Note 3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Medical Outcomes Research Analytics, LLC and its wholly owned subsidiaries COR Analytics, LLC and MOR Analytics, LLC. All intercompany transactions have been eliminated in consolidation.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses together with amounts disclosed in related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value for equity securities and stock-based compensation. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that the external factors could have an effect on the Company estimates and could cause actual results to differ from those estimates.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities;

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 — inputs that are unobservable.

The carrying value of the Company’s financial instruments, such as cash, marketable securities, accounts receivable, and accrued liabilities and other liabilities approximate fair values due to the short-term nature of these instruments.

Cash and Cash Equivalents and Credit Risk

The Company considers all cash accounts that are not subject to withdrawal restrictions and highly liquid investments with a maturity of three months or less, when purchased, as cash and cash equivalents.

The Company maintains cash with major financial institutions. Cash held at U.S. bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. The portion of deposits in excess of FDIC coverage is not protected by such insurance and represents a credit risk to the Company. At times, the Company’s deposits exceed this coverage.

Revenue Recognition

The Company recognizes revenue in accordance with FASB Topic 606 - Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenues when (or as) the Company satisfies a performance obligation.

The Company anticipates generating revenue from two categories of product offerings: Technology and Information Products and Services.

In 2020, the revenue generated by the Company was exclusively from Information Products.

In most Information Products contracts, payments are scheduled throughout the term and the contract may include one of the following performance obligations: (i) the provision of historical and/or current data as agreed upon, (ii) access to the data through a third-party technology provider, and (iii) access to the Company’s analytical team throughout the term of the agreement as agreed upon.

Many of the initial contracts the Company has signed to date do not have distinct pricing assigned to each performance obligation; rather, the price is bundled and the total bundled pricing is invoiced throughout the term of the agreement.

The Company recognizes data subscription revenue pursuant to licensing agreements under which the Company receives payments for providing the customer access to the data over the contract period. As the performance obligations and payments are associated with exclusive rights that the Company provides in connection with such contracts over the term of the agreements, revenue related to the payments received are deferred and recognized over the term of the exclusive distribution period of the respective agreement. Payments are usually due within 30 days. There are no variable considerations or financing component under such contracts for the year ended December 31, 2020. The Company satisfies its performance obligations under the contract throughout the term of the agreement of license of data subscription. Prices are typically fixed for each year of the contract, but can include royalties in excess of fixed fees. There were no such excess of royalties over fixed fees for the year December 31, 2020. Invoicing under contracts is set forth in an invoicing schedule as part of the contract and payments are due within 30 days.

ASC 606-10-32-32 requires the determination of the price the Company would sell individual products or services to a customer. The Company does not yet have sufficient data or experience related to the terms and pricing for products and services when components are sold on a standalone basis. In instances where insufficient data exists, the Company recognizes the contractual fees ratably over the term of the arrangement. In instances where a customer has limited operating history or the Company has recently been formed, management may determine that it is prudent to recognize only the first year’s fees ratably over the first year of the term, more often than not resulting in the recognition of a lower amount of revenue during the first year. Performance obligations that are distinct and remain undelivered would not be recognized until the end of the contract provided that the Consideration is guaranteed. No significant judgements affect the determination of the amount and timing of revenue. The Company had satisfied all performance obligations and collected all amounts billed on such contracts for the year ended December 31, 2020.

Contract acquisition costs, which consist of sales commissions paid or payable, is considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the contract term. $53,784 and $0 of such costs were capitalized as of December 31, 2020 and 2019. There are no significant judgements affecting the determination of the amount and timing of the related revenue.

Contract Assets result when the cumulative revenue recognized exceeds the cumulative invoicing under a contract. The value of the differential is reflected in Contract Assets and represents the value of the revenue that was not billed to customers as of the balance sheet date.

Contract Liabilities (“Deferred Revenue”) result when cumulative receipts under a contract for the same performance obligation exceeds the total revenue recognition and such excess is reflected in Deferred Revenue and represents the value of the performance obligations to be satisfied after December 31, 2020.

The following are the contract balances as of and for the year December 31, 2020:

Contract assets
Balance at January 1, 2020	$	-
Add: Revenue recognized from related contract assets		366,667
Add: Contract acquisition costs capitalized		53,784
Less: Payments received during the year		(223,750	)
Balance at December 31, 2020	$	196,701

Contract Liabilities (Deferred Revenue)
Balance at January 1, 2020	$	-
Add: Payments received in 2020		334,092
Less: Revenue recognized during the year		(175,208	)
Balance at December 31, 2020	$	158,884

Customer Concentration

For the year ended December 31, 2020, the Company had a single customer that accounted for $450,000 of revenue, which represented 83% of revenues generated from customer sales. The Company believes that this customer is ultimately replaceable, and any disruption associated with this customer would only have a short-term impact on the business. The contracts assets balance for this customer at December 31, 2020 was $142,917.

The Company regularly reviews outstanding accounts receivable for collectability and records an allowance for doubtful accounts, if determined to be necessary. Management determined that a reserve was not necessary as of December 31, 2020.

Concentration of Vendors

The Company has licensed certain data sets from a third party as a key input to the Company’s products and services. Licensing fees to this vendor represented 5% and 42% of the Company’s operating expenses for the year ended December 31, 2020 and the period from inception (May 6, 2019) through December 31, 2019, respectively. The Company utilizes a third party for its technical infrastructure (technical support, system design, prototype development). Fees to this vendor represented 6% and 17% of the Company’s operating expenses for the year ended December 31, 2020 and the period from inception (May 6, 2019) through December 31, 2019, respectively. These vendors are critical to the business. The Company believes that while these vendors are ultimately replaceable, any disruption associated with these vendors could have a material short-term impact on the business.

For the year ended December 31, 2020, legal fees to one firm for work related to the Merger Agreement with Helix Technologies represented 12% of operating expenses. See Note 15.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which are 3 years. Maintenance and repairs are charged to operations as incurred.

The Company reviews for the impairment of long-lived assets annually and whenever events and or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when the present value of estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. There were no impairment losses recognized during the year ended December 31, 2020 and the period from inception (May 6, 2019) through December 31, 2019.

Software Development Costs

The Company accounts for costs incurred in the development of computer software in accordance with ASC Subtopic 350-40, Intangibles — Goodwill and Other — Internal-Use Software. Costs incurred in the application development stage are subject to capitalization and subsequent amortization and possible impairment. Application development stage costs were not material for the Company. Product development costs are primarily personnel related to activities for design and evaluating software development, testing, bug fixes, and other maintenance activities. Product development costs are expensed as incurred. There were no capitalized software development costs for the year ended December 31, 2020 and from inception (May 6, 2019) through December 31, 2019.

Net Loss per Share

Net loss per share of common stock is computed by dividing net loss by the weighted average number of common shares outstanding during the period. At December 31, 2020, the Company had potentially dilutive securities that could be exercised or converted into common stock. Refer to Note 12 for the Company’s disclosure on such potential dilution. Further, as the Company has incurred net losses for the year ended December 31, 2020 and for the period from inception (May 6, 2019) through December 31, 2019, the diluted loss per share is the same as basic loss per share for the periods presented.

Restricted Stock and Restricted Stock Units

The Company’s 2020 Equity Incentive Plan (“2020 Plan”) permits the grant of restricted stock and/or restricted stock units. Restricted stock awards are grants of shares of our common stock. Restricted stock units represent the right to receive shares of our common stock (or a cash amount equal to the value of our common stock) on future specified dates. The terms of the restricted stock and/or restricted stock units granted under the 2020 Plan are determined by the Board of Directors in the award agreement evidencing the award, including the number of shares, period of restriction or vesting schedule and other terms. The fair value of the restricted stock is based on the underlying grant date fair value of the Company’s stock. The fair value is then expensed over the requisite service periods of the awards, net of estimated forfeitures, which is generally the service period and the related amount is recognized in the consolidated statements of operations.

Income Taxes

MOR was organized as an LLC until the completion of the Merger with Helix on March 2, 2021. As a result, the Company was treated as a partnership for federal and state income tax purposes through March 2, 2021. Accordingly, the Company’s taxable income, deductions, assets and liabilities are reported by the members on their respective income tax returns. Therefore, no provision for federal or state income tax has been made by the Company for the year ended December 31, 2020 or the period from inception (May 6, 2019) through December 31, 2019.

There are no uncertain tax positions that would require recognition in the financial statements. If the Company were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties on any income tax would be reported as income taxes. Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.