Forian Inc. announced it will restate its financial statements from 2021 to 2024, citing technical accounting adjustments related to revenue recognition under Accounting Standards Codification (ASC) 606. The restatement affects how the company recognizes aggregate annual minimum payments for certain contracts, which will now be recognized on a straight-line basis over the contract's life.
The Audit Committee of Forian's Board of Directors determined that previously issued financial statements should no longer be relied upon. However, the company emphasized that the restatement applies only to a limited number of contracts and will not impact its cash flows.
Despite the accounting adjustment, 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 positive $0.5 million.
As a result of the restatement, Forian will delay filing its Annual Report on Form 10-K and expects to file a notification of late filing. The company anticipates completing the restated financial statements within the SEC-provided 15-day extension period.
The financial restatement underscores the complexity of revenue recognition in technology and data science industries, where contract structures can significantly impact financial reporting. While the adjustments appear technical, they highlight the importance of precise accounting practices in maintaining investor confidence.
