and discounts) in the aggregate amount of at least $11,000,000 cannot be completed prior to the closing date. |
| | As of September 30, 2020 | | | As of December 31, 2019 | |
Book Value Per Share | | | | | ||
MOR - Historical | | | $0.08 | | | $(0.07) |
Forian/MOR - Pro Forma Combined | | | $0.69 | | | $0.95 |
Helix Historical | | | $0.17 | | | $0.70 |
Forian/MOR/Helix – Pro Forma Combined | | | $1.05 | | | $1.52 |
| | For the Nine Months Ended September 30, 2020 | | | For the Year Ended December 31, 2019 | |
Loss Per Common Share/Unit – basic and diluted | | | | | ||
MOR - Historical | | | $(0.26) | | | $(0.24) |
Forian/MOR - Pro Forma Combined | | | $(0.15) | | | $(0.14) |
Helix Historical | | | $(0.46) | | | $(0.12) |
Forian/MOR/Helix – Pro Forma Combined | | | $(1.80) | | | $(0.42) |
Fiscal Year Ended December 31, 2018 | | | High | | | Low |
First Quarter | | | $4.50 | | | $1.35 |
Second Quarter | | | $2.05 | | | $1.30 |
Third Quarter | | | $1.64 | | | $0.98 |
Fourth Quarter | | | $1.45 | | | $0.90 |
Fiscal Year Ended December 31, 2019 | | | High | | | Low |
First Quarter | | | $3.09 | | | $0.95 |
Second Quarter | | | $2.84 | | | $1.03 |
Third Quarter | | | $1.09 | | | $0.59 |
Fourth Quarter | | | $0.75 | | | $0.42 |
Fiscal Year Ended December 31, 2020 | | | High | | | Low |
First Quarter | | | $0.63 | | | $0.11 |
Second Quarter | | | $0.35 | | | $0.10 |
Third Quarter | | | $0.19 | | | $0.09 |
Fourth Quarter (through November 20, 2020) | | | $0.33 | | | $0.10 |
Fiscal Year Ended December 31, 2020 | | | High | | | Low |
First Quarter | | | $0.63 | | | $0.11 |
Second Quarter | | | $0.35 | | | $0.10 |
Third Quarter | | | $0.19 | | | $0.09 |
Fourth Quarter | | | $0.49 | | | $0.10 |
Fiscal Year Ending December 31, 2021 | | | High | | | Low |
First Quarter (through January 15, 2021) | | | $0.83 | | | $0.44 |
i. | Reviewed certain governing documents and other corporate organization materials that were deemed pertinent; |
ii. | Reviewed the draft Agreement and Plan of Merger (the “Agreement”) and supporting conversion schedule; |
iii. | Reviewed the MOR Letter of Intent; |
iv. | Examined historical and projected financial information provided by management of Helix and MOR; |
v. | Reviewed other documents and related industry information and statistics that were deemed relevant; |
vi. | Interviewed management concerning Helix’s and MOR’s history, operations, services, customer relationships, employees, competition, outlook, strengths, weaknesses, opportunities, and threats, as well as other aspects of the business MPI considered pertinent; |
vii. | Reviewed publicly available information on selected guideline public companies and guideline precedent transactions; |
viii. | Performed discounted cash flow analyses and sensitized the results based on a range of selected inputs; |
ix. | Performed a guideline publicly traded companies’ analysis in the analysis of value for MOR; |
x. | Considered such other information regarding Helix and MOR and their industry deemed relevant by MPI, including the current economic environment, in general, and the specific economic factors bearing on firms competing in the industry; |
xi. | Conducted studies, analyses, and inquiries as MPI deemed appropriate. |
a) | determined the value of the equity of Helix; |
b) | determined the value of the equity of MOR; and, |
c) | combined the indicated values determined from the analysis of Helix and MOR, adjusting for MOR’s capital raise (As per the DRAFT Agreement and Plan of Merger, at least $11 million of new investment in MOR is being raised and is expected to close concurrently with the Transaction. Based upon information provided by management, MOR shall raise approximately $13 million; and this balance was incorporated in the analysis), to derive the indicated value range of Forian. |
| | Range of Values (000s) | ||||
| | Low | | | High | |
Concluded Enterprise Value | | | $19,849 | | | $31,631 |
Less: Debt | | | $1,076 | | | $1,076 |
Working capital deficiency(a) | | | $3,000 | | | $3,000 |
Plus:Cash (net of contingent claims)(b) | | | $1,002 | | | $1,002 |
Tax Savings on Net Operating Losses(c) | | | — | | | $2,599 |
Preliminary Concluded Total Equity Value | | | $16,775 | | | $31,157 |
Less: FV of Options | | | $781 | | | $1,592 |
FV of Warrants | | | $259 | | | $545 |
Concluded Value of Common Equity | | | $15,735 | | | $29,019 |
a) | Management advised that the projected information provided assumes access to $3 million of working capital funds. |
b) | Cash balance as of September 30, 2020, net of certain contingent obligations related to the divestiture of the Security Operations, as provided by management. |
c) | As per MPI’s analysis of net operating losses existing at October 14, 2020. |
| | MOR Guideline Companies’ Multiples | | | Selected Multiples(a) | ||||||||||
| | Low | | | High | | | Median | | | Low | | | High | |
Implied Enterprise Value as a multiple of: 3-Year Projected Revenue | | | 1.5x | | | 4.6x | | | 3.2x | | | 1.5x | | | 2.0x |
| | Range of Values (000s) | ||||
| | Low | | | High | |
Concluded Enterprise Value | | | $31,210 | | | $43,589 |
Plus: Cash | | | $1,081 | | | $1,081 |
Concluded Value of Common Equity | | | $32,300 | | | $44,500 |
| | Range of Values (000s) ____ | ||||||||||
| | Helix Low | | | Helix Low | | | Helix High | | | Helix High | |
| | MOR High | | | MOR Low | | | MOR High | | | MOR Low | |
Helix Value Range (before options & warrants) | | | $16,800 | | | $16,800 | | | $31,200 | | | $31,200 |
MOR Valuation Range (Pre-Money) | | | $44,500 | | | $32,300 | | | $44,500 | | | $32,300 |
Plus: MOR Capital Raise | | | $13,000 | | | $13,000 | | | $13,000 | | | $13,000 |
Adjusted MOR Valuation (Post-Money) | | | $57,500 | | | $45,300 | | | $57,500 | | | $45,300 |
Less: Transaction fees(a) | | | $630 | | | $630 | | | $630 | | | $630 |
Combined Forian Valuation Range | | | $73,670 | | | $61,470 | | | $88,070 | | | $75,870 |
Less: Value of Options(b) | | | $967 | | | $783 | | | $1,190 | | | $1,001 |
Value of Warrants(b) | | | $324 | | | $259 | | | $403 | | | $336 |
Combined Equity Forian Valuation Range | | | $72,379 | | | $60,428 | | | $86,477 | | | $74,533 |
Forian Shares to be Issued (’000's)(c) | | | 16,951 | | | 16,951 | | | 16,951 | | | 16,951 |
Forian Price Per Share | | | $4.27 | | | $3.56 | | | $5.10 | | | $4.40 |
Forian Shares Issued to Helix ('000's)(d) | | | 4,420 | | | 4,420 | | | 4,420 | | | 4,420 |
Indicated Transaction Proceeds to Helix Stockholders | | | $18,872 | | | $15,756 | | | $22,548 | | | $19,434 |
a) | As per information provided by management. |
b) | As determined by MPI using an option pricing models and assuming terms per the Draft Merger Agreement. |
c) | As per the Draft Merger Agreement and other information provided by management. |
d) | Excluding options and warrants. |
| | Range of Values | ||||
| | Low | | | High | |
Range of Value of Helix (after options & warrants) | | | $15,735,088 | | | $29,021,108 |
Divide: Current Fully Diluted Shares | | | 160,307,826 | | | 160,307,826 |
Range of Value of Shares Tendered (Fully Diluted) | | | $0.10 | | | $0.18 |
Shares of Forian to be received at closing | | | | | 4,420,000 | |
Implied conversion ratio | | | | | 0.027x |
| | Helix Technologies Forecasts | ||||||||||||||||||||||||||||||||||||||||
| | Q3 2020 | | | Q4 2020 | | | Q1 2021 | | | Q2 2021 | | | Q3 2021 | | | Q4 2021 | | | Q1 2022 | | | Q2 2022 | | | Q3 2022 | | | Q4 2022 | | | Q1 2023 | | | Q2 2023 | | | Q3 2023 | | | Q4 2023 | |
Revenue | | | $2,986,878 | | | $3,279,981 | | | $3,732,084 | | | $4,143,587 | | | $4,498,070 | | | $4,864,338 | | | $5,064,264 | | | $5,276,698 | | | $5,502,904 | | | $5,744,318 | | | $5,957,070 | | | $6,180,282 | | | $6,414,664 | | | $6,660,991 |
COGS | | | $765,513 | | | $817,018 | | | $896,571 | | | $974,922 | | | $1,031,942 | | | $1,094,162 | | | $1,274,752 | | | $1,334,363 | | | $1,398,590 | | | $1,467,974 | | | $1,530,342 | | | $1,596,302 | | | $1,666,127 | | | $1,740,111 |
Gross Margin | | | $2,221,365 | | | $2,462,963 | | | $2,835,514 | | | $3,168,665 | | | $3,466,128 | | | $3,770,175 | | | $3,789,512 | | | $3,942,335 | | | $4,104,314 | | | $4,276,344 | | | $4,426,729 | | | $4,583,979 | | | $4,748,537 | | | $4,920,879 |
Operating Expenses | | | $2,656,544 | | | $2,603,045 | | | $2,975,214 | | | $2,875,571 | | | $2,929,231 | | | $2,964,891 | | | $3,228,090 | | | $3,104,785 | | | $3,152,601 | | | $3,196,063 | | | $3,473,815 | | | $3,341,012 | | | $3,405,332 | | | $3,445,606 |
EBIT | | | $(435,178) | | | $(140,081) | | | $(139,700) | | | $293,094 | | | $536,897 | | | $805,285 | | | $561,422 | | | $837,551 | | | $951,714 | | | $1,080,280 | | | $952,913 | | | $1,242,967 | | | $1,343,205 | | | $1,475,273 |
Capitalized Development | | | $366,587 | | | $373,825 | | | $226,234 | | | $263,510 | | | $217,858 | | | $253,270 | | | $245,035 | | | $245,035 | | | $245,035 | | | $245,035 | | | $245,035 | | | $245,035 | | | $245,035 | | | $245,035 |
| | Helix Technologies Forecasts w/ Potential Acquisition | | | Helix Technologies Forecasts (assuming award of state contract) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Q3 2020 | | Q4 2020 | | Q1 2021 | | Q2 2021 | | Q3 2021 | | Q4 2021 | | Q1 2022 | | Q2 2022 | | Q3 2022 | | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | Q4 2023 | | | Q3 2020 | | Q4 2020 | | Q1 2021 | | Q2 2021 | | Q3 2021 | | Q4 2021 | | Q1 2022 | | Q2 2022 | | Q3 2022 | | Q4 2022 | | Q1 2023 | | Q2 2023 | | Q3 2023 | | Q4 2023 | |||||||||||||||||||||||||||
Revenue | | $2,986,878 | | $3,309,981 | | $4,400,084 | | $5,101,587 | | $5,616,070 | | $6,202,338 | | $6,739,884 | | $7,326,840 | | $7,967,986 | | $8,668,597 | | $8,969,079 | | $9,282,650 | | $9,610,103 | | $9,952,293 | | $2,986,878 | | $3,309,981 | | $4,400,084 | | $5,101,587 | | $5,616,070 | | $6,202,338 | | $6,739,884 | | $7,326,840 | | $7,967,986 | | $8,668,597 | | $8,969,079 | | $9,282,650 | | $9,610,103 | | $9,952,293 | ||||||||||||||||||||||||||||
COGS | | $915,513 | | $1,087,018 | | $1,166,571 | | $1,264,922 | | $1,296,942 | | $1,334,162 | | $1,768,229 | | $1,923,707 | | $2,093,974 | | $2,280,531 | | $2,367,275 | | $2,458,344 | | $2,554,030 | | $2,654,651 | | $915,513 | | $1,087,018 | | $1,166,571 | | $1,264,922 | | $1,296,942 | | $1,334,162 | | $1,768,229 | | $1,923,707 | | $2,093,974 | | $2,280,531 | | $2,367,275 | | $2,458,344 | | $2,554,030 | | $2,654,651 | ||||||||||||||||||||||||||||
Gross Margin | | $2,071,365 | | $2,222,963 | | $3,233,514 | | $3,836,665 | | $4,319,128 | | $4,868,175 | | $4,971,655 | | $5,403,132 | | $5,874,013 | | $6,388,067 | | $6,601,803 | | $6,824,306 | | $7,056,074 | | $7,297,642 | | $2,071,365 | | $2,222,963 | | $3,233,514 | | $3,836,665 | | $4,319,128 | | $4,868,175 | | $4,971,655 | | $5,403,132 | | $5,874,013 | | $6,388,067 | | $6,601,803 | | $6,824,306 | | $7,056,074 | | $7,297,642 | ||||||||||||||||||||||||||||
Operating Expenses | | $2,656,544 | | $2,603,045 | | $2,975,214 | | $2,875,571 | | $2,929,231 | | $2,964,891 | | $3,248,090 | | $3,124,785 | | $3,172,601 | | $3,216,063 | | $3,513,815 | | $3,381,012 | | $3,445,332 | | $3,485,606 | | $2,656,544 | | $2,603,045 | | $2,975,214 | | $2,875,571 | | $2,929,231 | | $2,964,891 | | $3,248,090 | | $3,124,785 | | $3,172,601 | | $3,216,063 | | $3,513,815 | | $3,381,012 | | $3,445,332 | | $3,485,606 | ||||||||||||||||||||||||||||
EBIT | | $(585,178) | | $(380,081) | | $258,300 | | $961,094 | | $1,389,897 | | $1,903,285 | | $1,723,565 | | $2,278,348 | | $2,701,412 | | $3,172,003 | | $3,087,988 | | $3,443,294 | | $3,610,742 | | $3,812,036 | | $(585,178) | | $(380,081) | | $258,300 | | $961,094 | | $1,389,897 | | $1,903,285 | | $1,723,565 | | $2,278,348 | | $2,701,412 | | $3,172,003 | | $3,087,988 | | $3,443,294 | | $3,610,742 | | $3,812,036 | ||||||||||||||||||||||||||||
Capitalized Development | | $366,587 | | $373,825 | | $226,234 | | $263,510 | | $217,858 | | $253,270 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $366,587 | | $373,825 | | $226,234 | | $263,510 | | $217,858 | | $253,270 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 | | $245,035 |
| | Annual P&L | | | | | Year-Over-Year % Change | | | Annual P&L | | | | | Year-Over-Year % Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | | | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | |||||||||||||||||||||||
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Product | | — | | — | | 810,000 | | 7,200,000 | | 14,916,000 | | 21,843,745 | | 24,604,763 | | | 0% | | 0% | | 789% | | 107% | | 46% | | — | | — | | 810,000 | | 7,200,000 | | 14,916,000 | | 21,843,745 | | 24,604,763 | | | 0% | | 0% | | 789% | | 107% | | 46% | ||||||||||||||||||||||||||||
Data | | — | | 475,415 | | 3,983,333 | | 8,056,667 | | 20,010,000 | | 37,805,299 | | 53,427,149 | | | 0% | | 738% | | 102% | | 148% | | 89% | | — | | 475,415 | | 3,983,333 | | 8,056,667 | | 20,010,000 | | 37,805,299 | | 53,427,149 | | | 0% | | 738% | | 102% | | 148% | | 89% | ||||||||||||||||||||||||||||
Services | | — | | 20,000 | | 2,910,001 | | 5,758,333 | | 9,156,668 | | 14,153,180 | | 17,386,772 | | | 0% | | 14450% | | 98% | | 59% | | 55% | | — | | 20,000 | | 2,910,001 | | 5,758,333 | | 9,156,668 | | 14,153,180 | | 17,386,772 | | | 0% | | 14450% | | 98% | | 59% | | 55% | ||||||||||||||||||||||||||||
Other | | — | | — | | — | | — | | — | | — | | — | | | 0% | | 0% | | 0% | | 0% | | 0% | | — | | — | | — | | — | | — | | — | | — | | | 0% | | 0% | | 0% | | 0% | | 0% | ||||||||||||||||||||||||||||
Total Revenue | | — | | 495,415 | | 7,703,334 | | 21,015,000 | | 44,082,668 | | 73,802,224 | | 95,418,684 | | | 0% | | 1455% | | 173% | | 110% | | 67% | | — | | 495,415 | | 7,703,334 | | 21,015,000 | | 44,082,668 | | 73,802,224 | | 95,418,684 | | | 0% | | 1455% | | 173% | | 110% | | 67% | ||||||||||||||||||||||||||||
Cost of Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Product | | — | | 245,693 | | 1,111,763 | | 1,748,251 | | 1,203,105 | | 2,933,934 | | 5,404,331 | | | 0% | | 353% | | 57% | | -31% | | 144% | | — | | 245,693 | | 1,111,763 | | 1,748,251 | | 1,203,105 | | 2,933,934 | | 5,404,331 | | | 0% | | 353% | | 57% | | -31% | | 144% | ||||||||||||||||||||||||||||
Data | | — | | 180,079 | | 367,500 | | 431,250 | | 1,044,750 | | 4,161,730 | | 7,374,293 | | | 0% | | 104% | | 17% | | 142% | | 298% | | — | | 180,079 | | 367,500 | | 431,250 | | 1,044,750 | | 4,161,730 | | 7,374,293 | | | 0% | | 104% | | 17% | | 142% | | 298% | ||||||||||||||||||||||||||||
Services | | — | | 164,602 | | 1,919,100 | | 4,536,855 | | 5,284,889 | | 7,665,201 | | 12,234,064 | | | 0% | | 1066% | | 136% | | 16% | | 45% | | — | | 164,602 | | 1,919,100 | | 4,536,855 | | 5,284,889 | | 7,665,201 | | 12,234,064 | | | 0% | | 1066% | | 136% | | 16% | | 45% | ||||||||||||||||||||||||||||
Other | | — | | — | | — | | — | | — | | — | | — | | | 0% | | 0% | | 0% | | 0% | | 0% | | — | | — | | — | | — | | — | | — | | — | | | 0% | | 0% | | 0% | | 0% | | 0% | ||||||||||||||||||||||||||||
Total Cost of Revenue | | — | | 590,373 | | 3,398,363 | | 6,716,356 | | 7,532,744 | | 14,760,866 | | 25,012,688 | | | 0% | | 476% | | 98% | | 12% | | 96% | | — | | 590,373 | | 3,398,363 | | 6,716,356 | | 7,532,744 | | 14,760,866 | | 25,012,688 | | | 0% | | 476% | | 98% | | 12% | | 96% | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Profit | | — | | (94,958) | | 4,304,971 | | 14,298,643 | | 36,549,924 | | 59,041,359 | | 70,405,995 | | | 0% | | 4634% | | 232% | | 156% | | 62% | | — | | (94,958) | | 4,304,971 | | 14,298,643 | | 36,549,924 | | 59,041,359 | | 70,405,995 | | | 0% | | 4634% | | 232% | | 156% | | 62% | ||||||||||||||||||||||||||||
Gross Margin | | 0% | | -19% | | 56% | | 68% | | 83% | | 80% | | 74% | | | -19% | | 75% | | 12% | | 15% | | -3% | | 0% | | -19% | | 56% | | 68% | | 83% | | 80% | | 74% | | | -19% | | 75% | | 12% | | 15% | | -3% | ||||||||||||||||||||||||||||
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales & Marketing | | 47,578 | | 512,789 | | 2,832,679 | | 4,992,725 | | 6,917,094 | | 8,118,245 | | 10,496,055 | | | 978% | | 452% | | 76% | | 39% | | 17% | | 47,578 | | 512,789 | | 2,832,679 | | 4,992,725 | | 6,917,094 | | 8,118,245 | | 10,496,055 | | | 978% | | 452% | | 76% | | 39% | | 17% | ||||||||||||||||||||||||||||
Research & Development | | 860,722 | | 1,968,732 | | 4,032,418 | | 4,095,684 | | 4,204,802 | | 4,428,133 | | 5,725,121 | | | 129% | | 105% | | 2% | | 3% | | 5% | | 860,722 | | 1,968,732 | | 4,032,418 | | 4,095,684 | | 4,204,802 | | 4,428,133 | | 5,725,121 | | | 129% | | 105% | | 2% | | 3% | | 5% | ||||||||||||||||||||||||||||
General & Administrative | | 336,884 | | 1,074,117 | | 2,854,702 | | 3,458,155 | | 3,569,853 | | 2,952,089 | | 3,816,747 | | | 219% | | 166% | | 21% | | 3% | | -17% | | 336,884 | | 1,074,117 | | 2,854,702 | | 3,458,155 | | 3,569,853 | | 2,952,089 | | 3,816,747 | | | 219% | | 166% | | 21% | | 3% | | -17% | ||||||||||||||||||||||||||||
Total Expenses | | 1,245,185 | | 3,555,638 | | 9,719,800 | | 12,546,564 | | 14,691,750 | | 15,498,467 | | 20,037,924 | | | 186% | | 173% | | 29% | | 17% | | 5% | | 1,245,185 | | 3,555,638 | | 9,719,800 | | 12,546,564 | | 14,691,750 | | 15,498,467 | | 20,037,924 | | | 186% | | 173% | | 29% | | 17% | | 5% | ||||||||||||||||||||||||||||
Operating Profit | | (1,245,185) | | (3,650,596) | | (5,414,829) | | 1,752,080 | | 21,858,175 | | 43,542,891 | | 50,368,072 | | | -193% | | -48% | | 132% | | 1148% | | 99% | | (1,245,185) | | (3,650,596) | | (5,414,829) | | 1,752,080 | | 21,858,175 | | 43,542,891 | | 50,368,072 | | | -193% | | -48% | | 132% | | 1148% | | 99% | ||||||||||||||||||||||||||||
Operating Margin | | 0% | | -737% | | -70% | | 8% | | 50% | | 59% | | 53% | | | -737% | | 667% | | 79% | | 41% | | 9% | | 0% | | -737% | | -70% | | 8% | | 50% | | 59% | | 53% | | | -737% | | 667% | | 79% | | 41% | | 9% | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income | | 3,330 | | 5,770 | | — | | — | | — | | — | | — | | | 73% | | -100% | | 0% | | 0% | | 0% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Expenses/Tax Provision | | — | | 113,369 | | — | | 678,546 | | 6,651,160 | | 11,988,780 | | 17,628,825 | | | 0% | | -100% | | 0% | | 880% | | 80% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | | (1,241,854) | | (3,758,195) | | (5,414,829) | | 1,073,534 | | 15,207,015 | | 31,554,111 | | 32,739,247 | | | -203% | | -44% | | 120% | | 1317% | | 107% | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | | 0% | | -759% | | -70% | | 5% | | 34% | | 43% | | 34% | | | -759% | | 688% | | 75% | | 29% | | 8% |
| | Annual P&L | | | | | Year-Over-Year % Change | ||||||||||||||||||||||||||||||||
| | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2025 | | | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||
Other Income | | | 3,330 | | | 5,770 | | | — | | | — | | | — | | | — | | | — | | | | | 73% | | | -100% | | | 0% | | | 0% | | | 0% | |
Other Expenses/Tax Provision | | | — | | | 113,369 | | | — | | | 678,546 | | | 6,651,160 | | | 11,988,780 | | | 17,628,825 | | | | | 0% | | | -100% | | | 0% | | | 880% | | | 80% | |
Net Income | | | (1,241,854) | | | (3,758,195) | | | (5,414,829) | | | 1,073,534 | | | 15,207,015 | | | 31,554,111 | | | 32,739,247 | | | | | -203% | | | -44% | | | 120% | | | 1317% | | | 107% | |
Net Income | | | 0% | | | -759% | | | -70% | | | 5% | | | 34% | | | 43% | | | 34% | | | | | -759% | | | 688% | | | 75% | | | 29% | | | 8% |
| | ACTUALS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
| | 3Q19 | | | 4Q19 | | | 1Q20 | | | 2Q20 | | | 3Q20 | | | 4Q20 | | | 1Q21 | | | 2Q21 | | | 3Q21 | | | 4Q21 | | | 1Q22 | | | 2Q22 | | | 3Q22 | | | 4Q22 | | | 1Q23 | | | 2Q23 | | | 3Q23 | | | 4Q23 | |
Product | | | — | | | — | | | — | | | — | | | — | | | — | | | 30,000 | | | 150,000 | | | 240,000 | | | 390,000 | | | 1,101,000 | | | 1,533,000 | | | 2,029,000 | | | 2,537,000 | | | 2,997,000 | | | 3,465,000 | | | 3,993,000 | | | 4,461,000 |
Data | | | — | | | — | | | 66,666 | | | 108,749 | | | 180,000 | | | 120,000 | | | 533,333 | | | 740,000 | | | 1,150,000 | | | 1,560,000 | | | 1,480,000 | | | 1,480,000 | | | 2,100,000 | | | 2,996,667 | | | 3,690,000 | | | 4,420,000 | | | 5,233,333 | | | 6,666,667 |
Services | | | — | | | — | | | — | | | — | | | — | | | 20,000 | | | 556,667 | | | 631,667 | | | 801,666 | | | 920,001 | | | 1,256,666 | | | 1,376,667 | | | 1,510,000 | | | 1,615,000 | | | 1,710,000 | | | 2,060,001 | | | 2,518,333 | | | 2,868,334 |
Other | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
| | — | | | — | | | 66,666 | | | 108,749 | | | 180,000 | | | 140,000 | | | 1,120,000 | | | 1,521,667 | | | 2,191,666 | | | 2,870,001 | | | 3,837,666 | | | 4,389,667 | | | 5,639,000 | | | 7,148,667 | | | 8,397,000 | | | 9,945,001 | | | 11,744,666 | | | 13,996,001 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
Product | | | — | | | — | | | — | | | — | | | 69,963 | | | 175,729 | | | 282,403 | | | 265,092 | | | 289,634 | | | 274,634 | | | 531,942 | | | 398,915 | | | 416,197 | | | 401,197 | | | 401,383 | | | 265,165 | | | 267,447 | | | 269,110 |
Data | | | — | | | — | | | — | | | 79 | | | — | | | 180,000 | | | 180,000 | | | 187,500 | | | — | | | — | | | 187,500 | | | 243,750 | | | — | | | — | | | 243,750 | | | 267,000 | | | 267,000 | | | 267,000 |
Services | | | — | | | — | | | — | | | — | | | — | | | 164,602 | | | 325,326 | | | 378,296 | | | 576,478 | | | 639,000 | | | 1,094,647 | | | 979,193 | | | 1,231,507 | | | 1,231,507 | | | 1,599,133 | | | 1,220,241 | | | 1,231,507 | | | 1,234,007 |
Other | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
| | — | | | — | | | — | | | 79 | | | 69,963 | | | 520,331 | | | 787,729 | | | 830,887 | | | 866,112 | | | 913,635 | | | 1,814,090 | | | 1,621,858 | | | 1,647,704 | | | 1,632,704 | | | 2,244,266 | | | 1,752,406 | | | 1,765,954 | | | 1,770,117 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | — | | | — | | | 66,666 | | | 108,670 | | | 110,037 | | | (380,331) | | | 332,271 | | | 690,780 | | | 1,325,554 | | | 1,956,366 | | | 2,023,576 | | | 2,767,809 | | | 3,991,296 | | | 5,515,962 | | | 6,152,734 | | | 8,192,595 | | | 9,978,712 | | | 12,225,883 | |
| | 0% | | | 0% | | | 100% | | | 100% | | | 61% | | | -283% | | | 22% | | | 32% | | | 47% | | | 66% | | | 53% | | | 63% | | | 71% | | | 77% | | | 73% | | | 82% | | | 85% | | | 87% | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
Sales & Marketing | | | 7,000 | | | 40,578 | | | 46,352 | | | 26,207 | | | 55,721 | | | 384,510 | | | 564,349 | | | 604,016 | | | 745,257 | | | 919,058 | | | 1,200,819 | | | 1,208,078 | | | 1,255,401 | | | 1,328,427 | | | 1,600,478 | | | 1,719,704 | | | 1,779,520 | | | 1,817,392 |
Research & Develop- ment | | | 575,379 | | | 285,343 | | | 377,167 | | | 555,617 | | | 280,973 | | | 754,975 | | | 1,049,416 | | | 1,001,606 | | | 1,013,198 | | | 968,198 | | | 1,335,122 | | | 954,790 | | | 925,386 | | | 880,386 | | | 1,412,194 | | | 1,011,290 | | | 913,808 | | | 867,511 |
General & Administra- tive | | | 1,974 | | | 334,911 | | | 144,583 | | | 94,472 | | | 327,122 | | | 507,940 | | | 1,083,678 | | | 543,021 | | | 571,426 | | | 656,577 | | | 1,312,532 | | | 695,514 | | | 725,055 | | | 725,055 | | | 1,437,054 | | | 731,178 | | | 699,119 | | | 702,503 |
| | 584,353 | | | 660,832 | | | 568,101 | | | 676,296 | | | 663,816 | | | 1,647,425 | | | 2,697,443 | | | 2,148,642 | | | 2,329,881 | | | 2,543,834 | | | 3,848,473 | | | 2,858,382 | | | 2,905,841 | | | 2,933,868 | | | 4,449,725 | | | 3,462,172 | | | 3,392,447 | | | 3,387,406 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | (584,353) | | | (660,832) | | | (501,435) | | | (567,625) | | | (553,779) | | | (2,027,756) | | | (2,365,172) | | | (1,457,862) | | | (1,004,327) | | | (587,467) | | | (1,824,897) | | | (90,573) | | | 1,085,454 | | | 2,582,095 | | | 1,703,008 | | | 4,730,423 | | | 6,586,266 | | | 8,838,478 | |
| | 0% | | | 0% | | | -752% | | | -522% | | | -332% | | | -1494% | | | -246% | | | -143% | | | -97% | | | -30% | | | -48% | | | -2% | | | 19% | | | 36% | | | 20% | | | 48% | | | 56% | | | 63% | |
S&M % of Revenue | | | 0% | | | 0% | | | 70% | | | 24% | | | 34% | | | 283% | | | 56% | | | 49% | | | 46% | | | 35% | | | 31% | | | 28% | | | 22% | | | 19% | | | 19% | | | 17% | | | 15% | | | 13% |
R&D % of Revenue | | | 0% | | | 0% | | | 566% | | | 511% | | | 156% | | | 555% | | | 104% | | | 82% | | | 62% | | | 36% | | | 35% | | | 22% | | | 16% | | | 12% | | | 17% | | | 10% | | | 8% | | | 6% |
G&A % of Revenue | | | 0% | | | 0% | | | 217% | | | 87% | | | 203% | | | 373% | | | 108% | | | 44% | | | 35% | | | 25% | | | 34% | | | 16% | | | 13% | | | 10% | | | 17% | | | 7% | | | 6% | | | 5% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | 1,979 | | | 1,352 | | | 4,963 | | | 744 | | | 63 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | — | | | — | | | — | | | 58,781 | | | 54,588 | | | | | | | | | | | — | | | — | | | — | | | 208,317 | | | 470,229 | | | 316,389 | | | 848,617 | | | 2,348,940 | | | 3,137,214 | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | (582,374) | | | (659,480) | | | (496,472) | | | (625,662) | | | (608,303) | | | (2,027,756) | | | (2,365,172) | | | (1,457,862) | | | (1,004,327) | | | (587,467) | | | (1,824,897) | | | (90,573) | | | 877,137 | | | 2,111,866 | | | 1,386,619 | | | 3,881,806 | | | 4,237,326 | | | 5,701,264 | |
| | 0% | | | 0% | | | -745% | | | -575% | | | -362% | | | -1494% | | | -246% | | | -143% | | | -97% | | | -30% | | | -48% | | | -2% | | | 16% | | | 30% | | | 17% | | | 39% | | | 36% | | | 41% |
1Q24 | | | 2Q24 | | | 3Q24 | | | 4Q24 | | | 1Q25 | | | 2Q25 | | | 3Q25 | | | 4Q25 |
5,269,853 | | | 5,341,981 | | | 5,537,998 | | | 5,693,914 | | | 6,310,183 | | | 6,095,244 | | | 6,095,786 | | | 6,103,551 |
8,209,121 | | | 8,863,142 | | | 9,551,373 | | | 11,181,662 | | | 12,772,490 | | | 12,907,196 | | | 13,128,509 | | | 14,618,953 |
3,037,060 | | | 3,338,946 | | | 3,769,132 | | | 4,008,043 | | | 4,002,460 | | | 4,188,035 | | | 4,535,920 | | | 4,660,357 |
— | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
16,516,034 | | | 17,544,068 | | | 18,858,503 | | | 20,883,619 | | | 23,085,133 | | | 23,190,476 | | | 23,760,215 | | | 25,382,861 |
| | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | ||||||||
708,478 | | | 718,858 | | | 825,593 | | | 681,007 | | | 1,098,227 | | | 1,129,678 | | | 1,511,917 | | | 1,664,509 |
856,895 | | | 1,010,087 | | | 1,216,409 | | | 1,078,339 | | | 1,661,809 | | | 1,759,709 | | | 1,859,019 | | | 2,093,756 |
1,857,731 | | | 1,772,372 | | | 1,942,742 | | | 2,092,356 | | | 2,681,320 | | | 2,843,426 | | | 3,206,054 | | | 3,503,265 |
— | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
3,423,104 | | | 3,501,317 | | | 3,984,743 | | | 3,851,702 | | | 5,441,357 | | | 5,732,813 | | | 6,576,989 | | | 7,261,530 |
13,092,930 | | | 14,042,752 | | | 14,873,759 | | | 17,031,917 | | | 17,643,776 | | | 17,457,662 | | | 17,183,226 | | | 18,121,331 |
79% | | | 80% | | | 79% | | | 82% | | | 76% | | | 75% | | | 72% | | | 71% |
| | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | ||||||||
1,816,764 | | | 1,929,848 | | | 2,074,435 | | | 2,297,198 | | | 2,539,365 | | | 2,550,952 | | | 2,613,624 | | | 2,792,115 |
990,962 | | | 1,052,644 | | | 1,131,510 | | | 1,253,017 | | | 1,385,108 | | | 1,391,429 | | | 1,425,613 | | | 1,522,972 |
660,641 | | | 701,763 | | | 754,340 | | | 835,345 | | | 923,405 | | | 927,619 | | | 950,409 | | | 1,015,314 |
3,468,367 | | | 3,684,254 | | | 3,960,286 | | | 4,385,560 | | | 4,847,878 | | | 4,870,000 | | | 4,989,645 | | | 5,330,401 |
9,624,563 | | | 10,358,497 | | | 10,913,474 | | | 12,646,357 | | | 12,795,898 | | | 12,587,662 | | | 12,193,581 | | | 12,790,930 |
58% | | | 59% | | | 58% | | | 61% | | | 55% | | | 54% | | | 51% | | | 50% |
11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% |
6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% |
4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% |
| | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | ||||||||
— | | | — | | | — | | | 11,988,780 | | | — | | | — | | | — | | | 17,628,825 |
9,624,563 | | | 10,358,497 | | | 10,913,474 | | | 657,577 | | | 12,795,898 | | | 12,587,662 | | | 12,193,581 | | | (4,837,895) |
58% | | | 59% | | | 58% | | | 3% | | | 55% | | | 54% | | | 51% | | | -19% |
| | | | | | | | | | | | | | | | Quarter-Over-Quarter % Change | | | | | Assumptions | | | Growth Input | | | | | | | |||||||||||||||||||||||||||||||||
3Q20 | | | 4Q20 | | | 1Q21 | | | 2Q21 | | | 3Q21 | | | 4Q21 | | | 1Q22 | | | 2Q22 | | | 3Q22 | | | 4Q22 | | | 1Q23 | | | 2Q23 | | | 3Q23 | | | 4Q23 | | | 1Q24 | | | 2Q24 | | | 3Q24 | | | 4Q24 | | | 1Q25 | | | 2Q25 | | | 3Q25 | | | 4Q25 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Revenue continued revenue growth trend | | | | | | | |||||||||||||||||||||||||||||
0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 3570% | | | 922% | | | 745% | | | 551% | | | 172% | | | 126% | | | 97% | | | 76% | | | 54% | | | 39% | | | 28% | | | 20% | | | 14% | | | 10% | | | 7% | | | 5% |
0% | | | 0% | | | 700% | | | 580% | | | 539% | | | 1200% | | | 178% | | | 100% | | | 83% | | | 92% | | | 149% | | | 199% | | | 149% | | | 122% | | | 101% | | | 83% | | | 68% | | | 56% | | | 46% | | | 37% | | | 31% | | | 25% |
0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 4500% | | | 126% | | | 118% | | | 88% | | | 76% | | | 36% | | | 50% | | | 67% | | | 78% | | | 62% | | | 50% | | | 40% | | | 32% | | | 25% | | | 20% | | | 16% | | | 13% |
0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 1580% | | | 1299% | | | 1118% | | | 1950% | | | 243% | | | 188% | | | 157% | | | 149% | | | 119% | | | 127% | | | 108% | | | 96% | | | 97% | | | 76% | | | 61% | | | -100% | | | -100% | | | -100% | | | -100% | | | 0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | COGS maintained % of revenue | | | | ||||||||||||||||||||||||||||||||
0% | | | 0% | | | 0% | | | 0% | | | 314% | | | 56% | | | 88% | | | 50% | | | 44% | | | 46% | | | -25% | | | -34% | | | -36% | | | -33% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 0% | | | 237242% | | | 0% | | | -100% | | | 4% | | | 30% | | | 0% | | | 0% | | | 30% | | | 10% | | | 0% | | | 0% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 288% | | | 236% | | | 159% | | | 114% | | | 93% | | | 46% | | | 25% | | | 0% | | | 0% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 0% | | | 1051656% | | | 1138% | | | 76% | | | 130% | | | 95% | | | 90% | | | 79% | | | 24% | | | 8% | | | 7% | | | 8% | | | 53% | | | 100% | | | 126% | | | -100% | | | -100% | | | -100% | | | -100% | | | 0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
0% | | | 0% | | | 398% | | | 536% | | | 1105% | | | 614% | | | 509% | | | 301% | | | 201% | | | 182% | | | 204% | | | 196% | | | 150% | | | 122% | | | | | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
696% | | | 848% | | | 1118% | | | 2205% | | | 1237% | | | 139% | | | 113% | | | 100% | | | 68% | | | 45% | | | 33% | | | 42% | | | 42% | | | 37% | | | | | | | | | | | | | | | | | ||||||||
-51% | | | 165% | | | 178% | | | 80% | | | 261% | | | 28% | | | 27% | | | -5% | | | -9% | | | -9% | | | 6% | | | 6% | | | -1% | | | -1% | | | | | | | | | | | | | | | | | ||||||||
16475% | | | 52% | | | 650% | | | 475% | | | 75% | | | 29% | | | 21% | | | 28% | | | 27% | | | 10% | | | 9% | | | 5% | | | -4% | | | -3% | | | | | | | | | | | | | | | | | ||||||||
14% | | | 149% | | | 375% | | | 218% | | | 251% | | | 54% | | | 43% | | | 33% | | | 25% | | | 15% | | | 16% | | | 21% | | | 17% | | | 15% | | | -22% | | | 6% | | | 17% | | | -100% | | | -100% | | | -100% | | | -100% | | | 0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
5% | | | -207% | | | -372% | | | -157% | | | -81% | | | 71% | | | 23% | | | 94% | | | 208% | | | 540% | | | 193% | | | 5323% | | | 507% | | | 242% | | | | | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | | | 11% | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | | | 6% | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | | | 4% | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
-97% | | | -100% | | | -100% | | | -100% | | | -100% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | | | | | | | | | | | | | | | ||||||||
0% | | | 0% | | | 0% | | | -100% | | | -100% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 0% | | | 1028% | | | 567% | | | | | | | | | | | | | | | | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
-4% | | | -207% | | | -376% | | | -133% | | | -65% | | | 71% | | | 23% | | | 94% | | | 187% | | | 459% | | | 176% | | | 4386% | | | 383% | | | 170% | | | 594% | | | 167% | | | 158% | | | -100% | | | -100% | | | -100% | | | -100% | | | 0% |
-362% | | | -1494% | | | 499% | | | 433% | | | 266% | | | 1464% | | | 198% | | | 140% | | | 112% | | | 60% | | | 64% | | | 41% | | | 21% | | | 11% | | | | | | | | | | | | | | | | |
Name | | | Cash | | Equity(1) | | Total | | Cash | | Equity(1) | | Total | |||||
Zachary Venegas | | 200,000 | | $24,325 | | $— | | 200,000 | | $24,325 | | $224,325 | ||||||
Scott Ogur | | 180,000 | | $— | | $180,000 | | 180,000 | | $— | | $180,000 |
(1) | Represents acceleration of options for Mr. Venegas (options for 150,000 shares of Helix common stock with an exercise price of $0.1045 and options for 500,000 shares of Helix common stock with an exercise price of $0.167). These options, in the merger, convert, respectively into options to acquire |
Name | | | Option Date | | | Current Ex. Price | | | Curr. Exp. Date | | | Helix Shares (#) | | | Forian Shares (#) | | | Ex. Price as adj. in Merger |
Mr. Venegas | | | 3/15/18 | | | $1.90 | | | 3/28/28 | | | 450,000 | | | 12,289 | | | $69.57 |
| | 3/15/18 | | | $2.09 | | | 3/28/23 | | | 40,000 | | | 1,092 | | | $76.53 | |
| | 3/19/19 | | | $2.59 | | | 3/19/24 | | | 114,000 | | | 3,113 | | | $94.84 | |
| | 3/19/19 | | | $2.35 | | | 3/19/29 | | | 386,000 | | | 10,541 | | | $86.04 | |
| | 6/19/20 | | | $0.167 | | | 6/19/25 | | | 500,000 | | | 13,655 | | | $6.11 | |
| | 10/14/20 | | | $0.1045 | | | 10/14/25 | | | 300,000 | | | 8,193 | | | $3.83 | |
Mr. Ogur | | | 3/19/19 | | | $2.59 | | | 3/19/24 | | | 114,000 | | | 3,113 | | | $94.84 |
| | 3/19/19 | | | $2.35 | | | 3/19/29 | | | 186,000 | | | 5,079 | | | $86.04 | |
| | 2/21/20 | | | $0.385 | | | 2/21/25 | | | 200,000 | | | 5,462 | | | $13.10 | |
Garvis Toler | | | 3/31/20 | | | $0.115 | | | 3/31/25 | | | 400,000 | | | 10,924 | | | $4.21 |
Steve Janjic | | | 12/27/19 | | | $0.52 | | | 12/27/24 | | | 100,000 | | | 2,731 | | | $19.04 |
○ | if the Merger is not consummated on or before February 26, 2021, provided, that, the right to terminate the merger agreement will not be available to a party if its action or failure to act constitutes a material breach or violation of any of its covenants, agreements or other obligations hereunder and such material breach or violation has been the principal cause of or directly resulted in the failure to satisfy the conditions to the obligations of the terminating party to consummate the merger prior to February 26, 2021 or the failure of the closing of the merger to occur by February 26, 2021; |
○ | if an applicable law, order, preliminary, temporary or permanent, or other legal restraint or prohibition and no action, proceeding, binding order, decree or determination by any governmental entity is in effect that prevents, enjoins, makes illegal or prohibits the consummation of the merger and the other transactions contemplated by the merger agreement; |
○ | if Helix stockholder approval of the merger is not obtained at the Helix special meeting or any adjournment or postponement thereof at which the vote was taken on the merger; or |
○ | if all of the conditions to closing have been satisfied or waived (other than those conditions that by their nature are to be satisfied (or waived) at the closing, which conditions would be reasonably capable of being satisfied at such time) and Forian is unable to satisfy its obligation to effect the closing at such time because a private offering by MOR of equity interests or other securities of MOR on terms and conditions reasonably acceptable to MOR in its sole discretion, resulting in net proceeds to MOR (after deducting applicable fees, expenses, charges and discounts) in the aggregate amount of at least $11,000,000 cannot be completed prior to the closing date. |
Location | | | Monthly Rent | | | Lease Term | | | Expiration Date |
5300 DTC Parkway, Suite 300, Greenwood Village, CO 80111 | | | $6,011 to $6,718 | | | 5 years | | | 2/28/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $19,380 to $20,560 | | | 34 months | | | 11/30/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $15,200 to $16,127 | | | 3 years | | | 12/31/2024 |
921 Lakeridge Way, Suite 301, Olympia, WA 98502 | | | $3,500 to $3,713 | | | 3 years | | | 2/28/2021 |
Name and Principal Position | | | Fiscal Year | | Base Salary ($) | | All Other Compensation ($) | | Total ($) | | Fiscal Year | | Base Salary ($) | | Option Awards ($) | | Total ($) | |||||||
Zachary Venegas President/CEO, Director | | | 2019 | | 200,000 | | 975,736 | | 1,175,736 | | | 2020 | | 200,000 | | 101,364 | | 301,364 | ||||||
| 2018 | | 200,000 | | 629,200 | | 829,200 | | 2019 | | 200,000 | | 975,736 | | 1,175,736 | |||||||||
Scott Ogur CFO, Director | | | 2019 | | 180,000 | | 575,136 | | 755,136 | | | 2020 | | 180,000 | | 67,710 | | 247,710 | ||||||
| 2018 | | 135,000 | | — | | 135,000 | | 2019 | | 180,000 | | 575,136 | | 755,136 | |||||||||
Patrick Vo CEO, BioTrackTHC(1) | | | 2019 | | 114,507 | | — | | 114,507 | |||||||||||||||
| 2018 | | 102,000 | | — | | 102,000 | |||||||||||||||||
Terence J. Ferraro Chief Software Architect, BioTrackTHC | | | 2019 | | 175,000 | | — | | 175,000 | | | 2020 | | 175,000 | | — | | 175,000 | ||||||
| 2018 | | 102,000 | | — | | 102,000 | | 2019 | | 175,000 | | — | | 175,000 |
Name | | | Stock Underlying Option | | | Option Exercise Price | | | Option Expiration Date |
Zachary Venegas | | | 40,000 shares of common stock | | | $2.09* | | | 3/28/2023 |
Zachary Venegas | | | 450,000 shares of common stock | | | $1.90 | | | 3/28/2028 |
Zachary Venegas | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Zachary Venegas | | | 386,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Zachary Venegas | | | 500,000 shares of common stock | | | $0.167* | | | 6/19/2025 |
Zachary Venegas | | | 300,000 shares of common stock | | | $0.1045* | | | 10/14/2025 |
Scott Ogur | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Scott Ogur | | | 186,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Scott Ogur | | | 200,000 shares of common stock | | | $0.385* | | | 2/21/2025 |
* | Represents 110% of the fair market value of Helix’s common stock on the day of issuance. |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans |
Equity compensation plans approved by security holders | | | | | | | |||
Helix TCS, Inc. 2017 Omnibus Stock Plan | | | 1,835,000 | | | $1.97 | | | 2,400,055 |
Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan | | | 5,398,018 | | | $0.62 | | | 286,140 |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2019 | | | 2018 | | | Dollars | | | Percentage | |
Revenue | | | $10,862,695 | | | $5,318,128 | | | $5,544,567 | | | 104% |
Cost of revenue | | | 4,684,969 | | | 2,792,875 | | | 1,892,094 | | | 68% |
Gross margin | | | 6,177,726 | | | 2,525,253 | | | 3,652,473 | | | 145% |
Operating expenses | | | 16,114,859 | | | 12,777,804 | | | 3,337,055 | | | 26% |
Loss from operations | | | (9,937,133) | | | (10,252,551) | | | 315,418 | | | -3% |
Other income, net | | | 647,730 | | | 2,759,052 | | | (2,111,322) | | | -77% |
Loss from continuing operations | | | $(9,289,403) | | | $(7,493,499) | | | $(1,795,904) | | | 24% |
Loss from discontinued operations | | | (290,766) | | | (472,303) | | | 181,537 | | | -38% |
Net loss | | | $(9,580,169) | | | $(7,965,802) | | | $(1,614,367) | | | 20% |
Changes in foreign currency translation adjustment | | | $(97,892) | | | $17,991 | | | $(115,883) | | | -644% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | — | | | (22,202,194) | | | 22,202,194 | | | -100% |
Net loss attributable to common shareholders | | | $(9,678,061) | | | $(30,150,005) | | | $20,471,944 | | | -68% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2018 | | | 2017 | | | Dollars | | | Percentage | |
Revenue | | | $5,318,128 | | | $787,080 | | | $4,531,048 | | | 576% |
Cost of revenue | | | 2,792,875 | | | 405,470 | | | 2,387,405 | | | 589% |
Gross margin | | | 2,525,253 | | | 381,610 | | | 2,143,643 | | | 562% |
Operating expenses | | | 12,777,804 | | | 3,851,294 | | | 8,926,510 | | | 232% |
Loss from operations | | | (10,252,551) | | | (3,469,684) | | | (6,782,867) | | | 195% |
Other income (expense), net | | | 2,759,052 | | | (6,882,705) | | | 9,641,757 | | | -140% |
Loss from continuing operations | | | $(7,493,499) | | | $(10,352,389) | | | $2,858,890 | | | -28% |
Loss from discontinued operations | | | (472,303) | | | (313,598) | | | (158,705) | | | 51% |
Net loss | | | $(7,965,802) | | | $(10,665,987) | | | $2,700,185 | | | -25% |
Changes in foreign currency translation adjustment | | | $17,991 | | | $— | | | $17,991 | | | 100% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | (22,202,194) | | | (22,210,520) | | | 8,326 | | | -1% |
Net loss attributable to common shareholders | | | $(30,150,005) | | | $(32,876,507) | | | $2,726,502 | | | -8% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2018 | | | 2017 | | | Dollars | | | Percentage | |
Revenue | | | $5,318,128 | | | $787,080 | | | $4,531,048 | | | 576% |
Cost of revenue | | | 2,792,875 | | | 405,470 | | | 2,387,405 | | | 589% |
Gross margin | | | 2,525,253 | | | 381,610 | | | 2,143,643 | | | 562% |
Operating expenses | | | 12,777,804 | | | 3,851,294 | | | 8,926,510 | | | 232% |
Loss from operations | | | (10,252,551) | | | (3,469,684) | | | (6,782,867) | | | 195% |
Other income (expense), net | | | 2,759,052 | | | (6,882,705) | | | 9,641,757 | | | -140% |
Loss from continuing operations | | | $(7,493,499) | | | $(10,352,389) | | | $2,858,890 | | | -28% |
Loss from discontinued operations | | | (472,303) | | | (313,598) | | | (158,705) | | | 51% |
Net loss | | | $(7,965,802) | | | $(10,665,987) | | | $2,700,185 | | | -25% |
Changes in foreign currency translation adjustment | | | $17,991 | | | $— | | | $17,991 | | | 100% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | (22,202,194) | | | (22,210,520) | | | 8,326 | | | -1% |
Net loss attributable to common shareholders | | | $(30,150,005) | | | $(32,876,507) | | | $2,726,502 | | | -8% |
| | December 31, 2019 | | | December 31, 2018 | | | Change | |
Current assets | | | $3,518,224 | | | $1,923,353 | | | $1,594,871 |
Current liabilities | | | 6,934,725 | | | 4,157,005 | | | 2,777,720 |
Working capital | | | $(3,416,501) | | | $(2,233,652) | | | $(1,182,849) |
| | December 31, 2018 | | | December 31, 2017 | | | Change | |
Current assets | | | $1,923,353 | | | $1,519,714 | | | $403,639 |
Current liabilities | | | 4,157,005 | | | 4,808,995 | | | (651,990) |
Working capital | | | $(2,233,652) | | | $(3,289,281) | | | $1,055,629 |
| | For the Year Ended December 31, | ||||
| | 2019 | | | 2018 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | (175,528) | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Year Ended December 31, | ||||
| | 2018 | | | 2017 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | 175,528 | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Three Months Ended September 30, | | Change | | | For the Year Ended December 31, | | Change | |||||||||||||||
| | 2020 | | 2019 | | Dollars | | Percentage | | | 2018 | | 2017 | | Dollars | | Percentage | |||||||
Revenue | | $2,893,058 | | $2,737,568 | | $155,490 | | 6% | | $5,318,128 | | $787,080 | | $4,531,048 | | 576% | ||||||||
Cost of revenue | | 918,150 | | 1,318,825 | | (400,675) | | -30% | | 2,792,875 | | 405,470 | | 2,387,405 | | 589% | ||||||||
Gross margin | | 1,974,908 | | 1,418,743 | | 556,165 | | 39% | | 2,525,253 | | 381,610 | | 2,143,643 | | 562% | ||||||||
Operating expenses | | 43,611,028 | | 4,141,254 | | 39,469,774 | | 953% | | 12,777,804 | | 3,851,294 | | 8,926,510 | | 232% | ||||||||
Loss from operations | | (41,636,120) | | (2,722,511) | | (38,913,609) | | 1,429% | | (10,252,551) | | (3,469,684) | | (6,782,867) | | 195% | ||||||||
Other (expense) income, net | | (482,422) | | (1,608,218) | | (2,090,640) | | -130% | ||||||||||||||||
Other income (expense), net | | 2,759,052 | | (6,882,705) | | 9,641,757 | | -140% | ||||||||||||||||
Loss from continuing operations | | $(7,493,499) | | $(10,352,389) | | $2,858,890 | | -28% | ||||||||||||||||
Loss from discontinued operations | | $(70,259) | | $(141,276) | | $71,017 | | -50% | | (472,303) | | (313,598) | | (158,705) | | 51% | ||||||||
Net loss | | $(42,188,801) | | $(1,255,569) | | $(40,933,232) | | 3,260% | | $(7,965,802) | | $(10,665,987) | | $2,700,185 | | -25% | ||||||||
Changes in foreign currency translation adjustment | | $62,069 | | $(118,003) | | $180,072 | | -153% | | $17,991 | | $— | | $17,991 | | 100% | ||||||||
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | (22,202,194) | | (22,210,520) | | 8,326 | | -1% | ||||||||||||||||
Net loss attributable to common shareholders | | $(42,126,732) | | $(1,373,572) | | $40,753,160 | | 2,967% | | $(30,150,005) | | $(32,876,507) | | $2,726,502 | | -8% |
| | December 31, 2019 | | | December 31, 2018 | | | Change | |
Current assets | | | $3,518,224 | | | $1,923,353 | | | $1,594,871 |
Current liabilities | | | 6,934,725 | | | 4,157,005 | | | 2,777,720 |
Working capital | | | $(3,416,501) | | | $(2,233,652) | | | $(1,182,849) |
| | December 31, 2018 | | | December 31, 2017 | | | Change | |
Current assets | | | $1,923,353 | | | $1,519,714 | | | $403,639 |
Current liabilities | | | 4,157,005 | | | 4,808,995 | | | (651,990) |
Working capital | | | $(2,233,652) | | | $(3,289,281) | | | $1,055,629 |
| | For the Year Ended December 31, | ||||
| | 2019 | | | 2018 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | (175,528) | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Year Ended December 31, | ||||
| | 2018 | | | 2017 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | 175,528 | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Nine Months Ended September 30, | | | Change | |||||||
| | 2020 | | | 2019 | | | Dollars | | | Percentage | |
Revenue | | | $8,800,352 | | | $7,757,066 | | | $1,043,286 | | | 13% |
Cost of revenue | | | 2,848,674 | | | 3,594,491 | | | (745,817) | | | -21% |
Gross margin | | | 5,951,678 | | | 4,162,575 | | | 1,789,103 | | | 43% |
Operating expenses | | | 52,055,830 | | | 11,929,552 | | | 40,126,277 | | | 336% |
Loss from operations | | | (46,104,152) | | | (7,766,977) | | | (38,337,174) | | | 493% |
Other (expense) income, net | | | (2,210,877) | | | 642,813 | | | (2,938,043) | | | -457% |
Loss from discontinued operations | | | $(65,141) | | | $(160,798) | | | $169,200 | | | -105% |
Net loss | | | $(48,380,170) | | | $(7,284,962) | | | $(41,106,017) | | | 564% |
Changes in foreign currency translation adjustment | | | $110,264 | | | $(114,346) | | | $224,610 | | | -196% |
Net loss attributable to common shareholders | | | $(48,269,906) | | | $(7,399,308) | | | $(40,881,407) | | | 552% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2018 | | | 2017 | | | Dollars | | | Percentage | |
Revenue | | | $5,318,128 | | | $787,080 | | | $4,531,048 | | | 576% |
Cost of revenue | | | 2,792,875 | | | 405,470 | | | 2,387,405 | | | 589% |
Gross margin | | | 2,525,253 | | | 381,610 | | | 2,143,643 | | | 562% |
Operating expenses | | | 12,777,804 | | | 3,851,294 | | | 8,926,510 | | | 232% |
Loss from operations | | | (10,252,551) | | | (3,469,684) | | | (6,782,867) | | | 195% |
Other income (expense), net | | | 2,759,052 | | | (6,882,705) | | | 9,641,757 | | | -140% |
Loss from continuing operations | | | $(7,493,499) | | | $(10,352,389) | | | $2,858,890 | | | -28% |
Loss from discontinued operations | | | (472,303) | | | (313,598) | | | (158,705) | | | 51% |
Net loss | | | $(7,965,802) | | | $(10,665,987) | | | $2,700,185 | | | -25% |
Changes in foreign currency translation adjustment | | | $17,991 | | | $— | | | $17,991 | | | 100% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | (22,202,194) | | | (22,210,520) | | | 8,326 | | | -1% |
Net loss attributable to common shareholders | | | $(30,150,005) | | | $(32,876,507) | | | $2,726,502 | | | -8% |
| | September 30, 2020 | | | December 31, 2019 | | | Change | |
Current assets | | | $4,573,684 | | | $3,518,224 | | | $1,055,460 |
Current liabilities | | | 5,914,154 | | | 6,934,725 | | | (1,020,571) |
Working capital | | | $(1,340,470) | | | $(3,416,501) | | | $2,076,031 |
| | December 31, 2019 | | | December 31, 2018 | | | Change | |
Current assets | | | $3,518,224 | | | $1,923,353 | | | $1,594,871 |
Current liabilities | | | 6,934,725 | | | 4,157,005 | | | 2,777,720 |
Working capital | | | $(3,416,501) | | | $(2,233,652) | | | $(1,182,849) |
| | December 31, 2018 | | | December 31, 2017 | | | Change | |
Current assets | | | $1,923,353 | | | $1,519,714 | | | $403,639 |
Current liabilities | | | 4,157,005 | | | 4,808,995 | | | (651,990) |
Working capital | | | $(2,233,652) | | | $(3,289,281) | | | $1,055,629 |
| | For the Nine Months Ended September 30, | | | For the Year Ended December 31, | |||||||
| | 2020 | | 2019 | | | 2019 | | 2018 | |||
Net cash used in operating activities | | $(738,678) | | $(2,769,048) | | $(3,668,522) | | $(1,811,228) | ||||
Net cash provided by (used in) investing activities | | 482,517 | | (895,406) | | (175,528) | | (1,712,930) | ||||
Net cash provided by financing activities | | 1,260,966 | | 4,212,525 | | 3,006,501 | | 4,209,451 |
| | For the Year Ended December 31, | ||||
| | 2018 | | | 2017 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | 175,528 | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
Location | | | Monthly Rent | | | Lease Term | | | Expiration Date |
5300 DTC Parkway, Suite 300, Greenwood Village, CO 80111 | | | $6,011 to $6,718 | | | 5 years | | | 2/28/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $19,380 to $20,560 | | | 34 months | | | 11/30/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $15,200 to $16,127 | | | 3 years | | | 12/31/2024 |
921 Lakeridge Way, Suite 301, Olympia, WA 98502 | | | $3,500 to $3,713 | | | 3 years | | | 2/28/2021 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net Loss | | | $(42,188,801) | | | $(1,255,569) | | | $(48,380,170) | | | $(7,284,962) |
Interest expense | | | 355,176 | | | 538,591 | | | 1,029,686 | | | 1,227,271 |
Depreciation & amortization | | | 1,049,235 | | | 1,179,597 | | | 3,320,641 | | | 3,516,418 |
Loss on impairment of intangible assets | | | 39,963,107 | | | — | | | 41,333,085 | | | — |
Share based compensation expense | | | 549,012 | | | 352,341 | | | 1,620,616 | | | 1,241,741 |
Change in fair value of convertible note | | | 321,915 | | | (430,766) | | | 1,104,856 | | | (288,425) |
Change in fair value of convertible note - related party | | | — | | | (491,442) | | | (498,233) | | | 213,828 |
Change in fair value of warrant liability | | | (67,039) | | | (1,224,601) | | | (682,717) | | | (3,462,746) |
Change in fair value of contingent consideration | | | 111,902 | | | — | | | 1,536,324 | | | 880,050 |
Loss (gain) on issuance of warrants | | | — | | | — | | | (2,000) | | | 787,209 |
Other expense | | | — | | | — | | | (37,507) | | | — |
Adjusted EBITDA | | | $94,800 | | | $(1,331,849) | | | $344,874 | | | $(3,169,616) |
Name and Principal Position | | | Fiscal Year | | | Base Salary ($) | | | Option Awards ($) | | | Total ($) |
Zachary Venegas President/CEO, Director | | | 2020 | | | 200,000 | | | 101,364 | | | 301,364 |
| 2019 | | | 200,000 | | | 975,736 | | | 1,175,736 | ||
Scott Ogur CFO, Director | | | 2020 | | | 180,000 | | | 67,710 | | | 247,710 |
| 2019 | | | 180,000 | | | 575,136 | | | 755,136 | ||
Terence J. Ferraro Chief Software Architect, BioTrackTHC | | | 2020 | | | 175,000 | | | — | | | 175,000 |
| 2019 | | | 175,000 | | | — | | | 175,000 |
Name | | | Stock Underlying Option | | | Option Exercise Price | | | Option Expiration Date |
Zachary Venegas | | | 40,000 shares of common stock | | | $2.09* | | | 3/28/2023 |
Zachary Venegas | | | 450,000 shares of common stock | | | $1.90 | | | 3/28/2028 |
Zachary Venegas | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Zachary Venegas | | | 386,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Zachary Venegas | | | 500,000 shares of common stock | | | $0.167* | | | 6/19/2025 |
Zachary Venegas | | | 300,000 shares of common stock | | | $0.1045* | | | 10/14/2025 |
Scott Ogur | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Scott Ogur | | | 186,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Scott Ogur | | | 200,000 shares of common stock | | | $0.385* | | | 2/21/2025 |
* | Represents 110% of the fair market value of Helix’s common stock on the day of issuance. |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans |
Equity compensation plans approved by security holders | | | | | | | |||
Helix TCS, Inc. 2017 Omnibus Stock Plan | | | 1,835,000 | | | $1.97 | | | 2,400,055 |
Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan | | | 5,398,018 | | | $0.62 | | | 286,140 |
| | Common Stock | | | Series A Preferred Stock | | | Series B Preferred Stock | | | |||||||||||
Name of Beneficial Owner | | | # of Shares | | | % Owned | | | # of Shares | | | % Owned | | | # of Shares | | | % Owned | | | Total % of Voting Power |
5% Beneficial Shareholders | | | | | | | | | | | | | | | |||||||
RSF4, LLC(1) | | | 13,544,722 | | | 10.5% | | | — | | | 0.0% | | | 13,784,201 | | | 100.0% | | | 19.1% |
Helix Opportunities, LLC(2) | | | 21,918,152 | | | 17.0% | | | 1,000,000 | | | 100.0% | | | — | | | 0.0% | | | 16.0% |
RSF5, LLC(1) | | | 13,544,722 | | | 10.5% | | | — | | | — | | | 13,784,201 | | | 100.0% | | | 19.1% |
Nightstone Unlimited, Inc. | | | 5,207,100 | | | 4.1% | | | — | | | 0.0% | | | — | | | 0.0% | | | 3.6% |
Minds Eye Trust | | | 6,420,000 | | | 5.0% | | | — | | | 0.0% | | | — | | | 0.0% | | | 4.5% |
Officers and Directors | | | | | | | | | | | | | | | |||||||
Zachary Venegas(2)(3) | | | 22,724,818 | | | 17.6% | | | 1,000,000 | | | 100.0% | | | — | | | 0.0% | | | 16.5% |
Scott Ogur(2)(4) | | | 22,218,152 | | | 17.3% | | | 1,000,000 | | | 100.0% | | | — | | | 0.0% | | | 16.2% |
Andrew Schweibold(1) | | | 16,385,593 | | | 12.7% | | | — | | | 0.0% | | | 13,784,201 | | | 100.0% | | | 21.0% |
Satyavrat Joshi | | | — | | | 0.0% | | | — | | | 0.0% | | | — | | | 0.0% | | | 0.0% |
Paul Hodges | | | 2,500,483 | | | 1.9% | | | — | | | 0.0% | | | — | | | 0.0% | | | 1.7% |
Garvis Toler III(5) | | | 200,000 | | | 0.2% | | | — | | | 0.0% | | | — | | | 0.0% | | | 0.1% |
Steve Janjic(6) | | | 661,796 | | | 0.5% | | | — | | | 0.0% | | | — | | | | | 0.5% | |
Officers and Directors as a Group (7 persons) | | | 42,772,690 | | | 33.0% | | | 1,000,000 | | | 100.0% | | | 13,784,201 | | | 0.0% | | | 39.9% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2019 | | | 2018 | | | Dollars | | | Percentage | |
Revenue | | | $10,862,695 | | | $5,318,128 | | | $5,544,567 | | | 104% |
Cost of revenue | | | 4,684,969 | | | 2,792,875 | | | 1,892,094 | | | 68% |
Gross margin | | | 6,177,726 | | | 2,525,253 | | | 3,652,473 | | | 145% |
Operating expenses | | | 16,114,859 | | | 12,777,804 | | | 3,337,055 | | | 26% |
Loss from operations | | | (9,937,133) | | | (10,252,551) | | | 315,418 | | | -3% |
Other income, net | | | 647,730 | | | 2,759,052 | | | (2,111,322) | | | -77% |
Loss from continuing operations | | | $(9,289,403) | | | $(7,493,499) | | | $(1,795,904) | | | 24% |
Loss from discontinued operations | | | (290,766) | | | (472,303) | | | 181,537 | | | -38% |
Net loss | | | $(9,580,169) | | | $(7,965,802) | | | $(1,614,367) | | | 20% |
Changes in foreign currency translation adjustment | | | $(97,892) | | | $17,991 | | | $(115,883) | | | -644% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | — | | | (22,202,194) | | | 22,202,194 | | | -100% |
Net loss attributable to common shareholders | | | $(9,678,061) | | | $(30,150,005) | | | $20,471,944 | | | -68% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2018 | | | 2017 | | | Dollars | | | Percentage | |
Revenue | | | $5,318,128 | | | $787,080 | | | $4,531,048 | | | 576% |
Cost of revenue | | | 2,792,875 | | | 405,470 | | | 2,387,405 | | | 589% |
Gross margin | | | 2,525,253 | | | 381,610 | | | 2,143,643 | | | 562% |
Operating expenses | | | 12,777,804 | | | 3,851,294 | | | 8,926,510 | | | 232% |
Loss from operations | | | (10,252,551) | | | (3,469,684) | | | (6,782,867) | | | 195% |
Other income (expense), net | | | 2,759,052 | | | (6,882,705) | | | 9,641,757 | | | -140% |
Loss from continuing operations | | | $(7,493,499) | | | $(10,352,389) | | | $2,858,890 | | | -28% |
Loss from discontinued operations | | | (472,303) | | | (313,598) | | | (158,705) | | | 51% |
Net loss | | | $(7,965,802) | | | $(10,665,987) | | | $2,700,185 | | | -25% |
Changes in foreign currency translation adjustment | | | $17,991 | | | $— | | | $17,991 | | | 100% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | (22,202,194) | | | (22,210,520) | | | 8,326 | | | -1% |
Net loss attributable to common shareholders | | | $(30,150,005) | | | $(32,876,507) | | | $2,726,502 | | | -8% |
| | December 31, 2019 | | | December 31, 2018 | | | Change | |
Current assets | | | $3,518,224 | | | $1,923,353 | | | $1,594,871 |
Current liabilities | | | 6,934,725 | | | 4,157,005 | | | 2,777,720 |
Working capital | | | $(3,416,501) | | | $(2,233,652) | | | $(1,182,849) |
| | December 31, 2018 | | | December 31, 2017 | | | Change | |
Current assets | | | $1,923,353 | | | $1,519,714 | | | $403,639 |
Current liabilities | | | 4,157,005 | | | 4,808,995 | | | (651,990) |
Working capital | | | $(2,233,652) | | | $(3,289,281) | | | $1,055,629 |
| | For the Year Ended December 31, | ||||
| | 2019 | | | 2018 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | (175,528) | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Year Ended December 31, | ||||
| | 2018 | | | 2017 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | 175,528 | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
Location | | | Monthly Rent | | | Lease Term | | | Expiration Date |
5300 DTC Parkway, Suite 300, Greenwood Village, CO 80111 | | | $6,011 to $6,718 | | | 5 years | | | 2/28/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $19,380 to $20,560 | | | 34 months | | | 11/30/2021 |
6750 North Andrews Avenue, Suite 325, Fort Lauderdale, FL 33309 | | | $15,200 to $16,127 | | | 3 years | | | 12/31/2024 |
921 Lakeridge Way, Suite 301, Olympia, WA 98502 | | | $3,500 to $3,713 | | | 3 years | | | 2/28/2021 |
Name and Principal Position | | | Fiscal Year | | | Base Salary ($) | | | Option Awards ($) | | | Total ($) |
Zachary Venegas President/CEO, Director | | | 2020 | | | 200,000 | | | 101,364 | | | 301,364 |
| 2019 | | | 200,000 | | | 975,736 | | | 1,175,736 | ||
Scott Ogur CFO, Director | | | 2020 | | | 180,000 | | | 67,710 | | | 247,710 |
| 2019 | | | 180,000 | | | 575,136 | | | 755,136 | ||
Terence J. Ferraro Chief Software Architect, BioTrackTHC | | | 2020 | | | 175,000 | | | — | | | 175,000 |
| 2019 | | | 175,000 | | | — | | | 175,000 |
Name | | | Stock Underlying Option | | | Option Exercise Price | | | Option Expiration Date |
Zachary Venegas | | | 40,000 shares of common stock | | | $2.09* | | | 3/28/2023 |
Zachary Venegas | | | 450,000 shares of common stock | | | $1.90 | | | 3/28/2028 |
Zachary Venegas | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Zachary Venegas | | | 386,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Zachary Venegas | | | 500,000 shares of common stock | | | $0.167* | | | 6/19/2025 |
Zachary Venegas | | | 300,000 shares of common stock | | | $0.1045* | | | 10/14/2025 |
Scott Ogur | | | 114,000 shares of common stock | | | $2.59* | | | 3/19/2024 |
Scott Ogur | | | 186,000 shares of common stock | | | $2.35 | | | 3/19/2029 |
Scott Ogur | | | 200,000 shares of common stock | | | $0.385* | | | 2/21/2025 |
* | Represents 110% of the fair market value of Helix’s common stock on the day of issuance. |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted-average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans |
Equity compensation plans approved by security holders | | | | | | | |||
Helix TCS, Inc. 2017 Omnibus Stock Plan | | | 1,835,000 | | | $1.97 | | | 2,400,055 |
Bio-Tech Medical Software, Inc. 2014 Stock Incentive Plan | | | 5,398,018 | | | $0.62 | | | 286,140 |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2019 | | | 2018 | | | Dollars | | | Percentage | |
Revenue | | | $10,862,695 | | | $5,318,128 | | | $5,544,567 | | | 104% |
Cost of revenue | | | 4,684,969 | | | 2,792,875 | | | 1,892,094 | | | 68% |
Gross margin | | | 6,177,726 | | | 2,525,253 | | | 3,652,473 | | | 145% |
Operating expenses | | | 16,114,859 | | | 12,777,804 | | | 3,337,055 | | | 26% |
Loss from operations | | | (9,937,133) | | | (10,252,551) | | | 315,418 | | | -3% |
Other income, net | | | 647,730 | | | 2,759,052 | | | (2,111,322) | | | -77% |
Loss from continuing operations | | | $(9,289,403) | | | $(7,493,499) | | | $(1,795,904) | | | 24% |
Loss from discontinued operations | | | (290,766) | | | (472,303) | | | 181,537 | | | -38% |
Net loss | | | $(9,580,169) | | | $(7,965,802) | | | $(1,614,367) | | | 20% |
Changes in foreign currency translation adjustment | | | $(97,892) | | | $17,991 | | | $(115,883) | | | -644% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | — | | | (22,202,194) | | | 22,202,194 | | | -100% |
Net loss attributable to common shareholders | | | $(9,678,061) | | | $(30,150,005) | | | $20,471,944 | | | -68% |
| | For the Year Ended December 31, | | | Change | |||||||
| | 2018 | | | 2017 | | | Dollars | | | Percentage | |
Revenue | | | $5,318,128 | | | $787,080 | | | $4,531,048 | | | 576% |
Cost of revenue | | | 2,792,875 | | | 405,470 | | | 2,387,405 | | | 589% |
Gross margin | | | 2,525,253 | | | 381,610 | | | 2,143,643 | | | 562% |
Operating expenses | | | 12,777,804 | | | 3,851,294 | | | 8,926,510 | | | 232% |
Loss from operations | | | (10,252,551) | | | (3,469,684) | | | (6,782,867) | | | 195% |
Other income (expense), net | | | 2,759,052 | | | (6,882,705) | | | 9,641,757 | | | -140% |
Loss from continuing operations | | | $(7,493,499) | | | $(10,352,389) | | | $2,858,890 | | | -28% |
Loss from discontinued operations | | | (472,303) | | | (313,598) | | | (158,705) | | | 51% |
Net loss | | | $(7,965,802) | | | $(10,665,987) | | | $2,700,185 | | | -25% |
Changes in foreign currency translation adjustment | | | $17,991 | | | $— | | | $17,991 | | | 100% |
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | (22,202,194) | | | (22,210,520) | | | 8,326 | | | -1% |
Net loss attributable to common shareholders | | | $(30,150,005) | | | $(32,876,507) | | | $2,726,502 | | | -8% |
| | December 31, 2019 | | | December 31, 2018 | | | Change | |
Current assets | | | $3,518,224 | | | $1,923,353 | | | $1,594,871 |
Current liabilities | | | 6,934,725 | | | 4,157,005 | | | 2,777,720 |
Working capital | | | $(3,416,501) | | | $(2,233,652) | | | $(1,182,849) |
| | December 31, 2018 | | | December 31, 2017 | | | Change | |
Current assets | | | $1,923,353 | | | $1,519,714 | | | $403,639 |
Current liabilities | | | 4,157,005 | | | 4,808,995 | | | (651,990) |
Working capital | | | $(2,233,652) | | | $(3,289,281) | | | $1,055,629 |
| | For the Year Ended December 31, | ||||
| | 2019 | | | 2018 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | (175,528) | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Year Ended December 31, | ||||
| | 2018 | | | 2017 | |
Net cash used in operating activities | | | $(3,668,522) | | | $(1,811,228) |
Net cash provided by (used in) investing activities | | | 175,528 | | | (1,712,930) |
Net cash provided by financing activities | | | 3,006,501 | | | 4,209,451 |
| | For the Three Months Ended September 30, | | | Change | |||||||
| | 2020 | | | 2019 | | | Dollars | | | Percentage | |
Revenue | | | $2,893,058 | | | $2,737,568 | | | $155,490 | | | 6% |
Cost of revenue | | | 918,150 | | | 1,318,825 | | | (400,675) | | | -30% |
Gross margin | | | 1,974,908 | | | 1,418,743 | | | 556,165 | | | 39% |
Operating expenses | | | 43,611,028 | | | 4,141,254 | | | 39,469,774 | | | 953% |
Loss from operations | | | (41,636,120) | | | (2,722,511) | | | (38,913,609) | | | 1,429% |
Other (expense) income, net | | | (482,422) | | | (1,608,218) | | | (2,090,640) | | | -130% |
Loss from discontinued operations | | | $(70,259) | | | $(141,276) | | | $71,017 | | | -50% |
Net loss | | | $(42,188,801) | | | $(1,255,569) | | | $(40,933,232) | | | 3,260% |
Changes in foreign currency translation adjustment | | | $62,069 | | | $(118,003) | | | $180,072 | | | -153% |
Net loss attributable to common shareholders | | | $(42,126,732) | | | $(1,373,572) | | | $40,753,160 | | | 2,967% |
| | For the Nine Months Ended September 30, | | | Change | |||||||
| | 2020 | | | 2019 | | | Dollars | | | Percentage | |
Revenue | | | $8,800,352 | | | $7,757,066 | | | $1,043,286 | | | 13% |
Cost of revenue | | | 2,848,674 | | | 3,594,491 | | | (745,817) | | | -21% |
Gross margin | | | 5,951,678 | | | 4,162,575 | | | 1,789,103 | | | 43% |
Operating expenses | | | 52,055,830 | | | 11,929,552 | | | 40,126,277 | | | 336% |
Loss from operations | | | (46,104,152) | | | (7,766,977) | | | (38,337,174) | | | 493% |
Other (expense) income, net | | | (2,210,877) | | | 642,813 | | | (2,938,043) | | | -457% |
Loss from discontinued operations | | | $(65,141) | | | $(160,798) | | | $169,200 | | | -105% |
Net loss | | | $(48,380,170) | | | $(7,284,962) | | | $(41,106,017) | | | 564% |
Changes in foreign currency translation adjustment | | | $110,264 | | | $(114,346) | | | $224,610 | | | -196% |
Net loss attributable to common shareholders | | | $(48,269,906) | | | $(7,399,308) | | | $(40,881,407) | | | 552% |
| | September 30, 2020 | | | December 31, 2019 | | | Change | |
Current assets | | | $4,573,684 | | | $3,518,224 | | | $1,055,460 |
Current liabilities | | | 5,914,154 | | | 6,934,725 | | | (1,020,571) |
Working capital | | | $(1,340,470) | | | $(3,416,501) | | | $2,076,031 |
| | For the Nine Months Ended September 30, | ||||
| | 2020 | | | 2019 | |
Net cash used in operating activities | | | $(738,678) | | | $(2,769,048) |
Net cash provided by (used in) investing activities | | | 482,517 | | | (895,406) |
Net cash provided by financing activities | | | 1,260,966 | | | 4,212,525 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net Loss | | | $(42,188,801) | | | $(1,255,569) | | | $(48,380,170) | | | $(7,284,962) |
Interest expense | | | 355,176 | | | 538,591 | | | 1,029,686 | | | 1,227,271 |
Depreciation & amortization | | | 1,049,235 | | | 1,179,597 | | | 3,320,641 | | | 3,516,418 |
Loss on impairment of intangible assets | | | 39,963,107 | | | — | | | 41,333,085 | | | — |
Share based compensation expense | | | 549,012 | | | 352,341 | | | 1,620,616 | | | 1,241,741 |
Change in fair value of convertible note | | | 321,915 | | | (430,766) | | | 1,104,856 | | | (288,425) |
Change in fair value of convertible note - related party | | | — | | | (491,442) | | | (498,233) | | | 213,828 |
Change in fair value of warrant liability | | | (67,039) | | | (1,224,601) | | | (682,717) | | | (3,462,746) |
Change in fair value of contingent consideration | | | 111,902 | | | — | | | 1,536,324 | | | 880,050 |
Loss (gain) on issuance of warrants | | | — | | | — | | | (2,000) | | | 787,209 |
Other expense | | | — | | | — | | | (37,507) | | | — |
Adjusted EBITDA | | | $94,800 | | | $(1,331,849) | | | $344,874 | | | $(3,169,616) |
| | Common Stock | | | Series A Preferred Stock | | | Series B Preferred Stock | | | |||||||||||
Name of Beneficial Owner | | | # of Shares | | | % Owned | | | # of Shares | | | % Owned | | | # of Shares | | | % Owned | | | Total % of Voting Power |
5% Beneficial Shareholders | | | | | | | | | | | | | | | |||||||
RSF4, LLC(1) | | | 33,330,734 | | | 22.7% | | | — | | | 0.0% | | | 13,784,201 | | | 100.0% | | | 29.1% |
RSF5, LLC(1) | | | 33,330,734 | | | 22.7% | | | — | | | — | | | 13,784,201 | | | 100.0% | | | 29.1% |
Rose Capital Fund I, LP | | | 33,330,734 | | | 22.7% | | | | | | | | | | | 29.1% | ||||
Officers and Directors | | | | | | | | | | | | | | | |||||||
Zachary Venegas(2) | | | 13,724,818 | | | 9.3% | | | 1,000,000 | | | 100.0% | | | — | | | 0.0% | | | 9.1% |
Scott Ogur(3) | | | 9,300,000 | | | 6.3% | | | | | 0.0% | | | — | | | 0.0% | | | 5.7% | |
Andrew Schweibold(1) | | | 33,330,734 | | | 22.7% | | | — | | | 0.0% | | | 13,784,201 | | | 100.0% | | | 29.1% |
Satyavrat Joshi | | | — | | | 0.0% | | | — | | | 0.0% | | | — | | | 0.0% | | | 0.0% |
Paul Hodges | | | 2,500,483 | | | 1.7% | | | — | | | 0.0% | | | — | | | 0.0% | | | 1.5% |
Garvis Toler III(4) | | | 200,000 | | | 0.1% | | | — | | | 0.0% | | | — | | | 0.0% | | | 0.1% |
Steve Janjic(5) | | | 661,796 | | | 0.4% | | | — | | | 0.0% | | | — | | | | | 0.4% | |
Officers and Directors as a Group (7 persons) | | | 42,772,690 | | | 40.6% | | | 1,000,000 | | | 100.0% | | | 13,784,201 | | | 0.0% | | | 46.0% |
(1) | RSF4, LLC, RSF5, LLC and Rose Capital Fund I, LP are solely managed by Rose Capital Fund I GP, LLC (“Rose GP”). Rose GP has the sole power to vote or sell the shares of our Series B Preferred Stock held by RSF4, LLC. Rose GP is owned 50% by Andrew Schweibold and 50% by Jonathan Rosenthal. As a result of the foregoing, Rose GP, Schweibold and Rosenthal may be deemed to be beneficial owners of the shares of our Series B Preferred Stock held by RSF4, LLC. |
(2) | Includes shares owned by Helix Opportunities, LLC, of which Mr. Venegas owns 100% and (ii) options to purchase up to 806,666 shares of Helix Common Stock. |
(3) | Consists of (i) his direct ownership of 9,000,000 shares of Helix Common Stock and (ii) options to purchase up to 300,000 shares of Helix Common Stock. |
(4) | Consists of options to purchase up to 200,000 shares of Helix Common Stock. |
(5) | Consists of (i) 586,796 shares of Common Stock and (ii) options to purchase up to 75,000 shares of Helix Common Stock. |
| | Year Ended December 31, | | | Nine Months Ended September 30, | |||||||
| | 2019 | | | 2018(1) | | | 2020 | | | 2019 | |
| | | | | | (Unaudited) | ||||||
Net sales | | | $— | | | — | | | $334,921 | | | $— |
Research and development | | | 827,474 | | | — | | | 1,465,550 | | | 544,375 |
Selling, general and administrative expenses | | | 464,698 | | | — | | | 1,300,350 | | | 224,278 |
Loss from Operations | | | (1,292,172) | | | — | | | (2,430,979) | | | (768,653) |
| | Year Ended December 31, | | | Nine Months Ended September 30, | |||||||
| | 2019 | | | 2018(1) | | | 2020 | | | 2019 | |
| | | | | | (Unaudited) | ||||||
Net sales | | | $— | | | — | | | $334,921 | | | $— |
Research and development | | | 827,474 | | | — | | | 1,465,550 | | | 544,375 |
Selling, general and administrative expenses | | | 464,698 | | | — | | | 1,300,350 | | | 224,278 |
Loss from Operations | | | (1,292,172) | | | — | | | (2,430,979) | | | (768,653) |
(1) | MOR was formed in May 2019 and therefore did not have any operations in 2018. |
| | Year Ended December 31, | | | Nine Months Ended September 30, | |||||||
| | 2019 | | | 2018 | | | 2020 | | | 2019 | |
| | | | | | (Unaudited) | ||||||
Net loss | | | $(1,288,842) | | | — | | | $(2,620,816) | | | $(766,674) |
Net cash used in operating activities | | | (1,032,372) | | | — | | | (2,350,224) | | | (764,725) |
Net cash (used in) provided by investing activities | | | (151,434) | | | — | | | 115,561 | | | (419,505) |
Net cash provided by financing activities | | | 1,184,300 | | | — | | | 3,315,700 | | | 1,184,300 |
Total change in cash and cash equivalents | | | $494 | | | — | | | $1,081,037 | | | $71 |
Name | | | Age | | | Position |
Daniel Barton(1) | | | 55 | | | Chief Executive Officer |
Adam Dublin(2) | | | 55 | | | Chief Strategy Officer, Manager |
Clifford Farren | | | 57 | | | Chief Financial Officer |
Martin J. Wygod(2) | | | 80 | | | Manager |
Max C. Wygod(2) | | | 33 | | | Manager |
(1) | To be a director of Forian at the effective time of the merger. |
(2) | Currently a director of Forian. |
Name and Principal Position | | Fiscal Year | | Salary ($) | | Bonus ($) | | Stock Awards ($)(1) | | Option Awards ($) | | Total ($) | | Fiscal Year | | Salary ($) | | Bonus ($)(1) | | Stock Awards ($)(2) | | All Other Compensation ($)(3) | | Total ($) | ||||||||||||
Max Wygod Executive Chairman and Co-Founder | | 2019 | | — | | — | | — | | — | | — | | 2020 | | 46,875 | | — | | 8,864 | | — | | 55,739 | ||||||||||||
| | | | | | | 2019 | | — | | — | | — | | — | | — | |||||||||||||||||||
| | | | | | |||||||||||||||||||||||||||||||
Adam Dublin Chief Strategy Officer and Co-Founder | | 2019 | | 12,500 | | — | | — | | — | | 12,500 | | 2020 | | 80,199 | | — | | 8,864 | | 33,500 | | 122,563 | ||||||||||||
| | | | | | | 2019 | | 12,500 | | — | | — | | — | | 12,500 | |||||||||||||||||||
| | | | | | |||||||||||||||||||||||||||||||
Dan Barton Chief Executive Officer | | 2019 | | 41,667 | | 20,625 | | 5,661 | | — | | 67,953 | | 2020 | | 309,577 | | — | | 5,145 | | — | | 314,722 | ||||||||||||
| 2019 | | 41,667 | | 20,625 | | 5,661 | | — | | 67,953 |
(1) | The bonuses earned in 2020, if any, is not calculable as of the date hereof. MOR expects to determine the bonuses payable, if any, by March 31, 2021. |
(2) | Amounts reflect the full grant date fair value of profits interests granted, computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of the profits interest awards in Note 5 to our financial statements included in this proxy statement/prospectus. |
(3) | Represents commissions earned in 2020. |
| | Stock Awards | ||||||||||
Name | | | Number of shares or units of stock that have not vested (#) | | | Market value of shares of units of stock that have not vested ($) | | | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | | | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) |
Max Wygod | | | — | | | — | | | — | | | — |
Adam Dublin | | | — | | | — | | | — | | | — |
Dan Barton | | | — | | | — | | | 200,753 | | | 5,661 |
| | Stock Awards | ||||||||||
Name | | | Number of shares or units of stock that have not vested (#) | | | Market value of shares of units of stock that have not vested ($) | | | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | | | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) |
Max Wygod | | | — | | | — | | | 209,588(1) | | | 6,032 |
Adam Dublin | | | — | | | — | | | 209,588(2) | | | 6,032 |
Dan Barton | | | — | | | — | | | 229,875(3) | | | 6,482 |
(1) | On August 31, 2020, Mr. Wygod was granted 307,963 restricted Class B units that vested 43% on the grant date and the remainder vests equally over the sixteen months following the grant date. |
(2) | On August 31, 2020, Mr. Dublin was granted 307,963 restricted Class B units that vested 43% on the grant date and the remainder vests equally over the sixteen months following the grant date. |
(3) | On August 30, 2019, Mr. Barton was granted 334,359 restricted Class B units that vested 25% on the grant date anniversary and the remainder vests equally over the following 36 months. |
Name | | | Age | | | Position |
Mark J. Adler, M.D. | | | 64 | | | Director |
Ian G. Banwell | | | 56 | | | Director |
Jennifer Hajj | | | 36 | | | Director |
Shahir Kassam-Adams | | | 61 | | | Director |
Stanley S. Trotman, Jr. | | | 77 | | | Director |
Alyssa F. Varadhan | | | 40 | | | Director |
Kristiina Vuori, M.D., Ph.D. | | | 53 | | | Director |
Name of Beneficial Owner | | | Number of Shares of Common Stock | | Percentage Of Class | | Number of Shares of Common Stock | | Percentage Of Class | |||
Mark J. Adler, M.D. | | 13,426 | | * | | 23,497 | | * | ||||
Ian G. Banwell(1) | | 56,394 | | * | | 98,691 | | * | ||||
Daniel Barton (2) | | 362,533 | | 2.1% | | 663,903 | | 2.1% | ||||
Adam Dublin (3) | | 1,292,349 | | 7.6% | | 2,312,364 | | 7.4% | ||||
Clifford Farren (4) | | 37,693 | | * | | 163,741 | | * | ||||
Jennifer Hajj | | — | | | — | | ||||||
Shahir Kassam-Adams | | 67,164 | | * | | 117,539 | | * | ||||
Scott Ogur(5) | | 606,778 | | 3.6% | | 465,000 | | 1.5% | ||||
Stanley S. Trotman, Jr. | | 13,426 | | * | | 23,497 | | * | ||||
Alyssa Varadhan | | — | | |||||||||
Kristiina Vuori | | 23,497 | | * | ||||||||
Martin J. Wygod(6) | | — | | | 1,896,941 | | 6.1% | |||||
Max C. Wygod(7) | | 3,307,645 | | 19.5% | | 2,260,287 | | 7.3% | ||||
Directors and Officers as a group (12 individuals) | | 5,757,408 | | 33.9% | ||||||||
Directors and Officers as a group (13 individuals) | | 8,048,957 | | 25.8% | ||||||||
Beneficial Owners of more than 5% of our common stock: | | | | | ||||||||
Phyllis Dublin(8) | | 1,030,128 | | 6.1% | | 1,802,757 | | 5.8% | ||||
Edward Spaniel(9) | | 1,343,302 | | 7.9% | | 2,405,395 | | 7.7% | ||||
Anthony Vuolo(10) | | 3,967,154 | | 12.7% |
* | Represents beneficial ownership of less than one percent (1%). |
(1) | Includes |
(2) | Includes 483,770 shares of restricted stock over which Mr. Barton has voting power. |
(3) | Includes 370,837 shares of restricted stock over which Mr. Dublin has voting power. |
(4) | Includes 140,244 shares of restricted stock over which Mr. Farren has voting power. |
(5) | Includes (i) 450,000 shares held by directly by Mr. Ogur | (ii) |
(6) | Includes 1,896,941 shares transferred by Martin Wygod to family trusts of which Martin Wygod does not retain voting or dispositive power but Martin Wygod may be deemed beneficial owner of such shares. |
(7) | Includes (i) | and (iii) |
(8) | These shares are held by the The Adam H. Dublin 2019 Family Trust of which Ms. Dublin is co-trustee and has joint investment and | dispositive power. |
(9) | Includes (i) |
(10) | Includes (i) 3,605,514 shares held by the Max Wygod Dynasty Trust of which Mr. Vuolo is trustee and has sole investment and dispositive power and Mr. Vuolo disclaims beneficial ownership of these shares, (ii) 340,604 shares held directly by Mr. Vuolo and (iii) 21,036 shares of restricted stock over which Mr. |
(1) | the Helix merger proposal; |
(2) | the Helix merger-related compensation proposal; and |
(3) | the Helix adjournment proposal. |
| | Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | | | MOR Historical | | Pro Forma Adjustments | | Forian/MOR Pro Forma | | Helix Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | |||||||||||
| | MOR | | Helix | | (See Note 6) | | | | | | (See Note 6) | | | | (See Note 6) | | | ||||||||||||
ASSETS | | | | | | | | | | | ||||||||||||||||||||
Current assets: | | | | | | | | | | | ||||||||||||||||||||
Cash and cash equivalents | | $1,081 | | $1,677 | | $13,000(a) | | $14,331 | | $1,081 | | $13,000(a) | | $14,081 | | $1,677 | | $(486)(b) | | $14,381 | ||||||||||
| | | (486)(b) | | ||||||||||||||||||||||||||
| | | 250(c) | | | | | | | 300(c) | | |||||||||||||||||||
| | | (1,191)(d) | | | | | | | (1,191)(d) | | |||||||||||||||||||
Accounts receivable, net | | — | | 745 | | — | | 745 | | — | | | | 745 | | — | | 745 | ||||||||||||
Prepaid expenses and other current assets | | 275 | | 1,271 | | — | | 1,546 | | 275 | | | 275 | | 1,271 | | — | | 1,546 | |||||||||||
Costs & earnings in excess of billings | | — | | 281 | | — | | 281 | | — | | | | 281 | | — | | 281 | ||||||||||||
Other receivables | | — | | 600 | | | 600 | | — | | | | 600 | | | 600 | ||||||||||||||
Total current assets | | 1,356 | | 4,574 | | 11,573 | | 17,503 | | 1,356 | | 13,000 | | 14,356 | | 4,574 | | (1,377) | | 17,553 | ||||||||||
Property, plant and equipment, net | | 33 | | 1,359 | | — | | 1,392 | | 33 | | | 33 | | 1,359 | | — | | 1,392 | |||||||||||
Intangible assets, net | | — | | 9,768 | | 17,838(e) | | 27,606 | | — | | | | 9,768 | | 2,068(e) | | 11,836 | ||||||||||||
Goodwill | | — | | 9,743 | | (5,841)(f) | | 3,902 | | — | | | | 9,743 | | (6,964)(f) | | 2,779 | ||||||||||||
Deposits and other assets | | — | | 904 | | — | | 904 | | — | | | | 904 | | — | | 904 | ||||||||||||
Promissory note receivable | | — | | 75 | | — | | 75 | | — | | | | 75 | | — | | 75 | ||||||||||||
Total assets | | $1,389 | | $26,423 | | $23,570 | | $51,382 | | $1,389 | | $13,000 | | $14,389 | | $26,423 | | $(6,273) | | $34,539 | ||||||||||
| | | | | | | | | | |||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | ||||||||||||||||||||
Current liabilities: | | | | | | | | | | | ||||||||||||||||||||
Accounts payable and accrued expense | | $779 | | $2,849 | | — | | $3,628 | | $779 | | | $779 | | $2,849 | | | $3,628 | ||||||||||||
Billings in excess of costs | | — | | 68 | | — | | 68 | | — | | | | 68 | | — | | 68 | ||||||||||||
Notes payable, current portion | | — | | 497 | | (486)(b) | | 11 | | — | | | | 497 | | (486)(b) | | 11 | ||||||||||||
Convertible notes payable, net of discount | | — | | 1,126 | | (1,126)(b) | | — | | — | | | | 1,126 | | (1,126)(b) | | — | ||||||||||||
Convertible notes payable, net of discount – related party | | — | | 1,285 | | (1,285)(b) | | — | | — | | | | 1,285 | | (1,285)(b) | | — | ||||||||||||
Warrant liability | | — | | 89 | | — | | 89 | | — | | | | 89 | | (89)(g) | | |||||||||||||
Total current liabilities | | 779 | | 5,914 | | (2,897) | | 3,796 | | 779 | | | 779 | | 5,914 | | (2,986) | | 3,707 | |||||||||||
Notes payable and financing arrangements, net of current position | | — | | 32 | | — | | 32 | | — | | | | 32 | | — | | 32 | ||||||||||||
Convertible notes payable, net of discount and current portion | | — | | 385 | | (385)(b) | | — | | — | | | | 385 | | (385)(b) | | — | ||||||||||||
Other long-term liabilities | | — | | 622 | | — | | 622 | | — | | | | 622 | | — | | 622 | ||||||||||||
Total liabilities | | $779 | | $6,953 | | $(3,282) | | $4,450 | | 779 | | | 779 | | 6,953 | | (3,371) | | 4,361 | |||||||||||
| | | | | | | | | | |||||||||||||||||||||
Stockholders’ equity: | | | | | | | | | | | ||||||||||||||||||||
Members Equity | | 4,520 | | — | | (4,520)(g) | | — | | 4,520 | | 13,000(a) | | — | | — | | | — | |||||||||||
| | (17,520)(g) | | | | | ||||||||||||||||||||||||
Preferred stock, Class A | | — | | 1 | | (1)(g) | | — | | — | | | | 1 | | (1)(g) | | — | ||||||||||||
Preferred stock, Class B | | — | | 14 | | (14)(g) | | — | | — | | | | 14 | | (14)(g) | | — | ||||||||||||
Common stock | | — | | 116 | | 10(d) | | 15 | | | 20(g) | | 20 | | 116 | | 3(b) | | 28 | |||||||||||
| | | 3(b) | | ||||||||||||||||||||||||||
| | | 2(c) | | | | | | | 2(c) | | |||||||||||||||||||
| | | (116)(g) | | | | | | | (113)(g) | | |||||||||||||||||||
Additional paid-in capital | | — | | 103,477 | | 17,510(g) | | 52,018 | | — | | 17,500(g) | | 17,500 | | 103,477 | | 2,793(b) | | 35,251 | ||||||||||
| | | 2,793(b) | ��� | | | | | | | 298(c) | | ||||||||||||||||||
| | | 248(c) | | | | | | | (88,817)(g) | | |||||||||||||||||||
| | | (72,010)(g) | | | | | | | | ||||||||||||||||||||
Accumulated other comprehensive income | | | 30 | | (30)(g) | | — | | | | | 30 | | (30)(g) | | — | ||||||||||||||
Accumulated deficit | | (3,910) | | (84,168) | | 84,168(g) | | (5,101) | | (3,910) | | | (3,910) | | (84,168) | | 84,168(g) | | (5,101) | |||||||||||
| | | (1,191)(d) | | | | | | | (1,191)(d) | | |||||||||||||||||||
Total stockholders’ equity | | 610 | | 19,470 | | 26,852 | | 46,932 | | 610 | | 13,000 | | 13,610 | | 19,470 | | (2,902) | | 30,178 | ||||||||||
Total liabilities and stockholders’ equity | | $1,389 | | $26,423 | | $23,570 | | $51,382 | | $1,389 | | $13,000 | | $14,389 | | $26,423 | | $(6,273) | | $34,539 |
| | Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | | | Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | |||||||||||
| | MOR | | Helix | | (See Note 7) | | | | | MOR | | Helix | | (See Note 7) | | | |||||||
Net sales | | $— | | $10,863 | | $— | | $10,863 | | $— | | $10,863 | | $— | | $10,863 | ||||||||
Cost of Goods Sold | | — | | 4,685 | | — | | 4,685 | | — | | 4,685 | | — | | 4,685 | ||||||||
Gross margin | | — | | 6,178 | | — | | 6,178 | | — | | 6,178 | | — | | 6,178 | ||||||||
| | | | | | | | |||||||||||||||||
Operating expenses | | 1,291 | | 11,389 | | (192)(a) | | 12,488 | | 1,291 | | 11,389 | | (192)(a) | | 12,488 | ||||||||
Depreciation and amortization | | 1 | | 4,726 | | 1,171(c) | | 5,898 | | 1 | | 4,726 | | (2,169)(c) | | 2,558 | ||||||||
Loss Before Interest and Taxes | | (1,292) | | (9,937) | | (979) | | (12,208) | | (1,292) | | (9,937) | | 2,361 | | (8,868) | ||||||||
| | | | | | | | |||||||||||||||||
Change in fair value of convertible note | | — | | 497 | | (497)(d) | | — | | — | | 497 | | (497)(d) | | — | ||||||||
Change in fair value of convertible note - related party | | — | | (284) | | 284(e) | | — | | — | | (284) | | 284(e) | | — | ||||||||
Change in fair value of warrant liability | | — | | 3,813 | | — | | 3,813 | | — | | 3,813 | | — | | 3,813 | ||||||||
Change in fair value of contingent consideration | | — | | (880) | | — | | (880) | | — | | (880) | | — | | (880) | ||||||||
Loss on issuance of warrants | | — | | (825) | | — | | (825) | | — | | (825) | | — | | (825) | ||||||||
Interest income/(expense) | | 3 | | (1,690) | | 1,670(g) | | (17) | | 3 | | (1,690) | | 1,670(g) | | (17) | ||||||||
Other income | | — | | 17 | | — | | 17 | | — | | 17 | | — | | 17 | ||||||||
Net Loss from Continuing Operations | | $(1,289) | | $(9,289) | | $479 | | $(10,100) | | $(1,289) | | $(9,289) | | $3,818 | | $(6,760) | ||||||||
| | | | | | | | |||||||||||||||||
Loss per share attributable to common shareholders: | | | | | | | | | ||||||||||||||||
Basic and Diluted | | $— | | $(0.12) | | $— | | $(0.74) | | $(0.14) | | $(0.12) | | $— | | $(0.42) | ||||||||
| | | | | | | | |||||||||||||||||
Weighted average common shares used in per share calculations: | | | | | | | | | ||||||||||||||||
Basic and Diluted | | — | | 80,207 | | (66,525) | | 13,682 | | 9,505 | | 80,207 | | (73,788) | | 15,924 |
| | Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | | | Historical | | Pro Forma Adjustments | | Pro Forma Condensed Combined | |||||||||||
| | MOR | | Helix | | (See Note 7) | | | | | MOR | | Helix | | (See Note 7) | | | |||||||
Net sales | | $335 | | $8,800 | | $— | | $9,135 | | $335 | | $8,800 | | $— | | $9,135 | ||||||||
Cost of Goods Sold | | — | | 2,848 | | — | | 2,848 | | — | | 2,848 | | — | | 2,848 | ||||||||
Gross margin | | 335 | | 5,952 | | — | | 6,287 | | 335 | | 5,952 | | — | | 6,287 | ||||||||
| | | | | | | | |||||||||||||||||
Operating expenses | | 2,946 | | 7,402 | | (187)(a) | | 9,852 | | 2,946 | | 7,402 | | (187)(a) | | 9,852 | ||||||||
| | | (114)(b) | | | | | (114)(b) | | |||||||||||||||
| | | (195)(h) | | | | | (195)(h) | | |||||||||||||||
Depreciation and amortization | | 5 | | 3,321 | | 1,133(c) | | 4,458 | | 5 | | 3,321 | | (1,372)(c) | | 1,954 | ||||||||
Impairment of intangible assets | | — | | 41,333 | | — | | 41,333 | | — | | 41,333 | | — | | 41,333 | ||||||||
Loss Before Interest and Taxes | | (2,616) | | (46,104) | | 1,026 | | (49,356) | | (2,616) | | (46,104) | | 1,868 | | (46,852) | ||||||||
| | | | | | | | |||||||||||||||||
Change in fair value of convertible note | | — | | (1,105) | | 1,105(d) | | — | | — | | (1,105) | | 1,105(d) | | — | ||||||||
Change in fair value of convertible note - related party | | — | | 498 | | (498)(e) | | — | | — | | 498 | | (498)(e) | | — | ||||||||
Change in fair value of warrant liability | | — | | 683 | | — | | 683 | | — | | 683 | | — | | 683 | ||||||||
Gain on asset disposal | | — | | 240 | | — | | 240 | | — | | 240 | | — | | 240 | ||||||||
Loss on conversion of convertible note | | — | | (1,536) | | 1,536(f) | | — | | — | | (1,536) | | 1,536(f) | | — | ||||||||
Gain on reduction of obligation pursuant to acquisition | | — | | 2 | | — | | 2 | | — | | 2 | | — | | 2 | ||||||||
Interest income/(expense) | | — | | (1,030) | | 835(g) | | (200) | | (5) | | (1,030) | | 835(g) | | (200) | ||||||||
Other income/(expense) | | (5) | | 38 | | — | | 38 | | — | | 38 | | — | | 38 | ||||||||
Net Loss from Continuing Operations | | $(2,621) | | $(48,315) | | $2,341 | | $(48,595) | | $(2,621) | | $(48,314) | | $4,846 | | $(46,089) | ||||||||
| | | | | | | | |||||||||||||||||
Loss per share attributable to common shareholders: | | | | | | | | | ||||||||||||||||
Basic and Diluted | | $— | | $(0.46) | | $— | | $(3.38) | | $(0.15) | | $(0.46) | | $— | | $(1.80) | ||||||||
| | | | | | | | |||||||||||||||||
Weighted average common shares used in per share calculations: | | | | | | | | | ||||||||||||||||
Basic and Diluted | | — | | 105,403 | | (91,032) | | 14,371 | | 17,980 | | 105,403 | | (97,724) | | 25,659 |
1. | Description of the Merger |
2. | Basis of Presentation |
3. | Accounting Policies |
4. | Helix Reclassifications |
a. | Operating Expenses – operating expenses are consolidated to a single expense result to enable comparability across time periods for the combined businesses. Helix and MOR have historically categorized operating expenses differently and consolidating the two different approaches standardizes the presentation. |
5. | Reverse acquisition and purchase price allocation |
(in thousands, except per share amounts) | | | Amounts |
Proceeds from MOR Private Placement completed December 2020 | | | $13,000 |
MOR Partnership Units issued in Private Placement | | | 3,389 |
Fair Value per MOR Partnership Unit | | | $3.836 |
MOR Exchange Ratio | | | 1.7776 |
Fair Value of Forian Common Stock per share based upon MOR Private Placement and MOR Exchange Ratio | | | $2.158 |
Purchase consideration | | | Amounts |
Helix common shares outstanding as of September 30, 2020 | | | 11 |
Helix common shares issued in exercise of warrants after September 30, 2020 | | | |
Helix common shares to be issued to redeem Convertible Preferred Stock | | | |
Helix common share to be issued to redeem Convertible Notes | | | 3 |
Total shares of Helix common stock assumed to be outstanding as of the closing of the merger | | | 16 |
Helix | | | 0.050 |
Forian shares to be issued at the closing of | | | 8,229.6 |
Forian fair value per share | | | $ |
Fair value of total estimated purchase consideration transferred | | | $ |
| | Amounts | |
Book value of net assets acquired from continuing operations as of September 30, 2020 | | | $ |
Less: | | | (9,743) |
Book value of net assets acquired as of September 30, 2020 | | | |
Adjustments to reflect preliminary fair value of assets acquired and liabilities assumed: | | | |
Intangibles, net (see Note | | | |
Goodwill | | | |
Fair value of total estimated consideration transferred | | | $ |
| | ||
| | $9,743 | |
| | ||
Net pro forma adjustment to goodwill | | | $( |
(thousands in USD) | | | Estimated Remaining Useful Life | | Estimated Fair Value | | Incremental Amortization Expense for the Nine-Months Ended June 30, 2020 | | Incremental Amortization Expense for the Year Ended December 31, 2019 | | | Estimated Remaining Useful Life | | Estimated Fair Value | | Change in Amortization Expense for the Nine-Months Ended September 30, 2020 | | Change in Amortization Expense for the Year Ended December 31, 2019 | ||||||
Customer Lists | | 5 years | | $12,671 | | $498 | | $244 | | 5 years | | $5,238 | | (618) | | $(1,243) | ||||||||
Software | | 4.5 years | | 14,224 | | 640 | | 931 | | 4.5 years | | 6,186 | | (699) | | (855) | ||||||||
Tradenames | | 4.5 years | | 711 | | (5) | | (5) | | 4.5 years | | 412 | | (55) | | (71) | ||||||||
Total | | | $27,606 | | $1,133 | | $1,170 | | | $11,836 | | $(1,372) | | $(2,169) |
Share price sensitivity analysis (thousands in USD) | | Estimate | | 10% increase in Helix share price | | 10% decrease in Helix share price | | Estimate | | 10% increase in Forian share price | | 10% decrease in Forian share price | ||||||
Preliminary fair value of purchase consideration | | $34,513 | | $37,965 | | $31,063 | | $17,759 | | $19,535 | | $15,983 | ||||||
Preliminary goodwill from the merger | | $3,902 | | $7,353 | | $451 | ||||||||||||
Goodwill | | $2,779 | | $4,555 | | $1,003 |
6. | Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments |
(a) | Represents the net proceeds from MOR's private placement of $13,000 in exchange for 26% equity interest in |
(b) | Represents repayment of $486 in Helix notes payable for cash and the conversion of $2,793 of Helix Convertible Notes and related accrued interest into Helix common stock which occurred after September 30, 2020. |
(c) | Represents the exercise of |
(d) | Represents $1,500 of transaction costs expected to be incurred in connection with the merger, of which approximately $309 was incurred or accrued by MOR on the balance sheet as of September 30, 2020. The remaining transaction costs of $1,191 not reflected in the balance sheet as of September 30, 2020 are reflected as a decrease to cash and increase to accumulated deficit. |
(e) | Represents the difference between the preliminary estimated fair value of Helix intangible assets of |
(f) | Represents the difference between the historical carrying value of Helix goodwill of $9,743 as of September 30, 2020 less the preliminary estimated fair value of goodwill of |
(g) | Represents the |
( | | | Amount |
MOR LLC interests outstanding on September 30, 2020 | | | 8,119 |
Additional MOR LLC interests issued subsequent to September 30, 2020 | | | 3,389 |
Total MOR LLC Interests outstanding as of merger close | | | 11,508 |
MOR Exchange Ratio | | | 1.7776 |
Total Forian Shares issued at merger close to MOR investors | | | 20,456 |
| | ||
Shares of Helix common stock outstanding on September 30, 2020 | | | |
Additional Helix common stock issued subsequent to September 30, 2020 | | | |
Total shares of Helix common stock outstanding as of merger close | | | |
Helix Exchange Ratio | | | |
Total Forian Shares issued at merger close to Helix Shareholders | | | |
| | ||
Total Forian Shares issued in Merger | | | |
Par value per common share | | | 0.001 |
Common stock total par value at merger | | | $ |
( | | | Amount |
Merger consideration | | | $ |
Elimination of Helix historical additional paid-in capital, net of amounts as disclosed in note 6(b) and 6(c) | | | |
Par value common stock issued to Helix Shareholders | | | ( |
Total pro forma merger adjustments | | | $( |
( | | | Amount |
Elimination of historical Helix accumulated deficit | | $84,168 |
( | | | Amount |
Pro forma merger adjustments: | | | |
Elimination of historical Helix accumulated other comprehensive income | | | $30 |
7. | Unaudited Pro Forma Condensed Combined Statement of Operations Adjustments |
(a) | Represents the elimination of a management fee of |
(b) | Represents the elimination of |
(c) | Represents |
(d) | Represents the elimination of |
(e) | Represents the elimination of |
(f) | Represents the elimination of a loss of $1,536 for the nine-months ended September 30, 2020 related to a loss on a Helix convertible note that will not recur on an ongoing basis. |
(g) | Represents the elimination of the historical interest expense of $835 and $1,670 for the nine-months ended September 30, 2020 and for the year ended December 31, 2019, respectively, related to conversion of Helix convertible notes to Helix common stock. The convertible notes were converted by the note holders |
(h) | Represents the elimination of $195 for the nine-months ended September 30, 2020 relating to merger transaction related expenses incurred by MOR that will not recur on an ongoing basis. |
8. | Loss per Share |
(thousands in USD except share and per share amounts) | | Nine-months ended September 30, 2020 | | Year ended December 31, 2019 | | Nine-months ended September 30, 2020 | | Year ended December 31, 2019 | ||||
Weighted average MOR LLC interests outstanding as of September 30, 2020 and December 31, 2019 – basic | | 10,115 | | 5,347 | ||||||||
MOR Exchange Ratio | | 1.7776 | | 1.7776 | ||||||||
Pro Forma Forian Shares issued to MOR LLC interests | | 17,980 | | 9,505 | ||||||||
Weighted average Helix shares outstanding as of September 30, 2020 and December 31, 2019 – basic | | 105,403 | | 80,207 | | 105,403 | | 80,207 | ||||
Additional Helix shares issued to convertible preferred holders as condition to the closing of the merger | | 15,464 | | 15,464 | | 15,464 | | 15,464 | ||||
Additional Helix shares issued to convertible note holders that have converted to common stock through November 20, 2020 | | 32,505 | | 32,505 | ||||||||
Additional Helix shares issued to convertible note holders that have converted to common stock after September 30, 2020 | | 32,715 | | 32,715 | ||||||||
Total Pro Forma Weighted Average Helix Shares | | 153,372 | | 128,176 | | 153,582 | | 128,386 | ||||
Helix Exchange Ratio | | 0.02731 | | 0.02731 | | 0.05 | | 0.05 | ||||
Pro Forma Forian Shares issued to Helix Shareholders | | 4,189 | | 3,500 | | 7,679 | | 6,419 | ||||
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Weighted average MOR LLC interests outstanding as of September 30, 2020 and December 31, 2019 – basic | | 7,098 | | 7,098 | ||||||||
Additional MOR LLC interests issued in relation to $13,000 financing required as a condition to closing the merger | | 3,389 | | 3,389 | ||||||||
Total Pro Forma Weighted Average MOR Shares | | 10,487 | | 10,487 | ||||||||
MOR Exchange Ratio | | 0.9709 | | 0.9709 | ||||||||
Pro Forma Forian Shares issued to MOR LLC interests | | 10,182 | | 10,182 | ||||||||
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Pro forma Forian Weighted Average Shares Outstanding | | 14,371 | | 13,682 | | 25,659 | | 15,924 |
Helix | | | MOR | | | Forian |
Authorized Capital Stock; Units | ||||||
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The aggregate number of shares which Helix has the authority to issue is 220,000,000 shares consisting of (i) 200,000 shares of common stock, par value $0.001 per share, and (ii) 20,000,000 shares of preferred stock, par value $0.001 each. | | | The ownership of MOR is represented by units. The aggregate number of units that MOR has the authority to issue is 8,000,000 Class A Units, 3,000,000 Class B Units and 3,500,000 Series S Preferred Units. | | | The aggregate number of shares which Forian has the authority to issue is 100,000,000 shares consisting of (i) 5,000,000 shares of preferred stock, par value $0.001 each, and (ii) 95,000,000 shares of common stock, par value $0.001 each. |
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The number of shares of Series A Preferred Stock authorized is one million (1,000,000) shares. | | |||||
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The number of shares of Series B Preferred Stock authorized is seventeen million (17,000,000) shares. | | | | |
Helix | | | MOR | | | Forian |
Common Stock | | | | | ||
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Except as stated in the articles of incorporation, each outstanding share, regardless of class, is entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter voted on at a shareholders' meeting in person or by proxy. | | | Class A Units. Holders of Class A Units have, together with holders of Series S Preferred Units, full voting power on all manners requiring member action, each Class A Unit being entitled to one vote for each unit held of record, in person or by written proxy. Holders of Class A Units also have certain rights of first offer and rights of first refusal, and, subject to rights of holders of Series S Preferred Units, are entitled to distributions at the discretion of the board of managers on a pro rata basis with holders of the Class B Units. Holders of Class A Units may appoint two members of the Board of Managers of MOR, subject to the terms of the MOR limited liability company agreement Class B Units. Class B Units are issued in exchange for services or upon the exercise of options granted in consideration of services. Class B Units may be issued as a profits interest. Holders of Class B Units have no voting rights. Holders of Class B Units, subject to rights of holders of Series S Preferred Units, are entitled to distributions at the discretion of the board of managers on a pro rata basis with holders of the Class A Units. | | | Subject to the rights of the holders of Forian preferred stock and except as provided by the DGCL, the holders of Forian common stock have full voting powers on all matters requiring stockholder action, each share of such common stock being entitled to one vote for each share held of record, in person or by written proxy. |
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Preferred Stock | | | | | ||
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The Helix board is authorized to from time to time issue one or more series of preferred stock in series and to establish the terms of such series. Each holder of shares of the Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of the Common Stock into which such shares of the Series A Preferred Stock are then convertible pursuant to Article VI | | | Series S Preferred Units. Holders of Series S Preferred Units have, together with holders of Class A Units, full voting power on all manners requiring member action, each Series S Preferred Unit being entitled to one vote for each unit held of record, in person or by written proxy. Holders of Series S Preferred also have certain rights of first offer and rights of first refusal, and are entitled to distributions at the discretion of the board of | | | The Forian board is authorized to from time to time issue one or more series of preferred stock in series and to establish the terms of such series. |
Helix | | | MOR | | | Forian |
of the AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF CLASS A PREFERRED CONVERTIBLE SUPER MAJORITY VOTING STOCK, $.001 PAR VALUE PER SHARE. Each holder of shares of the Series B Preferred Stock shall be entitled to the number of votes equal to the number of shares of the Common Stock into which such shares of the Series A Preferred Stock are then convertible pursuant to Article VI of the CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES B PREFERRED STOCK, $.001 PAR VALUE PER SHARE. | | | managers that, following the payment in full of certain unrecovered capital contributions made by holders of the Series S preferred Units, on a pro rata basis with holders of the Class A and B Units. Holders of Series S Preferred Units may appoint one member of the Board of Managers of MOR, subject to the terms of the MOR limited liability company agreement. In addition to the Series S Preferred Units, the Board of Managers of MOR may, upon the approval holders of a majority of Class A Units and Series S Preferred Units, create additional classes of units with designations, preferences and other special rights as the Board of Managers of MOR may determine. | | | |
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Number and Qualification of Directors | ||||||
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Subject to the provisions of the Articles of Incorporation, the number of directors shall be fixed by resolution of the Board of Directors from time to time and may be increased or decreased by resolution adopted by the Board of Directors from time to time, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The number of directors shall be no less than three directors in order to carry out any business other than appointment of a replacement director to fill a vacancy on the Board. Directors shall be natural persons at least eighteen years old but need not be residents of the State of Delaware or shareholders of the Corporation. | | | The MOR board of managers consists of five managers. | | | The Forian board will consist of 11 members. |
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Helix | | | MOR | | | Forian |
Structure of Board of Directors; Term of Directors; Election of Directors | ||||||
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The Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. Each director shall be elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and qualified unless the directors are appointed to staggered terms as provided in the Articles of Incorporation. In such case, the terms of the directors shall expire as set forth in the Articles of Incorporation. | | | MOR’s limited liability company agreement provides that one of the managers shall be elected by holders of the Series S Preferred Units. Two of the managers shall be appointed by the holders of the Class A Units. Two managers shall be elected by the holders of the Class A Units and the Series S Preferred Units, voting together as a single class, which two managers shall include the CEO of MOR and one individual designated by a majority of the other managers. | | | Stockholders shall elect directors, each of whom shall hold office for an initial term ending in either 2021, 2022 or 2023, and thereafter for a term of three years or until his or her successor is duly elected and qualified, subject to such director's earlier death, resignation, disqualification or removal. At all meetings of stockholders for the election of directors at which a quorum is present, a plurality of the votes cast shall be sufficient to elect. The chairman of the Forian board will be determined by the majority vote of the directors who are independent under Nasdaq and applicable SEC rules. |
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Removal of Directors | ||||||
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Any director may be removed by the shareholders of the voting group that elected the director, with or without cause, at a meeting called, Notice of which includes that purpose. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal. | | | MOR’s limited liability company agreement provides that each manager may be removed with or without cause by the members or managers entitled to elect such manager, provided that the CEO shall serve as a manager for so long as such person is CEO. | | | The DGCL provides, subject to the rights of the holders of any class or series of preferred stock, any director, or the entire Forian board, may be removed from office at any time, with or without cause only by the affirmative vote of the holders of a majority of the voting power of all of the shares of capital stock of Forian then entitled to vote generally in the election of directors, voting as a single class. |
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Vacancies on the Board of Directors | ||||||
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If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors: (1) The shareholders may fill the vacancy at the next annual meeting or at a special meeting called for that purpose; or (2) The Board of Directors may fill the vacancy; or (3) If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote | | | MOR’s limited liability company agreement provides that any vacancy shall be filled such that the composition of the board of managers is consistent with the description in “Structure of Board of Directors; Term of Directors; Election of Directors; Board of Managers” above. | | | The Forian charter and bylaws provide that, except as otherwise required by law and subject to the rights of the holders of any class or series of preferred stock to elect directors, any vacancies on the Forian board for any reason, including from the death, resignation, disqualification or removal of any director, and any newly created directorships resulting by reason of any increase in the number of directors shall be |
Helix | | | MOR | | | Forian |
of a majority of all the directors remaining in office. If the vacant office was held by a director elected by a voting group of shareholders, then, if one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders. A vacancy that will occur at a specific later date, by reason of a resignation, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. | | | | | filled by the Forian board, acting by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by stockholders. Any directors elected to fill a vacancy shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. | |
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Stockholder Action by Written Consent | ||||||
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Written consent is permitted under the DGCL. | | | MOR’s limited liability company agreement provides that any action required or permitted to be taken at a meeting may be taken without a meeting if a written consent authorizing such action is signed by the Members required to approve such action. | | | Forian’s charter provides that any action required or permitted to be taken by the Forian stockholders must be effected at a duly called annual or special meeting of Forian stockholders and may not be effected by any consent in writing by such stockholders. |
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Quorum | ||||||
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Helix’s Bylaws provide that shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. One-third of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on the matter. Helix’s Bylaws provide that a majority of the number of directors shall constitute a quorum for the transaction of business at all | | | MOR’s limited liability company agreement provides that the participation of a majority in interest of holders of Class A Units and Series S Preferred Units, acting as a single class, shall constitute a quorum at any meeting. MOR’s limited liability company agreement provides that a majority of the total number of managers shall constitute a quorum for board action. | | | Forian’s bylaws provide that, unless otherwise provided by statute, the holders of one-third of the outstanding shares of stock entitled to cast of votes at a meeting, present either in person, by remote communication or by proxy, constitutes a quorum at such meeting. Forian’s bylaws provide that a majority of the entire board constitutes a quorum for board action, except as it relates to indemnification of directors, in |
Helix | | | MOR | | | Forian |
meetings of the Board of Directors. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise specifically required by law. | | | | | which case one-third of the entire board constitutes a quorum. | |
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Special Meetings of Stockholders | ||||||
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Helix’s Bylaws provide that a special shareholders' meeting for any purpose or purposes, may be called by the Board of Directors or the president. The Corporation shall also hold a special shareholders' meeting in the event it receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing not less than one-tenth of all of the votes entitled to be cast on any issue at the meeting. Special meetings shall be held at the principal office of the Corporation or at such other place as the Board of Directors or the president may determine. | | | MOR’s limited liability company agreement provides that meetings of the members may be called by the board of managers or at the request of the holders of a majority of the Class A Units and Series S Preferred Units, acting as a single class. | | | The Forian bylaws provide that except as otherwise required by law and subject to the rights of the holders of any class or series of preferred stock, special meetings of stockholders of Forian may be called by (i) the chairperson of the board of directors, (ii) the CEO, (iii) the majority of the board of directors, or (iv) by a committee of the board which has been duly designated by the board and whose power and authority include the power to call such meetings, but such special meetings may not be called by another person. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to Forian’s notice of meeting. |
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Notice of Stockholder Meetings | ||||||
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Helix’s Bylaws provide that the secretary shall give notice to shareholders of the date, time, and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the date of the meeting; except that, if the articles of incorporation are to be amended to increase the number of authorized shares, at least thirty days' notice shall be given. Except as otherwise required by the Delaware General Corporation Law, the secretary shall be required to give such notice only to shareholders entitled to vote at the meeting. | | | MOR’s limited liability company agreement provides that notice of each meeting of the members shall be given not less five (5) and not more than thirty (30) calendar days before the date of the meeting to each member entitled to vote thereat. | | | In accordance with the DGCL, Forian’s bylaws provide that notice of each meeting of stockholders, stating the place, date and hour of the meeting, and in the case of special meetings, the purpose or purposes thereof, shall be sent not less than ten (10) nor more than sixty (60) days before the date of such meeting to each stockholder entitled to vote thereat. |
Helix | | | MOR | | | Forian |
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Helix’s Bylaws provide that any shareholder may nominate a person to stand for election to the Board of Directors provided such shareholder provides written notification of the intention to nominate such persons at the next shareholder meeting not less than 90 days in advance of such meeting, and provided further such notice is accompanied by information regarding the proposed nominee meeting the requirements of part III of SEC Regulation SB or Regulation SK and information regarding all direct and indirect business or personal relationships between the shareholder and the proposed nominee. | | | None. | | | The Forian bylaws provide that for nominations and other business to be properly brought at a meeting of stockholders, a stockholder of record at such time who is entitled to vote at the meeting must have given timely notice; provided that only such business as has been brought before a special meeting pursuant to Forian’s notice of such meeting may be conducted at such special meeting. For proposals and nominations to be timely, a stockholder’s notice of nominations to be made at an annual meeting must be delivered to, or mailed and received at, the principal executive offices of Forian not less than ninety (90) days nor more than 120 days prior to the one (1)-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than thirty (30) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of such annual meeting was first made. For a notice of nomination to be timely in connection with a special meeting called by Forian for the purpose of electing directors, such notice must be delivered to, or mailed to and received at, the principal executive offices of Forian not later than the 90th day prior to such special meeting, or if later, the 10th day following the |
Helix | | | MOR | | | Forian |
| | | | day on which public disclosure of the date of such special meeting was first made. | ||
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Charter Amendments | ||||||
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Helix’s Bylaws provides that notice of an annual shareholders' meeting need not include a description of the purpose or purposes for which the meeting is called unless a purpose of the meeting is to consider an amendment to the articles of incorporation. Helix must amend the Charter pursuant to the DGCL. The DGCL provides that an amendment to a corporation’s certificate of incorporation requires that (i) the board of directors adopt a resolution setting forth the proposed amendment and either call a special meeting of the stockholders entitled to vote in respect thereof for consideration of such amendment or direct that the amendment be considered at the next annual meeting of the stockholders (provided a meeting or vote is required pursuant to Section 242 of the DGCL) and (ii) the stockholders approve the amendment by a majority of outstanding shares entitled to vote (and a majority of the outstanding shares of each class entitled to vote, if any). | | | The Delaware Limited Liability Company Act provides that an amendment to a limited liability company’s certificate of formation may be amended by filing a certificate of amendment at any time for any proper purpose. | | | The DGCL provides that an amendment to a corporation’s certificate of incorporation requires that (i) the board of directors adopt a resolution setting forth the proposed amendment and either call a special meeting of the stockholders entitled to vote in respect thereof for consideration of such amendment or direct that the amendment be considered at the next annual meeting of the stockholders (provided a meeting or vote is required pursuant to Section 242 of the DGCL) and (ii) the stockholders approve the amendment by a majority of outstanding shares entitled to vote (and a majority of the outstanding shares of each class entitled to vote, if any). The Forian charter provides that Forian reserves the right to amend, alter, change or repeal any provision contained in its charter in the manner now or hereafter prescribed by the DGCL and all rights conferred on stockholders therein granted are subject to such reservation; provided that amendments, alterations. |
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Amendment of Bylaws | ||||||
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Helix’s Bylaws may at any time and from time to time be amended, supplemented, or repealed by the Board of Directors. | | | The MOR limited liability company agreement provides that any amendment thereto shall be valid only if in writing and approved by the board of managers and a the holders of a majority of the Class A Units and Series S Preferred Units, voting as a single class, provided, that: (a) for so long as any member (or group of members) has the right to designate a manager, in no event shall any amendment to remove such | | | Forian’s charter and bylaws provide that (i) the Forian board has the power to make, alter, and repeal Forian’s bylaws and (ii) the Forian stockholders have the power to rescind, alter, amend, and repeal Forian’s bylaws by the affirmative vote of the holders of at least a majority of the outstanding voting stock, voting together as a single class. |
Helix | | | MOR | | | Forian |
| | designation right be effected without the consent of such member; (b) the MOR limited liability company agreement may not be amended or modified, with respect to any particular member so as to adversely affect the rights or obligations of such member thereunder without the written consent of such member, unless such amendment applies to all of the other members holding the same class of interests equally; and (c) the MOR limited liability company agreement may not be amended so as to adversely affect the rights or obligations of the Series S Preferred Units without the written consent of a majority of the holders thereof unless such amendment applies to all of the holders of Series S Preferred Units and Class A Units. Generally, terms benefitting owners of one particular class of equity interests may not be amended without consent of the holders of a majority of such class of interests. | | | ||
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Limitation on Director Liability | ||||||
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Helix’s Bylaws provide that the Corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding. | | | MOR’s limited liability company agreement provides that a manager of MOR is personally liable to MOR or its members for any act or omission on behalf of MOR, provided that the act or omission is not determined by a court of competent jurisdiction to be in bad faith or to constitute gross negligence, willful misconduct or to have violated such lesser standard of conduct as under applicable law affirmatively prevents indemnification under the MOR limited liability company agreement. | | | Forian’s charter provides that a director of Forian is not personally liable to Forian or its stockholders for monetary damages for breach of a fiduciary duty as a director in accordance with and to the fullest extent permitted by the DGCL. If the DGCL is amended to authorize further eliminating or limiting the personal liability of directors, then the liability of a director will be eliminated or limited to the fullest extent permitted by the DGCL, as amended. |
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Indemnification | ||||||
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Helix’s Bylaws provide that the Corporation may indemnify a person made a party to a proceeding because the person is or | | | MOR’s limited liability company agreement provides that, to the fullest extent permitted by the Delaware Limited Liability | | | Permitted Indemnification and Advance of Expenses: Forian’s charter provides that |
Helix | | | MOR | | | Forian |
was a director against liability incurred in the proceeding if: (1) The person conducted himself or herself in good faith; and (2) The person reasonably believed: (A) In the case of conduct in an official capacity with the Corporation, that his or her conduct was in the Corporation's best interests; and (B) In all other cases, that his or her conduct was at least not opposed to the Corporation's best interests; and (3) In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful. The Corporation may not indemnify a director: (1) In connection with a proceeding by or in the right of the Corporation in which the director was adjudged liable to the Corporation; or (2) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit. Helix’s Bylaws provide that indemnification in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding. The Corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at | | | Company Act from time to time in effect, MOR shall indemnify, defend and hold each member and manager and their respective agents, employees, consultants and other independent contractors, harmless from and against all costs, liabilities, claims, expenses, including reasonable attorneys’ fees, and damages arising from any demands, claims or lawsuits in connection with or resulting from his, her or its acts or omissions in his, her or its capacity as a member, manager, officer, employee or agent of MOR or as such an agent, employee, consultant or other independent contractor, or in connection with, arising from or relating to, business or activities undertaken on behalf of MOR, unless such acts or omissions are found by a court of competent jurisdiction to be in bad faith or to constitute gross negligence, fraud or willful misconduct or to have violated such lesser standard of conduct as under applicable law affirmatively prevents indemnification under the MOR limited liability company agreement; provided, however, that no member or manager shall be entitled to indemnification under the MOR limited liability company agreement for any demands, claims or lawsuits initiated by such member or manager, other than any claim to enforce the provisions of indemnification and exculpation set forth in the MOR limited liability company agreement. The termination of any action, suit or proceeding by judgment, order, settlement, plea of nolo contendere or its equivalent or conviction shall not, of itself, create a presumption of an entitlement to indemnification hereunder or action not in good faith and or reasonably believed to be in or not opposed to the best interests of MOR. | | | Forian may indemnify, to the fullest extent permitted by Delaware law, any person who is a party or is threatened to be made a party to any action or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person: (i) is or was a director, officer, or employee of Forian or any predecessor to Forian; or (ii) is or was serving at the request of Forian or any predecessor to Forian as a director, officer, or employee at another enterprise. Forian may, but is not required to, purchase and maintain insurance on behalf of any such person against any liability which may be asserted or enter into contracts providing for the indemnification of any such person to the fullest extent permitted by law. Mandatory Indemnification: Forian’s charter provides that Forian shall indemnify, to the extent not prohibited by the DGCL, directors and executive officers of Forian for personal liability to Forian or its stockholders for monetary damages for breach of fiduciary duty as a director. Forian’s bylaws provided that Forian shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer, of Forian, or is or was serving at the request of Forian as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, |
Helix | | | MOR | | | Forian |
the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent. Any such insurance may be procured from any insurance company designated by the Board of Directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise. | | | Each person to be indemnified shall be entitled to receive, upon application therefor, advances from MOR to cover the costs of defending any pending, threatened or completed claim, action, suit or proceeding against it for indemnified amounts in connection with which it would be entitled to indemnification under the MOR limited liability company agreement, provided that such advances shall be repaid to MOR if the recipient thereof is found by a court of competent jurisdiction to have violated any of the standards set forth above that preclude indemnification. | | | prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding, provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or executive officer in his or her capacity as a director or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to Forian of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial adjudication that such indemnitee is not entitled to be indemnified for such expenses. No advance shall be made by Forian to an executive officer of (except by reason of the fact that such executive officer is or was a director of Forian) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of directors who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of Forian. |
Helix | | | MOR | | | Forian |
Preemptive Rights | | | | | ||
| | MOR’s limited liability company agreement provides that the holders of Class A Units and Series S Preferred Units have rights of first offer and rights of first refusal regarding proposed issuances of additional interests by MOR or certain transfers of interests by members of MOR. | | | Forian’s stockholders do not have preemptive rights. Thus, if additional shares of Forian common stock are issued, the current Forian stockholders will own a proportionately smaller interest in a larger number of outstanding shares of common stock to the extent that they do not participate in the additional issuance. | |
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Dividends and Share Repurchases | ||||||
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The Series A Preferred Stock shall bear no dividends, except that if the Board shall declare a dividend payable upon the then-outstanding shares of the Company’s common stock (the “Common Stock”), the Board shall declare at the same time a dividend upon the then-outstanding shares of the Series A Preferred Stock, payable at the same time as the dividend paid on the Common Stock, in an amount equal to the amount of dividends per share of the Series A Preferred Stock as would have been payable on the largest number of whole shares of the Common Stock into which each share of the Series A Preferred Stock held by each holder thereof would be entitled to if such shares of the Series A Preferred Stock had been converted to the Common Stock. The Series B Preferred Stock shall bear no dividends, except that if the Board shall declare a dividend payable upon the then-outstanding shares of the Company’s common stock (the “Common Stock”), the Board shall declare at the same time a dividend upon the then-outstanding shares of the Series B Preferred Stock, payable at the same time as the dividend paid on the Common Stock, in an amount equal to the amount of dividends per share of the Series B Preferred Stock as would have been payable on the largest number of | | | MOR’s limited liability company agreement provides for distributions to the members of the proceeds of MOR, if any, as determined by the board of managers. | | | The DGCL provides that, subject to any restrictions in a corporation’s certificate of incorporation, dividends may be declared from the corporation’s surplus, or if there is no surplus, from its net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Dividends may not be declared out of net profits, however, if the corporation’s capital has been diminished to an amount less than the aggregate amount of all capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. Furthermore, the DGCL generally provides that a corporation may redeem or repurchase its shares only if the redemption or repurchase would not impair the capital of the corporation |
Helix | | | MOR | | | Forian |
whole shares of the Common Stock into which each share of the Series B Preferred Stock held by each holder thereof would be entitled to if such shares of the Series B Preferred Stock had been converted to the Common Stock. | | | | | ||
| | | | |||
| | | | |||
| | MOR’s limited liability company agreement provides that the board of managers may not enter into any merger, consolidation or sale of all or a significant portion of MOR’s properties or assets without the prior written consent of the holders of a majority of the Class A Units and Series S Preferred Units, acting as a single class. | | | Section 251 of the DGCL requires, with limited exceptions, a merger, consolidation or sale of substantially all of the assets of a company to be approved by the board and a majority of the issued and outstanding shares entitled to vote thereon. | |
| | | | |||
Stockholder Rights Plan | ||||||
| | | | |||
Helix does not currently have a stockholders’ rights plan in effect. | | | MOR does not currently have a members’ rights plan in effect. | | | Forian does not currently have a stockholders’ rights plan in effect. |
| | | | |||
Transfer Restrictions | ||||||
| | | | |||
Helix does not have transfer restrictions. | | | MOR’s limited liability company agreement provides for numerous restrictions on transfer, providing for certain rights of first refusal, tag-along rights, drag-along rights and additional restrictions and conditions. | | | None. |
| | | | |||
Business Combination or Antitakeover Statutes | ||||||
| | | | |||
Helix has not opted out of the protections of Section 203 of the DGCL. As a result, the statute applies to Forian. | | | None. | | | Section 203 of the DGCL generally prohibits “business combinations,” including mergers, sales and leases of assets, issuances of securities and similar transactions by a corporation or a subsidiary with an interested stockholder who beneficially owns 15% or more of a corporation’s voting stock, within three (3) years after the person or entity becomes an interested stockholder, unless: (i) the board of directors of the target corporation has approved, before the acquisition time, either the business combination or the transaction that |
Helix | | | MOR | | | Forian |
| | | | resulted in the person becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owns at least 85% of the corporation’s voting stock (excluding shares owned by directors who are officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer) or (iii) after the person or entity becomes an interested stockholder, the business combination is approved by the board of directors and authorized at a meeting of stockholders by the affirmative vote of at least 66 2⁄3% of the outstanding voting stock not owned by the interested stockholder. Forian has not opted out of the protections of Section 203 of the DGCL. As a result, the statute applies to Forian. | ||
| | | | |||
Appraisal Rights | ||||||
| | | | |||
Neither the Helix charter nor bylaws provide for appraisal rights in any additional circumstance other than as required by applicable law. | | | None. | | | Under the DGCL, a stockholder may dissent from, and receive payments in cash for, the fair value of his or her shares as appraised by the Court of Chancery of the State of Delaware in the event of certain mergers and consolidations. However, stockholders do not have appraisal rights if the shares of stock they hold, at the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon the merger or consolidation, or on the record date with respect to action by written consent, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Further, no appraisal rights are available to stockholders of the surviving corporation if the |
Helix | | | MOR | | | Forian |
| | | | merger did not require the vote of the stockholders of the surviving corporation. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (i) shares of stock of the surviving corporation, (ii) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (iii) cash instead of fractional shares or (iv) any combination of clauses (i)-(iii). Appraisal rights are also available under the DGCL in certain other circumstances, including in certain parent-subsidiary corporation mergers and in certain circumstances where the certificate of incorporation so provides. Neither the Forian charter nor bylaws provide for appraisal rights in any additional circumstance other than as required by applicable law. | ||
| | | | |||
Forum for Adjudication of Disputes | ||||||
| | | | |||
Helix does not specify a forum for adjudication of disputes. | | | The MOR limited liability company agreement does not specify a forum for adjudication of disputes. | | | The Forian bylaws provide that unless Forian consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law (i) any derivative action or proceeding brought on behalf of Forian; (ii) any action or proceeding asserting a claim of |
Helix | | | MOR | | | Forian |
| | | | breach of a fiduciary duty owed by any current or former director, officer or other employee of Forian, to Forian or its stockholders; (iii) any action or proceeding asserting a claim against the corporation or any current or former director, officer or other employee of Forian, arising out of or pursuant to any provision of the DGCL, the certificate of incorporation or the bylaws of Forian (as each may be amended from time to time); (iv) any action or proceeding to interpret, apply, enforce or determine the validity of the certificate of incorporation or the bylaws of Forian (including any right, obligation, or remedy thereunder); (v) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against Forian or any director, officer or other employee of Forian, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. The Forian charter also provides that unless Forian consents in writing to the selection of an alternative forum, the federal district courts of the District of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. |
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HELIX FINANCIAL STATEMENTS | | | |
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MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC FINANCIAL STATEMENTS | | | |
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| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
ASSETS | | | | | | | |||
Current assets: | | | | | | | |||
Cash | | | $556,858 | | | $208,945 | | | $718,465 |
Accounts receivable, net | | | 909,503 | | | 557,747 | | | 129,341 |
Prepaid expenses and other current assets | | | 737,159 | | | 409,800 | | | — |
Costs & earnings in excess of billings | | | 257,819 | | | 42,869 | | | 40,847 |
Current assets held for sale | | | 1,056,885 | | | 703,992 | | | 631,061 |
Total current assets | | | 3,518,224 | | | 1,923,353 | | | 1,519,714 |
Property and equipment, net | | | 771,228 | | | 263,653 | | | 7,549 |
Intangible assets, net | | | 14,395,287 | | | 18,604,078 | | | 3,042,259 |
Goodwill | | | 52,894,399 | | | 39,913,559 | | | 664,329 |
Deposits and other assets | | | 1,066,930 | | | 117,811 | | | 43,756 |
Promissory note receivable | | | 75,000 | | | — | | | — |
Non-current assets held for sale | | | 961,929 | | | 115,044 | | | 127,642 |
Total assets | | | $73,682,997 | | | $60,937,498 | | | $5,405,249 |
| | | | | | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |||
Current liabilities: | | | | | | | |||
Accounts payable and accrued liabilities | | | $2,810,640 | | | $1,594,520 | | | 543,481 |
Advances from related parties | | | — | | | 45,250 | | | 124,750 |
Billings in excess of costs | | | 164,663 | | | 155,192 | | | 20,191 |
Deferred rent | | | — | | | — | | | 5,424 |
Notes payable, current portion | | | — | | | (10,639) | | | (44,711) |
Obligation pursuant to acquisition | | | 50,000 | | | 201,667 | | | 559,103 |
Convertible notes payable, net of discount | | | 832,492 | | | 187,177 | | | 812,393 |
Convertible notes payable, net of discount - related party | | | 1,584,360 | | | — | | | 243,506 |
Due to related party | | | — | | | 32,489 | | | — |
Contingent consideration | | | — | | | 908,604 | | | — |
Warrant liability | | | 715,259 | | | 896,171 | | | 2,429,569 |
Promissory notes | | | 300,000 | | | — | | | — |
Current liabilities held for sale | | | 477,311 | | | 146,574 | | | 115,289 |
Total current liabilities | | | 6,934,725 | | | 4,157,005 | | | 4,808,995 |
| | | | | | ||||
Long-term liabilities: | | | | | | | |||
Notes payable, net of current portion | | | 433,087 | | | 51,554 | | | 53,293 |
Convertible notes payable, net of current portion and discount | | | 385,000 | | | — | | | — |
Other long-term liabilities | | | 776,512 | | | — | | | — |
Non-current liabilities held for sale | | | 6,718 | | | — | | | — |
Total long-term liabilities | | | 1,601,317 | | | 51,554 | | | 53,293 |
Total liabilities | | | 8,536,042 | | | 4,208,559 | | | 4,862,288 |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Shareholders’ equity: | | | | | | | |||
Preferred stock (Class A), $0.001 par value, 3,000,000 shares authorized; 1,000,000 issued and outstanding as of December 31, 2019, December 31, 2018, and December 31, 2017 | | | 1,000 | | | 1,000 | | | 1,000 |
Preferred stock (Class B), $0.001 par value, 17,000,000 shares authorized; 13,784,201 issued and outstanding as of December 31, 2019, December 31, 2018, and December 31, 2017 | | | 13,784 | | | 13,784 | | | 13,784 |
Common stock; par value $0.001; 200,000,000 shares authorized; 93,608,619 shares issued and outstanding as of December 31, 2019; 72,660,825 shares issued and outstanding as of December 31, 2018, 28,771,402 shares issued and outstanding as of December 31, 2017 | | | 93,608 | | | 72,660 | | | 28,771 |
Additional paid-in capital | | | 100,906,143 | | | 82,831,014 | | | 18,741,114 |
Accumulated other comprehensive (loss) income | | | (79,901) | | | 17,991 | | | — |
Accumulated deficit | | | (35,787,679) | | | (26,207,510) | | | (18,241,708) |
Total shareholders’ equity | | | 65,146,955 | | | 56,728,939 | | | 542,961 |
Total liabilities and shareholders’ equity | | | $73,682,997 | | | $60,937,498 | | | $5,405,249 |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Revenue: | | | | | | | |||
Security monitoring | | | $593,031 | | | $644,027 | | | $787,080 |
Systems installation | | | 783,192 | | | 499,138 | | | — |
Software | | | 9,486,472 | | | 4,174,963 | | | — |
Total revenues | | | 10,862,695 | | | 5,318,128 | | | 787,080 |
Cost of revenue | | | 4,684,969 | | | 2,792,875 | | | 405,470 |
Gross margin | | | 6,177,726 | | | 2,525,253 | | | 381,610 |
| | | | | | ||||
Operating expenses: | | | | | | | |||
Selling, general and administrative | | | 3,517,360 | | | 1,885,247 | | | 528,061 |
Salaries and wages | | | 5,283,903 | | | 5,172,165 | | | 589,482 |
Professional and legal fees | | | 2,587,483 | | | 2,025,007 | | | 2,307,391 |
Depreciation and amortization | | | 4,726,113 | | | 3,031,056 | | | 426,360 |
Loss on impairment of goodwill | | | — | | | 664,329 | | | — |
Total operating expenses | | | 16,114,859 | | | 12,777,804 | | | 3,851,294 |
Loss from continuing operations | | | (9,937,133) | | | (10,252,551) | | | (3,469,684) |
| | | | | | ||||
Other income (expenses): | | | | | | | |||
Change in fair value of convertible note | | | 496,790 | | | 450,216 | | | (712,393) |
Change in fair value of convertible note - related party | | | (283,453) | | | 93,506 | | | 31,068 |
Change in fair value of warrant liability | | | 3,812,977 | | | 1,641,398 | | | 590,436 |
Change in fair value of contingent consideration | | | (880,050) | | | (131,306) | | | — |
(Loss) gain on issuance of warrants | | | (825,098) | | | 91,778 | | | |
Gain on reduction of obligation pursuant to acquisition | | | — | | | 607,415 | | | |
Interest expense | | | (1,690,115) | | | — | | | (674,313) |
Other income | | | 16,679 | | | 6,045 | | | — |
Loss on sale of assets | | | | | | | (2,232) | ||
Loss on extinguishment of debt | | | | | | | (4,611,395) | ||
Loss on conversion of convertible notes | | | | | | | (1,503,876) | ||
Other income (expense), net | | | 647,730 | | | 2,759,052 | | | (6,882,705) |
| | | | | | ||||
Loss from continuing operations | | | $(9,289,403) | | | $(7,493,499) | | | $(10,352,389) |
| | | | | | ||||
Loss from discontinued operations, net of tax | | | $(290,766) | | | $(472,303) | | | $(313,598) |
| | | | | | ||||
Net Loss | | | $(9,580,169) | | | $(7,965,802) | | | $(10,665,987) |
| | | | | | ||||
Other comprehensive (loss) income: | | | | | | | |||
Changes in foreign currency translation adjustment | | | (97,892) | | | 17,991 | | | — |
Total other comprehensive (loss) income | | | (97,892) | | | 17,991 | | | — |
Total comprehensive loss | | | (9,678,061) | | | (7,947,811) | | | $(10,665,987) |
| | | | | | ||||
Convertible preferred stock beneficial conversion feature accreted as a deemed dividend | | | — | | | (22,202,194) | | | (22,210,520) |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Loss attributable to common shareholders | | | $(9,678,061) | | | $(30,150,005) | | | $(32,876,507) |
| | | | | | ||||
Loss from continuing operations: | | | | | | | |||
Basic | | | $(0.12) | | | $(0.14) | | | $(0.36) |
Diluted | | | $(0.12) | | | $(0.14) | | | $(0.36) |
| | | | | | ||||
Loss from discontinued operations: | | | | | | | |||
Basic | | | $(0.00) | | | $(0.01) | | | $(0.01) |
Diluted | | | $(0.00) | | | $(0.01) | | | $(0.01) |
| | | | | | ||||
Loss attributable to common shareholders: | | | | | | | |||
Basic | | | $(0.12) | | | $(0.56) | | | $(1.15) |
Diluted | | | $(0.12) | | | $(0.56) | | | $(1.15) |
| | | | | | ||||
Weighted average common shares outstanding: | | | | | | | |||
Basic | | | 80,206,895 | | | 53,777,343 | | | 28,612,727 |
Diluted | | | 80,206,895 | | | 53,777,343 | | | 28,612,727 |
| | Common Stock | | | Preferred Stock (Class A) | | | Preferred Stock (Class B) | | | Additional Paid-In Capital | | | Accumulated Other Comprehensive Income | | | Accumulated Deficit | | | Total Shareholders’ Equity | ||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||
Balance at December 31, 2018 | | | 72,660,825 | | | $72,660 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $82,831,014 | | | $17,991 | | | $(26,207,510) | | | $56,728,939 |
Issuance of common stock per investment unit agreements | | | 1,421,889 | | | 1,422 | | | — | | | — | | | — | | | — | | | 66,247 | | | — | | | — | | | 67,669 |
Issuance of common stock resulting from convertible note conversion | | | 1,031,315 | | | 1,031 | | | — | | | — | | | — | | | — | | | 675,710 | | | — | | | — | | | 676,741 |
Share-based compensation expense | | | 370,000 | | | 370 | | | — | | | — | | | — | | | — | | | 1,783,569 | | | — | | | — | | | 1,783,939 |
Issuance of common stock resulting from exercise of stock options | | | 78,644 | | | 79 | | | — | | | — | | | — | | | — | | | 26,534 | | | — | | | — | | | 26,613 |
Issuance of common stock resulting from cashless exercise of stock options | | | 109,931 | | | 110 | | | — | | | — | | | — | | | — | | | (110) | | | — | | | — | | | — |
Restricted common stock issued as part of the Tan Security acquisition | | | 250,000 | | | 250 | | | — | | | — | | | — | | | — | | | 709,750 | | | — | | | — | | | 710,000 |
Issuance of common stock in satisfaction of contingent consideration | | | 733,300 | | | 733 | | | — | | | — | | | — | | | — | | | 1,787,921 | | | — | | | — | | | 1,788,654 |
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 186,988 | | | 187 | | | — | | | — | | | — | | | — | | | 132,663 | | | — | | | — | | | 132,850 |
Restricted common stock issued as part of the Green Tree acquisition | | | 16,765,727 | | | 16,766 | | | — | | | — | | | — | | | — | | | 12,892,845 | | | — | | | — | | | 12,909,611 |
Foreign currency translation | | | — | | | — | | | — | | | — | | | — | | | — | | | | | (97,892) | | | | | (97,892) | ||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,580,169) | | | (9,580,169) |
Balance at December 31, 2019 | | | 93,608,619 | | | $93,608 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $100,906,143 | | | $(79,901) | | | $(35,787,679) | | | $65,146,955 |
| | Common Stock | | Preferred Stock (Class A) | | Preferred Stock (Class B) | | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income | | Accumulated Deficit | | Total Shareholders’ Equity | | | Common Stock | | Preferred Stock (Class A) | | Preferred Stock (Class B) | | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income | | Accumulated Deficit | | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | |||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | | 28,771,402 | | $28,771 | | 1,000,000 | | $1,000 | | 13,784,201 | | $13,784 | | $18,741,114 | | $— | | $(18,241,708) | | $542,961 | | 28,771,402 | | $28,771 | | 1,000,000 | | $1,000 | | 13,784,201 | | $13,784 | | $18,741,114 | | $— | | $(18,241,708) | | $542,961 | ||||||||||||||||||||
Beneficial conversion feature of Series B convertible preferred stock | | — | | — | | — | | — | | — | | — | | 22,202,194 | | — | | — | | 22,202,194 | | — | | — | | — | | — | | — | | — | | 22,202,194 | | — | | — | | 22,202,194 | ||||||||||||||||||||
Deemed dividend on conversion of Series B convertible preferred stock to common stock | | — | | — | | — | | — | | — | | — | | (22,202,194) | | — | | — | | (22,202,194) | | — | | — | | — | | — | | — | | — | | (22,202,194) | | — | | — | | (22,202,194) | ||||||||||||||||||||
Issuance of common stock per stock subscription agreements | | 3,949,997 | | 3,949 | | — | | — | | — | | — | | 3,351,269 | | — | | — | | 3,355,218 | | 3,949,997 | | 3,949 | | — | | — | | — | | — | | 3,351,269 | | — | | — | | 3,355,218 | ||||||||||||||||||||
Issuance of common stock resulting from convertible note conversion | | 205,974 | | 206 | | — | | — | | — | | — | | 174,794 | | — | | — | | 175,000 | | 205,974 | | 206 | | — | | — | | — | | — | | 174,794 | | — | | — | | 175,000 | ||||||||||||||||||||
Issuance of restricted common stock | | 115,000 | | 115 | | — | | �� | | — | | — | | 134,850 | | — | | — | | 134,965 | | 115,000 | | 115 | | — | | — | | — | | — | | 134,850 | | — | | — | | 134,965 | ||||||||||||||||||||
Reduction in Additional Paid-In Capital due to Security Grade acquisition settlement agreement | | — | | — | | — | | — | | — | | — | | (340,039) | | — | | — | | (340,039) | | — | | — | | — | | — | | — | | — | | (340,039) | | — | | — | | (340,039) | ||||||||||||||||||||
Restricted common stock issued as part of BioTrack acquisition | | 38,184,985 | | 38,185 | | — | | — | | — | | — | | 57,513,848 | | — | | — | | 57,552,033 | | 38,184,985 | | 38,185 | | — | | — | | — | | — | | 57,513,848 | | — | | — | | 57,552,033 | ||||||||||||||||||||
Restricted common stock issued as part of Engeni acquisition | | 366,700 | | 367 | | — | | — | | — | | — | | 388,335 | | — | | — | | 388,702 | | 366,700 | | 367 | | — | | — | | — | | — | | 388,335 | | — | | — | | 388,702 | ||||||||||||||||||||
Issuance of common stock to employees under Stock Incentive Plan | | 514,945 | | 515 | | — | | — | | — | | — | | 915,968 | | — | | — | | 916,483 | | 514,945 | | 515 | | — | | — | | — | | — | | 915,968 | | — | | — | | 916,483 | ||||||||||||||||||||
Grant of an option to purchase common stock | | — | | — | | — | | — | | — | | — | | 629,200 | | — | | — | | 629,200 | | — | | — | | — | | — | | — | | — | | 629,200 | | — | | — | | 629,200 | ||||||||||||||||||||
Issuance of common stock resulting from inducement of consulting agreement | | 200,000 | | 200 | | — | | — | | — | | — | | 251,800 | | — | | — | | 252,000 | | 200,000 | | 200 | | — | | — | | — | | — | | 251,800 | | — | | — | | 252,000 | ||||||||||||||||||||
Issuance of restricted common stock resulting from an investor relation consulting agreement | | 125,000 | | 125 | | — | | — | | — | | — | | 126,875 | | — | | — | | 127,000 | | 125,000 | | 125 | | — | | — | | — | | — | | 126,875 | | — | | — | | 127,000 | ||||||||||||||||||||
Issuance of warrants pursuant to consulting agreement | | — | | — | | — | | — | | — | | — | | 943,000 | | — | | — | | 943,000 | | — | | — | | — | | — | | — | | — | | 943,000 | | — | | — | | 943,000 | ||||||||||||||||||||
Issuance of common stock resulting from exercise of stock options | | 226,822 | | 227 | | — | | — | | — | | — | | — | | — | | — | | 227 | | 226,822 | | 227 | | — | | — | | — | | — | | — | | — | | — | | 227 | ||||||||||||||||||||
Foreign currency translation | | — | | — | | — | | — | | — | | — | | — | | 17,991 | | — | | 17,991 | | — | | — | | — | | — | | — | | — | | — | | 17,991 | | — | | 17,991 | ||||||||||||||||||||
Net loss | | — | | — | | — | | — | | — | | — | | — | | — | | (7,965,802) | | (7,965,802) | | — | | — | | — | | — | | — | | — | | — | | — | | (7,965,802) | | (7,965,802) | ||||||||||||||||||||
Balance at December 31, 2018 | | 72,660,825 | | $72,660 | | 1,000,000 | | $1,000 | | 13,784,201 | | $13,784 | | $82,831,014 | | $17,991 | | $(26,207,510) | | $56,728,939 | | 72,660,825 | | $72,660 | | 1,000,000 | | $1,000 | | 13,784,201 | | $13,784 | | $82,831,014 | | $17,991 | | $(26,207,510) | | $56,728,939 |
| | Common Stock | | | Preferred Stock (Class A) | | | Preferred Stock (Class B) | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Total Shareholders’ Equity (Deficit) | ||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | |||||||||
Balance at December 31, 2016 | | | 28,533,411 | | | $28,533 | | | 1,000,000 | | | $1,000 | | | — | | | $— | | | $7,107,630 | | | $(7,575,721) | | | $(438,558) |
Beneficial conversion feature of Series B convertible preferred stock | | | | | | | | | | | | | | | 22,210,520 | | | — | | | 22,210,520 | ||||||
Deemed dividend on conversion of Series B convertible preferred stock to common stock | | | | | | | | | | | | | | | (22,210,520) | | | — | | | (22,210,520) | ||||||
Issuance of Series B preferred shares | | | | | | | | | | | 13,784,201 | | | 12,243 | | | 4,475,257 | | | — | | | 4,487,500 | ||||
Cost of issuance of Series B preferred shares | | | | | | | | | | | | | | | (1,941,633) | | | | | (1,941,633) | |||||||
Stock options issued pursuant to acquisition consideration | | | | | | | | | | | | | | | 916,643 | | | — | | | 916,643 | ||||||
Stock options issued in satisfaction of contingent consideration | | | | | | | | | | | | | | | 871,193 | | | — | | | 871,193 | ||||||
Induced conversion of convertible debt | | | | | | | | | | | | | 1,541 | | | 2,002,335 | | | — | | | 2,003,876 | |||||
Issuance of common stock per share purchase agreements | | | 111,111 | | | 111 | | | | | | | | | | | 99,889 | | | — | | | 100,000 | ||||
Issuance of common stock relating to cashless exercise of warrants | | | 126,880 | | | 127 | | | | | | | | | | | 461,169 | | | | | 461,296 | |||||
Reversal of additional paid in capital - warrants related to cashless exercise of warrants | | | | | | | | | | | | | | | (461,296) | | | | | (461,296) | |||||||
Warrant issuances to investors | | | | | | | | | | | | | | | 93,200 | | | — | | | 93,200 | ||||||
Beneficial conversion feature on convertible debt | | | | | | | | | | | | | | | 535,332 | | | — | | | 535,332 | ||||||
Reacquisition price of convertible debt | | | | | | | | | | | | | | | 4,581,395 | | | — | | | 4,581,395 | ||||||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (10,665,987) | | | (10,665,987) |
Balance at December 31, 2017 | | | 28,771,402 | | | $28,771 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $18,741,114 | | | $(18,241,708) | | | $542,961 |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |||
Net loss | | | $(9,580,169) | | | $(7,965,802) | | | $(10,665,987) |
Loss from discontinued operations | | | (290,766) | | | (472,303) | | | (359,759) |
Loss from continuing operations | | | $(9,289,403) | | | $(7,493,499) | | | $(10,306,228) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | |||
Depreciation and amortization | | | 4,778,334 | | | 3,086,531 | | | 477,364 |
Accretion of debt discounts | | | 1,354,689 | | | — | | | 254,333 |
Loss on issuance of warrants | | | 825,098 | | | — | | | — |
Provision for doubtful accounts | | | 357,749 | | | — | | | — |
Share-based compensation expense | | | 1,783,939 | | | 3,002,648 | | | — |
Change in fair value of convertible notes, net of discount | | | (496,790) | | | (450,216) | | | 712,393 |
Change in fair value of warrant liability | | | (3,812,977) | | | (1,533,398) | | | 590,436 |
Change in fair value of convertible notes, net of discount - related party | | | 283,453 | | | (93,506) | | | (31,068) |
Change in fair value of contingent consideration | | | 880,050 | | | 131,306 | | | — |
Loss on impairment of goodwill | | | — | | | 664,329 | | | — |
Gain on reduction of obligation pursuant to acquisition | | | — | | | (607,415) | | | — |
Gain on reduction of contingent consideration | | | (100,000) | | | — | | | — |
Loss on extinguishment of debt | | | — | | | — | | | 4,611,395 |
Loss on induced conversion of convertible note | | | — | | | — | | | 1,503,876 |
Loss on beneficial conversion feature of convertible note | | | — | | | — | | | 390,666 |
Change in operating assets and liabilities: | | | | | | | |||
Accounts receivable | | | (893,063) | | | (269,735) | | | (75,549) |
Prepaid expenses and other current assets | | | (334,627) | | | (406,997) | | | — |
Deposits and other assets | | | 141,946 | | | 285,325 | | | (39,876) |
Due to related party | | | (32,489) | | | 32,489 | | | — |
Costs & earnings in excess of billings | | | (214,950) | | | (2,022) | | | 56,051 |
Accounts payable and accrued expenses | | | 1,629,551 | | | 370,010 | | | 702,876 |
Deferred rent | | | — | | | (5,424) | | | 1,181 |
Billings in excess of costs | | | 9,471 | | | 135,001 | | | (3,776) |
Right of use assets and liabilities | | | 65,875 | | | — | | | — |
Net cash used in continued operations | | | (3,064,144) | | | (3,154,573) | | | (1,155,726) |
Net cash used in discontinued operations | | | (297,076) | | | (513,949) | | | (655,502) |
Net cash used in operating activities | | | (3,361,220) | | | (3,668,522) | | | (1,811,228) |
| | | | | | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |||
Purchase of property and equipment | | | (1,095,871) | | | (232,647) | | | 24,767 |
Purchase of domain names | | | (21,856) | | | — | | | — |
Payments for business combination, net of cash acquired | | | 673,080 | | | — | | | (1,631,313) |
Cash acquired as part of business combination | | | — | | | 454,306 | | | — |
Payments for asset acquisition | | | — | | | (58,729) | | | (46,872) |
Net cash (used in) provided by continued operations | | | (444,647) | | | 162,930 | | | (1,653,418) |
Net cash (used in) provided by discontinued operations | | | (846,885) | | | 12,598 | | | (59,512) |
Net cash (used in) provided by investing activities | | | (1,291,532) | | | 175,528 | | | (1,712,930) |
| | | | | |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |||
Payments pursuant to convertible notes payable - related party | | | — | | | (150,000) | | | |
Promissory note receivable | | | (75,000) | | | — | | | |
Payments pursuant to advances from related parties | | | (45,250) | | | — | | | |
Payments pursuant to notes payable | | | (18,467) | | | (27,836) | | | (3,466) |
Payments pursuant to a promissory note | | | (280,000) | | | (250,000) | | | |
Payments pursuant to contingent consideration | | | — | | | (131,331) | | | |
Advances from shareholders | | | | | | | 83,250 | ||
Advances from related parties | | | — | | | (79,500) | | | (32,000) |
Proceeds from notes payable | | | — | | | 39,723 | | | |
Proceeds from the issuance of a promissory note | | | 580,000 | | | 250,000 | | | 255,000 |
Proceeds from the issuance of convertible notes payable | | | 3,745,000 | | | — | | | 229,167 |
Proceeds from the issuance of common stock | | | 1,306,313 | | | 3,355,445 | | | 100,000 |
Proceeds from the issuance of Series B convertible preferred stock | | | — | | | — | | | 3,577,500 |
Net cash provided by financing activities | | | 5,212,596 | | | 3,006,501 | | | 4,209,451 |
| | | | | | ||||
Effect of foreign exchange rate changes on cash | | | (211,931) | | | (23,027) | | | — |
Net change in cash | | | 347,913 | | | (509,520) | | | 685,293 |
Cash, beginning of year | | | 208,945 | | | 718,465 | | | 33,172 |
Cash, end of year | | | $556,858 | | | $208,945 | | | $718,465 |
| | | | | | ||||
Supplemental disclosure of cash and non-cash transactions: | | | | | | | — | ||
Cash paid for interest | | | $40,625 | | | $— | | | — |
Common stock issued pursuant to convertible notes payable | | | $676,741 | | | $— | | | 4,581,395 |
Debt discount for warrant liability | | | $(1,594,936) | | | $— | | | — |
Equity issued pursuant to acquisition | | | $13,619,611 | | | $57,552,033 | | | — |
Equity issuance pursuant to asset acquisition (non-cash acquisition of Engeni) | | | $— | | | $388,702 | | | — |
Cash payable pursuant to acquisition | | | $50,000 | | | $— | | | — |
PIK interest payment of common stock | | | $132,850 | | | $— | | | — |
Common stock issued pursuant to contingent consideration as part of acquisition | | | $1,788,654 | | | $— | | | — |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | | | $1,485,511 | | | $— | | | — |
Partial conversion of convertible note into common stock | | | $— | | | $175,000 | | | — |
Financing of property and equipment purchases | | | — | | | — | | | 52,082 |
Cost of issuance of Series B preferred shares | | | — | | | — | | | (1,941,633) |
Stock options issued pursuant to acquisition consideration | | | — | | | — | | | 916,643 |
Stock options issued pursuant to contingent consideration as part of acquisition | | | — | | | — | | | 871,193 |
Warrants issued to investors | | | — | | | — | | | 93,200 |
Reacquisition price of convertible debt | | | — | | | — | | | 4,581,395 |
1. | Description of Business |
2. | Going Concern Uncertainty, Financial Condition and Management’s Plans |
3. | Summary of Significant Accounting Policies |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Potentially dilutive securities: | | | | | | | |||
Convertible notes payable | | | 5,994,838 | | | 124,784 | | | 433,668 |
Convertible Preferred A Stock | | | 1,000,000 | | | 1,000,000 | | | 1,000,000 |
Convertible Preferred B Stock | | | 13,784,201 | | | 13,784,201 | | | 13,784,201 |
Warrants | | | 5,113,058 | | | 3,418,184 | | | 2,780,193 |
Stock options | | | 11,617,381 | | | 8,729,463 | | | — |
4. | Revenue Recognition |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Types of Revenues: | | | | | | | |||
Security Monitoring | | | $593,031 | | | $644,027 | | | $787,080 |
Systems Installation | | | 783,192 | | | 499,138 | | | — |
Software | | | 9,486,472 | | | 4,174,963 | | | — |
Total revenues | | | $10,862,695 | | | $5,318,128 | | | $787,080 |
5. | Business Combination |
Base Price - Cash | | | $2,100,373 |
Base Price - Stock Options | | | 916,643 |
Contingent Consideration - Stock Options | | | 916,643 |
Total Purchase Price | | | $3,933,659 |
Description | | Fair Value | | Weighted Average Useful Life (in years) | | Fair Value | | Weighted Average Useful Life (in years) | ||||
Assets acquired: | | | | | ||||||||
Cash | | $14,137 | | | $14,137 | | ||||||
Accounts receivable | | 53,792 | | | 53,792 | | ||||||
Costs & earnings in excess of billings | | 96,898 | | | 96,898 | | ||||||
Property, plant and equipment, net | | 27,775 | | | 27,775 | | ||||||
Trademarks | | 25,000 | | 10 | | 25,000 | | 10 | ||||
Customer lists | | 3,154,578 | | 5 | | 3,154,578 | | 5 | ||||
Web address | | 5,000 | | 5 | | 5,000 | | 5 | ||||
Goodwill | | 664,329 | | | 664,329 | | ||||||
Other assets | ��� | | 3,880 | | | 3,880 | | |||||
Total assets acquired | | $4,045,389 | | | $4,045,389 | | ||||||
Liabilities assumed: | | | | | ||||||||
Billings in excess of costs | | $23,967 | | | $23,967 | | ||||||
Loans payable | | 18,414 | | | 18,414 | | ||||||
Credit card payable and other liabilities | | 69,349 | | | 69,349 | | ||||||
Total liabilities assumed | | 111,730 | | | 111,730 | | ||||||
Estimated fair value of net assets acquired | | $3,933,659 | | | $3,933,659 | |
Base Price - Common Stock | | | $44,905,542 |
Base Price - Stock Options | | | 12,646,491 |
Total Purchase Price | | | $57,552,033 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $448,697 | | | |
Accounts receivable | | | 128,427 | | | |
Prepaid expenses | | | 351,615 | | | |
Property, plant and equipment, net | | | 72,252 | | | |
Goodwill | | | 39,135,007 | | | |
Customer list | | | 8,304,449 | | | 5 |
Software | | | 9,321,627 | | | 4.5 |
Tradename | | | 466,081 | | | 4.5 |
Total assets acquired | | | $58,228,155 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $223,581 | | | |
Other liabilities | | | 452,541 | | | |
Total liabilities assumed | | | 676,122 | | | |
Estimated fair value of net assets acquired | | | $57,552,033 | | |
Base Price - Common Stock | | | $388,702 |
Contingent Consideration - Common Stock | | | 777,298 |
Total Purchase Price | | | $1,166,000 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $5,609 | | | |
Accounts receivable and other assets | | | 30,479 | | | |
Property, plant and equipment, net | | | 57,830 | | | |
Software | | | 449,568 | | | 3.3 |
Goodwill | | | 778,552 | | | |
Total assets acquired | | | $1,322,038 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $56,038 | | | |
Total liabilities assumed | | | 56,038 | | | |
Estimated fair value of net assets acquired | | | $1,266,000 | | |
Base Price – Cash at closing | | | $25,000 |
Base Price – Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing) | | | 75,000 |
Base Price – Common Stock | | | 710,000 |
Total Purchase Price | | | $810,000 |
Description | | | Fair Value |
Assets acquired: | | | |
Cash | | | $2,940 |
Accounts receivable | | | 7,635 |
Goodwill | | | 821,807 |
Total assets acquired | | | $832,382 |
Liabilities assumed: | | | |
Accounts payable | | | $12,526 |
Other liabilities | | | 9,856 |
Total liabilities assumed | | | 22,382 |
Estimated fair value of net assets acquired | | | $810,000 |
Base Price - Common Stock | | | $12,909,611 |
Total Purchase Price | | | $12,909,611 |
Description | | | Fair Value | | | Weighted Average Useful Life (Years) |
Assets acquired: | | | | | ||
Note Receivable, net | | | $135,000 | | | |
Property, Plant and Equipment, Net | | | 12,142 | | | |
Software | | | 452,002 | | | 4.5 |
Goodwill | | | 12,980,840 | | | |
Total assets acquired | | | $13,579,984 | | | |
Liabilities assumed: | | | | | ||
Accounts Payable | | | 43,717 | | | |
Notes Payable | | | 400,000 | | | |
Other Liabilities | | | 226,656 | | | |
Total liabilities assumed: | | | 670,373 | | | |
Estimated fair value of net assets acquired: | | | $12,909,611 | | |
6. | Discontinued Operations |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Assets | | | | | | | |||
Cash | | | $95,666 | | | $76,816 | | | $ 150,089 |
Accounts receivable, net | | | 961,219 | | | 627,176 | | | 480,972 |
Current assets held for sale | | | 1,056,885 | | | 703,992 | | | 631,061 |
Property and equipment, net | | | 34,451 | | | 85,865 | | | 103,085 |
Goodwill | | | 821,807 | | | — | | | — |
Deposits and other assets | | | 105,671 | | | 29,179 | | | 24,557 |
Non-current assets held for sale | | | 961,929 | | | 115,044 | | | 127,642 |
Total assets held for sale | | | 2,018,814 | | | 819,036 | | | 758,703 |
| | | |||||||
Liabilities | | | | | | | |||
Accounts payable and accrued liabilities | | | 452,292 | | | 108,193 | | | 55,156 |
Notes payable, current portion | | | 25,019 | | | 35,444 | | | 55,890 |
Deferred rent | | | — | | | 2,937 | | | 4,243 |
Current liabilities held for sale | | | 477,311 | | | 146,574 | | | 115,289 |
Other long-term liabilities | | | 6,718 | | | — | | | — |
Non-current liabilities held for sale | | | 6,718 | | | — | | | — |
Total liabilities held for sale | | | 484,029 | | | 146,574 | | | 115,289 |
Net assets | | | $1,534,785 | | | $ 672,462 | | | $ 643,414 |
| | For the Years Ended, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Revenue: | | | | | | | |||
Security and guarding | | | $4,429,405 | | | $4,245,445 | | | $3,242,720 |
Total Revenues | | | 4,429,405 | | | 4,245,445 | | | 3,242,720 |
Cost of revenue | | | 3,493,168 | | | 3,176,164 | | | 2,479,989 |
Gross margin | | | 936,237 | | | 1,069,281 | | | 762,731 |
| | | | | | ||||
Operating expenses: | | | | | | | |||
Selling, general and administrative | | | 618,725 | | | 606,271 | | | 491,030 |
Salaries and wages | | | 455,880 | | | 638,429 | | | 431,330 |
Professional and legal fees | | | 95,143 | | | 238,205 | | | 102,965 |
Depreciation and amortization | | | 52,221 | | | 55,475 | | | 51,004 |
Total operating expenses | | | 1,221,969 | | | 1,538,380 | | | 1,076,329 |
Loss from operations | | | (285,732) | | | (469,099) | | | (313,598) |
| | | | | | ||||
Other expenses: | | | | | | | |||
Interest (expense) income | | | (5,034) | | | (3,204) | | | — |
Other expenses | | | (5,034) | | | (3,204) | | | — |
| | | | | | ||||
Net loss | | | $(290,766) | | | $(472,303) | | | $(313,598) |
| | December 31, | | ||||||
| | 2019 | | | 2018 | | | 2017 | |
Furniture and equipment | | | $238,547 | | | $241,845 | | | $— |
Software equipment | | | 561,964 | | | — | | | — |
Vehicles | | | 73,380 | | | 75,014 | | | 11,846 |
Total | | | 873,891 | | | 316,859 | | | 11,846 |
Less: Accumulated depreciation | | | (102,663) | | | (53,206) | | | (4,297) |
Property and equipment, net | | | $771,228 | | | $263,653 | | | $7,549 |
8. | Intangible Assets, Net and Goodwill |
| | | | December 31, 2019 | ||||||||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount | | | Assets Acquired Pursuant to Business Combination(4) | | | Assets Acquired | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $— | | | $(69,533) | | | $23,894 |
Trade names and trademarks | | | 5 - 10 | | | 591,081 | | | — | | | — | | | (207,525) | | | 383,556 |
Web addresses | | | 5 | | | 130,000 | | | — | | | — | | | (95,611) | | | 34,389 |
Customer list | | | 5 | | | 11,459,027 | | | — | | | — | | | (4,256,070) | | | 7,202,957 |
Software | | | 4.5 | | | 9,771,195 | | | 452,002 | | | 1,625 | | | (3,492,525) | | | 6,732,297 |
Domain Name | | | 5 | | | — | | | — | | | 20,231 | | | (2,037) | | | 18,194 |
| | | | $22,044,730 | | | $452,002 | | | $21,856 | | | $(8,123,301) | | | $14,395,287 |
| | | | | | December 31, 2018 | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2017 | | | Assets Acquired Pursuant to Business Combination(2)(3) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(50,858) | | | $42,569 |
Trade names and trademarks | | | 5-10 | | | 125,000 | | | 466,081 | | | (91,554) | | | 499,527 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (69,625) | | | 60,375 |
Customer list | | | 5 | | | 3,154,578 | | | 8,304,449 | | | (1,965,520) | | | 9,493,507 |
Software | | | 4.5 | | | — | | | 9,771,195 | | | (1,263,095) | | | 8,508,100 |
| | | | $3,503,005 | | | $18,541,725 | | | $(3,440,652) | | | $18,604,078 |
| | December 31, 2017 | | ||||||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2016 | | | Assets Acquired Pursuant to Business Combination(1) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(32,183) | | | $61,244 |
Trade names and trademarks | | | 10 | | | 100,000 | | | 25,000 | | | (18,675) | | | 106,325 |
Web addresses | | | 5 | | | 125,000 | | | 5,000 | | | (43,639) | | | 86,361 |
Customer list | | | 5 | | | — | | | 3,154,578 | | | (366,249) | | | 2,788,329 |
| | | | $318,427 | | | $3,184,578 | | | $(460,746) | | | $3,042,259 |
(1) | On June 1, 2017, the Company acquired various assets of Security Grade Protective Services, Ltd. (See Note 5) |
(2) | On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 5) |
(3) | On August 3, 2018, the Company acquired various assets of Engeni (See Note 5) |
(4) | On September 10, 2019, the Company acquired various assets of GTI (See Note 5) |
Years Ending December 31, | | | Future amortization expense |
2020 | | | $4,773,348 |
2021 | | | 4,718,392 |
2022 | | | 4,036,485 |
2023 | | | 808,591 |
2024 | | | 39,669 |
Thereafter | | | 18,802 |
Total | | | $14,395,287 |
| | Total Goodwill | |
Balance at December 31, 2016 | | | $— |
Goodwill pursuant to acquisition | | | 664,329 |
Balance at December 31, 2017 | | | 664,329 |
Impairment of goodwill | | | (664,329) |
Goodwill attributable to Biotrack acquisition | | | 39,135,007 |
Goodwill attributable to Engeni acquisition | | | 778,552 |
Balance at December 31, 2018 | | | 39,913,559 |
| | ||
Goodwill attributable to Green Tree acquisition | | | 12,980,840 |
Balance at December 31, 2019 | | | $52,894,399 |
9. | Costs, Estimated Earnings and Billings |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Costs incurred on uncompleted contracts | | | $444,344 | | | $89,700 | | | $64,704 |
Estimated earnings | | | 150,355 | | | 50,512 | | | 27,730 |
Cost and estimated earnings earned on uncompleted contracts | | | 594,699 | | | 140,212 | | | 92,434 |
Billings to date | | | 501,543 | | | 252,535 | | | 71,778 |
Billings in excess of costs and costs in excess of billings on uncompleted contracts | | | 93,156 | | | (112,323) | | | 20,656 |
| | | | | |||||
Costs in excess of billings | | | $257,819 | | | $42,869 | | | $40,847 |
Billings in excess of cost | | | (164,663) | | | (155,192) | | | (20,191) |
| | $93,156 | | | $(112,323) | | | $20,656 |
10. | Accounts Payable and Accrued Expenses |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Accounts payable | | | $542,403 | | | $734,196 | | | $279,595 |
Accrued compensation and related expenses | | | 260,280 | | | — | | | — |
Accrued expenses | | | 1,717,796 | | | 847,560 | | | 220,682 |
Accrued interest | | | — | | | 12,764 | | | 43,204 |
Lease obligation - current | | | 290,161 | | | — | | | — |
Total | | | $2,810,640 | | | $1,594,520 | | | $543,481 |
11. | Convertible Notes Payable, net of discount |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Note Five, 5% convertible promissory note, fixed secured, maturing November 16, 2019 | | | $— | | | $187,177 | | | $812,393 |
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants | | | 143,630 | | | — | | | — |
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees | | | 185,313 | | | — | | | — |
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees | | | 205,363 | | | — | | | — |
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees | | | 206,091 | | | — | | | — |
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees | | | 92,095 | | | — | | | — |
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021 | | | 385,000 | | | — | | | — |
| | 1,217,492 | | | 187,177 | | | 812,393 | |
Less: Current portion | | | (832,492) | | | (187,177) | | | (812,393) |
Long-term portion | | | $385,000 | | | $— | | | $— |
12. | Related Party Transactions |
13. | Promissory Notes |
14. | Notes Payable |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 | | | $52,507 | | | $71,284 | | | $55,890 |
Loans Payable - Credit Union | | | 5,385 | | | 5,075 | | | 8,592 |
Notes Payable | | | 400,000 | | | — | | | — |
Less: Current portion of loans payable | | | (24,805) | | | (24,805) | | | (11,179) |
Long-term portion of loans payable | | | $433,087 | | | $51,554 | | | $53,293 |
15. | Shareholders’ Equity |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
February 2018 | | | 222,222 | | | $200,000 |
March 2018 | | | 500,000 | | | 450,000 |
April 2018 | | | 500,000 | | | 450,000 |
May 2018 | | | 244,444 | | | 219,999 |
July 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 183,333 | | | 164,999 |
September 2018 | | | 577,778 | | | 520,000 |
October 2018 | | | 694,444 | | | 625,000 |
November 2018 | | | 150,000 | | | 135,000 |
December 2018 | | | 222,222 | | | 200,000 |
| | 3,949,997 | | | $3,554,996 |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
May 2017 | | | 111,111 | | | $100,000 |
| | 111,111 | | | $100,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
March 2019 | | | 250,000 | | | $320,000 |
Ending Balance | | | 250,000 | | | $320,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
January 2018 | | | 42,850 | | | $173,014 |
March 2018 | | | 100,000 | | | 250,000 |
May 2018 | | | 133,900 | | | 223,774 |
July 2018 | | | 100,000 | | | 126,000 |
August 2018 | | | 10,000 | | | 10,600 |
August 2018 | | | 33,195 | | | 33,195 |
October 2018 | | | 20,000 | | | 20,400 |
November 2018 | | | 75,000 | | | 79,500 |
Ending Balance | | | 514,945 | | | $916,483 |
For the Year Ended December 31, 2018 | ||||||||||||||||||
Issuance Date | | | Beneficial Conversion Feature Term (months) | | | Number of shares | | | Fair Value of Beneficial Conversion Feature | | | Amount accreted as a deemed dividend at December 31, 2017 | | | Amount accreted as a deemed dividend for the Year Ended December 31, 2018 | | | Unamortized Beneficial Conversion Feature |
May 17, 2017 | | | 12 | | | 7,318,084 | | | $25,247,098 | | | $(15,779,436) | | | $(9,467,661) | | | $— |
July 29, 2017 | | | 9.5 | | | 1,680,000 | | | 6,804,000 | | | (3,674,634) | | | (3,129,366) | | | — |
August 29, 2017 | | | 8.5 | | | 369,756 | | | 1,148,263 | | | (556,190) | | | (592,073) | | | — |
September 15, 2017 | | | 8 | | | 462,195 | | | 1,435,329 | | | (648,601) | | | (786,728) | | | — |
October 11, 2017 | | | 7 | | | 462,195 | | | 1,121,036 | | | (426,309) | | | (694,727) | | | — |
October 31, 2017 | | | 6.5 | | | 1,042,337 | | | 1,735,641 | | | (548,570) | | | (1,187,071) | | | — |
December 19, 2017 | | | 5 | | | 2,449,634 | | | 6,921,348 | | | (576,780) | | | (6,344,568) | | | — |
Total | | | | | 13,784,201 | | | $44,412,715 | | | $(22,210,520) | | | $(22,202,194) | | | $— |
16. | Stock Options |
| | December 31, 2019 | | | March 28, 2018 to December 31, 2018 | | | June 2, 2017 to December 31, 2017 | |
Exercise Price | | | $0.435 to $2.59 | | | $1.90 to $2.09 | | | $0.001 |
Fair value of company’s common stock | | | $0.435 to $2.35 | | | $0.90 to $1.90 | | | $ 3.00 to $4.42 |
Dividend yield | | | 0 | | | 0 | | | 0 |
Expected volatility | | | 110% to 191% | | | 186.64% to 253.52 | | | 179.9% to 266.4% |
Risk free interest rate | | | 1.55% to 2.51% | | | 2.35% to 2.59 | | | 1.42% to 1.98% |
Expected life (years) remaining | | | 2.92 to 9.22 | | | 4.24 to 10.00 | | | 2.42 to 3.00 |
| | Shares Underlying Options | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2017 | | | — | | | — | | | — |
Granted | | | 414,854 | | | $0.001 | | | 3.00 |
Outstanding at January 1, 2018 | | | 414,854 | | | $0.001 | | | 2.42 |
Granted | | | 490,000 | | | $1.916 | | | 8.84 |
Options assumed pursuant to acquisition – BioTrackTHC Stock Plan | | | 3,841,492 | | | $0.790 | | | 1.84 |
Options assumed pursuant to acquisition – Management Awards | | | 4,290,918 | | | $0.439 | | | 2.34 |
Exercised | | | (226,822) | | | $0.001 | | | 1.50 |
Forfeited and expired | | | (79,486) | | | $0.001 | | | 0.00 |
Outstanding at January 1, 2019 | | | 8,730,956 | | | $0.671 | | | 2.44 |
Granted | | | 3,075,000 | | | $1.161 | | | 5.56 |
Exercised | | | (188,575) | | | $0.261 | | | 0.57 |
Outstanding at December 31, 2019 | | | 11,617,381 | | | $0.807 | | | 3.21 |
Vested options at December 31, 2019 | | | 9,339,881 | | | $0.716 | | | 1.72 |
17. | Warrant Liability |
Proceeds from January investment units | | | $1,129,700 |
Par value of common stock issues | | | $(1,255) |
Fair value of warrants | | | $(1,717,506) |
Loss on issuance of warrants (January 10, 2019 issuance) | | | $(589,061) |
| | Warrant Shares | | | Weighted Average Exercise Price | |
Balance at January 1, 2017 | | | 1,920,000 | | | $0.16 |
Warrants granted | | | 987,073 | | | $0.41 |
Warrants exercised | | | (175,000) | | | |
Balance at January 1, 2018 | | | 2,732,073 | | | $0.23 |
Warrants granted | | | 686,111 | | | $0.21 |
Balance at January 1, 2019 | | | 3,418,184 | | | $0.23 |
Warrants granted | | | 1,694,874 | | | $1.17 |
Balance at December 31, 2019 | | | 5,113,058 | | | $0.55 |
| | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | |
Fair value of company’s common stock | | | $0.60 | | | $0.90 | | | $3.00 |
Dividend yield | | | 0% | | | 0% | | | 0% |
Expected volatility | | | 45% - 140% | | | 175.0% | | | 266.40% |
Risk Free interest rate | | | 1.55% - 1.79% | | | 2.49% | | | 1.98% |
Expected life (years) | | | 2.83 | | | 1.65 | | | 2.65 |
Fair value of financial instruments - warrants | | | $715,259 | | | $896,171 | | | 2,429,569 |
| | Amount | |
Balance as of January 1, 2017 | | | $2,429,569 |
Fair value of warrants at date of inception | | | 1,839,133 |
Change in fair value of liability to issue warrants | | | 590,436 |
Balance as of December 31, 2017 | | | $2,429,569 |
Change in fair value of liability to issue warrants | | | (1,641,398) |
Balance as of December 31, 2018 | | | $896,171 |
Fair value of warrants issued | | | 3,632,065 |
Change in fair value of liability to issue warrants | | | (3,812,977) |
Balance as of December 31, 2019 | | | $715,259 |
18. | Stock-Based Compensation |
| | As of December 31, 2019 | |
2020 | | | $393,413 |
2021 | | | 248,223 |
2022 | | | 195,144 |
2023 | | | 200,944 |
2024 | | | 205,435 |
Thereafter | | | — |
Total future minimum lease payments | | | $1,243,159 |
Less imputed interest | | | (86,219) |
Total | | | $1,156,940 |
Years Ending December 31, | | | Future Minimum Lease Payments |
2020 | | | 420,291 |
2021 | | | 275,223 |
2022 | | | 198,144 |
2023 | | | 199,144 |
2024 | | | 205,135 |
Thereafter | | | — |
Total | | | $1,297,937 |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Potentially dilutive securities: | | | | | | | |||
Convertible notes payable | | | 5,994,838 | | | 124,784 | | | 433,668 |
Convertible Preferred A Stock | | | 1,000,000 | | | 1,000,000 | | | 1,000,000 |
Convertible Preferred B Stock | | | 13,784,201 | | | 13,784,201 | | | 13,784,201 |
Warrants | | | 5,113,058 | | | 3,418,184 | | | 2,780,193 |
Stock options | | | 11,617,381 | | | 8,729,463 | | | — |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Security and guarding | | | | | | | |||
Revenue | | | $593,031 | | | $644,027 | | | 787,080 |
Cost of revenue | | | 511,713 | | | 442,009 | | | 405,470 |
Gross profit | | | 81,318 | | | 202,018 | | | 381,610 |
Total operating expenses(1) | | | 5,952,897 | | | 9,563,255 | | | 3,851,294 |
Loss from operations | | | (5,871,579) | | | (9,361,237) | | | (3,469,684) |
Total other income | | | 558,646 | | | 3,032,596 | | | (6,882,705) |
Total net loss | | | $(5,312,933) | | | $(6,328,641) | | | (10,352,389) |
| | | | | | ||||
Systems installation | | | | | | | |||
Revenue | | | $783,192 | | | $499,138 | | | |
Cost of revenue | | | 854,801 | | | 531,567 | | | |
Gross loss | | | (71,609) | | | (32,429) | | | |
Total operating expenses | | | 545,474 | | | 168,159 | | | |
Loss from operations | | | (617,083) | | | (200,588) | | | |
Total other income (expense) | | | 88,903 | | | (273,642) | | | |
Total net loss | | | $(528,180) | | | $(474,230) | | | |
Software | | | | | | | |||
Revenue | | | $9,486,472 | | | $4,174,963 | | | |
Cost of revenue | | | 3,318,455 | | | 1,819,299 | | | |
Gross profit | | | 6,168,017 | | | 2,355,664 | | | |
Total operating expenses | | | 9,616,488 | | | 3,046,390 | | | |
Loss from operations | | | (3,448,471) | | | (690,726) | | | |
Total other income | | | 181 | | | 98 | | | |
Total net loss | | | $(3,448,290) | | | $(690,628) | | |
4. | Revenue Recognition |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Types of Revenues: | | | | | | | |||
Security Monitoring | | | $593,031 | | | $644,027 | | | $787,080 |
Systems Installation | | | 783,192 | | | 499,138 | | | — |
Software | | | 9,486,472 | | | 4,174,963 | | | — |
Total revenues | | | $10,862,695 | | | $5,318,128 | | | $787,080 |
| | September 30, 2020 | | | December 31, 2019 | |
| | (Unaudited) | | | (Audited) | |
ASSETS | | | | | ||
Current assets: | | | | | ||
Cash | | | $1,677,041 | | | $556,858 |
Accounts receivable, net | | | 744,906 | | | 909,503 |
Prepaid expenses and other current assets | | | 1,271,273 | | | 737,159 |
Costs & earnings in excess of billings | | | 280,464 | | | 257,819 |
Other receivable | | | 600,000 | | | — |
Current assets held for sale | | | — | | | 1,056,885 |
Total current assets | | | 4,573,684 | | | 3,518,224 |
Property and equipment, net | | | 1,359,351 | | | 771,228 |
Intangible assets, net | | | 9,768,319 | | | 14,395,287 |
Goodwill | | | 9,743,281 | | | 52,894,399 |
Deposits and other assets | | | 903,809 | | | 1,066,930 |
Promissory note receivable | | | 75,000 | | | 75,000 |
Non-current assets held for sale | | | — | | | 961,929 |
Total assets | | | $26,423,444 | | | $73,682,997 |
| | | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | ||
Current liabilities: | | | | | ||
Accounts payable and accrued liabilities | | | 2,848,988 | | | 2,810,854 |
Billings in excess of costs | | | 68,542 | | | 164,663 |
Notes payable, current portion | | | 496,671 | | | 10,814 |
Obligation pursuant to acquisition | | | — | | | 50,000 |
Convertible notes payable, net of discount | | | 1,125,983 | | | 832,492 |
Convertible notes payable, net of discount - related party | | | 1,285,220 | | | 1,584,360 |
Warrant liability | | | 88,750 | | | 715,259 |
Promissory notes | | | — | | | 300,000 |
Current liabilities held for sale | | | — | | | 466,283 |
Total current liabilities | | | 5,914,154 | | | 6,934,725 |
Long-term liabilities: | | | | | ||
Notes payable and financing arrangements, net of current portion | | | 31,700 | | | 422,059 |
Convertible notes payable, net of discount | | | 385,000 | | | 385,000 |
Other long-term liabilities | | | 621,781 | | | 776,512 |
Non-current liabilities held for sale | | | — | | | 17,746 |
Total long-term liabilities | | | 1,038,481 | | | 1,601,317 |
Total liabilities | | | 6,952,635 | | | 8,536,042 |
Shareholders’ equity: | | | | | ||
Preferred stock (Class A), $0.001 par value, 3,000,000 shares authorized; 1,000,000 issued and outstanding as of September 30, 2020 and December 31, 2019 | | | 1,000 | | | 1,000 |
Preferred stock (Class B), $0.001 par value, 17,000,000 shares authorized; 13,784,201 issued and outstanding as of September 30, 2020 and December 31, 2019 | | | 13,784 | | | 13,784 |
Common stock; par value $0.001; 200,000,000 shares authorized; 116,413,095 shares issued and outstanding as of September 30, 2020; 93,608,619 shares issued and outstanding as of December 31, 2019 | | | 116,413 | | | 93,608 |
Additional paid-in capital | | | 103,477,098 | | | 100,906,143 |
Accumulated other comprehensive income (loss) | | | 30,363 | | | (79,901) |
Accumulated deficit | | | (84,167,849) | | | (35,787,679) |
Total shareholders’ equity | | | 19,470,809 | | | 65,146,955 |
Total liabilities and shareholders’ equity | | | $26,423,444 | | | $73,682,997 |
5. | Business Combination |
Base Price - Cash | | | $2,100,373 |
Base Price - Stock Options | | | 916,643 |
Contingent Consideration - Stock Options | | | 916,643 |
Total Purchase Price | | | $3,933,659 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $14,137 | | | |
Accounts receivable | | | 53,792 | | | |
Costs & earnings in excess of billings | | | 96,898 | | | |
Property, plant and equipment, net | | | 27,775 | | | |
Trademarks | | | 25,000 | | | 10 |
Customer lists | | | 3,154,578 | | | 5 |
Web address | | | 5,000 | | | 5 |
Goodwill | | | 664,329 | | | |
Other assets | | | 3,880 | | | |
Total assets acquired | | | $4,045,389 | | | |
Liabilities assumed: | | | | | ||
Billings in excess of costs | | | $23,967 | | | |
Loans payable | | | 18,414 | | | |
Credit card payable and other liabilities | | | 69,349 | | | |
Total liabilities assumed | | | 111,730 | | | |
Estimated fair value of net assets acquired | | | $3,933,659 | | |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Security monitoring | | | $84,147 | | | $135,218 | | | $279,042 | | | $436,976 |
Systems installation | | | 30,555 | | | 245,272 | | | 346,460 | | | 447,880 |
Software | | | 2,778,356 | | | 2,357,078 | | | 8,174,850 | | | 6,872,210 |
Total revenues | | | $2,893,058 | | | $2,737,568 | | | $8,800,352 | | | $7,757,066 |
Cost of revenue | | | 918,150 | | | 1,318,825 | | | 2,848,674 | | | 3,594,491 |
Gross margin | | | 1,974,908 | | | 1,418,743 | | | 5,951,678 | | | 4,162,575 |
Operating expenses: | | | | | | | | | ||||
Selling, general and administrative | | | 549,770 | | | 1,020,819 | | | 1,759,196 | | | 2,825,765 |
Salaries and wages | | | 1,583,413 | | | 1,275,745 | | | 4,405,203 | | | 3,505,165 |
Professional and legal fees | | | 465,503 | | | 665,093 | | | 1,237,705 | | | 2,082,204 |
Depreciation and amortization | | | 1,049,235 | | | 1,179,597 | | | 3,320,641 | | | 3,516,418 |
Loss on impairment of intangible assets | | | 39,963,107 | | | — | | | 41,333,085 | | | — |
Total operating expenses | | | 43,611,028 | | | 4,141,254 | | | 52,055,830 | | | 11,929,552 |
Loss from continuing operations | | | (41,636,120) | | | (2,722,511) | | | (46,104,152) | | | (7,766,977) |
Other (expense) income: | | | | | | | | | ||||
Change in fair value of convertible note | | | (321,915) | | | 430,766 | | | (1,104,856) | | | 288,425 |
Change in fair value of convertible note - related party | | | — | | | 491,442 | | | 498,233 | | | (213,828) |
Change in fair value of warrant liability | | | 67,039 | | | 1,224,601 | | | 682,717 | | | 3,462,746 |
Change in fair value of contingent consideration | | | — | | | — | | | — | | | (880,050) |
Gain on asset disposal | | | 239,825 | | | — | | | 239,825 | | | — |
Loss on conversion of convertible note | | | (111,902) | | | — | | | (1,536,324) | | | — |
Loss on issuance of warrants | | | — | | | — | | | — | | | (787,209) |
Gain on reduction of obligation pursuant to acquisition | | | — | | | — | | | 2,000 | | | — |
Interest expense | | | (355,469) | | | (538,591) | | | (1,029,979) | | | (1,227,271) |
Other income | | | — | | | — | | | 37,507 | | | — |
Other (expense) income, net | | | (482,422) | | | 1,608,218 | | | (2,210,877) | | | 642,813 |
Loss from continuing operations | | | $(42,118,542) | | | $(1,114,293) | | | $(48,315,029) | | | $(7,124,164) |
Loss from discontinued operations | | | $(70,259) | | | $(141,276) | | | $(65,141) | | | $(160,798) |
Net Loss | | | $(42,188,801) | | | $(1,255,569) | | | $(48,380,170) | | | $(7,284,962) |
Other comprehensive income (loss): | | | | | | | | | ||||
Changes in foreign currency translation adjustment | | | 62,069 | | | (118,003) | | | 110,264 | | | (114,346) |
Total other comprehensive income (loss) | | | 62,069 | | | (118,003) | | | 110,264 | | | (114,346) |
Total comprehensive loss | | | (42,126,732) | | | (1,373,572) | | | (48,269,906) | | | (7,399,308) |
Net loss attributable to common shareholders | | | $(42,126,732) | | | $(1,373,572) | | | $(48,269,906) | | | $(7,399,308) |
Loss from continuing operations: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Diluted | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Income (loss) from discontinued operations: | | | | | | | | | ||||
Basic | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Diluted | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Loss attributable to common shareholders: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Diluted | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Weighted average common shares outstanding: | | | | | | | | | ||||
Basic | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
Diluted | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
| | Common Stock | | | Preferred Stock (Class A) | | | Preferred Stock (Class B) | | | Additional Paid- In Capital | | | Accumulated Other Comprehensive Income | | | Accumulated Deficit | | | Total Shareholders’ Equity | ||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||
Balance at June 30, 2020 | | | 115,323,931 | | | $115,324 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $105,755,784 | | | $(31,706) | | | $(41,979,048) | | | $63,875,138 |
Issuance of common stock resulting from convertible note conversion | | | 2,269,438 | | | 2,269 | | | | | | | | | | | 287,633 | | | | | | | 289,902 | ||||||
Share-based compensation expense | | | 1,810,000 | | | 1,810 | | | | | | | | | | | 547,202 | | | | | | | 549,012 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 650,000 | | | 650 | | | | | | | | | | | 70,850 | | | | | | | 71,500 | ||||||
Issuance of common stock resulting from cashless exercise of stock options | | | 500,000 | | | 500 | | | | | | | | | | | (500) | | | | | | | — | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | | | | | | | | | | | | | | | | | | | — | |||||||||
Holdback of common stock resulting from finalized allocation of purchase price as part of Green Tree acquisition | | | (4,140,274) | | | (4,140) | | | | | | | | | | | (3,183,871) | | | | | | | (3,188,011) | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | 62,069 | | | | | 62,069 | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (42,188,801) | | | (42,188,801) | ||||||||
Balance at September 30, 2020 | | | 116,413,095 | | | $116,413 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $103,477,098 | | | $30,363 | | | $(84,167,849) | | | $19,470,809 |
Balance at June 30, 2019 | | | 75,747,718 | | | $75,748 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $86,489,136 | | | 21,648 | | | $(32,236,903) | | | $54,364,413 |
Share-based compensation expense | | | | | | | | | | | | | | | 352,341 | | | | | | | 352,341 | ||||||||
Restricted common stock issued as part of Green Tree acquisition | | | 16,765,727 | | | 16,766 | | | | | | | | | | | 12,892,845 | | | | | | | 12,909,611 | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 16,568 | | | 17 | | | | | | | | | | | 14,046 | | | | | | | 14,063 | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | (118,003) | | | | | (118,003) | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (1,255,569) | | | (1,255,569) | ||||||||
Balance at September 30, 2019 | | | 92,530,013 | | | $92,531 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $99,748,368 | | | $(96,355) | | | $(33,492,472) | | | $66,266,856 |
Balance at December 31, 2019 | | | 93,608,619 | | | $93,608 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $100,906,143 | | | $(79,901) | | | $(35,787,679) | | | $65,146,955 |
Issuance of common stock per investment unit agreements | | | 11,433,790 | | | 11,434 | | | | | | | | | | | 1,260,345 | | | | | | | 1,271,779 | ||||||
Issuance of common stock resulting from convertible note conversion | | | 11,179,269 | | | 11,179 | | | | | | | | | | | 2,659,453 | | | | | | | 2,670,632 | ||||||
Share-based compensation expense | | | 2,313,800 | | | 2,314 | | | | | | | | | | | 1,618,302 | | | | | | | 1,620,616 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 1,350,000 | | | 1,350 | | | | | | | | | | | 161,150 | | | | | | | 162,500 | ||||||
Issuance of common stock resulting from cashless exercise of warrants | | | 500,000 | | | 500 | | | | | | | | | | | (500) | | | | | | | — | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 167,891 | | | 168 | | | | | | | | | | | 56,076 | | | | | | | 56,244 | ||||||
Holdback of common stock resulting from finalized allocation of purchase price as part of Green Tree acquisition | | | (4,140,274) | | | (4,140) | | | | | | | | | | | (3,183,871) | | | | | | | (3,188,011) | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | 110,264 | | | | | 110,264 | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (48,380,170) | | | (48,380,170) | ||||||||
Balance at September 30, 2020 | | | 116,413,095 | | | $116,413 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $103,477,098 | | | $30,363 | | | $(84,167,849) | | | $19,470,809 |
Balance at December 31, 2018 | | | 72,660,825 | | | $72,660 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $82,831,014 | | | 17,991 | | | $(26,207,510) | | | $56,728,939 |
Issuance of common stock per investment unit agreements | | | 1,421,889 | | | 1,422 | | | | | | | | | | | 66,247 | | | | | | | 67,669 | ||||||
Issuance of common stock resulting from convertible note conversion | | | 155,421 | | | 156 | | | | | | | | | | | 117,781 | | | | | | | 117,937 | ||||||
Share-based compensation expense | | | 270,000 | | | 270 | | | | | | | | | | | 1,241,471 | | | | | | | 1,241,741 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 78,644 | | | 79 | | | | | | | | | | | 26,534 | | | | | | | 26,613 | ||||||
Issuance of common stock resulting from cashless exercise of stock options | | | 109,931 | | | 110 | | | | | | | | | | | (110) | | | | | | | — | ||||||
Restricted common stock issued as part of the Tan Security acquisition | | | 250,000 | | | 250 | | | | | | | | | | | 709,750 | | | | | | | 710,000 | ||||||
Issuance of common stock in satisfaction of contingent consideration | | | 733,300 | | | 733 | | | | | | | | | | | 1,787,921 | | | | | | | 1,788,654 | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 84,276 | | | 85 | | | | | | | | | | | 74,915 | | | | | | | 75,000 | ||||||
Restricted common stock issued as part of Green Tree acquisition | | | 16,765,727 | | | 16,766 | | | | | | | | | | | 12,892,845 | | | | | | | 12,909,611 | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | (114,346) | | | | | (114,346) | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (7,284,962) | | | (7,284,962) | ||||||||
Balance at September 30, 2019 | | | 92,530,013 | | | $92,531 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $99,748,368 | | | $(96,355) | | | $(33,492,472) | | | $66,266,856 |
| | For the Nine Months Ended September 30, | ||||
| | 2020 | | | 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | ||
Net loss | | | $(48,380,170) | | | $(7,284,962) |
Income (loss) from discontinued operations | | | (65,141) | | | (160,798) |
Loss from continuing operations | | | $(48,315,029) | | | $(7,124,164) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | ||
Depreciation and amortization | | | 3,320,641 | | | 3,516,418 |
Accretion of debt discounts | | | 340,772 | | | 922,965 |
Loss on issuance of warrants | | | — | | | 787,209 |
Provision for doubtful accounts | | | 395,995 | | | 199,215 |
Share-based compensation expense | | | 1,620,616 | | | 1,241,741 |
Change in fair value of convertible notes, net of discount | | | 1,104,856 | | | (288,425) |
Change in fair value of warrant liability | | | (682,717) | | | (3,462,746) |
Change in fair value of convertible notes, net of discount - related party | | | (498,233) | | | 213,828 |
Change in fair value of contingent consideration | | | — | | | 880,050 |
Loss on conversion of convertible note | | | 1,536,324 | | | — |
Loss on impairment of intangible assets | | | 41,333,085 | | | — |
Gain on asset disposal | | | (239,825) | | | — |
Gain on reduction of obligation pursuant to acquisition | | | (2,000) | | | — |
Gain on reduction of contingent consideration | | | — | | | (100,000) |
Change in operating assets and liabilities: | | | | | ||
Accounts receivable | | | 620,859 | | | (86,398) |
Prepaid expenses | | | (536,692) | | | (239,374) |
Deposits | | | 19,146 | | | 144,488 |
Due from related party | | | — | | | (32,489) |
Costs in excess of billings | | | (22,645) | | | 12,401 |
Other receivable | | | (600,000) | | | — |
Accounts payable and accrued expenses | | | 40,674 | | | 832,690 |
Billings in excess of costs | | | (96,121) | | | (28,687) |
Right of use assets and liabilities | | | (27,561) | | | 37,848 |
Other long-term liabilities | | | — | | | 2,000 |
Net cash used in continued operations | | | (769,203) | | | (2,571,430) |
Net cash provided by (used in) discontinued operations | | | 30,525 | | | (197,618) |
Net cash used in operating activities | | | (738,678) | | | (2,769,048) |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | ||
Purchase of property and equipment | | | (619,483) | | | (657,765) |
Purchase of domain names | | | — | | | (21,856) |
Payments for business combination, net of cash acquired | | | — | | | (126,667) |
Payments for asset acquisition | | | (48,000) | | | — |
Proceeds from sale of security and guarding business | | | 1,150,000 | | | — |
Net cash provided by (used in) continued operations | | | 482,517 | | | (806,288) |
Net cash used in discontinued operations | | | — | | | (89,118) |
Net cash provided by (used in) investing activities | | | 482,517 | | | (895,406) |
| | For the Nine Months Ended September 30, | ||||
| | 2020 | | | 2019 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | ||
Promissory note receivable | | | — | | | (75,000) |
Payments pursuant to advances from related parties | | | — | | | (45,250) |
Payments pursuant to notes payable | | | (429,521) | | | (15,401) |
Payments pursuant to a promissory note | | | (300,000) | | | (280,000) |
Proceeds from notes payable and financing arrangements | | | 500,000 | | | 9,363 |
Proceeds from the issuance of a promissory note | | | — | | | 580,000 |
Proceeds from the issuance of convertible notes payable | | | — | | | 2,732,500 |
Proceeds from the issuance of common stock and warrants | | | 1,490,487 | | | 1,306,313 |
Net cash provided by financing activities | | | 1,260,966 | | | 4,212,525 |
Effect of foreign exchange rate changes on cash | | | 115,378 | | | (179,988) |
Net change in cash | | | 1,120,183 | | | 368,083 |
Cash, beginning of period | | | 556,858 | | | 208,945 |
Cash, end of period | | | $1,677,041 | | | $577,028 |
| | | | |||
Supplemental disclosure of cash and non-cash transactions: | | | | | ||
Cash paid for interest | | | $128,475 | | | $40,625 |
Common stock issued pursuant to convertible notes payable | | | $2,670,632 | | | $117,937 |
Debt discount for warrant liability | | | $— | | | $(1,578,225) |
Equity issued pursuant to acquisition | | | $— | | | $13,619,611 |
Security Grade acquisition consideration settlement | | | $— | | | $— |
Cash payable pursuant to acquisition | | | $— | | | $50,000 |
PIK interest payment of common stock | | | $56,244 | | | $75,000 |
Common stock issued pursuant to contingent consideration as part of acquisition | | | $— | | | $1,788,654 |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | | | $301,396 | | | $1,485,511 |
Base Price - Common Stock | | | $44,905,542 |
Base Price - Stock Options | | | 12,646,491 |
Total Purchase Price | | | $57,552,033 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $448,697 | | | |
Accounts receivable | | | 128,427 | | | |
Prepaid expenses | | | 351,615 | | | |
Property, plant and equipment, net | | | 72,252 | | | |
Goodwill | | | 39,135,007 | | | |
Customer list | | | 8,304,449 | | | 5 |
Software | | | 9,321,627 | | | 4.5 |
Tradename | | | 466,081 | | | 4.5 |
Total assets acquired | | | $58,228,155 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $223,581 | | | |
Other liabilities | | | 452,541 | | | |
Total liabilities assumed | | | 676,122 | | | |
Estimated fair value of net assets acquired | | | $57,552,033 | | |
Base Price - Common Stock | | | $388,702 |
Contingent Consideration - Common Stock | | | 777,298 |
Total Purchase Price | | | $1,166,000 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $5,609 | | | |
Accounts receivable and other assets | | | 30,479 | | | |
Property, plant and equipment, net | | | 57,830 | | | |
Software | | | 449,568 | | | 3.3 |
Goodwill | | | 778,552 | | | |
Total assets acquired | | | $1,322,038 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $56,038 | | | |
Total liabilities assumed | | | 56,038 | | | |
Estimated fair value of net assets acquired | | | $1,266,000 | | |
Base Price – Cash at closing | | | $25,000 |
Base Price – Deferred cash payment (including $25,000 to be made on the 4,8 and 12-month anniversaries of closing) | | | 75,000 |
Base Price – Common Stock | | | 710,000 |
Total Purchase Price | | | $810,000 |
Description | | | Fair Value |
Assets acquired: | | | |
Cash | | | $2,940 |
Accounts receivable | | | 7,635 |
Goodwill | | | 821,807 |
Total assets acquired | | | $832,382 |
Liabilities assumed: | | | |
Accounts payable | | | $12,526 |
Other liabilities | | | 9,856 |
Total liabilities assumed | | | 22,382 |
Estimated fair value of net assets acquired | | | $810,000 |
Base Price - Common Stock | | | $12,909,611 |
Total Purchase Price | | | $12,909,611 |
Description | | | Fair Value | | | Weighted Average Useful Life (Years) |
Assets acquired: | | | | | ||
Note Receivable, net | | | $135,000 | | | |
Property, Plant and Equipment, Net | | | 12,142 | | | |
Software | | | 452,002 | | | 4.5 |
Goodwill | | | 12,980,840 | | | |
Total assets acquired | | | $13,579,984 | | | |
Liabilities assumed: | | | | | ||
Accounts Payable | | | 43,717 | | | |
Notes Payable | | | 400,000 | | | |
Other Liabilities | | | 226,656 | | | |
Total liabilities assumed: | | | 670,373 | | | |
Estimated fair value of net assets acquired: | | | $12,909,611 | | |
6. | Discontinued Operations |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Assets | | | | | | | |||
Cash | | | $95,666 | | | $76,816 | | | $ 150,089 |
Accounts receivable, net | | | 961,219 | | | 627,176 | | | 480,972 |
Current assets held for sale | | | 1,056,885 | | | 703,992 | | | 631,061 |
Property and equipment, net | | | 34,451 | | | 85,865 | | | 103,085 |
Goodwill | | | 821,807 | | | — | | | — |
Deposits and other assets | | | 105,671 | | | 29,179 | | | 24,557 |
Non-current assets held for sale | | | 961,929 | | | 115,044 | | | 127,642 |
Total assets held for sale | | | 2,018,814 | | | 819,036 | | | 758,703 |
| | | |||||||
Liabilities | | | | | | | |||
Accounts payable and accrued liabilities | | | 452,292 | | | 108,193 | | | 55,156 |
Notes payable, current portion | | | 25,019 | | | 35,444 | | | 55,890 |
Deferred rent | | | — | | | 2,937 | | | 4,243 |
Current liabilities held for sale | | | 477,311 | | | 146,574 | | | 115,289 |
Other long-term liabilities | | | 6,718 | | | — | | | — |
Non-current liabilities held for sale | | | 6,718 | | | — | | | — |
Total liabilities held for sale | | | 484,029 | | | 146,574 | | | 115,289 |
Net assets | | | $1,534,785 | | | $ 672,462 | | | $ 643,414 |
| | For the Years Ended, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Revenue: | | | | | | | |||
Security and guarding | | | $4,429,405 | | | $4,245,445 | | | $3,242,720 |
Total Revenues | | | 4,429,405 | | | 4,245,445 | | | 3,242,720 |
Cost of revenue | | | 3,493,168 | | | 3,176,164 | | | 2,479,989 |
Gross margin | | | 936,237 | | | 1,069,281 | | | 762,731 |
| | | | | | ||||
Operating expenses: | | | | | | | |||
Selling, general and administrative | | | 618,725 | | | 606,271 | | | 491,030 |
Salaries and wages | | | 455,880 | | | 638,429 | | | 431,330 |
Professional and legal fees | | | 95,143 | | | 238,205 | | | 102,965 |
Depreciation and amortization | | | 52,221 | | | 55,475 | | | 51,004 |
Total operating expenses | | | 1,221,969 | | | 1,538,380 | | | 1,076,329 |
Loss from operations | | | (285,732) | | | (469,099) | | | (313,598) |
| | | | | | ||||
Other expenses: | | | | | | | |||
Interest (expense) income | | | (5,034) | | | (3,204) | | | — |
Other expenses | | | (5,034) | | | (3,204) | | | — |
| | | | | | ||||
Net loss | | | $(290,766) | | | $(472,303) | | | $(313,598) |
| | December 31, | | ||||||
| | 2019 | | | 2018 | | | 2017 | |
Furniture and equipment | | | $238,547 | | | $241,845 | | | $— |
Software equipment | | | 561,964 | | | — | | | — |
Vehicles | | | 73,380 | | | 75,014 | | | 11,846 |
Total | | | 873,891 | | | 316,859 | | | 11,846 |
Less: Accumulated depreciation | | | (102,663) | | | (53,206) | | | (4,297) |
Property and equipment, net | | | $771,228 | | | $263,653 | | | $7,549 |
8. | Intangible Assets, Net and Goodwill |
| | | | December 31, 2019 | ||||||||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount | | | Assets Acquired Pursuant to Business Combination(4) | | | Assets Acquired | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $— | | | $(69,533) | | | $23,894 |
Trade names and trademarks | | | 5 - 10 | | | 591,081 | | | — | | | — | | | (207,525) | | | 383,556 |
Web addresses | | | 5 | | | 130,000 | | | — | | | — | | | (95,611) | | | 34,389 |
Customer list | | | 5 | | | 11,459,027 | | | — | | | — | | | (4,256,070) | | | 7,202,957 |
Software | | | 4.5 | | | 9,771,195 | | | 452,002 | | | 1,625 | | | (3,492,525) | | | 6,732,297 |
Domain Name | | | 5 | | | — | | | — | | | 20,231 | | | (2,037) | | | 18,194 |
| | | | $22,044,730 | | | $452,002 | | | $21,856 | | | $(8,123,301) | | | $14,395,287 |
| | | | | | December 31, 2018 | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2017 | | | Assets Acquired Pursuant to Business Combination(2)(3) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(50,858) | | | $42,569 |
Trade names and trademarks | | | 5-10 | | | 125,000 | | | 466,081 | | | (91,554) | | | 499,527 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (69,625) | | | 60,375 |
Customer list | | | 5 | | | 3,154,578 | | | 8,304,449 | | | (1,965,520) | | | 9,493,507 |
Software | | | 4.5 | | | — | | | 9,771,195 | | | (1,263,095) | | | 8,508,100 |
| | | | $3,503,005 | | | $18,541,725 | | | $(3,440,652) | | | $18,604,078 |
| | December 31, 2017 | | ||||||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2016 | | | Assets Acquired Pursuant to Business Combination(1) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(32,183) | | | $61,244 |
Trade names and trademarks | | | 10 | | | 100,000 | | | 25,000 | | | (18,675) | | | 106,325 |
Web addresses | | | 5 | | | 125,000 | | | 5,000 | | | (43,639) | | | 86,361 |
Customer list | | | 5 | | | — | | | 3,154,578 | | | (366,249) | | | 2,788,329 |
| | | | $318,427 | | | $3,184,578 | | | $(460,746) | | | $3,042,259 |
(1) | On June 1, 2017, the Company acquired various assets of Security Grade Protective Services, Ltd. (See Note 5) |
(2) | On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 5) |
(3) | On August 3, 2018, the Company acquired various assets of Engeni (See Note 5) |
(4) | On September 10, 2019, the Company acquired various assets of GTI (See Note 5) |
Years Ending December 31, | | | Future amortization expense |
2020 | | | $4,773,348 |
2021 | | | 4,718,392 |
2022 | | | 4,036,485 |
2023 | | | 808,591 |
2024 | | | 39,669 |
Thereafter | | | 18,802 |
Total | | | $14,395,287 |
| | Total Goodwill | |
Balance at December 31, 2016 | | | $— |
Goodwill pursuant to acquisition | | | 664,329 |
Balance at December 31, 2017 | | | 664,329 |
Impairment of goodwill | | | (664,329) |
Goodwill attributable to Biotrack acquisition | | | 39,135,007 |
Goodwill attributable to Engeni acquisition | | | 778,552 |
Balance at December 31, 2018 | | | 39,913,559 |
| | ||
Goodwill attributable to Green Tree acquisition | | | 12,980,840 |
Balance at December 31, 2019 | | | $52,894,399 |
9. | Costs, Estimated Earnings and Billings |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Costs incurred on uncompleted contracts | | | $444,344 | | | $89,700 | | | $64,704 |
Estimated earnings | | | 150,355 | | | 50,512 | | | 27,730 |
Cost and estimated earnings earned on uncompleted contracts | | | 594,699 | | | 140,212 | | | 92,434 |
Billings to date | | | 501,543 | | | 252,535 | | | 71,778 |
Billings in excess of costs and costs in excess of billings on uncompleted contracts | | | 93,156 | | | (112,323) | | | 20,656 |
| | | | | |||||
Costs in excess of billings | | | $257,819 | | | $42,869 | | | $40,847 |
Billings in excess of cost | | | (164,663) | | | (155,192) | | | (20,191) |
| | $93,156 | | | $(112,323) | | | $20,656 |
10. | Accounts Payable and Accrued Expenses |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Accounts payable | | | $542,403 | | | $734,196 | | | $279,595 |
Accrued compensation and related expenses | | | 260,280 | | | — | | | — |
Accrued expenses | | | 1,717,796 | | | 847,560 | | | 220,682 |
Accrued interest | | | — | | | 12,764 | | | 43,204 |
Lease obligation - current | | | 290,161 | | | — | | | — |
Total | | | $2,810,640 | | | $1,594,520 | | | $543,481 |
11. | Convertible Notes Payable, net of discount |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Note Five, 5% convertible promissory note, fixed secured, maturing November 16, 2019 | | | $— | | | $187,177 | | | $812,393 |
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants | | | 143,630 | | | — | | | — |
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees | | | 185,313 | | | — | | | — |
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees | | | 205,363 | | | — | | | — |
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees | | | 206,091 | | | — | | | — |
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees | | | 92,095 | | | — | | | — |
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021 | | | 385,000 | | | — | | | — |
| | 1,217,492 | | | 187,177 | | | 812,393 | |
Less: Current portion | | | (832,492) | | | (187,177) | | | (812,393) |
Long-term portion | | | $385,000 | | | $— | | | $— |
12. | Related Party Transactions |
13. | Promissory Notes |
14. | Notes Payable |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 | | | $52,507 | | | $71,284 | | | $55,890 |
Loans Payable - Credit Union | | | 5,385 | | | 5,075 | | | 8,592 |
Notes Payable | | | 400,000 | | | — | | | — |
Less: Current portion of loans payable | | | (24,805) | | | (24,805) | | | (11,179) |
Long-term portion of loans payable | | | $433,087 | | | $51,554 | | | $53,293 |
15. | Shareholders’ Equity |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
February 2018 | | | 222,222 | | | $200,000 |
March 2018 | | | 500,000 | | | 450,000 |
April 2018 | | | 500,000 | | | 450,000 |
May 2018 | | | 244,444 | | | 219,999 |
July 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 183,333 | | | 164,999 |
September 2018 | | | 577,778 | | | 520,000 |
October 2018 | | | 694,444 | | | 625,000 |
November 2018 | | | 150,000 | | | 135,000 |
December 2018 | | | 222,222 | | | 200,000 |
| | 3,949,997 | | | $3,554,996 |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
May 2017 | | | 111,111 | | | $100,000 |
| | 111,111 | | | $100,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
March 2019 | | | 250,000 | | | $320,000 |
Ending Balance | | | 250,000 | | | $320,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
January 2018 | | | 42,850 | | | $173,014 |
March 2018 | | | 100,000 | | | 250,000 |
May 2018 | | | 133,900 | | | 223,774 |
July 2018 | | | 100,000 | | | 126,000 |
August 2018 | | | 10,000 | | | 10,600 |
August 2018 | | | 33,195 | | | 33,195 |
October 2018 | | | 20,000 | | | 20,400 |
November 2018 | | | 75,000 | | | 79,500 |
Ending Balance | | | 514,945 | | | $916,483 |
For the Year Ended December 31, 2018 | ||||||||||||||||||
Issuance Date | | | Beneficial Conversion Feature Term (months) | | | Number of shares | | | Fair Value of Beneficial Conversion Feature | | | Amount accreted as a deemed dividend at December 31, 2017 | | | Amount accreted as a deemed dividend for the Year Ended December 31, 2018 | | | Unamortized Beneficial Conversion Feature |
May 17, 2017 | | | 12 | | | 7,318,084 | | | $25,247,098 | | | $(15,779,436) | | | $(9,467,661) | | | $— |
July 29, 2017 | | | 9.5 | | | 1,680,000 | | | 6,804,000 | | | (3,674,634) | | | (3,129,366) | | | — |
August 29, 2017 | | | 8.5 | | | 369,756 | | | 1,148,263 | | | (556,190) | | | (592,073) | | | — |
September 15, 2017 | | | 8 | | | 462,195 | | | 1,435,329 | | | (648,601) | | | (786,728) | | | — |
October 11, 2017 | | | 7 | | | 462,195 | | | 1,121,036 | | | (426,309) | | | (694,727) | | | — |
October 31, 2017 | | | 6.5 | | | 1,042,337 | | | 1,735,641 | | | (548,570) | | | (1,187,071) | | | — |
December 19, 2017 | | | 5 | | | 2,449,634 | | | 6,921,348 | | | (576,780) | | | (6,344,568) | | | — |
Total | | | | | 13,784,201 | | | $44,412,715 | | | $(22,210,520) | | | $(22,202,194) | | | $— |
16. | Stock Options |
| | December 31, 2019 | | | March 28, 2018 to December 31, 2018 | | | June 2, 2017 to December 31, 2017 | |
Exercise Price | | | $0.435 to $2.59 | | | $1.90 to $2.09 | | | $0.001 |
Fair value of company’s common stock | | | $0.435 to $2.35 | | | $0.90 to $1.90 | | | $ 3.00 to $4.42 |
Dividend yield | | | 0 | | | 0 | | | 0 |
Expected volatility | | | 110% to 191% | | | 186.64% to 253.52 | | | 179.9% to 266.4% |
Risk free interest rate | | | 1.55% to 2.51% | | | 2.35% to 2.59 | | | 1.42% to 1.98% |
Expected life (years) remaining | | | 2.92 to 9.22 | | | 4.24 to 10.00 | | | 2.42 to 3.00 |
| | Shares Underlying Options | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2017 | | | — | | | — | | | — |
Granted | | | 414,854 | | | $0.001 | | | 3.00 |
Outstanding at January 1, 2018 | | | 414,854 | | | $0.001 | | | 2.42 |
Granted | | | 490,000 | | | $1.916 | | | 8.84 |
Options assumed pursuant to acquisition – BioTrackTHC Stock Plan | | | 3,841,492 | | | $0.790 | | | 1.84 |
Options assumed pursuant to acquisition – Management Awards | | | 4,290,918 | | | $0.439 | | | 2.34 |
Exercised | | | (226,822) | | | $0.001 | | | 1.50 |
Forfeited and expired | | | (79,486) | | | $0.001 | | | 0.00 |
Outstanding at January 1, 2019 | | | 8,730,956 | | | $0.671 | | | 2.44 |
Granted | | | 3,075,000 | | | $1.161 | | | 5.56 |
Exercised | | | (188,575) | | | $0.261 | | | 0.57 |
Outstanding at December 31, 2019 | | | 11,617,381 | | | $0.807 | | | 3.21 |
Vested options at December 31, 2019 | | | 9,339,881 | | | $0.716 | | | 1.72 |
17. | Warrant Liability |
Proceeds from January investment units | | | $1,129,700 |
Par value of common stock issues | | | $(1,255) |
Fair value of warrants | | | $(1,717,506) |
Loss on issuance of warrants (January 10, 2019 issuance) | | | $(589,061) |
| | Warrant Shares | | | Weighted Average Exercise Price | |
Balance at January 1, 2017 | | | 1,920,000 | | | $0.16 |
Warrants granted | | | 987,073 | | | $0.41 |
Warrants exercised | | | (175,000) | | | |
Balance at January 1, 2018 | | | 2,732,073 | | | $0.23 |
Warrants granted | | | 686,111 | | | $0.21 |
Balance at January 1, 2019 | | | 3,418,184 | | | $0.23 |
Warrants granted | | | 1,694,874 | | | $1.17 |
Balance at December 31, 2019 | | | 5,113,058 | | | $0.55 |
| | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | |
Fair value of company’s common stock | | | $0.60 | | | $0.90 | | | $3.00 |
Dividend yield | | | 0% | | | 0% | | | 0% |
Expected volatility | | | 45% - 140% | | | 175.0% | | | 266.40% |
Risk Free interest rate | | | 1.55% - 1.79% | | | 2.49% | | | 1.98% |
Expected life (years) | | | 2.83 | | | 1.65 | | | 2.65 |
Fair value of financial instruments - warrants | | | $715,259 | | | $896,171 | | | 2,429,569 |
| | Amount | |
Balance as of January 1, 2017 | | | $2,429,569 |
Fair value of warrants at date of inception | | | 1,839,133 |
Change in fair value of liability to issue warrants | | | 590,436 |
Balance as of December 31, 2017 | | | $2,429,569 |
Change in fair value of liability to issue warrants | | | (1,641,398) |
Balance as of December 31, 2018 | | | $896,171 |
Fair value of warrants issued | | | 3,632,065 |
Change in fair value of liability to issue warrants | | | (3,812,977) |
Balance as of December 31, 2019 | | | $715,259 |
18. | Stock-Based Compensation |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net loss attributable to common shareholders | | | $(42,126,732) | | | $(1,373,572) | | | $(48,269,906) | | | $(7,399,308) |
Loss from continuing operations: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Diluted | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Income (loss) from discontinued operations: | | | | | | | | | ||||
Basic | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Diluted | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Loss attributable to common shareholders: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Diluted | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Weighted average common shares outstanding: | | | | | | | | | ||||
Basic | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
Diluted | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | | | For the Years Ended December 31, | ||||||||||||||
| | 2020 | | 2019 | | 2020 | | 2019 | | | 2019 | | 2018 | | 2017 | ||||||
Potentially dilutive securities: | | | | | | | | ||||||||||||||
Convertible notes payable | | 15,520,651 | | 3,649,021 | | 15,520,651 | | 3,649,021 | | 5,994,838 | | 124,784 | | 433,668 | |||||||
Convertible Preferred A Stock | | 1,000,000 | | 1,000,000 | | 1,000,000 | | 1,000,000 | | 1,000,000 | | 1,000,000 | | 1,000,000 | |||||||
Convertible Preferred B Stock | | 13,784,201 | | 13,784,201 | | 13,784,201 | | 13,784,201 | | 13,784,201 | | 13,784,201 | | 13,784,201 | |||||||
Warrants | | 4,985,998 | | 4,975,558 | | 4,985,998 | | 4,975,558 | | 5,113,058 | | 3,418,184 | | 2,780,193 | |||||||
Stock options | | 10,944,266 | | 9,787,381 | | 10,944,266 | | 9,787,381 | | 11,617,381 | | 8,729,463 | | — |
4. | Revenue Recognition |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | | | For the Years Ended December 31, | ||||||||||||||
| | 2020 | | 2019 | | 2020 | | 2019 | | | 2019 | | 2018 | | 2017 | ||||||
Types of Revenues: | | | | | | | | ||||||||||||||
Security Monitoring | | $84,147 | | $135,218 | | $279,042 | | $436,976 | | $593,031 | | $644,027 | | $787,080 | |||||||
Systems Installation | | 30,555 | | 245,272 | | 346,460 | | 447,880 | | 783,192 | | 499,138 | | — | |||||||
Software | | 2,778,356 | | 2,357,078 | | 8,174,850 | | 6,872,210 | | 9,486,472 | | 4,174,963 | | — | |||||||
Total revenues | | $2,893,058 | | $2,737,568 | | $8,800,352 | | $7,757,066 | | $10,862,695 | | $5,318,128 | | $787,080 |
5. | Business Combination |
Base Price - Cash | | | $2,100,373 |
Base Price - Stock Options | | | 916,643 |
Contingent Consideration - Stock Options | | | 916,643 |
Total Purchase Price | | | $3,933,659 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $14,137 | | | |
Accounts receivable | | | 53,792 | | | |
Costs & earnings in excess of billings | | | 96,898 | | | |
Property, plant and equipment, net | | | 27,775 | | | |
Trademarks | | | 25,000 | | | 10 |
Customer lists | | | 3,154,578 | | | 5 |
Web address | | | 5,000 | | | 5 |
Goodwill | | | 664,329 | | | |
Other assets | | | 3,880 | | | |
Total assets acquired | | | $4,045,389 | | | |
Liabilities assumed: | | | | | ||
Billings in excess of costs | | | $23,967 | | | |
Loans payable | | | 18,414 | | | |
Credit card payable and other liabilities | | | 69,349 | | | |
Total liabilities assumed | | | 111,730 | | | |
Estimated fair value of net assets acquired | | | $3,933,659 | | |
Base Price - Common Stock | | | $44,905,542 |
Base Price - Stock Options | | | 12,646,491 |
Total Purchase Price | | | $57,552,033 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $448,697 | | | |
Accounts receivable | | | 128,427 | | | |
Prepaid expenses | | | 351,615 | | | |
Property, plant and equipment, net | | | 72,252 | | | |
Goodwill | | | 39,135,007 | | | |
Customer list | | | 8,304,449 | | | 5 |
Software | | | 9,321,627 | | | 4.5 |
Tradename | | | 466,081 | | | 4.5 |
Total assets acquired | | | $58,228,155 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $223,581 | | | |
Other liabilities | | | 452,541 | | | |
Total liabilities assumed | | | 676,122 | | | |
Estimated fair value of net assets acquired | | | $57,552,033 | | |
Base Price - Common Stock | | | $388,702 |
Contingent Consideration - Common Stock | | | 777,298 |
Total Purchase Price | | | $1,166,000 |
Description | | | Fair Value | | | Weighted Average Useful Life (in years) |
Assets acquired: | | | | | ||
Cash | | | $5,609 | | | |
Accounts receivable and other assets | | | 30,479 | | | |
Property, plant and equipment, net | | | 57,830 | | | |
Software | | | 449,568 | | | 3.3 |
Goodwill | | | 778,552 | | | |
Total assets acquired | | | $1,322,038 | | | |
Liabilities assumed: | | | | | ||
Accounts payable | | | $56,038 | | | |
Total liabilities assumed | | | 56,038 | | | |
Estimated fair value of net assets acquired | | | $1,266,000 | | |
Base Price – Cash at closing | | | $25,000 |
Base Price – Deferred cash payment (including $25,000 to be made on the | | | 75,000 |
Base Price – Common Stock | | | 710,000 |
Total Purchase Price | | | $810,000 |
Description | | | Fair Value |
Assets acquired: | | | |
Cash | | | $2,940 |
Accounts receivable | | | 7,635 |
Goodwill | | | 821,807 |
Total assets acquired | | | $832,382 |
Liabilities assumed: | | | |
Accounts payable | | | $12,526 |
Other liabilities | | | 9,856 |
Total liabilities assumed | | | 22,382 |
Estimated fair value of net assets acquired | | | $810,000 |
Base Price - Common Stock | | | $ |
Total Purchase Price | | | $ |
Description | | Fair Value | | Weighted Average Useful Life (Years) | | Fair Value | | Weighted Average Useful Life (Years) | ||||
Assets acquired: | | | | | ||||||||
Note Receivable, net | | $135,000 | | | $135,000 | | ||||||
Property, Plant and Equipment, Net | | 12,142 | | | 12,142 | | ||||||
Software | | 452,002 | | 4.5 | | 452,002 | | 4.5 | ||||
Goodwill | | 9,792,829 | | | 12,980,840 | | ||||||
Total assets acquired | | $10,391,973 | | | $13,579,984 | | ||||||
Liabilities assumed: | | | | | ||||||||
Accounts Payable | | 43,717 | | | 43,717 | | ||||||
Notes Payable | | 400,000 | | | 400,000 | | ||||||
Other Liabilities | | 226,656 | | | 226,656 | | ||||||
Total liabilities assumed: | | 670,373 | | | 670,373 | | ||||||
Estimated fair value of net assets acquired | | $9,721,600 | | |||||||||
Estimated fair value of net assets acquired: | | $12,909,611 | |
6. | Discontinued Operations |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Revenues | | | $635,398 | | | $1,003,716 | | | $4,043,246 | | | $3,254,198 |
Cost of revenue | | | 555,817 | | | 905,970 | | | 3,277,640 | | | 2,552,222 |
Gross margin | | | 79,581 | | | 97,746 | | | 765,606 | | | 701,976 |
Operating expenses: | | | | | | | | | ||||
Selling, general and administrative | | | 58,060 | | | 93,600 | | | 470,568 | | | 396,023 |
Salaries and wages | | | 45,370 | | | 116,777 | | | 242,454 | | | 353,903 |
Professional and legal fees | | | 47,990 | | | 9,079 | | | 110,424 | | | 72,524 |
Depreciation and amortization | | | — | | | 19,155 | | | 7,301 | | | 38,311 |
Total operating expenses | | | 151,420 | | | 238,611 | | | 830,747 | | | 860,761 |
Other income (expense) | | | | | | | | | ||||
Interest income (expense) | | | 1,580 | | | (411) | | | — | | | (2,013) |
Other income (expenses) | | | 1,580 | | | (411) | | | — | | | (2,013) |
Loss from discontinued operations | | | $(70,529) | | | $(141,276) | | | $(65,141) | | | $(160,798) |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Assets | | | | | | | |||
Cash | | | $95,666 | | | $76,816 | | | $ 150,089 |
Accounts receivable, net | | | 961,219 | | | 627,176 | | | 480,972 |
Current assets held for sale | | | 1,056,885 | | | 703,992 | | | 631,061 |
Property and equipment, net | | | 34,451 | | | 85,865 | | | 103,085 |
Goodwill | | | 821,807 | | | — | | | — |
Deposits and other assets | | | 105,671 | | | 29,179 | | | 24,557 |
Non-current assets held for sale | | | 961,929 | | | 115,044 | | | 127,642 |
Total assets held for sale | | | 2,018,814 | | | 819,036 | | | 758,703 |
| | | |||||||
Liabilities | | | | | | | |||
Accounts payable and accrued liabilities | | | 452,292 | | | 108,193 | | | 55,156 |
Notes payable, current portion | | | 25,019 | | | 35,444 | | | 55,890 |
Deferred rent | | | — | | | 2,937 | | | 4,243 |
Current liabilities held for sale | | | 477,311 | | | 146,574 | | | 115,289 |
Other long-term liabilities | | | 6,718 | | | — | | | — |
Non-current liabilities held for sale | | | 6,718 | | | — | | | — |
Total liabilities held for sale | | | 484,029 | | | 146,574 | | | 115,289 |
Net assets | | | $1,534,785 | | | $ 672,462 | | | $ 643,414 |
| | For the Years Ended, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Revenue: | | | | | | | |||
Security and guarding | | | $4,429,405 | | | $4,245,445 | | | $3,242,720 |
Total Revenues | | | 4,429,405 | | | 4,245,445 | | | 3,242,720 |
Cost of revenue | | | 3,493,168 | | | 3,176,164 | | | 2,479,989 |
Gross margin | | | 936,237 | | | 1,069,281 | | | 762,731 |
| | | | | | ||||
Operating expenses: | | | | | | | |||
Selling, general and administrative | | | 618,725 | | | 606,271 | | | 491,030 |
Salaries and wages | | | 455,880 | | | 638,429 | | | 431,330 |
Professional and legal fees | | | 95,143 | | | 238,205 | | | 102,965 |
Depreciation and amortization | | | 52,221 | | | 55,475 | | | 51,004 |
Total operating expenses | | | 1,221,969 | | | 1,538,380 | | | 1,076,329 |
Loss from operations | | | (285,732) | | | (469,099) | | | (313,598) |
| | | | | | ||||
Other expenses: | | | | | | | |||
Interest (expense) income | | | (5,034) | | | (3,204) | | | — |
Other expenses | | | (5,034) | | | (3,204) | | | — |
| | | | | | ||||
Net loss | | | $(290,766) | | | $(472,303) | | | $(313,598) |
| | December 31, | | ||||||||||||
| | September 30, 2020 | | December 31, 2019 | | | 2019 | | 2018 | | 2017 | ||||
Furniture and equipment | | $171,013 | | $238,547 | | $238,547 | | $241,845 | | $— | |||||
Software development costs | | 1,260,906 | | 561,964 | |||||||||||
Software equipment | | 561,964 | | — | | — | |||||||||
Vehicles | | 157,572 | | 73,380 | | 73,380 | | 75,014 | | 11,846 | |||||
Total | | 1,589,491 | | 873,891 | | 873,891 | | 316,859 | | 11,846 | |||||
Less: Accumulated depreciation and amortization | | (230,140) | | (102,663) | |||||||||||
Less: Accumulated depreciation | | (102,663) | | (53,206) | | (4,297) | |||||||||
Property and equipment, net | | $1,359,351 | | $771,228 | | $771,228 | | $263,653 | | $7,549 |
8. | Intangible Assets, Net and Goodwill |
| | | | September 30, 2020(1) | | | | December 31, 2019 | |||||||||||||||||||||||||
| | Estimated Useful Life (Years) | | Gross Carrying Amount | | Assets Acquired Pursuant to Business Combination | | Accumulated Amortization | | Net Book Value | | | Estimated Useful Life (Years) | | Gross Carrying Amount | | Assets Acquired Pursuant to Business Combination(4) | | Assets Acquired | | Accumulated Amortization | | Net Book Value | ||||||||||
Database | | 5 | | $93,427 | | $— | | $(83,501) | | $9,926 | | 5 | | $93,427 | | $— | | $— | | $(69,533) | | $23,894 | |||||||||||
Trade names and trademarks | | 5 - 10 | | 591,081 | | — | | (294,582) | | 296,499 | | 5 - 10 | | 591,081 | | — | | — | | (207,525) | | 383,556 | |||||||||||
Web addresses | | 5 | | 130,000 | | — | | (115,047) | | 14,953 | | 5 | | 130,000 | | — | | — | | (95,611) | | 34,389 | |||||||||||
Customer list | | 5 | | 8,304,449 | | — | | (3,874,569) | | 4,429,880 | | 5 | | 11,459,027 | | — | | — | | (4,256,070) | | 7,202,957 | |||||||||||
Software | | 4.5 | | 10,224,822 | | — | | (5,222,933) | | 5,001,889 | | 4.5 | | 9,771,195 | | 452,002 | | 1,625 | | (3,492,525) | | 6,732,297 | |||||||||||
Domain Name | | 5 | | 20,231 | | | (5,059) | | 15,172 | | 5 | | — | | — | | 20,231 | | (2,037) | | 18,194 | ||||||||||||
| | $19,364,010 | | $— | | $(9,595,691) | | $9,768,319 | | | $22,044,730 | | $452,002 | | $21,856 | | $(8,123,301) | | $14,395,287 |
| | | | | | December 31, 2019 | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2018 | | | Assets Acquired Pursuant to Business Combination(2) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(69,533) | | | $23,894 |
Trade names and trademarks | | | 5 - 10 | | | 591,081 | | | — | | | (207,525) | | | 383,556 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (95,611) | | | 34,389 |
Customer list | | | 5 | | | 11,459,027 | | | — | | | (4,256,070) | | | 7,202,957 |
Software | | | 4.5 | | | 9,771,195 | | | 453,627 | | | (3,492,525) | | | 6,732,297 |
Domain Name | | | 5 | | | — | | | 20,231 | | | (2,037) | | | 18,194 |
| | | | $22,044,730 | | | $473,858 | | | $(8,123,301) | | | $14,395,287 |
| | | | | | December 31, 2018 | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2017 | | | Assets Acquired Pursuant to Business Combination(2)(3) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(50,858) | | | $42,569 |
Trade names and trademarks | | | 5-10 | | | 125,000 | | | 466,081 | | | (91,554) | | | 499,527 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (69,625) | | | 60,375 |
Customer list | | | 5 | | | 3,154,578 | | | 8,304,449 | | | (1,965,520) | | | 9,493,507 |
Software | | | 4.5 | | | — | | | 9,771,195 | | | (1,263,095) | | | 8,508,100 |
| | | | $3,503,005 | | | $18,541,725 | | | $(3,440,652) | | | $18,604,078 |
| | December 31, 2017 | | ||||||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2016 | | | Assets Acquired Pursuant to Business Combination(1) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(32,183) | | | $61,244 |
Trade names and trademarks | | | 10 | | | 100,000 | | | 25,000 | | | (18,675) | | | 106,325 |
Web addresses | | | 5 | | | 125,000 | | | 5,000 | | | (43,639) | | | 86,361 |
Customer list | | | 5 | | | — | | | 3,154,578 | | | (366,249) | | | 2,788,329 |
| | | | $318,427 | | | $3,184,578 | | | $(460,746) | | | $3,042,259 |
(1) |
(2) | On June 1, 2018, the Company acquired various assets of BioTrackTHC (See Note 5) |
(3) | On August 3, 2018, the Company acquired various assets of Engeni (See Note 5) |
(4) | On September 10, 2019, the Company acquired various assets of GTI |
Years Ending December 31, | | | Future amortization expense |
2020 | | | $4,773,348 |
2021 | | | 4,718,392 |
2022 | | | 4,036,485 |
2023 | | | 808,591 |
2024 | | | 39,669 |
Thereafter | | | 18,802 |
Total | | | $14,395,287 |
| | Total Goodwill | |
Balance at December 31, 2016 | | | $— |
Goodwill pursuant to acquisition | | | 664,329 |
Balance at December 31, 2017 | | | 664,329 |
Impairment of goodwill | | | (664,329) |
Goodwill attributable to Biotrack acquisition | | | 39,135,007 |
Goodwill attributable to Engeni acquisition | | | 778,552 |
Balance at December 31, 2018 | | | |
| | ||
Goodwill attributable to Green Tree acquisition | | | |
Balance at December 31, 2019 | | | |
$ |
9. | Costs, Estimated Earnings and Billings |
| | December 31, | |||||||||||||
| | September 30, 2020 | | December 31, 2019 | | | 2019 | | 2018 | | 2017 | ||||
Costs incurred on uncompleted contracts | | $469,495 | | $444,344 | | $444,344 | | $89,700 | | $64,704 | |||||
Estimated earnings | | 167,123 | | 150,355 | | 150,355 | | 50,512 | | 27,730 | |||||
Cost and estimated earnings earned on uncompleted contracts | | 636,618 | | 594,699 | | 594,699 | | 140,212 | | 92,434 | |||||
Billings to date | | 424,696 | | 501,543 | | 501,543 | | 252,535 | | 71,778 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | | 211,922 | | 93,156 | |||||||||||
Billings in excess of costs and costs in excess of billings on uncompleted contracts | | 93,156 | | (112,323) | | 20,656 | |||||||||
| | | |||||||||||||
Costs in excess of billings | | $280,464 | | $257,819 | | $257,819 | | $42,869 | | $40,847 | |||||
Billings in excess of cost | | (68,542) | | (164,663) | | (164,663) | | (155,192) | | (20,191) | |||||
| $211,922 | | $93,156 | | $93,156 | | $(112,323) | | $20,656 |
10. | Accounts Payable and Accrued Expenses |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Accounts payable | | | $542,403 | | | $734,196 | | | $279,595 |
Accrued compensation and related expenses | | | 260,280 | | | — | | | — |
Accrued expenses | | | 1,717,796 | | | 847,560 | | | 220,682 |
Accrued interest | | | — | | | 12,764 | | | 43,204 |
Lease obligation - current | | | 290,161 | | | — | | | — |
Total | | | $2,810,640 | | | $1,594,520 | | | $543,481 |
11. | Convertible Notes Payable, net of discount |
| | December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Note Five, 5% convertible promissory note, fixed secured, maturing November 16, 2019 | | | $— | | | $187,177 | | | $812,393 |
Note Ten, 25% convertible promissory note, fixed secured, maturing March 1, 2020, net of debt discount for warrants | | | 143,630 | | | — | | | — |
Note Eleven, 10% convertible promissory note, fixed secured, maturing May 15, 2020, net of debt discount for warrants and legal fees | | | 185,313 | | | — | | | — |
Note Twelve, 10% convertible promissory note, fixed secured, maturing June 16, 2020, net of debt discount for warrants and legal fees | | | 205,363 | | | — | | | — |
Note Thirteen, 10% convertible promissory note, fixed secured, maturing July 11, 2020, net of debt discount for warrants and legal fees | | | 206,091 | | | — | | | — |
Note Fourteen, 12% convertible promissory note, fixed secured, maturing September 26, 2020, net of debt discount for warrants and legal fees | | | 92,095 | | | — | | | — |
Note Fifteen, 12% convertible promissory note, fixed secured, maturing November 15, 2021 | | | 385,000 | | | — | | | — |
| | 1,217,492 | | | 187,177 | | | 812,393 | |
Less: Current portion | | | (832,492) | | | (187,177) | | | (812,393) |
Long-term portion | | | $385,000 | | | $— | | | $— |
| | September 30, 2020 | | | December 31, 2019 | |
Accounts payable | | | $358,766 | | | $542,617 |
Accrued compensation and related expenses | | | 710,086 | | | 260,280 |
Accrued expenses | | | 1,522,183 | | | 1,717,796 |
Lease obligation - current | | | 257,953 | | | 290,161 |
Total | | | $2,848,988 | | | $2,810,854 |
12. | Related Party Transactions |
13. | Promissory Notes |
14. | Notes Payable |
| | December 31, | |||||||||||||
| | September 30, 2020 | | December 31, 2019 | | | 2019 | | 2018 | | 2017 | ||||
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 | | $40,415 | | $27,488 | | $52,507 | | $71,284 | | $55,890 | |||||
Loans Payable - Credit Union | | 2,099 | | 5,385 | | 5,385 | | 5,075 | | 8,592 | |||||
Notes Payable and financing arrangements | | 485,857 | | 400,000 | |||||||||||
Notes Payable | | 400,000 | | — | | — | |||||||||
Less: Current portion of loans payable | | (496,671) | | (10,814) | | (24,805) | | (24,805) | | (11,179) | |||||
Long-term portion of loans payable | | $31,700 | | $422,059 | | $433,087 | | $51,554 | | $53,293 |
15. | Shareholders’ Equity |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
February 2018 | | | 222,222 | | | $200,000 |
March 2018 | | | 500,000 | | | 450,000 |
April 2018 | | | 500,000 | | | 450,000 |
May 2018 | | | 244,444 | | | 219,999 |
July 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 327,777 | | | 294,999 |
August 2018 | | | 183,333 | | | 164,999 |
September 2018 | | | 577,778 | | | 520,000 |
October 2018 | | | 694,444 | | | 625,000 |
November 2018 | | | 150,000 | | | 135,000 |
December 2018 | | | 222,222 | | | 200,000 |
| | 3,949,997 | | | $3,554,996 |
Date of Sale | | | Number of Shares Sold | | | Total Proceeds |
May 2017 | | | 111,111 | | | $100,000 |
| | 111,111 | | | $100,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
March 2019 | | | 250,000 | | | $320,000 |
Ending Balance | | | 250,000 | | | $320,000 |
Date of Sale | | | Number of Shares Issued | | | Total Expense |
January 2018 | | | 42,850 | | | $173,014 |
March 2018 | | | 100,000 | | | 250,000 |
May 2018 | | | 133,900 | | | 223,774 |
July 2018 | | | 100,000 | | | 126,000 |
August 2018 | | | 10,000 | | | 10,600 |
August 2018 | | | 33,195 | | | 33,195 |
October 2018 | | | 20,000 | | | 20,400 |
November 2018 | | | 75,000 | | | 79,500 |
Ending Balance | | | 514,945 | | | $916,483 |
For the Year Ended December 31, 2018 | ||||||||||||||||||
Issuance Date | | | Beneficial Conversion Feature Term (months) | | | Number of shares | | | Fair Value of Beneficial Conversion Feature | | | Amount accreted as a deemed dividend at December 31, 2017 | | | Amount accreted as a deemed dividend for the Year Ended December 31, 2018 | | | Unamortized Beneficial Conversion Feature |
May 17, 2017 | | | 12 | | | 7,318,084 | | | $25,247,098 | | | $(15,779,436) | | | $(9,467,661) | | | $— |
July 29, 2017 | | | 9.5 | | | 1,680,000 | | | 6,804,000 | | | (3,674,634) | | | (3,129,366) | | | — |
August 29, 2017 | | | 8.5 | | | 369,756 | | | 1,148,263 | | | (556,190) | | | (592,073) | | | — |
September 15, 2017 | | | 8 | | | 462,195 | | | 1,435,329 | | | (648,601) | | | (786,728) | | | — |
October 11, 2017 | | | 7 | | | 462,195 | | | 1,121,036 | | | (426,309) | | | (694,727) | | | — |
October 31, 2017 | | | 6.5 | | | 1,042,337 | | | 1,735,641 | | | (548,570) | | | (1,187,071) | | | — |
December 19, 2017 | | | 5 | | | 2,449,634 | | | 6,921,348 | | | (576,780) | | | (6,344,568) | | | — |
Total | | | | | 13,784,201 | | | $44,412,715 | | | $(22,210,520) | | | $(22,202,194) | | | $— |
16. | Stock Options |
| | December 31, 2019 | | | March 28, 2018 to December 31, 2018 | | | June 2, 2017 to December 31, 2017 | |
Exercise Price | | | $0.435 to $2.59 | | | $1.90 to $2.09 | | | $0.001 |
Fair value of company’s common stock | | | $0.435 to $2.35 | | | $0.90 to $1.90 | | | $ 3.00 to $4.42 |
Dividend yield | | | 0 | | | 0 | | | 0 |
Expected volatility | | | 110% to 191% | | | 186.64% to 253.52 | | | 179.9% to 266.4% |
Risk free interest rate | | | 1.55% to 2.51% | | | 2.35% to 2.59 | | | 1.42% to 1.98% |
Expected life (years) remaining | | | 2.92 to 9.22 | | | 4.24 to 10.00 | | | 2.42 to 3.00 |
| | Shares Underlying Options | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2020 | | | 11,617,381 | | | $0.807 | | | 3.21 |
Granted | | | 2,880,000 | | | $0.163 | | | 3.96 |
Exercised | | | (1,350,000) | | | $0.120 | | | 3 |
Forfeited and expired | | | (2,203,115) | | | $0.675 | | | 1.61 |
Outstanding at September 30, 2020 | | | 10,944,266 | | | $0.749 | | | 3.65 |
Vested options at September 30, 2020 | | | 8,945,932 | | | $0.714 | | | 1.68 |
| | Shares Underlying Options | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2017 | | | — | | | — | | | — |
Granted | | | 414,854 | | | $0.001 | | | 3.00 |
Outstanding at January 1, 2018 | | | 414,854 | | | $0.001 | | | 2.42 |
Granted | | | 490,000 | | | $1.916 | | | 8.84 |
Options assumed pursuant to acquisition – BioTrackTHC Stock Plan | | | 3,841,492 | | | $0.790 | | | 1.84 |
Options assumed pursuant to acquisition – Management Awards | | | 4,290,918 | | | $0.439 | | | 2.34 |
Exercised | | | (226,822) | | | $0.001 | | | 1.50 |
Forfeited and expired | | | (79,486) | | | $0.001 | | | 0.00 |
Outstanding at January 1, 2019 | | | 8,730,956 | | | $0.671 | | | 2.44 |
Granted | | | 3,075,000 | | | $1.161 | | | 5.56 |
Exercised | | | (188,575) | | | $0.261 | | | 0.57 |
Outstanding at December 31, 2019 | | | 11,617,381 | | | $0.807 | | | 3.21 |
Vested options at December 31, 2019 | | | 9,339,881 | | | $0.716 | | | 1.72 |
17. | Warrant Liability |
Proceeds from January investment units | | | $1,129,700 |
Par value of common stock issues | | | $(1,255) |
Fair value of warrants | | | $(1,717,506) |
Loss on issuance of warrants (January 10, 2019 issuance) | | | $(589,061) |
| | Warrant Shares | | | Weighted Average Exercise Price | |
Balance at January 1, 2017 | | | 1,920,000 | | | $0.16 |
Warrants granted | | | 987,073 | | | $0.41 |
Warrants exercised | | | (175,000) | | | |
Balance at January 1, 2018 | | | 2,732,073 | | | $0.23 |
Warrants granted | | | 686,111 | | | $0.21 |
Balance at January 1, 2019 | | | 3,418,184 | | | $0.23 |
Warrants granted | | | 1,694,874 | | | $1.17 |
Balance at December 31, 2019 | | | 5,113,058 | | | $0.55 |
| | As of December 31, 2019 | | | As of December 31, 2018 | | | As of December 31, 2017 | |
Fair value of company’s common stock | | | $0.60 | | | $0.90 | | | $3.00 |
Dividend yield | | | 0% | | | 0% | | | 0% |
Expected volatility | | | 45% - 140% | | | 175.0% | | | 266.40% |
Risk Free interest rate | | | 1.55% - 1.79% | | | 2.49% | | | 1.98% |
Expected life (years) | | | 2.83 | | | 1.65 | | | 2.65 |
Fair value of financial instruments - warrants | | | $715,259 | | | $896,171 | | | 2,429,569 |
| | For the Nine Months Ended September 30, 2020 | ||||
| | Warrant Shares | | | Weighted Average Exercise Price | |
Balance at January 1, 2020 | | | 5,113,058 | | | $0.23 |
Warrants expired | | | (462,195) | | | $0.32 |
Warrants granted | | | 335,135 | | | $0.16 |
Balance at September 30, 2020 | | | 4,985,998 | | | $0.52 |
| | As of September 30, 2020 | | | As of December 31, 2019 | |
Fair value of company's common stock | | | $0.101 | | | $0.60 |
Dividend yield | | | 0% | | | 0% |
Expected volatility | | | 37% - 163% | | | 45% - 140% |
Risk Free interest rate | | | 0.16% - 0.26% | | | 1.55% - 1.79% |
Expected life (years) | | | 2.64 | | | 2.83 |
Fair value of financial instruments - warrants | | | $88,750 | | | $715,259 |
| | Amount | |
Balance as of January 1, | | | $ |
Fair value of warrants | | | 1,839,133 |
Change in fair value of liability to issue warrants | | | 590,436 |
Balance as of December 31, 2017 | | | $ |
Change in fair value of liability to issue warrants | | | |
Balance as of | | | $ |
Fair value of warrants issued | | | |
Change in fair value of liability to issue warrants | | | |
Balance as of | | | $ |
18. | Stock-Based Compensation |
19. | Income Taxes |
20. | Commitments and Contingencies |
| | Year Ended December 31, 2019 | |
Operating lease expense | | | $513,008 |
Cash paid for amounts included in the measurement of operating lease liabilities | | | $389,380 |
ROU assets obtained in exchange for operating lease obligations | | | $1,499,752 |
| | As of December 31, 2019 | |
Other assets | | | $1,091,065 |
Accounts payable and accrued liabilities | | | $373,710 |
Other long-term liabilities | | | 783,230 |
Total lease liabilities | | | $1,156,940 |
Weighted average remaining lease term (in years) | | | 2.91 |
Weighted average discount rate | | | 6.00% |
| | As of December 31, 2019 | |
2020 | | | $393,413 |
2021 | | | 248,223 |
2022 | | | 195,144 |
2023 | | | 200,944 |
2024 | | | 205,435 |
Thereafter | | | — |
Total future minimum lease payments | | | $1,243,159 |
Less imputed interest | | | (86,219) |
Total | | | $1,156,940 |
Years Ending December 31, | | | Future Minimum Lease Payments |
2020 | | | 420,291 |
2021 | | | 275,223 |
2022 | | | 198,144 |
2023 | | | 199,144 |
2024 | | | 205,135 |
Thereafter | | | — |
Total | | | $1,297,937 |
21. | Segment Reporting |
| | For the Years Ended December 31, | |||||||
| | 2019 | | | 2018 | | | 2017 | |
Security and guarding | | | | | | | |||
Revenue | | | $593,031 | | | $644,027 | | | 787,080 |
Cost of revenue | | | 511,713 | | | 442,009 | | | 405,470 |
Gross profit | | | 81,318 | | | 202,018 | | | 381,610 |
Total operating expenses(1) | | | 5,952,897 | | | 9,563,255 | | | 3,851,294 |
Loss from operations | | | (5,871,579) | | | (9,361,237) | | | (3,469,684) |
Total other income | | | 558,646 | | | 3,032,596 | | | (6,882,705) |
Total net loss | | | $(5,312,933) | | | $(6,328,641) | | | (10,352,389) |
| | | | | | ||||
Systems installation | | | | | | | |||
Revenue | | | $783,192 | | | $499,138 | | | |
Cost of revenue | | | 854,801 | | | 531,567 | | | |
Gross loss | | | (71,609) | | | (32,429) | | | |
Total operating expenses | | | 545,474 | | | 168,159 | | | |
Loss from operations | | | (617,083) | | | (200,588) | | | |
Total other income (expense) | | | 88,903 | | | (273,642) | | | |
Total net loss | | | $(528,180) | | | $(474,230) | | | |
Software | | | | | | | |||
Revenue | | | $9,486,472 | | | $4,174,963 | | | |
Cost of revenue | | | 3,318,455 | | | 1,819,299 | | | |
Gross profit | | | 6,168,017 | | | 2,355,664 | | | |
Total operating expenses | | | 9,616,488 | | | 3,046,390 | | | |
Loss from operations | | | (3,448,471) | | | (690,726) | | | |
Total other income | | | 181 | | | 98 | | | |
Total net loss | | | $(3,448,290) | | | $(690,628) | | |
(1) | Total operating expenses for the years ended December 31, 2019, 2018 and 2017 contained certain corporate expenditures totaling $5,399,184, $8,687,900 and $3,425,626, respectively, which benefit all segments of the business but are not specifically allocable to any one segment. |
22. | Subsequent Events |
| | September 30, 2020 | | | December 31, 2019 | |
| | (Unaudited) | | | (Audited) | |
ASSETS | | | | | ||
Current assets: | | | | | ||
Cash | | | $1,677,041 | | | $556,858 |
Accounts receivable, net | | | 744,906 | | | 909,503 |
Prepaid expenses and other current assets | | | 1,271,273 | | | 737,159 |
Costs & earnings in excess of billings | | | 280,464 | | | 257,819 |
Other receivable | | | 600,000 | | | — |
Current assets held for sale | | | — | | | 1,056,885 |
Total current assets | | | 4,573,684 | | | 3,518,224 |
Property and equipment, net | | | 1,359,351 | | | 771,228 |
Intangible assets, net | | | 9,768,319 | | | 14,395,287 |
Goodwill | | | 9,743,281 | | | 52,894,399 |
Deposits and other assets | | | 903,809 | | | 1,066,930 |
Promissory note receivable | | | 75,000 | | | 75,000 |
Non-current assets held for sale | | | — | | | 961,929 |
Total assets | | | $26,423,444 | | | $73,682,997 |
| | | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | ||
Current liabilities: | | | | | ||
Accounts payable and accrued liabilities | | | 2,848,988 | | | 2,810,854 |
Billings in excess of costs | | | 68,542 | | | 164,663 |
Notes payable, current portion | | | 496,671 | | | 10,814 |
Obligation pursuant to acquisition | | | — | | | 50,000 |
Convertible notes payable, net of discount | | | 1,125,983 | | | 832,492 |
Convertible notes payable, net of discount - related party | | | 1,285,220 | | | 1,584,360 |
Warrant liability | | | 88,750 | | | 715,259 |
Promissory notes | | | — | | | 300,000 |
Current liabilities held for sale | | | — | | | 466,283 |
Total current liabilities | | | 5,914,154 | | | 6,934,725 |
Long-term liabilities: | | | | | ||
Notes payable and financing arrangements, net of current portion | | | 31,700 | | | 422,059 |
Convertible notes payable, net of discount | | | 385,000 | | | 385,000 |
Other long-term liabilities | | | 621,781 | | | 776,512 |
Non-current liabilities held for sale | | | — | | | 17,746 |
Total long-term liabilities | | | 1,038,481 | | | 1,601,317 |
Total liabilities | | | 6,952,635 | | | 8,536,042 |
Shareholders’ equity: | | | | | ||
Preferred stock (Class A), $0.001 par value, 3,000,000 shares authorized; 1,000,000 issued and outstanding as of September 30, 2020 and December 31, 2019 | | | 1,000 | | | 1,000 |
Preferred stock (Class B), $0.001 par value, 17,000,000 shares authorized; 13,784,201 issued and outstanding as of September 30, 2020 and December 31, 2019 | | | 13,784 | | | 13,784 |
Common stock; par value $0.001; 200,000,000 shares authorized; 116,413,095 shares issued and outstanding as of September 30, 2020; 93,608,619 shares issued and outstanding as of December 31, 2019 | | | 116,413 | | | 93,608 |
Additional paid-in capital | | | 103,477,098 | | | 100,906,143 |
Accumulated other comprehensive income (loss) | | | 30,363 | | | (79,901) |
Accumulated deficit | | | (84,167,849) | | | (35,787,679) |
Total shareholders’ equity | | | 19,470,809 | | | 65,146,955 |
Total liabilities and shareholders’ equity | | | $26,423,444 | | | $73,682,997 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Security monitoring | | | $84,147 | | | $135,218 | | | $279,042 | | | $436,976 |
Systems installation | | | 30,555 | | | 245,272 | | | 346,460 | | | 447,880 |
Software | | | 2,778,356 | | | 2,357,078 | | | 8,174,850 | | | 6,872,210 |
Total revenues | | | $2,893,058 | | | $2,737,568 | | | $8,800,352 | | | $7,757,066 |
Cost of revenue | | | 918,150 | | | 1,318,825 | | | 2,848,674 | | | 3,594,491 |
Gross margin | | | 1,974,908 | | | 1,418,743 | | | 5,951,678 | | | 4,162,575 |
Operating expenses: | | | | | | | | | ||||
Selling, general and administrative | | | 549,770 | | | 1,020,819 | | | 1,759,196 | | | 2,825,765 |
Salaries and wages | | | 1,583,413 | | | 1,275,745 | | | 4,405,203 | | | 3,505,165 |
Professional and legal fees | | | 465,503 | | | 665,093 | | | 1,237,705 | | | 2,082,204 |
Depreciation and amortization | | | 1,049,235 | | | 1,179,597 | | | 3,320,641 | | | 3,516,418 |
Loss on impairment of intangible assets | | | 39,963,107 | | | — | | | 41,333,085 | | | — |
Total operating expenses | | | 43,611,028 | | | 4,141,254 | | | 52,055,830 | | | 11,929,552 |
Loss from continuing operations | | | (41,636,120) | | | (2,722,511) | | | (46,104,152) | | | (7,766,977) |
Other (expense) income: | | | | | | | | | ||||
Change in fair value of convertible note | | | (321,915) | | | 430,766 | | | (1,104,856) | | | 288,425 |
Change in fair value of convertible note - related party | | | — | | | 491,442 | | | 498,233 | | | (213,828) |
Change in fair value of warrant liability | | | 67,039 | | | 1,224,601 | | | 682,717 | | | 3,462,746 |
Change in fair value of contingent consideration | | | — | | | — | | | — | | | (880,050) |
Gain on asset disposal | | | 239,825 | | | — | | | 239,825 | | | — |
Loss on conversion of convertible note | | | (111,902) | | | — | | | (1,536,324) | | | — |
Loss on issuance of warrants | | | — | | | — | | | — | | | (787,209) |
Gain on reduction of obligation pursuant to acquisition | | | — | | | — | | | 2,000 | | | — |
Interest expense | | | (355,469) | | | (538,591) | | | (1,029,979) | | | (1,227,271) |
Other income | | | — | | | — | | | 37,507 | | | — |
Other (expense) income, net | | | (482,422) | | | 1,608,218 | | | (2,210,877) | | | 642,813 |
Loss from continuing operations | | | $(42,118,542) | | | $(1,114,293) | | | $(48,315,029) | | | $(7,124,164) |
Loss from discontinued operations | | | $(70,259) | | | $(141,276) | | | $(65,141) | | | $(160,798) |
Net Loss | | | $(42,188,801) | | | $(1,255,569) | | | $(48,380,170) | | | $(7,284,962) |
Other comprehensive income (loss): | | | | | | | | | ||||
Changes in foreign currency translation adjustment | | | 62,069 | | | (118,003) | | | 110,264 | | | (114,346) |
Total other comprehensive income (loss) | | | 62,069 | | | (118,003) | | | 110,264 | | | (114,346) |
Total comprehensive loss | | | (42,126,732) | | | (1,373,572) | | | (48,269,906) | | | (7,399,308) |
Net loss attributable to common shareholders | | | $(42,126,732) | | | $(1,373,572) | | | $(48,269,906) | | | $(7,399,308) |
Loss from continuing operations: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Diluted | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Income (loss) from discontinued operations: | | | | | | | | | ||||
Basic | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Diluted | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Loss attributable to common shareholders: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Diluted | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Weighted average common shares outstanding: | | | | | | | | | ||||
Basic | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
Diluted | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
| | Common Stock | | | Preferred Stock (Class A) | | | Preferred Stock (Class B) | | | Additional Paid- In Capital | | | Accumulated Other Comprehensive Income | | | Accumulated Deficit | | | Total Shareholders’ Equity | ||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||
Balance at June 30, 2020 | | | 115,323,931 | | | $115,324 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $105,755,784 | | | $(31,706) | | | $(41,979,048) | | | $63,875,138 |
Issuance of common stock resulting from convertible note conversion | | | 2,269,438 | | | 2,269 | | | | | | | | | | | 287,633 | | | | | | | 289,902 | ||||||
Share-based compensation expense | | | 1,810,000 | | | 1,810 | | | | | | | | | | | 547,202 | | | | | | | 549,012 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 650,000 | | | 650 | | | | | | | | | | | 70,850 | | | | | | | 71,500 | ||||||
Issuance of common stock resulting from cashless exercise of stock options | | | 500,000 | | | 500 | | | | | | | | | | | (500) | | | | | | | — | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | | | | | | | | | | | | | | | | | | | — | |||||||||
Holdback of common stock resulting from finalized allocation of purchase price as part of Green Tree acquisition | | | (4,140,274) | | | (4,140) | | | | | | | | | | | (3,183,871) | | | | | | | (3,188,011) | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | 62,069 | | | | | 62,069 | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (42,188,801) | | | (42,188,801) | ||||||||
Balance at September 30, 2020 | | | 116,413,095 | | | $116,413 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $103,477,098 | | | $30,363 | | | $(84,167,849) | | | $19,470,809 |
Balance at June 30, 2019 | | | 75,747,718 | | | $75,748 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $86,489,136 | | | 21,648 | | | $(32,236,903) | | | $54,364,413 |
Share-based compensation expense | | | | | | | | | | | | | | | 352,341 | | | | | | | 352,341 | ||||||||
Restricted common stock issued as part of Green Tree acquisition | | | 16,765,727 | | | 16,766 | | | | | | | | | | | 12,892,845 | | | | | | | 12,909,611 | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 16,568 | | | 17 | | | | | | | | | | | 14,046 | | | | | | | 14,063 | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | (118,003) | | | | | (118,003) | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (1,255,569) | | | (1,255,569) | ||||||||
Balance at September 30, 2019 | | | 92,530,013 | | | $92,531 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $99,748,368 | | | $(96,355) | | | $(33,492,472) | | | $66,266,856 |
Balance at December 31, 2019 | | | 93,608,619 | | | $93,608 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $100,906,143 | | | $(79,901) | | | $(35,787,679) | | | $65,146,955 |
Issuance of common stock per investment unit agreements | | | 11,433,790 | | | 11,434 | | | | | | | | | | | 1,260,345 | | | | | | | 1,271,779 | ||||||
Issuance of common stock resulting from convertible note conversion | | | 11,179,269 | | | 11,179 | | | | | | | | | | | 2,659,453 | | | | | | | 2,670,632 | ||||||
Share-based compensation expense | | | 2,313,800 | | | 2,314 | | | | | | | | | | | 1,618,302 | | | | | | | 1,620,616 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 1,350,000 | | | 1,350 | | | | | | | | | | | 161,150 | | | | | | | 162,500 | ||||||
Issuance of common stock resulting from cashless exercise of warrants | | | 500,000 | | | 500 | | | | | | | | | | | (500) | | | | | | | — | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 167,891 | | | 168 | | | | | | | | | | | 56,076 | | | | | | | 56,244 | ||||||
Holdback of common stock resulting from finalized allocation of purchase price as part of Green Tree acquisition | | | (4,140,274) | | | (4,140) | | | | | | | | | | | (3,183,871) | | | | | | | (3,188,011) | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | 110,264 | | | | | 110,264 | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (48,380,170) | | | (48,380,170) | ||||||||
Balance at September 30, 2020 | | | 116,413,095 | | | $116,413 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $103,477,098 | | | $30,363 | | | $(84,167,849) | | | $19,470,809 |
Balance at December 31, 2018 | | | 72,660,825 | | | $72,660 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $82,831,014 | | | 17,991 | | | $(26,207,510) | | | $56,728,939 |
Issuance of common stock per investment unit agreements | | | 1,421,889 | | | 1,422 | | | | | | | | | | | 66,247 | | | | | | | 67,669 | ||||||
Issuance of common stock resulting from convertible note conversion | | | 155,421 | | | 156 | | | | | | | | | | | 117,781 | | | | | | | 117,937 | ||||||
Share-based compensation expense | | | 270,000 | | | 270 | | | | | | | | | | | 1,241,471 | | | | | | | 1,241,741 | ||||||
Issuance of common stock resulting from exercise of stock options | | | 78,644 | | | 79 | | | | | | | | | | | 26,534 | | | | | | | 26,613 | ||||||
Issuance of common stock resulting from cashless exercise of stock options | | | 109,931 | | | 110 | | | | | | | | | | | (110) | | | | | | | — | ||||||
Restricted common stock issued as part of the Tan Security acquisition | | | 250,000 | | | 250 | | | | | | | | | | | 709,750 | | | | | | | 710,000 | ||||||
Issuance of common stock in satisfaction of contingent consideration | | | 733,300 | | | 733 | | | | | | | | | | | 1,787,921 | | | | | | | 1,788,654 | ||||||
Issuance of common stock resulting from convertible note PIK interest (paid) | | | 84,276 | | | 85 | | | | | | | | | | | 74,915 | | | | | | | 75,000 | ||||||
Restricted common stock issued as part of Green Tree acquisition | | | 16,765,727 | | | 16,766 | | | | | | | | | | | 12,892,845 | | | | | | | 12,909,611 | ||||||
Foreign currency translation | | | | | | | | | | | | | | | | | (114,346) | | | | | (114,346) | ||||||||
Net loss | | | | | | | | | | | | | | | | | | | (7,284,962) | | | (7,284,962) | ||||||||
Balance at September 30, 2019 | | | 92,530,013 | | | $92,531 | | | 1,000,000 | | | $1,000 | | | 13,784,201 | | | $13,784 | | | $99,748,368 | | | $(96,355) | | | $(33,492,472) | | | $66,266,856 |
| | For the Nine Months Ended September 30, | ||||
| | 2020 | | | 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | ||
Net loss | | | $(48,380,170) | | | $(7,284,962) |
Income (loss) from discontinued operations | | | (65,141) | | | (160,798) |
Loss from continuing operations | | | $(48,315,029) | | | $(7,124,164) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | ||
Depreciation and amortization | | | 3,320,641 | | | 3,516,418 |
Accretion of debt discounts | | | 340,772 | | | 922,965 |
Loss on issuance of warrants | | | — | | | 787,209 |
Provision for doubtful accounts | | | 395,995 | | | 199,215 |
Share-based compensation expense | | | 1,620,616 | | | 1,241,741 |
Change in fair value of convertible notes, net of discount | | | 1,104,856 | | | (288,425) |
Change in fair value of warrant liability | | | (682,717) | | | (3,462,746) |
Change in fair value of convertible notes, net of discount - related party | | | (498,233) | | | 213,828 |
Change in fair value of contingent consideration | | | — | | | 880,050 |
Loss on conversion of convertible note | | | 1,536,324 | | | — |
Loss on impairment of intangible assets | | | 41,333,085 | | | — |
Gain on asset disposal | | | (239,825) | | | — |
Gain on reduction of obligation pursuant to acquisition | | | (2,000) | | | — |
Gain on reduction of contingent consideration | | | — | | | (100,000) |
Change in operating assets and liabilities: | | | | | ||
Accounts receivable | | | 620,859 | | | (86,398) |
Prepaid expenses | | | (536,692) | | | (239,374) |
Deposits | | | 19,146 | | | 144,488 |
Due from related party | | | — | | | (32,489) |
Costs in excess of billings | | | (22,645) | | | 12,401 |
Other receivable | | | (600,000) | | | — |
Accounts payable and accrued expenses | | | 40,674 | | | 832,690 |
Billings in excess of costs | | | (96,121) | | | (28,687) |
Right of use assets and liabilities | | | (27,561) | | | 37,848 |
Other long-term liabilities | | | — | | | 2,000 |
Net cash used in continued operations | | | (769,203) | | | (2,571,430) |
Net cash provided by (used in) discontinued operations | | | 30,525 | | | (197,618) |
Net cash used in operating activities | | | (738,678) | | | (2,769,048) |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | ||
Purchase of property and equipment | | | (619,483) | | | (657,765) |
Purchase of domain names | | | — | | | (21,856) |
Payments for business combination, net of cash acquired | | | — | | | (126,667) |
Payments for asset acquisition | | | (48,000) | | | — |
Proceeds from sale of security and guarding business | | | 1,150,000 | | | — |
Net cash provided by (used in) continued operations | | | 482,517 | | | (806,288) |
Net cash used in discontinued operations | | | — | | | (89,118) |
Net cash provided by (used in) investing activities | | | 482,517 | | | (895,406) |
| | For the Nine Months Ended September 30, | ||||
| | 2020 | | | 2019 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | ||
Promissory note receivable | | | — | | | (75,000) |
Payments pursuant to advances from related parties | | | — | | | (45,250) |
Payments pursuant to notes payable | | | (429,521) | | | (15,401) |
Payments pursuant to a promissory note | | | (300,000) | | | (280,000) |
Proceeds from notes payable and financing arrangements | | | 500,000 | | | 9,363 |
Proceeds from the issuance of a promissory note | | | — | | | 580,000 |
Proceeds from the issuance of convertible notes payable | | | — | | | 2,732,500 |
Proceeds from the issuance of common stock and warrants | | | 1,490,487 | | | 1,306,313 |
Net cash provided by financing activities | | | 1,260,966 | | | 4,212,525 |
Effect of foreign exchange rate changes on cash | | | 115,378 | | | (179,988) |
Net change in cash | | | 1,120,183 | | | 368,083 |
Cash, beginning of period | | | 556,858 | | | 208,945 |
Cash, end of period | | | $1,677,041 | | | $577,028 |
| | | | |||
Supplemental disclosure of cash and non-cash transactions: | | | | | ||
Cash paid for interest | | | $128,475 | | | $40,625 |
Common stock issued pursuant to convertible notes payable | | | $2,670,632 | | | $117,937 |
Debt discount for warrant liability | | | $— | | | $(1,578,225) |
Equity issued pursuant to acquisition | | | $— | | | $13,619,611 |
Security Grade acquisition consideration settlement | | | $— | | | $— |
Cash payable pursuant to acquisition | | | $— | | | $50,000 |
PIK interest payment of common stock | | | $56,244 | | | $75,000 |
Common stock issued pursuant to contingent consideration as part of acquisition | | | $— | | | $1,788,654 |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | | | $301,396 | | | $1,485,511 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net loss attributable to common shareholders | | | $(42,126,732) | | | $(1,373,572) | | | $(48,269,906) | | | $(7,399,308) |
Loss from continuing operations: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Diluted | | | $(0.36) | | | $(0.01) | | | $(0.46) | | | $(0.09) |
Income (loss) from discontinued operations: | | | | | | | | | ||||
Basic | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Diluted | | | $0.00 | | | $(0.00) | | | $0.00 | | | $(0.00) |
Loss attributable to common shareholders: | | | | | | | | | ||||
Basic | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Diluted | | | $(0.36) | | | $(0.02) | | | $(0.46) | | | $(0.10) |
Weighted average common shares outstanding: | | | | | | | | | ||||
Basic | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
Diluted | | | 116,068,876 | | | 79,295,278 | | | 105,402,831 | | | 76,038,782 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Potentially dilutive securities: | | | | | | | | | ||||
Convertible notes payable | | | 15,520,651 | | | 3,649,021 | | | 15,520,651 | | | 3,649,021 |
Convertible Preferred A Stock | | | 1,000,000 | | | 1,000,000 | | | 1,000,000 | | | 1,000,000 |
Convertible Preferred B Stock | | | 13,784,201 | | | 13,784,201 | | | 13,784,201 | | | 13,784,201 |
Warrants | | | 4,985,998 | | | 4,975,558 | | | 4,985,998 | | | 4,975,558 |
Stock options | | | 10,944,266 | | | 9,787,381 | | | 10,944,266 | | | 9,787,381 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Types of Revenues: | | | | | | | | | ||||
Security Monitoring | | | $84,147 | | | $135,218 | | | $279,042 | | | $436,976 |
Systems Installation | | | 30,555 | | | 245,272 | | | 346,460 | | | 447,880 |
Software | | | 2,778,356 | | | 2,357,078 | | | 8,174,850 | | | 6,872,210 |
Total revenues | | | $2,893,058 | | | $2,737,568 | | | $8,800,352 | | | $7,757,066 |
Base Price – Cash at closing | | | $25,000 |
Base Price – Deferred cash payment (including $25,000 to be made on the 4, 8 and 12-month anniversaries of closing) | | | 75,000 |
Base Price – Common Stock | | | 710,000 |
Total Purchase Price | | | $810,000 |
Description | | | Fair Value |
Assets acquired: | | | |
Cash | | | $2,940 |
Accounts receivable | | | 7,635 |
Goodwill | | | 821,807 |
Total assets acquired | | | $832,382 |
Liabilities assumed: | | | |
Accounts payable | | | $12,526 |
Other liabilities | | | 9,856 |
Total liabilities assumed | | | 22,382 |
| | ||
Estimated fair value of net assets acquired | | | $810,000 |
Base Price - Common Stock | | | $9,721,600 |
Total Purchase Price | | | $9,721,600 |
Description | | | Fair Value | | | Weighted Average Useful Life (Years) |
Assets acquired: | | | | | ||
Note Receivable, net | | | $135,000 | | | |
Property, Plant and Equipment, Net | | | 12,142 | | | |
Software | | | 452,002 | | | 4.5 |
Goodwill | | | 9,792,829 | | | |
Total assets acquired | | | $10,391,973 | | | |
Liabilities assumed: | | | | | ||
Accounts Payable | | | 43,717 | | | |
Notes Payable | | | 400,000 | | | |
Other Liabilities | | | 226,656 | | | |
Total liabilities assumed: | | | 670,373 | | | |
Estimated fair value of net assets acquired | | | $9,721,600 | | |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Revenues | | | $635,398 | | | $1,003,716 | | | $4,043,246 | | | $3,254,198 |
Cost of revenue | | | 555,817 | | | 905,970 | | | 3,277,640 | | | 2,552,222 |
Gross margin | | | 79,581 | | | 97,746 | | | 765,606 | | | 701,976 |
Operating expenses: | | | | | | | | | ||||
Selling, general and administrative | | | 58,060 | | | 93,600 | | | 470,568 | | | 396,023 |
Salaries and wages | | | 45,370 | | | 116,777 | | | 242,454 | | | 353,903 |
Professional and legal fees | | | 47,990 | | | 9,079 | | | 110,424 | | | 72,524 |
Depreciation and amortization | | | — | | | 19,155 | | | 7,301 | | | 38,311 |
Total operating expenses | | | 151,420 | | | 238,611 | | | 830,747 | | | 860,761 |
Other income (expense) | | | | | | | | | ||||
Interest income (expense) | | | 1,580 | | | (411) | | | — | | | (2,013) |
Other income (expenses) | | | 1,580 | | | (411) | | | — | | | (2,013) |
Loss from discontinued operations | | | $(70,529) | | | $(141,276) | | | $(65,141) | | | $(160,798) |
Adjusted purchase price | | | $1,750,000 |
Less net assets sold: | | | |
Accounts receivable, net | | | 686,208 |
Property and equipment, net | | | 2,160 |
Goodwill | | | 821,807 |
| | 1,510,175 | |
Gain on disposal | | | $239,825 |
| | September 30, 2020 | | | December 31, 2019 | |
Furniture and equipment | | | $171,013 | | | $238,547 |
Software development costs | | | 1,260,906 | | | 561,964 |
Vehicles | | | 157,572 | | | 73,380 |
Total | | | 1,589,491 | | | 873,891 |
Less: Accumulated depreciation and amortization | | | (230,140) | | | (102,663) |
Property and equipment, net | | | $1,359,351 | | | $771,228 |
| | | | | | September 30, 2020(1) | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount | | | Assets Acquired Pursuant to Business Combination | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(83,501) | | | $9,926 |
Trade names and trademarks | | | 5 - 10 | | | 591,081 | | | — | | | (294,582) | | | 296,499 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (115,047) | | | 14,953 |
Customer list | | | 5 | | | 8,304,449 | | | — | | | (3,874,569) | | | 4,429,880 |
Software | | | 4.5 | | | 10,224,822 | | | — | | | (5,222,933) | | | 5,001,889 |
Domain Name | | | 5 | | | 20,231 | | | | | (5,059) | | | 15,172 | |
| | | | $19,364,010 | | | $— | | | $(9,595,691) | | | $9,768,319 |
| | | | | | December 31, 2019 | |||||||||
| | Estimated Useful Life (Years) | | | Gross Carrying Amount at December 31, 2018 | | | Assets Acquired Pursuant to Business Combination(2) | | | Accumulated Amortization | | | Net Book Value | |
Database | | | 5 | | | $93,427 | | | $— | | | $(69,533) | | | $23,894 |
Trade names and trademarks | | | 5 - 10 | | | 591,081 | | | — | | | (207,525) | | | 383,556 |
Web addresses | | | 5 | | | 130,000 | | | — | | | (95,611) | | | 34,389 |
Customer list | | | 5 | | | 11,459,027 | | | — | | | (4,256,070) | | | 7,202,957 |
Software | | | 4.5 | | | 9,771,195 | | | 453,627 | | | (3,492,525) | | | 6,732,297 |
Domain Name | | | 5 | | | — | | | 20,231 | | | (2,037) | | | 18,194 |
| | | | $22,044,730 | | | $473,858 | | | $(8,123,301) | | | $14,395,287 |
(1) | The Company wrote off the remaining unamortized balance of $1,369,978 related to the customer list intangible asset from the Security Grade Protective Services transaction as of March 31, 2020. |
(2) | On September 10, 2019 the Company acquired various assets of GTI (see Note 5). |
| | Total Goodwill | |
Balance at December 31, 2018 | | | $39,913,559 |
Goodwill attributable to Tan Security acquisition | | | 821,807 |
Goodwill attributable to Green Tree acquisition | | | 9,792,829 |
Balance at December 31, 2019 | | | 50,528,195 |
Goodwill disposed pursuant to sale of security and guarding business | | | (821,807) |
Impairment of goodwill | | | (39,963,107) |
Balance at September 30, 2020 | | | $9,743,281 |
| | September 30, 2020 | | | December 31, 2019 | |
Costs incurred on uncompleted contracts | | | $469,495 | | | $444,344 |
Estimated earnings | | | 167,123 | | | 150,355 |
Cost and estimated earnings earned on uncompleted contracts | | | 636,618 | | | 594,699 |
Billings to date | | | 424,696 | | | 501,543 |
Costs and estimated earnings in excess of billings on uncompleted contracts | | | 211,922 | | | 93,156 |
Costs in excess of billings | | | $280,464 | | | $257,819 |
Billings in excess of cost | | | (68,542) | | | (164,663) |
| | $211,922 | | | $93,156 |
| | September 30, 2020 | | | December 31, 2019 | |
Accounts payable | | | $358,766 | | | $542,617 |
Accrued compensation and related expenses | | | 710,086 | | | 260,280 |
Accrued expenses | | | 1,522,183 | | | 1,717,796 |
Lease obligation - current | | | 257,953 | | | 290,161 |
Total | | | $2,848,988 | | | $2,810,854 |
| | September 30, 2020 | | | December 31, 2019 | |
Vehicle financing loans payable, between 4.7% and 7.0% interest and maturing between June 2022 and July 2022 | | | $40,415 | | | $27,488 |
Loans Payable - Credit Union | | | 2,099 | | | 5,385 |
Notes Payable and financing arrangements | | | 485,857 | | | 400,000 |
Less: Current portion of loans payable | | | (496,671) | | | (10,814) |
Long-term portion of loans payable | | | $31,700 | | | $422,059 |
| | Shares Underlying Options | | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (in years) | |
Outstanding at January 1, 2020 | | | 11,617,381 | | | $0.807 | | | 3.21 |
Granted | | | 2,880,000 | | | $0.163 | | | 3.96 |
Exercised | | | (1,350,000) | | | $0.120 | | | 3 |
Forfeited and expired | | | (2,203,115) | | | $0.675 | | | 1.61 |
Outstanding at September 30, 2020 | | | 10,944,266 | | | $0.749 | | | 3.65 |
Vested options at September 30, 2020 | | | 8,945,932 | | | $0.714 | | | 1.68 |
Proceeds from January investment units | | | $1,129,700 |
Par value of common stock issues | | | $(1,255) |
Fair value of warrants | | | $(1,717,506) |
Loss on issuance of warrants (January 10, 2019 issuance) | | | $(589,061) |
Loss on issuance of warrants (March 11, 2019 issuance) | | | $(198,148) |
Total loss on issuance of warrants | | | $(787,209) |
| | For the Nine Months Ended September 30, 2020 | ||||
| | Warrant Shares | | | Weighted Average Exercise Price | |
Balance at January 1, 2020 | | | 5,113,058 | | | $0.23 |
Warrants expired | | | (462,195) | | | $0.32 |
Warrants granted | | | 335,135 | | | $0.16 |
Balance at September 30, 2020 | | | 4,985,998 | | | $0.52 |
| | As of September 30, 2020 | | | As of December 31, 2019 | |
Fair value of company's common stock | | | $0.101 | | | $0.60 |
Dividend yield | | | 0% | | | 0% |
Expected volatility | | | 37% - 163% | | | 45% - 140% |
Risk Free interest rate | | | 0.16% - 0.26% | | | 1.55% - 1.79% |
Expected life (years) | | | 2.64 | | | 2.83 |
Fair value of financial instruments - warrants | | | $88,750 | | | $715,259 |
Nine Months Ended September 30, 2020 | | | |
| | Amount | |
Balance as of January 1, 2020 | | | $715,259 |
Fair value of warrants issued | | | $56,208 |
Change in fair value of liability to issue warrants | | | $(682,717) |
Balance as of September 30, 2020 | | | $88,750 |
Three Months Ended September 30, 2020 | | | |
| | Amount | |
Balance as of July 1, 2020 | | | $155,789 |
Fair value of warrants issued | | | $— |
Change in fair value of liability to issue warrants | | | $(67,039) |
Balance as of September 30, 2020 | | | $88,750 |
| | Nine Months Ended September 30, 2020 | |
Operating lease expense | | | $60,306 |
Cash paid for amounts included in the measurement of operating lease liabilities | | | $67,233 |
ROU assets obtained in exchange for operating lease obligations | | | $301,396 |
| | As of September 30, 2020 | |
Other current assets | | | $841,419 |
| | ||
Accounts payable and accrued liabilities | | | $257,952 |
Other long-term liabilities | | | $621,781 |
Total lease liabilities | | | $879,733 |
| | ||
Weighted average remaining lease term (in years) | | | 3.16 |
Weighted average discount rate | | | 6.37% |
| | As of September 30, 2020 | |
2020 | | | $67,233 |
2021 | | | 254,961 |
2022 | | | 222,744 |
2023 | | | 200,944 |
2024 | | | 205,435 |
Thereafter | | | — |
Total future minimum lease payments | | | $951,317 |
Less imputed interest | | | (71,584) |
Total | | | $879,733 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Security monitoring | | | | | | | | | ||||
Revenue | | | $84,147 | | | $135,218 | | | $279,042 | | | $436,976 |
Cost of revenue | | | 90,738 | | | 330,602 | | | 264,629 | | | 422,880 |
Gross profit | | | (6,591) | | | (195,384) | | | 14,413 | | | 14,096 |
Total operating expenses | | | 41,345,177 | | | 1,551,016 | | | 45,129,661 | | | 4,565,944 |
Loss from operations | | | (41,351,768) | | | (1,746,400) | | | (45,115,248) | | | (4,551,848) |
Total other (expense) income | | | (604,821) | | | 1,619,885 | | | (2,208,937) | | | 642,077 |
Total loss from continuing operations | | | $(41,956,589) | | | $(126,515) | | | $(47,324,185) | | | $(3,909,771) |
Loss from discontinued operations | | | (70,529) | | | (141,276) | | | (65,141) | | | (160,798) |
Net Loss | | | $(42,026,848) | | | $(267,791) | | | $(47,389,326) | | | $(4,070,569) |
| | | | | | | | |||||
Adjusted EBITDA | | | $(849,911) | | | $(1,515,464) | | | $(1,961,145) | | | $(3,437,766) |
| | | | | | | | |||||
Systems installation | | | | | | | | | ||||
Revenue | | | $30,555 | | | $245,272 | | | $346,460 | | | $447,880 |
Cost of revenue | | | 97,161 | | | 149,431 | | | 361,260 | | | 649,041 |
Gross profit | | | (66,606) | | | 95,841 | | | (14,800) | | | (201,161) |
Total operating expenses | | | 25,209 | | | 179,641 | | | 294,216 | | | 367,094 |
Loss from operations | | | (91,815) | | | (83,800) | | | (309,016) | | | (568,255) |
Total other expense | | | 560 | | | 280 | | | 277 | | | 713 |
Total loss from continuing operations | | | $(91,255) | | | $(83,520) | | | $(308,739) | | | $(567,542) |
Income (loss) from discontinued operations | | | | | | | | | ||||
Net Loss | | | $(91,255) | | | $(83,520) | | | $(308,739) | | | $(567,542) |
| | | | | | | | |||||
Adjusted EBITDA | | | $(91,255) | | | $76,630 | | | $(308,456) | | | $(84,430) |
| | | | | | | |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Software | | | | | | | | | ||||
Revenue | | | $2,778,356 | | | $2,357,078 | | | $8,174,850 | | | $6,872,210 |
Cost of revenue | | | 730,251 | | | 838,792 | | | 2,222,785 | | | 2,522,570 |
Gross profit | | | 2,048,105 | | | 1,518,286 | | | 5,952,065 | | | 4,349,640 |
Total operating expenses | | | 2,240,642 | | | 2,410,597 | | | 6,631,953 | | | 6,996,514 |
Loss from operations | | | (192,537) | | | (892,311) | | | (679,888) | | | (2,646,874) |
Total other expense | | | 121,839 | | | (11,947) | | | (2,217) | | | 23 |
Total loss from continuing operations | | | $(70,698) | | | $(904,258) | | | $(682,105) | | | $(2,646,851) |
Income (loss) from discontinued operations | | | | | | | | | ||||
Net Loss | | | $(70,698) | | | $(904,258) | | | $(682,105) | | | $(2,646,851) |
| | | | | | | | |||||
Adjusted EBITDA | | | $1,035,966 | | | $106,985 | | | $2,614,475 | | | $352,580 |
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net Loss | | | $(42,188,801) | | | $(1,255,569) | | | $(48,380,170) | | | $(7,284,962) |
Interest expense | | | 355,469 | | | 538,591 | | | 1,029,979 | | | 1,227,271 |
Depreciation & amortization | | | 1,049,235 | | | 1,179,597 | | | 3,320,641 | | | 3,516,418 |
Loss on impairment of intangible assets | | | 39,963,107 | | | — | | | 41,333,085 | | | — |
Share based compensation expense | | | 549,012 | | | 352,341 | | | 1,620,616 | | | 1,241,741 |
Change in fair value of convertible note | | | 321,915 | | | (430,766) | | | 1,104,856 | | | (288,425) |
Change in fair value of convertible note - related party | | | — | | | (491,442) | | | (498,233) | | | 213,828 |
Change in fair value of warrant liability | | | (67,039) | | | (1,224,601) | | | (682,717) | | | (3,462,746) |
Change in fair value of contingent consideration | | | 111,902 | | | — | | | 1,536,324 | | | 880,050 |
Loss (gain) on issuance of warrants | | | — | | | — | | | (2,000) | | | 787,209 |
Other expense | | | — | | | — | | | (37,507) | | | — |
Adjusted EBITDA(1) | | | $94,800 | | | $(1,331,849) | | | $344,874 | | | $(3,169,616) |
(1) | See “Non-GAAP Financial Measures” within Part I, Item 2, Management’s Discussion and Analysis. |
Assets | | | |
Current Assets: | | | |
Cash and cash equivalents | | | $494 |
Marketable securities | | | 149,767 |
Prepaid expenses | | | 25,365 |
Total Current Assets | | | 175,626 |
| | ||
Property and Equipment, Net | | | 3,419 |
| | ||
Total Assets | | | $179,045 |
| | ||
Liabilities and Members’ Deficit | | | |
Current Liabilities: | | | |
Promissory notes | | | $184,300 |
Accounts payable | | | 6,400 |
Accrued expenses | | | 269,376 |
Total Current Liabilities | | | 460,076 |
| | ||
Members’ Deficit: | | | |
Class A capital contributions | | | 1,000,000 |
Class B profit interests | | | 7,811 |
Accumulated deficit | | | (1,288,842) |
Total Members’ Deficit | | | (281,031) |
| | ||
Total Liabilities and Members’ Deficit | | | $179,045 |
Operating Expenses: | | | |
Research and development | | | $827,474 |
Selling, general and administrative | | | 464,698 |
Total Operating Expenses | | | 1,292,172 |
| | ||
Loss From Operations | | | (1,292,172) |
| | ||
Other Income: | | | |
Interest and dividends | | | 3,330 |
| | ||
Net Loss | | | $(1,288,842) |
| | Class A | | | Class B | | | Accumulated Deficit | | | Total Members’ Deficit | |||||||
| | Units | | | Amount | | | Units | | | Amount | | ||||||
Balance, May 6, 2019 | | | — | | | $— | | | — | | | $— | | | $— | | | $— |
| | | | | | | | | | | | |||||||
Member units issued | | | 4,000,000 | | | 1,000,000 | | | — | | | — | | | — | | | 1,000,000 |
Vested Profits Interests Units | | | — | | | — | | | 276,976 | | | 7,811 | | | — | | | 7,811 |
Net loss | | | — | | | — | | | — | | | — | | | (1,288,842) | | | (1,288,842) |
| | | | | | | | | | | | |||||||
Balance, December 31, 2019 | | | 4,000,000 | | | $1,000,000 | | | 276,976 | | | $7,811 | | | $(1,288,842) | | | $(281,031) |
Cash Flows From Operating Activities: | | | |
Net loss | | | $(1,288,842) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Depreciation | | | 854 |
Stock based compensation | | | 7,811 |
Changes in operating assets and liabilities: | | | |
Prepaid expenses | | | (25,365) |
Accounts payable | | | 6,400 |
Accrued expenses | | | 266,770 |
Net Cash Used in Operating Activities | | | (1,032,372) |
| | ||
Cash Flows From Investing Activities: | | | |
Purchases of marketable securities | | | (149,767) |
Purchases of property and equipment | | | (1,667) |
Net Cash Used in Investing Activities | | | (151,434) |
| | ||
Cash Flows From Financing Activities: | | | |
Proceeds from issuance of promissory notes | | | 184,300 |
Proceeds from members’ contributions | | | 1,000,000 |
Net Cash Provided by Financing Activities | | | 1,184,300 |
| | ||
Net Increase in Cash and Cash Equivalents | | | 494 |
| | ||
Cash and Cash Equivalents, May 6, 2019 | | | — |
| | ||
Cash and Cash Equivalents, December 31, 2019 | | | $494 |
Supplemental disclosure of cash flow information: | | | |
Interest paid | | | $0 |
Purchases of property and equipment | | | $2,606* |
* | Purchases of property and equipment in the amount of $2,606 were accrued but not paid during 2019. |
Vendor Description | | | Amount | | | Percentage |
Vendor A | | | $544,375 | | | 42.1% |
Vendor B | | | 227,593 | | | 17.6% |
| | $771,968 | | | 59.7% |
Risk Free Rate | | | 1.51% |
Volatility | | | 70% |
Expected term | | | 4 Years |
Dividend Rate | | | 0.0% |
Personal computing equipment | | | $4,273 |
| | ||
Less accumulated depreciation | | | (854) |
| | ||
Property and equipment, net | | | $3,419 |
Nature of Expenditure | | | Amount |
Engineering & technology expenses | | | $227,593 |
Employee compensation expenses | | | 39,177 |
Personal computing equipment | | | 2,606 |
Total | | | $269,376 |
Year ending December 31, 2020 | | | $631,475 |
Year ending December 31, 2021 | | | 533,488 |
Year ending December 31, 2022 | | | 272,187 |
| | $1,437,150 |
Vendor Description | | | Amount | | | Percentage |
Vendor A | | | $544,375 | | | 42.1% |
Vendor B | | | 227,593 | | | 17.6% |
| | $771,968 | | | 59.7% |
Risk Free Rate | | | 1.51% |
Volatility | | | 70% |
Expected term | | | 4 Years |
Dividend Rate | | | 0.0% |
| | September 30, 2020 (Unaudited) | | | December 31, 2019 (Audited) | |
Assets | | | | | ||
Current Assets: | | | | | ||
Cash and cash equivalents | | | $1,081,531 | | | $494 |
Marketable securities | | | — | | | 149,767 |
Prepaid expenses | | | 275,188 | | | 25,365 |
Total Current Assets | | | 1,356,719 | | | 175,626 |
| | | | |||
Property and Equipment, Net | | | 32,693 | | | 3,419 |
| | | | |||
Total Assets | | | $1,389,412 | | | $179,045 |
| | | | |||
| | | | |||
Liabilities and Members’ Equity (Deficit) | | | | | ||
Current Liabilities: | | | | | ||
Promissory Notes | | | $— | | | $184,300 |
Accounts payable | | | 167,781 | | | 6,400 |
Accrued expenses | | | 611,021 | | | 269,376 |
Total Current Liabilities | | | 778,802 | | | 460,076 |
| | | | |||
Members’ Equity (Deficit): | | | | | ||
Series S preferred units | | | 3,500,000 | | | — |
Class A units | | | 1,000,000 | | | 1,000,000 |
Class B units | | | 20,268 | | | 7,811 |
Accumulated deficit | | | (3,909,658) | | | (1,288,842) |
Total Members’ Equity (Deficit) | | | 610,610 | | | (281,031) |
| | | | |||
Total Liabilities and Members’ Equity (Deficit) | | | $1,389,412 | | | $179,045 |
Personal computing equipment | | | $4,273 |
| | ||
Less accumulated depreciation | | | (854) |
| | ||
Property and equipment, net | | | $3,419 |
| | Nine Months Ended September 30, 2020 | | | May 6, 2019 Through September 30, 2019 | |
| | (unaudited) | | | (unaudited) | |
Operating Revenues | | | $334,921 | | | $— |
| | | | |||
Operating Expenses: | | | | | ||
Research and development | | | 1,465,550 | | | 544,375 |
Selling, general and administrative | | | 1,495,984 | | | 224,278 |
Total Operating Expenses | | | 2,961,534 | | | 768,653 |
| | | | |||
Loss From Operations | | | (2,626,613) | | | (768,653) |
| | | | |||
Other Income (Expense): | | | | | ||
Interest and dividends | | | 5,797 | | | 1,979 |
Net Other Income | | | 5,797 | | | 1,979 |
| | | | |||
Net Loss | | | $(2,620,816) | | | $(766,674) |
Nature of Expenditure | | | Amount |
Engineering & technology expenses | | | $227,593 |
Employee compensation expenses | | | 39,177 |
Personal computing equipment | | | 2,606 |
Total | | | $269,376 |
Year ending December 31, 2020 | | | $631,475 |
Year ending December 31, 2021 | | | 533,488 |
Year ending December 31, 2022 | | | 272,187 |
| | $1,437,150 |
| | Series S Preferred Units | | | Class A Units | | | Class B Units | | | Accumulated Deficit | | | Total Members’ Deficit | ||||||||||
| | Units | | | Amount | | | Units | | | Amount | | | Units | | | Amount | | ||||||
Balance, May 6, 2019 | | | — | | | $— | | | — | | | $— | | | — | | | $— | | | $— | | | $— |
| | | | | | | | | | | | | | | | |||||||||
Member units issued | | | — | | | — | | | 4,000,000 | | | 1,000,000 | | | — | | | — | | | — | | | 1,000,000 |
| | | | | | | | | | | | | | | | |||||||||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | (766,674) | | | (766,674) |
| | | | | | | | | | | | | | | | |||||||||
Balance, September 30, 2019 | | | — | | | $— | | | 4,000,000 | | | $1,000,000 | | | — | | | $— | | | $(766,674) | | | $233,326 |
| | | | | | | | | | | | | | | | |||||||||
Balance, January 1, 2020 | | | — | | | $— | | | 4,000,000 | | | $1,000,000 | | | 140,527 | | | $7,811 | | | $(1,288,842) | | | $(281,031) |
| | | | | | | | | | | | | | | | |||||||||
Member units issued | | | 3,078,276 | | | 3,500,000 | | | — | | | — | | | — | | | — | | | — | | | 3,500,000 |
| | | | | | | | | | | | | | | | |||||||||
Vested Profits Interests Units | | | — | | | — | | | — | | | — | | | 510,247 | | | 12,457 | | | — | | | 12,457 |
| | | | | | | | | | | | | | | | |||||||||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,620,816) | | | (2,620,816) |
| | | | | | | | | | | | | | | | |||||||||
Balance, September 30, 2020 | | | 3,078,276 | | | $3,500,000 | | | 4,000,000 | | | $1,000,000 | | | 650,774 | | | $20,268 | | | $(3,909,658) | | | $610,610 |
| | Nine Months Ended September 30, 2020 | | | May 6, 2019 Through September 30, 2019 | |
Cash Flows From Operating Activities: | | | | | ||
Net loss | | | $(2,620,816) | | | $(766,674) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | | | | | ||
Depreciation | | | 4,932 | | | — |
Stock based compensation | | | 12,457 | | | — |
Changes in operating assets and liabilities: | | | | | ||
Prepaid expenses | | | (249,823) | | | — |
Accounts payable | | | 161,381 | | | 1,949 |
Accrued expenses | | | 341,645 | | | — |
Net Cash and Cash Equivalents Used in Operating Activities | | | (2,350,224) | | | (764,725) |
| | | | |||
Cash Flows From Investing Activities: | | | | | ||
Sales of marketable securities | | | 149,767 | | | — |
Purchases of marketable securities | | | — | | | (419,504) |
Purchases of property and equipment | | | (34,206) | | | — |
Net Cash and Cash Equivalents Provided by (Used in) Investing Activities | | | 115,561 | | | (419,504) |
| | | | |||
Cash Flows From Financing Activities: | | | | | ||
Proceeds from members' contributions | | | 3,315,700 | | | 1,000,000 |
Proceeds from issuance of promissory notes | | | — | | | 184,300 |
Net Cash and Cash Equivalents Provided by Financing Activities | | | 3,315,700 | | | 1,184,300 |
| | | | |||
Net Increase in Cash and Cash Equivalents | | | 1,081,037 | | | 71 |
| | | | |||
Cash and Cash Equivalents, Beginning of Period | | | 494 | | | — |
| | | | |||
Cash and Cash Equivalents, End of Period | | | $1,081,531 | | | $71 |
| | | | |||
Supplemental Disclosure of Cash Flow Information | | | | | ||
Interest Paid | | | $0 | | | $0 |
Non-cash financing activities: | | | | | ||
Promissory notes of $184,300 were converted to Series S preferred units. | | | | |
Vendor Description | | | Amount | | | Percentage |
Vendor A | | | $544,375 | | | 42.1% |
Vendor B | | | 227,593 | | | 17.6% |
| | $771,968 | | | 59.7% |
Risk Free Rate | | | 1.51% |
Volatility | | | 70% |
Expected term | | | 4 Years |
Dividend Rate | | | 0.0% |
Personal computing equipment | | | $4,273 |
| | ||
Less accumulated depreciation | | | (854) |
| | ||
Property and equipment, net | | | $3,419 |
Nature of Expenditure | | | Amount |
Engineering & technology expenses | | | $227,593 |
Employee compensation expenses | | | 39,177 |
Personal computing equipment | | | 2,606 |
Total | | | $269,376 |
Year ending December 31, 2020 | | | $631,475 |
Year ending December 31, 2021 | | | 533,488 |
Year ending December 31, 2022 | | | 272,187 |
| | $1,437,150 |
| | September 30, 2020 (Unaudited) | | | December 31, 2019 (Audited) | |
Assets | | | | | ||
Current Assets: | | | | | ||
Cash and cash equivalents | | | $1,081,531 | | | $494 |
Marketable securities | | | — | | | 149,767 |
Prepaid expenses | | | 275,188 | | | 25,365 |
Total Current Assets | | | 1,356,719 | | | 175,626 |
| | | | |||
Property and Equipment, Net | | | 32,693 | | | 3,419 |
| | | | |||
Total Assets | | | $1,389,412 | | | $179,045 |
| | | | |||
| | | | |||
Liabilities and Members’ Equity (Deficit) | | | | | ||
Current Liabilities: | | | | | ||
Promissory Notes | | | $— | | | $184,300 |
Accounts payable | | | 167,781 | | | 6,400 |
Accrued expenses | | | 611,021 | | | 269,376 |
Total Current Liabilities | | | 778,802 | | | 460,076 |
| | | | |||
Members’ Equity (Deficit): | | | | | ||
Series S preferred units | | | 3,500,000 | | | — |
Class A units | | | 1,000,000 | | | 1,000,000 |
Class B units | | | 20,268 | | | 7,811 |
Accumulated deficit | | | (3,909,658) | | | (1,288,842) |
Total Members’ Equity (Deficit) | | | 610,610 | | | (281,031) |
| | | | |||
Total Liabilities and Members’ Equity (Deficit) | | | $1,389,412 | | | $179,045 |
| | Nine Months Ended September 30, 2020 | | | May 6, 2019 Through September 30, 2019 | |
| | (unaudited) | | | (unaudited) | |
Operating Revenues | | | $334,921 | | | $— |
| | | | |||
Operating Expenses: | | | | | ||
Research and development | | | 1,465,550 | | | 544,375 |
Selling, general and administrative | | | 1,495,984 | | | 224,278 |
Total Operating Expenses | | | 2,961,534 | | | 768,653 |
| | | | |||
Loss From Operations | | | (2,626,613) | | | (768,653) |
| | | | |||
Other Income (Expense): | | | | | ||
Interest and dividends | | | 5,797 | | | 1,979 |
Net Other Income | | | 5,797 | | | 1,979 |
| | | | |||
Net Loss | | | $(2,620,816) | | | $(766,674) |
| | Series S Preferred Units | | | Class A Units | | | Class B Units | | | Accumulated Deficit | | | Total Members’ Deficit | ||||||||||
| | Units | | | Amount | | | Units | | | Amount | | | Units | | | Amount | | ||||||
Balance, May 6, 2019 | | | — | | | $— | | | — | | | $— | | | — | | | $— | | | $— | | | $— |
| | | | | | | | | | | | | | | | |||||||||
Member units issued | | | — | | | — | | | 4,000,000 | | | 1,000,000 | | | — | | | — | | | — | | | 1,000,000 |
| | | | | | | | | | | | | | | | |||||||||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | (766,674) | | | (766,674) |
| | | | | | | | | | | | | | | | |||||||||
Balance, September 30, 2019 | | | — | | | $— | | | 4,000,000 | | | $1,000,000 | | | — | | | $— | | | $(766,674) | | | $233,326 |
| | | | | | | | | | | | | | | | |||||||||
Balance, January 1, 2020 | | | — | | | $— | | | 4,000,000 | | | $1,000,000 | | | 140,527 | | | $7,811 | | | $(1,288,842) | | | $(281,031) |
| | | | | | | | | | | | | | | | |||||||||
Member units issued | | | 3,078,276 | | | 3,500,000 | | | — | | | — | | | — | | | — | | | — | | | 3,500,000 |
| | | | | | | | | | | | | | | | |||||||||
Vested Profits Interests Units | | | — | | | — | | | — | | | — | | | 510,247 | | | 12,457 | | | — | | | 12,457 |
| | | | | | | | | | | | | | | | |||||||||
Net loss | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,620,816) | | | (2,620,816) |
| | | | | | | | | | | | | | | | |||||||||
Balance, September 30, 2020 | | | 3,078,276 | | | $3,500,000 | | | 4,000,000 | | | $1,000,000 | | | 650,774 | | | $20,268 | | | $(3,909,658) | | | $610,610 |
| | Nine Months Ended September 30, 2020 | | | May 6, 2019 Through September 30, 2019 | |
Cash Flows From Operating Activities: | | | | | ||
Net loss | | | $(2,620,816) | | | $(766,674) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: | | | | | ||
Depreciation | | | 4,932 | | | — |
Stock based compensation | | | 12,457 | | | — |
Changes in operating assets and liabilities: | | | | | ||
Prepaid expenses | | | (249,823) | | | — |
Accounts payable | | | 161,381 | | | 1,949 |
Accrued expenses | | | 341,645 | | | — |
Net Cash and Cash Equivalents Used in Operating Activities | | | (2,350,224) | | | (764,725) |
| | | | |||
Cash Flows From Investing Activities: | | | | | ||
Sales of marketable securities | | | 149,767 | | | — |
Purchases of marketable securities | | | — | | | (419,504) |
Purchases of property and equipment | | | (34,206) | | | — |
Net Cash and Cash Equivalents Provided by (Used in) Investing Activities | | | 115,561 | | | (419,504) |
| | | | |||
Cash Flows From Financing Activities: | | | | | ||
Proceeds from members' contributions | | | 3,315,700 | | | 1,000,000 |
Proceeds from issuance of promissory notes | | | — | | | 184,300 |
Net Cash and Cash Equivalents Provided by Financing Activities | | | 3,315,700 | | | 1,184,300 |
| | | | |||
Net Increase in Cash and Cash Equivalents | | | 1,081,037 | | | 71 |
| | | | |||
Cash and Cash Equivalents, Beginning of Period | | | 494 | | | — |
| | | | |||
Cash and Cash Equivalents, End of Period | | | $1,081,531 | | | $71 |
| | | | |||
Supplemental Disclosure of Cash Flow Information | | | | | ||
Interest Paid | | | $0 | | | $0 |
Non-cash financing activities: | | | | | ||
Promissory notes of $184,300 were converted to Series S preferred units. | | | | |
Risk Free Rate | | | 0.16% |
Volatility | | | 65% |
Expected Term | | | 3 Years |
Dividend Rate | | | 0.0% |
Personal computing equipment | | | $ 38,479 |
| | ||
Less accumulated depreciation | | | (5,786) |
| | ||
Property and equipment, net | | | $32,693 |
Nature of Expenditure | | | Amount |
Employee compensation expenses | | | $ 461,021 |
Engineering & technology expenses | | | 150,000 |
Total | | | $611,021 |
Three months ending December 31, 2020 | | | $261,300 |
Year ending December 31, 2021 | | | 533,488 |
Year ending December 31, 2022 | | | 272,187 |
| | $1,066,975 |
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| |
| | HELIX TECHNOLOGIES, INC. | ||||
| | | | |||
| | By: | | | /s/ Zachary L. Venegas | |
| | Name: | | | Zachary L. Venegas | |
| | Title: | | | Chief Executive Officer | |
| | | | |||
| | FORIAN INC. | ||||
| | | | |||
| | By: | | | /s/ Max Wygod | |
| | Name: | | | Max Wygod | |
| | Title: | | | Executive Chairman | |
| | | ||||
| | DNA MERGER SUB INC. | ||||
| | | | |||
| | By: | | | /s/ Max Wygod | |
| | Name: | | | Max Wygod | |
| | Title: | | | Executive Chairman | |
| | | ||||
| | MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC | ||||
| | | | |||
| | By: | | | /s/ Max Wygod | |
| | Name: | | | Max Wygod | |
| | Title: | | | Manager |
Acceptable Confidentiality Agreement | | | Section 5.04(f)(iii) |
Adverse Recommendation Change | | | Section 5.04(a) |
Agreement | | | Preamble |
Alternative Proposal | | | Section 5.04(f) |
Anti-Corruption Laws | | | Section 3.17(a) |
Blue Sky Laws | | | Section 3.05(b) |
Book-Entry Shares | | | Section 2.01(d) |
Certificate | | | Section 2.01(d) |
Certificate of Merger | | | Section 1.03 |
Class A Preferred Stock | | | Section 4.03(a) |
Class B Preferred Stock | | | Section 4.03(a) |
Closing | | | Section 1.02 |
Closing Date. | | | Section 1.02 |
Company | | | Preamble |
Company Board | | | Section 4.03(a) |
Company Bringdown Certificate | | | Article IV |
Company Business Data | | | Section 4.16(h) |
Company Business Systems | | | Section 4.16(f) |
Company Capital Stock | | | Section 2.01 |
Company Common Stock | | | Section 2.01 |
Company Data Sources | | | Section 4.16(q) |
Company Disclosure Letter | | | Article IV |
Company Employees | | | Section 4.10(a) |
Company Financial Advisor | | | Section 4.21 |
Company Form 10-Q | | | Section 4.06(c) |
Company Governmental Contract | | | Section 4.14(b)(xv) |
Company Inbound IP Contracts | | | Section 4.14(b)(vi) |
Company Indemnified Parties | | | Section 6.05(a) |
Company Insurance Policies | | | Section 4.23 |
Company IP Contracts | | | Section 4.14(b)(vii) |
Company Leased Real Property | | | Section 4.15(b) |
Company Material Commercial Customers | | | Section 4.20 |
Company Material Contract | | | Section 4.14(b) |
Company Material Customers | | | Section 4.20 |
Company Material Suppliers | | | Section 4.20 |
Company Outbound IP Contracts | | | Section 4.14(b)(vii) |
Company Owned Software | | | Section 4.16(k) |
Company Preferred Stock | | | Section 2.01 |
Company Preferred Stock Conversion Agreement | | | Section 2.01(f) |
Company Products and Services | | | Section 4.19(a) |
Company Real Property Leases | | | Section 4.15(b) |
Company Recommendation | | | Section 6.01(b) |
Company Registered IP | | | Section 4.16(a) |
Company Related Party | | | Section 4.24(a) |
Company Related Party Transaction | | | Section 4.24(a) |
Company SEC Documents | | | Section 4.06(a) |
Company Stock Options | | | Section 4.03(a) |
Company Stockholder Approval | | | Section 4.04 |
Company Stockholders Meeting | | | Section 4.04 |
Company Termination Fee | | | Section 8.03(b) |
Company Warrants | | | Section 4.03(a) |
Confidentiality Agreement | | | Section 6.02 |
Continuing Employee | | | Section 6.09(a) |
DGCL | | | Section 1.01 |
Dispensary Data Sources | | | Section 4.16(p) |
Dissenter’s Rights | | | Section 2.05(a) |
Dissenting Shares | | | Section 2.01(c) |
Effective Time | | | Section 1.03 |
End Date | | | Section 8.01(b)(i) |
Environmental Law | | | Section 3.13 |
Environmental Permits | | | Section 3.13 |
EU Personal Data | | | Section 3.16(h) |
Exchange Agent | | | Section 2.02(a) |
Filed Company Contract | | | Section 4.14(a) |
GAAP | | | Section 3.06(a) |
HHS | | | Section 3.16(h) |
Indemnity Period | | | Section 6.05(b) |
Inquiry | | | Section 5.04(a) |
IRS | | | Section 3.09(a) |
Legal Restraints | | | Section 7.01(e) |
Licensed Software | | | Section 4.16(k) |
Malicious Code | | | Section 4.16(k) |
Material Data Sources | | | Section 4.16(p) |
Maximum Amount | | | Section 6.05(a) |
Merger | | | Section 1.01 |
Merger Consideration | | | Section 2.01(c) |
Merger Sub | | | Preamble |
Merger Sub Common Stock | | | Section 2.01 |
Misuse | | | Section 3.16(h) |
MOR | | | Preamble |
MOR Financial Statements | | | Section 3.06(a) |
MOR Offering Materials | | | Section 6.15 |
Notice of Superior Proposal | | | Section 5.04(d) |
Notice Period | | | Section 5.04(d) |
Owned Data Sources | | | Section 4.16(q) |
Parent | | | Preamble |
Parent Board | | | Section 3.03(b) |
Parent Board Designees | | | Section 1.06(a)(i) |
Parent Bringdown Certificate | | | Article III |
Parent Business Data | | | Section 3.16(h) |
Parent Business Systems | | | Section 3.16(f) |
Parent Capital Stock | | | Section 3.03(a) |
Parent Designees | | | Section 1.06(a)(ii) |
Parent Disclosure Letter | | | Article III |
Parent Expense Reimbursement Amount | | | Section 8.03(c) |
Parent Expenses | | | Section 8.03(b) |
Parent Insurance Policies | | | Section 3.23 |
Parent Leased Real Property | | | Section 3.15(b) |
Parent Material Contract | | | Section 3.14(a) |
Parent Material Customers | | | Section 3.19 |
Parent Material Suppliers | | | Section 3.19 |
Parent Officer Designees | | | Section 1.06(a)(ii) |
Parent Preferred Stock | | | Section 3.03(a) |
Parent Products and Services | | | Section 3.18(a) |
Parent Real Property Leases | | | Section 3.15(b) |
Parent Registered IP | | | Section 3.16(a) |
Parent Related Party | | | Section 3.24(a) |
Parent Related Party Transaction | | | Section 3.24(a) |
Parent Stock Option | | | Section 6.04(a) |
Pension Plan | | | Section 3.09(e) |
PPP Loan Audit | | | Section 6.16(c) |
Processing | | | Section 3.16(g) |
RC Convertible Notes Conversion Agreement | | | Section 2.01(g) |
Release | | | Section 3.13 |
Representatives | | | Section 5.04(a) |
Required Approvals | | | Section 6.03(b) |
Reverse Termination Fee | | | Section 8.03(d) |
SBA | | | Section 6.16(a) |
SDN List | | | Section 3.17(b) |
SEC Clearance Date | | | Section 6.01(b) |
Superior Proposal | | | Section 5.04(f)(ii) |
Surviving Corporation | | | Section 1.01 |
Surviving Corporation Board Designees | | | Section 1.06(b)(i) |
Surviving Corporation Designees | | | Section 1.06(b)(ii) |
Surviving Corporation Officer Designees | | | Section 1.06(b)(ii) |
Third-Party Data Sources | | | Section 4.16(p) |
Union | | | Section 3.10(c) |
Voting Agreement | | | Recitals |
WARN Act | | | Section 3.10(i) |
(a) | if to MOR, to: |
(b) | if to the Equityholders, at such address set forth on the signature page hereto. |
(c) | if to Parent, to: |
1 | NTD: To discuss whether Indemnification is acceptable. |
| | FORIAN INC. | ||||
| | | | |||
| | By: | | | ||
| | Name: Max Wygod | ||||
| | Title: Executive Chairman | ||||
| | | | |||
| | MEDICAL OUTCOMES RESEARCH ANALYTICS, LLC | ||||
| | | | |||
| | By: | | | ||
| | Name: Max Wygod | ||||
| | Title: Manager |
| | [EQUITYHOLDER] | ||||
| | [•] | ||||
| | | | |||
| | By: | | | ||
| | Name: | ||||
| | | | |||
| | Address: |
No. of MOR Equity Interests | | | Class of Units | | | No. of Shares of Parent Common Stock |
| | | | |||
| | | | |||
| | | | |||
| | | |
| | October 16, 2020 |
i. | Reviewed certain governing documents and other corporate organization materials that were deemed pertinent; |
ii. | Reviewed the DRAFT Agreement and Plan of Merger and supporting conversion schedule; |
iii. | Reviewed MOR Letter of Intent; |
iv. | Examined historical and projected financial information provided by management of Helix and MOR; |
v. | Reviewed other documents, and related industry information and statistics we deemed relevant; |
vi. | Interviewed management concerning Helix’s and MOR’s history, operations, services, customer relationships, employees, competition, outlook, strengths, weaknesses, opportunities, and threats, as well as other aspects of the business we considered pertinent; |
vii. | We reviewed publicly available information on selected guideline public companies and guideline precedent transactions; |
viii. | Performed discounted cash flow analyses and sensitized the results based on a range of selected inputs; |
ix. | Performed guideline publicly traded companies' analysis in the analysis of value for MOR; |
x. | Considered such other information regarding the Helix and MOR and their industry deemed relevant by MPI, including the current economic environment, in general, and the specific economic factors bearing on firms competing in the industry; |
xi. | Conducted studies, analyses, and inquiries as MPI deemed appropriate. |
(a) | Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. |
(b) | Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title: |
(1) | Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or, in the case of a merger pursuant to § 251(h), as of immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title. |
(2) | Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. | Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; |
b. | Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders; |
c. | Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or |
d. | Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section. |
(3) | In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
(4) | [Repealed] |
(c) | Any corporation may provide in its certificate of incorporation that appraisal rights under this section |
(d) | Appraisal rights shall be perfected as follows: |
(1) | If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or |
(2) | If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each |
(e) | Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon request given in writing (or by electronic transmission directed to an information processing system (if any) expressly designated for that purpose in the notice of appraisal), shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in § 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such stockholder’s request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection. |
(f) | Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. |
(g) | At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title. |
(h) | After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section. |
(i) | The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. |
(j) | The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. |
(k) | From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an |
(l) | The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. |
Item 20. | Indemnification of Directors and Officers |
Item 21. | Exhibits and Financial Statement Schedules |
(a) | The following is a list of exhibits to this registration statement: |
Exhibit No. | | | Description |
| | Agreement and Plan of Merger, dated as of October 16, 2020, by and among Helix Technologies, Inc., Forian Inc., DNA Merger Sub, Inc. and Medical Outcomes Research Analytics, LLC (included as Appendix A to the proxy statement/prospectus forming a part of this Registration Statement). | |
| | Amendment to Agreement and Plan of Merger dated December 30, 2020, by and among Helix Technologies, Inc., Forian Inc., DNA Merger Sub, Inc. and Medical Outcomes Research Analytics, LLC | |
| | Form of Equity Interest Contribution Agreement | |
| | Certificate of Incorporation of the Registrant | |
| | Bylaws of the Registrant | |
| | Forian Inc. 2020 Equity Incentive Plan | |
| | Opinion of Duane Morris LLP as to the validity of the securities being registered. | |
| | Opinion of Duane Morris LLP regarding certain tax matters. | |
| | Voting and Support Agreement, dated October 16, 2020 by and among Forian and the undersigned securityholders of Helix Technologies, Inc. | |
| | License Agreement, dated June 30, 2019 (portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv).) | |
| | Consent of Marcum LLP, relating to MOR’s financial statements. | |
| | Consent of BF Borgers CPA PC, relating to Helix’s financial statements. | |
| | Consent of Duane Morris LLP (included in Exhibit 5.1). | |
| | Consent of Duane Morris LLP (included in Exhibit 8.1). | |
| | Power of | |
| | Opinion of Management Planning Inc. (included as Appendix C to the proxy statement/prospectus forming a part of this Registration Statement). | |
| | Consent of Management Planning Inc. (included in Exhibit 99.1) | |
| | Consent of Mark J. Adler, M.D. | |
| | Consent of Ian G. Banwell | |
| | Consent of Jennifer Hajj | |
| | Consent of Shahir Kassam-Adams | |
| | Consent of Stanley S. Trotman, Jr. | |
| | Form of Proxy Card for Helix Technologies, Inc. | |
| | Consent of Kristiina Vuori, M.D., Ph.D. | |
| | Consent of Alyssa Varadhan |
+ | Indicates management contract or compensatory plan. |
* | Previously filed. |
Item 22. | Undertakings |
(a) | To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
(1) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. |
(2) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) that, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any |
(3) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(b) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
(c) | To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. |
(d) | That for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
(e) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus that is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(f) | That every prospectus (1) that is filed pursuant to paragraph (e) immediately preceding, or (2) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
(g) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 20 above, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
(h) | To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first-class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(i) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
| | FORIAN INC. | ||||
| | | | |||
| | By: | | | /s/ Daniel Barton | |
| | Name: | | | Daniel Barton | |
| | Title: | | | Chief Executive Officer |
Name | | | Title | | | Date |
/s/ Daniel Barton | | | Chief Executive Officer (Principal Executive Officer) | | | |
Daniel Barton | | |||||
| | | | |||
/s/ Clifford Farren | | | Chief Financial Officer (Principal Financial and Accounting Officer) | | | |
Clifford Farren | | |||||
| | | | |||
| | Director | | | ||
Adam Dublin | | |||||
| | | ||||
| | Director | | | ||
Martin Wygod | | | | | ||
| | | | |||
| | Director | | | ||
Max Wygod | | | | |
*By: | | | /s/ Daniel Barton | | | |
| | Attorney-in-fact | | |