| Summary of Significant Accounting Policies | 2)
Summary of Significant Accounting Policies Basis
of consolidated financial statements The
accompanying condensed consolidated financial statements include the accounts of Healthcare Triangle and its wholly owned subsidiary.
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America. All intercompany balances and transactions have been eliminated in consolidation. The
accompanying statements of operations include expenses for certain functions historically performed by the Parent company, including
general corporate services, such as legal, accounting, treasury, information technology, human resources and administration. These expenses
are based primarily on direct usage when identifiable, direct capital expenditures or other relevant allocations during the respective
periods. We believe the assumptions underlying the accompanying condensed consolidated financial statements, including the assumptions
regarding these expenses from this related party, are reasonable. Actual results may differ from these expenses, assumptions and estimates.
The amounts recorded in the accompanying condensed consolidated financial statements are not necessarily indicative of the actual amount
of such indirect expenses that would have been recorded had we been a separate independent entity. Unaudited
Interim Financial Information The
accompanying unaudited condensed consolidated financial statements and the related footnote disclosures have been prepared by us in accordance
with GAAP for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated
financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end
December 31, 2021 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not
include all disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary
to present fairly our financial position as of June 30, 2022, the results of operations, comprehensive income (loss), stockholders’
deficit, and cash flows for the three months ended June 30, 2022 and 2021. The results of operations for the three months ended June
30, 2022 and 2021 are not necessarily indicative of the results to be expected for the full year. The information contained herein should
be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31,
2021 filed with the SEC. Management considers events or transactions that occur after the balance sheet date but before the financial
statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure.
Subsequent events have been evaluated through the date of issuance of these financial statements. Accounting
Policies Use
of Estimates The
preparation of financial statements is in conformity with GAAP which requires us to make estimates, judgments and assumptions that affect
the financial statements and the notes thereto. These estimates are based on information available as of the date of the financial statements.
On a regular basis, management evaluates these estimates and assumptions. Items subject to such estimates and assumptions include, but
are not limited to: • the standalone selling price for each distinct performance obligation • the determination of the period of benefit for amortization of deferred costs • the fair value of assets acquired, and liabilities assumed for business combinations. • Share based compensation including warrants. Emerging
Growth Company Status We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging
growth company until the earlier of (i) December 21, 2026 (the last day of the fiscal year following the fifth anniversary of our IPO),
(ii) the last day of the first fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day
of the first fiscal year in which we are deemed to be a “large accelerated filer”, as defined in the rules under the Exchange
Act, and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We
refer to the Jumpstart Our Business Startups Act of 2012 herein as the “JOBS Act,” and any reference herein to “emerging
growth company” has the meaning ascribed to it in the JOBS Act. We
have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report on Form 10-K and may elect to take
advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to
our stockholders may be different from the information you might receive from other public reporting companies in which you hold equity
interests. In particular, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act) for complying with new or revised
accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, so long
as we remain an emerging growth company, we will not be subject to the same implementation timing of new or revised accounting standards
as other public companies that are not emerging growth companies until these standards apply to private companies unless we elect to
early adopt as permitted by the relevant guidance for private companies. Segment
Information The
management has chosen to organize the Company around differences in products and services and segregated the reporting segments as Software
Services, Managed Services and Support, and Platform Services. Operating
segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and assessing performance. The Company defines the term ‘‘chief operating
decision maker’’ to be the Chief Executive Officer. The Chief Executive Officer along with the management team reviews the
financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance.Accordingly,
the Company has determined that it operates in three distinct reportable operating segments, and all required financial segments information
can be found in the consolidated financial statements. Expenses
included in segment operating profit consist principally of direct selling, delivery costs and research and development expenses. Certain
Sales and Marketing expenses, General and Administrative expenses, depreciation, and amortization are not allocated to individual segments
in internal management reports used by the chief operating decision maker. Accordingly, such expenses are excluded from segment operating
profit and are included below as “unallocated costs” and adjusted against our total income from operations. Additionally,
management has determined that it is not practical to allocate identifiable assets by segment, since such assets are used interchangeably
among the segments.
Revenue
by Operating Segment Schedule
of Operating segment
Three
Months Ended Changes
2022 2021 Amount %
(In
thousands, except percentages)
Software
Services $ 6,585 $ 3,217 $ 3,368 105 %
Managed
Services and Support 3,903 5,304 (1,401 ) (26 %)
Platform
Services 1,100 1,529 (429 ) (28 %)
Revenue $ 11,588 $ 10,050 $ 1,538 15 %
Six
Months Ended Changes
2022 2021 Amount %
(In
thousands, except percentages)
Software
Services $ 12,041 $ 5,941 $ 6,100 103 %
Managed
Services and Support 8,172 9,531 (1,359 ) (14 %)
Platform
Services 2,431 2,531 (100 ) (4 %)
Revenue $ 22,644 $ 18,003 $ 4,641 26 % Operating
profit/(loss) by Operating Segment
Operating
profit by Operating Segment
Three
Months Ended Changes
2022 2021 Amount %
Software
Services $ (321 ) $ 521 $ (842 ) (161 %)
Managed
Services and Support 1,284 1,441 (157 ) (11 %)
Platform
Services (212 ) 174 (386 ) (222 %)
Total
segment operating profit 751 2,136 (1,385 ) (65 %)
Less:
unallocated costs 2,184 1,667 (517 ) (31 %)
Income/(loss)
from operations (1,433 ) 469 (1,902 ) (406 %)
Other
Income 1,087 — 1,087 100 %
Interest
expense 58 164 106 65 %
Net
income / (loss) before income tax expenses $ (404 ) $ 305 $ (709 ) (232 %)
Six
Months Ended Changes
2022 2021 Amount %
Software
Services $ (521 ) $ 989 $ (1,510 ) (153 %)
Managed
Services and Support 2,538 2,328 210 9 %
Platform
Services (784 ) (94 ) (690 ) (734 %)
Total
segment operating profit 1,233 3,223 (1,990 ) (62 %)
Less:
unallocated costs 4,640 3,472 (1,169 ) (34 %)
Income/(loss)
from operations (3,407 ) (248 ) (3,159 ) (1,274 %)
Other
Income 1,087 — 1,087 100 %
Interest
expense 74 259 185 71 %
Net
income / (loss) before income tax expenses $ (2,394 ) $ (507 ) $ (1,887 ) (372 %) Revenue
from top 5 customers Three
Months Ended June 30, 2022
Schedule of concentration
(In
thousands, except percentages)
Customer Amount %
of Revenue
Customer
1 $ 4,517 39 %
Customer
2 1,744 15 %
Customer
3 920 8 %
Customer
4 845 7 %
Customer
5 $ 440 4 % 2021
(In
thousands, except percentages)
Customer Amount %
of Revenue
Customer
1 $ 5,038 50 %
Customer
2 1,450 14 %
Customer
3 960 10 %
Customer
4 651 6 %
Customer
5 $ 471 5 % Six
Months Ended June 30, 2022
(In
thousands, except percentages)
Customer Amount %
of Revenue
Customer
1 $ 8,350 37 %
Customer
2 3,709 16 %
Customer
3 1,886 8 %
Customer
4 1,744 8 %
Customer
5 $ 912 4 % 2021
(In
thousands, except percentages)
Customer Amount %
of Revenue
Customer
1 $ 9,291 52 %
Customer
2 1,851 10 %
Customer
3 1,799 10 %
Customer
4 1,508 8 %
Customer
5 $ 754 4 % Revenue
Recognition We
recognize revenues as we transfer control of deliverables (services, solutions, and platform) to our clients in an amount reflecting
the consideration to which we expect to be entitled. To recognize revenues, we apply the following five step approach: (1) identify the
contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied.
We account for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms
are identified, the contract has commercial substance and collectability of consideration is probable. We apply judgment in determining
the customer’s ability and intention to pay based on a variety of factors including the customer’s historical payment experience. For
performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion
of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the
nature of the deliverables to be provided. Software
Services The
Company enters into contractual obligations with the customers to perform (i) Strategic advisory services which include assessment of
the enterprise network, applications environment and advise on the design and tools; (ii) Implementation services which include deployment,
upgrades, enhancements, migration, training, documentation and maintenance of various electronic health record systems and (iii) Development
services which include customization of network and applications in the public cloud environment. Revenue
from Strategic advisory, Implementation and Development services are distinct performance obligation and is recognized on time-and-material
or fixed-price project basis. Revenues related to time-and-material are recognized over the period the services are provided using labor
hours. Revenues related to fixed-price contracts are recognized as the service is performed using the cost-to-cost method, under which
the total value of revenues is recognized based on the percentage that each contract’s total labor cost to date bears to the total
expected labor costs. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect
the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision
in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses
on contracts are recognized immediately, where appropriate. We
may enter into contracts that consist of multiple performance obligations. Such contracts may include any combination of our deliverables.
To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable
of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted
for as a combined performance obligation. For contracts with multiple distinct performance obligations, we allocate consideration among
the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would
sell a promised good or service separately to the customer. When not directly observable, we estimate standalone selling price by using
the expected cost plus a margin approach. We establish a standalone selling price range for our deliverables, which is reassessed on
a periodic basis or when facts and circumstances change. Managed
Services and Support The
Company has standard contracts for its Managed Services and Support, however the statement of work contained in such contracts is unique
for each customer. A typical Managed Services and Support contract would provide for some or all of the following types of services being
provided to the customer: Cloud hosting, Continuous monitoring of applications, security and compliance and support. Revenue
from Managed services and support is a distinct performance obligation and recognized based on SSP (standalone selling price), rateably
on a straight-line basis over the period in which the services are rendered. Contract with customers includes subcontractor services
or third-party cloud infrastructure services in certain integrated services arrangements. In these types of arrangements, revenue is
recognized net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the
principal for the transaction. In doing so, the Company first evaluates whether it controls the platform or service before it is transferred
to the customer. The
Company considers whether it has the primary obligation to fulfil the contract, pricing discretion and other factors to determine whether
it controls the platform or service and therefore is acting as a principal or an agent. Payment for managed services and support is due
monthly. Platform
Services The
Company has standard contracts for its Platform Services, however the statement of work contained in such contracts is unique for each
customer. A typical Platform Services contract would provide for some or all of the following types of services being provided to the
customer: Data Analytics, Backup and Recovery, through our Platform. The
revenue from Platform services is a distinct performance obligation and recognized based on SSP. During the periods presented the Company
generated revenue from Platform services on a fixed-price solutions delivery model. Revenues related to fixed-price contracts are recognized
as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized based on the percentage
that each contract’s total labor cost to date bears to the total expected labor costs. The cost-to-cost method requires estimation
of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in
estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period
in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately, where appropriate. Our
contractual terms and conditions for Software services, Managed Services and Support and Platform services mandate that our services
are documented and subject to inspection, testing at the time of delivery to customer. In addition, the Company needs to integrate seamlessly
into the customers’ systems. Also, the customer has a right to cancel all, or part of the services rendered if it is not in accordance
with statement of work and within the stipulated time. Source
and Timing of revenue
Schedule of revenue
Three
Months Ended Changes
2022 2021 Amount %
(In
thousands, except percentages)
Software
Services $ 6,585 $ 3,217 $ 3,368 105 %
Managed
Services and Support 3,903 5,304 (1,401 ) (26 %)
Platform
Services 1,100 1,529 (429 ) (28 %)
Revenue $ 11,588 $ 10,050 $ 1,538 15 %
Six
Months Ended Changes
2022 2021 Amount %
(In
thousands, except percentages)
Software
Services $ 12,041 $ 5,941 $ 6,100 103 %
Managed
Services and Support 8,172 9,531 (1,359 ) (14 %)
Platform Services 2,431 2,531 (100 ) (4 %)
Revenue $ 22,644 $ 18,003 $ 4,641 26 % Timing
of Revenue Recognition quarter ended June 30, 2022 and 2021.
Three
Months Ended
Timing
of Revenue Recognition Software
Services Managed
Services Platform
Services Total
Revenue
2022 2021 2022 2021 2022 2021 2022 2021
Transferred
to a point of time $ 6,585 $ 3,217 $ — $ — $ 1,100 $ 1,529 $ 7,685 $ 4,746
Transferred
over time — — 3,903 5,304 — — 3,903 5,304
Total
Revenue $ 6,585 $ 3,217 $ 3,903 $ 5,304 $ 1,100 $ 1,529 $ 11,588 $ 10,050 Timing
of Revenue Recognition six months ended June 30, 2022 and 2021.
Six
Months Ended
Timing
of Revenue Recognition Software
Services Managed
Services Platform
Services Total
Revenue
2022 2021 2022 2021 2022 2021 2022 2021
Transferred
to a point of time $ 12,041 $ 5,941 $ — $ — $ 2,431 $ 2,531 $ 14,472 $ 8,472
Transferred
over time — — 8,172 9,531 — — 8,172 9,531
Total
Revenue $ 12,041 $ 5,941 $ 8,172 $ 9,531 $ 2,431 $ 2,531 $ 22,644 $ 18,003 Various
economic factors affect revenues and cash flows. Software services are provided on time-and-material and fixed-price project basis and
generally sales are collected within two months. Managed services are provided rateably over the term of the contract and cash flows
generally are collected monthly. Platform services are delivered over several months; revenues and cash flows occur based on stages of
completion. Contract
Balances The
timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (contract assets),
and customer advances and deferred revenue (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses
in accordance with agreedupon contractual terms, generally monthly upon achievement of contractual milestones. Generally, billing occurs
after revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly
on our international contracts, before revenue is recognized, resulting in contract liabilities. These deposits are liquidated when revenue
is recognized. The
beginning and ending contract balances were as follows:
Schedule
of receivables and contract liabilities
June
30, 2022 December
31, 2021
Accounts
Receivable 6,547 9,672 Cash
and Cash Equivalents The
Company considers all highly liquid investments (including money market funds) with an original maturity at acquisition of three months
or less to be cash equivalents. The Company maintains cash balances, which may exceed federally insured limits. The Company does not
believe that this results in any significant credit risk. Accounts
Receivable The
Company extends credit to clients based upon management’s assessment of their creditworthiness on an unsecured basis. The Company
provides an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. The Company
includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. For the quarter ended June 30,
2022 and year ended December 31, 2021 the Company did not provide allowances for uncollectible accounts. Based on the information available,
management believes the Company’s accounts receivable are collectible. Property
and Equipment Property
and equipment are stated at cost. The Company provides for depreciation of property and equipment using the straight-line method over
the estimated useful lives of the related assets ranging from 3 to 7 years. Leasehold improvements are amortized using the straight-line
method over the shorter of the lease terms or the useful lives of the improvements. The Company charges repairs and maintenance costs
that do not extend the lives of the assets to expenses as incurred. Intangible
Assets We
capitalize certain costs incurred for the platform development when it is determined that it is probable that the platform will be completed
and will be used as intended. Costs related to preliminary project activities, post-implementation activities, training, and maintenance
are expensed as incurred. Customer relationship and platform development are amortized based on finite lives using either the straight-line
method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized.
Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances
occur that could impact the recoverability of these assets. Goodwill Goodwill
is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities
assumed. Goodwill is not amortized but is subject to an annual impairment test. The
Company performs its annual goodwill impairment test on an annual basis in the fourth quarter of each fiscal year or more frequently
if changes in circumstances or the occurrence of events suggest that an impairment exists. If the fair value of the reporting unit is
less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s
goodwill is less than the carrying value of the reporting unit’s goodwill. The
Company’s quarterly goodwill impairment test resulted in no impairment charges in the quarter ended June 30, 2022 and 2021. Software
Development Costs Costs
for the development of new software products and substantial enhancements to existing software products are expensed as incurred and
classified under research and development expenses until technological feasibility has been established, at which time any additional
costs would be capitalized. The Company believes its current process for developing software is essentially completed concurrently with
the establishment of technological feasibility. Software development costs charged to expense for the quarter ended June 30, 2022, and
2021 was $ 262 302 Allowance
for Doubtful Accounts Trade
accounts receivable are stated at the amount the Company expects to collect and do not bear interest. The collectability of trade receivable
balances is regularly evaluated based on a combination of factors such as customer creditworthiness, past transaction history with the
customer, current economic industry trends and changes in customer payment pattern. Additionally, if it is determined that a customer
will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material event impacting its
business, a specific allowance for doubtful accounts may be recorded to reduce the related receivable to the amount expected to be recovered. Although
we believe that our approach to estimates and judgments regarding our allowance for doubtful accounts is reasonable, actual results could
differ and we may be exposed to increases or decreases in required allowances that could be material. Business
Combinations As
per ASC 805-50 a common-control transaction does not meet the definition of a business combination because there is no change in control
over the net assets. The accounting for these transactions are addressed in the “Transactions Between Entities Under Common Control”.
The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent
of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net
assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation.
The change in accounting principle is applied retroactively for all periods presented. We
account for business combinations using the acquisition method, which requires the identification of the acquirer, the determination
of the acquisition date and the allocation of the purchase price paid by the acquirer to the identifiable tangible and intangible assets
acquired, the liabilities assumed, including any contingent consideration and any non-controlling interest in the acquiree at their acquisition
date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount
assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related
costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our
consolidated financial statements from the date of effective control. Valuation
of Contingent Earn-out Consideration Acquisitions
may include contingent consideration payments based on the achievement of certain future financial performance measures of the acquired
company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of
these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. We believe our
estimates and assumptions are reasonable, however, there is significant judgment involved. We evaluate, on a routine, periodic basis,
the estimated fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate
at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations. Changes in the fair
value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount
of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out
criteria. Any changes in the estimated fair value of contingent consideration may have a material impact on our operating results. Earnings
(Loss) Per Share Earnings
per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used
to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification.
Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders
(the numerator) by the weighted average number of common shares outstanding (the denominator) during the period. Income available to
common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid)
and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations
(if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation
of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding
if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common
shares issuable through contingent shares issuance arrangement, stock options or warrants. Fair
Value Measurements The
Company measures its financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable
inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving
significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level
1—Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that the Company has the
ability to access at the measurement date. Level
2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level
3—Inputs that are unobservable Money
market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative
pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if
the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields,
reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale
debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs
in various asset price models. In connection with the acquisition of Devcool, Inc., the Company recognized a liability on the acquisition
date for the estimated fair value of the contingent consideration based on the probability of achieving certain milestones pursuant to
the acquisition agreement. The fair value measurement of the contingent consideration is based on significant unobservable inputs and
management judgment; therefore, it is categorized under Level 3 at the balance sheet date in the table below.
Schedule
of balance sheet
June
30, 2022
Fair
Value Measured Using
Level
1 Level
2 Level
3 Total
Financial
liabilities:
Warrant
Liabilities $ 55 $ 55
Acquisition-related
contingent consideration — — $ 2,227 $ 2,227 Stock-Based
Compensation The
Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires
compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial
statements based on a determination of the fair value of the stock options over the instruments vesting period. Options awarded to purchase
shares of common stock issued to non-employees do not need to be remeasured as per ASU 2018-07 principles. The
Company adopted the “2020 Stock Incentive Plan” (Plan). The Company has reserved 4,000,000 Income
taxes The
provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under this approach,
deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered
or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes
during the period. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when changes are enacted. Va |
