Forian Inc., a provider of data science and analytics solutions, announced that it will restate its historical financial statements for certain periods between 2021 and 2024. The company's Audit Committee determined that previously issued financial statements should no longer be relied upon due to technical adjustments in revenue recognition.
The restatement stems from the application of Accounting Standards Codification (ASC) 606, which requires recognizing aggregate annual minimum payments for certain contracts on a straight-line basis over the contract's duration. This adjustment will affect how the company reports revenues for contracts with variable fee structures based on customer sales thresholds. The financial restatement is expected to result in an increase to previously reported revenues and net income across all affected periods. Importantly, the company emphasized that this technical adjustment will not impact its actual cash flows.
Despite the financial restatement, Forian maintains its 2024 financial outlook. The company continues to expect revenues between $19 million and $20 million, with Adjusted EBITDA projected between negative $0.5 million and $0.5 million. As a result of the restatement, Forian will experience a delay in filing its Annual Report on Form 10-K. The company plans to file a notification of late filing and expects to submit the updated financial report within a 15-calendar-day extension period as permitted by SEC regulations.
The company has also deferred its previously scheduled conference call and webcast, rescheduling it to coincide with the financial results for the first quarter of 2025. This restatement underscores the importance of proper revenue recognition under ASC 606 for companies with complex contract structures. Investors and analysts will be watching closely to see how the restated figures compare to prior reports and what implications this may have for Forian's future financial reporting.
