UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended June 30, 2024
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ___________ to ___________
Commission
file number 001-40903
HEALTHCARE
TRIANGLE, INC.
(Exact
name of registrant as specified in its charter)
Delaware | | 84-3559776 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
| | |
7901 Stoneridge Drive,
Suite 220 Pleasanton, CA | | 94588 |
(Address of principal executive officer) | | (Zip Code) |
(925) 270-4812
(Registrant’s telephone number, including area code)
Title of each class | | Ticker Symbol(s) | | Name of each exchange on which registered |
Common Stock, $0.00001 par value | | HCTI | | The Nasdaq Stock Market LLC |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”,
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☒ | Emerging growth company ☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
☐ No ☒
As
of August 19, 2024, 5,666,781 shares of the registrant’s common stock, $0.00001 par value per share, were issued and outstanding.
NOTE
ABOUT FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Risk Factors,” contains certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involving substantial
risks and uncertainties. The words “believe,” “may,” “will,” “potentially,” “plan,”
“could,” “should,” “predict,” “ongoing,” “estimate,” “continue,”
“anticipate,” “intend,” “project,” “expect,” “seek,” or the negative of these
words, or terms or similar expressions conveying uncertainty of future events or outcomes, or that concern our expectations, strategy,
plans or intentions, are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those projected, anticipated, or expected. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary statements discussed under the heading “Risk Factors”
and in our publicly available filings and press releases. These statements include, among other things, those regarding:
|
● |
our
ability to continue to add new customers and increase sales to our existing customers; |
|
● |
our
ability to develop new solutions and bring them to market in a timely manner; |
|
● |
our
ability to timely and effectively scale and adapt our existing solutions; |
|
● |
our
dependence on establishing and maintaining a strong brand; |
|
● |
the
occurrence of service interruptions and security or privacy breaches and related remediation efforts and fines; |
|
● |
system
failures or capacity constraints; |
|
● |
the
rate of growth of, and anticipated trends and challenges in, our business and in the market for our products; |
|
● |
our
future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes
in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability
to achieve and maintain future profitability; |
|
● |
our
ability to continue to efficiently acquire customers, maintain our high customer retention rates and maintain the level of our customers’
lifetime spend; |
|
● |
our
ability to provide high quality customer care; |
|
● |
the
effects of increased competition in our markets and our ability to compete effectively; |
|
● |
our
ability to grow internationally; |
|
● |
the
impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such
fluctuations; |
|
● |
our
ability to effectively manage our growth and associated investments, including our migration of the vast majority of our infrastructure
to the public cloud; |
|
● |
our
ability to maintain our relationships with our partners; |
|
● |
adverse
consequences of our substantial level of indebtedness and our ability to repay our debt; |
|
● |
our
ability to maintain, protect and enhance our intellectual property; |
|
● |
our
ability to maintain or improve our market share; |
|
● |
sufficiency
of cash and cash equivalents to meet our needs for at least the next 12 months; |
|
● |
beliefs
and objectives for future operations; |
|
● |
our
ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business
both in the United States (U.S.) and internationally; |
|
● |
economic
and industry trends or trend analysis; |
|
● |
our
ability to attract and retain qualified employees and key personnel; |
|
● |
anticipated
income tax rates, tax estimates and tax standards; |
|
● |
the
future trading prices of our common stock; |
|
● |
our
expectations regarding the outcome of any regulatory investigation or litigation; |
|
● |
the
amount and timing of future repurchases of our common stock under any share repurchase program; |
|
● |
the
potential impact of shareholder activism on our business and operations; |
|
● |
the
length and severity of the coronavirus (COVID-19) pandemic and its impact on our business, customers and employees; as well as other
statements regarding our future operations, financial condition, growth prospects and business strategies. |
We
operate in very competitive and rapidly changing environments, and new risks emerge from time-to-time. It is not possible for us to predict
all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this report may not occur, and actual results could differ materially
and adversely from those implied in our forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances
described in the forward-looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the
accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements
for any reason after the date of this report to confirm such statements to actual results or to changes in our expectations, except as
required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless
expressly indicated or the context suggests otherwise, references to “Healthcare Triangle,” “company,” “we,”
“us” and “our” refer to Healthcare Triangle Inc. and its consolidated subsidiary.
PART
I
FINANCIAL
INFORMATION
Item
1. Financial statements
HEALTHCARE
TRIANGLE, INC.
Unaudited
Condensed Consolidated Balance Sheets
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
(In thousands) | |
Assets | |
| | |
| |
Current assets | |
| | |
| |
Cash and cash equivalents | |
$ | 29 | | |
$ | 1,234 | |
Accounts receivable | |
| 2,005 | | |
| 3,236 | |
Other current assets | |
| 299 | | |
| 824 | |
Total current assets | |
| 2,333 | | |
| 5,294 | |
Property and equipment, net | |
| 24 | | |
| 44 | |
Intangible assets, net | |
| 3,301 | | |
| 3,972 | |
Goodwill | |
| | | |
| | |
Due from affiliates | |
| 363 | | |
| 304 | |
Total assets | |
$ | 6,021 | | |
$ | 9,614 | |
| |
| | | |
| | |
Liabilities and stockholders’ equity (deficit) | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable | |
$ | 1,937 | | |
$ | 1,953 | |
Warrant Liability | |
| 1,333 | | |
| 954 | |
Short term borrowing | |
| 1,726 | | |
| 3,429 | |
Other current liabilities | |
| 1,171 | | |
| 1,787 | |
Total current liabilities | |
| 6,167 | | |
| 8,123 | |
| |
| | | |
| | |
Long-term liabilities | |
| | | |
| | |
Contingent Consideration | |
| 500 | | |
| 500 | |
Convertible Notes | |
| - | | |
| 453 | |
Total current and long-term liabilities | |
| 6,667 | | |
| 9,076 | |
| |
| | | |
| | |
Stockholders’ equity (deficit) | |
| | | |
| | |
Preferred stock, par value $0.00001; 10,000,000 authorized | |
| - | | |
| - | |
Series A, Super Voting Preferred Stock - 6,000 shares (1,000 votes per share) | |
| - | | |
| - | |
Common stock, par value $0.00001; 100,000,000 authorized 5,616,781 and 4,308,822 shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively | |
| - | | |
| - | |
Additional paid-in capital | |
| 27,631 | | |
| 25,443 | |
Retained earnings | |
| (28,277 | ) | |
| (24,905 | ) |
Total stockholders’ equity (deficit) | |
| (646 | ) | |
| 538 | |
Total liabilities and stockholders’ equity (deficit) | |
$ | 6,021 | | |
$ | 9,614 | |
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHCARE
TRIANGLE, INC.
Unaudited
Condensed Consolidated Statements of Operations
| |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
(In thousands) | | |
(In thousands) | |
Net revenue | |
$ | 2,984 | | |
$ | 8,526 | | |
$ | 7,093 | | |
$ | 18,364 | |
Cost of revenue (exclusive of depreciation and amortization shown separately below) | |
| 2,086 | | |
| 6,579 | | |
| 5,181 | | |
| 14,824 | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 207 | | |
| 102 | | |
| 334 | | |
| 641 | |
Sales and Marketing | |
| 631 | | |
| 1,026 | | |
| 1,514 | | |
| 2,787 | |
General and Administrative | |
| 904 | | |
| 1,612 | | |
| 2,080 | | |
| 3,240 | |
Depreciation and amortization | |
| 534 | | |
| 802 | | |
| 1,070 | | |
| 1,676 | |
Total operating expenses | |
| 2,276 | | |
| 3,542 | | |
| 4,998 | | |
| 8,344 | |
Loss from operation | |
| (1,378 | ) | |
| (1,595 | ) | |
| (3,087 | ) | |
| (4,804 | ) |
Other income | |
| — | | |
| — | | |
| — | | |
| 12 | |
Interest expense | |
| (131 | ) | |
| (186 | ) | |
| (280 | ) | |
| (248 | ) |
Loss before income tax | |
| (1,509 | ) | |
| (1,781 | ) | |
| (3,366 | ) | |
| (5,040 | ) |
Provision for Income tax | |
| (1 | ) | |
| (5 | ) | |
| (6 | ) | |
| (24 | ) |
Net loss | |
$ | (1,510 | ) | |
$ | (1,786 | ) | |
$ | (3,372 | ) | |
$ | (5,064 | ) |
Net loss per common share—basic and diluted | |
| (0.28 | ) | |
| (0.42 | ) | |
| (0.69 | ) | |
| (1.20 | ) |
Weighted average shares outstanding used in per common share computations: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted | |
| 5,316,376 | | |
| 4,273,142 | | |
| 4,885,810 | | |
| 4,229,782 | |
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHCARE
TRIANGLE, INC.
Unaudited
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
| |
Preferred stock | | |
Common stock | | |
Additional
paid-in | | |
Retained | | |
Total
stockholders’
equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
capital | | |
earnings | | |
(deficit) | |
| |
| | |
| | |
| | |
| | |
(In thousands) | |
Three Months Ended June 30, 2024 | |
| | |
| | |
| | |
| | |
| |
Balance at March 31, 2024 | |
| 6,000 | | |
$ | - | | |
| 4,726,217 | | |
$ | - | | |
$ | 26,256 | | |
$ | (26,767 | ) | |
$ | (511 | ) |
Net Loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | (1,510 | ) | |
$ | (1,510 | ) |
Preferential Issue | |
| | | |
| | | |
| 558,955 | | |
$ | - | | |
$ | 956 | | |
| - | | |
$ | 956 | |
Issue of stock option (ISO/NSO) | |
| | | |
| | | |
| | | |
$ | - | | |
$ | 25 | | |
| - | | |
$ | 25 | |
Conversion of Debt to Equity | |
| | | |
| | | |
| 331,609 | | |
$ | - | | |
$ | 394 | | |
| | | |
$ | 394 | |
Balance at June 30, 2024 | |
| 6,000 | | |
$ | - | | |
| 5,616,781 | | |
$ | - | | |
$ | 27,631 | | |
$ | (28,277 | ) | |
$ | (646 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Six Months Ended June 30, 2024 and 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2023 | |
| 6,000 | | |
$ | - | | |
| 4,308,822 | | |
$ | - | | |
$ | 25,443 | | |
$ | (24,905 | ) | |
$ | 538 | |
Issue of Options (ISO/NSO) | |
| | | |
| | | |
| | | |
| | | |
$ | 51 | | |
| | | |
$ | 51 | |
Preferential Issue | |
| | | |
| | | |
| 558,955 | | |
$ | - | | |
$ | 956 | | |
| | | |
$ | 956 | |
Conversion of Debt to Equity | |
| | | |
| | | |
| 749,004 | | |
$ | - | | |
$ | 1,181 | | |
| | | |
$ | 1,181 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
$ | (3,372 | ) | |
$ | (3,372 | ) |
Balance at June 30, 2024 | |
| 6,000 | | |
$ | - | | |
| 5,616,781 | | |
| - | | |
| 27,631 | | |
| (28,277 | ) | |
| (646 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Three Months Ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at March 31, 2023 | |
| 6,000 | | |
$ | - | | |
| 4,185,940 | | |
$ | - | | |
$ | 25,149 | | |
$ | (15,846 | ) | |
$ | 9,303 | |
Shares Issued for Services | |
| | | |
| | | |
| 15,000 | | |
| | | |
| | | |
| | | |
| - | |
Net Loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,786 | ) | |
$ | (1,786 | ) |
Issue of stock option (ISO/NSO) | |
| | | |
| | | |
| | | |
| | | |
| 35 | | |
| | | |
$ | 35 | |
Preferential Issue | |
| | | |
| | | |
| 76,923 | | |
| | | |
| 499 | | |
| | | |
$ | 499 | |
Balance at June 30, 2023 | |
| 6,000 | | |
$ | - | | |
| 4,277,863 | | |
$ | - | | |
$ | 25,683 | | |
$ | (17,632 | ) | |
$ | 8,051 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Six Months Ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at December 31, 2022 | |
| 6,000 | | |
$ | - | | |
| 4,170,940 | | |
$ | - | | |
$ | 24,956 | | |
$ | (12,568 | ) | |
$ | 12,388 | |
Issue of stock option (ISO/NSO) | |
| | | |
| | | |
| | | |
| | | |
| 177 | | |
| | | |
$ | 177 | |
Preferential Issue | |
| | | |
| | | |
| 76,923 | | |
$ | - | | |
| 499 | | |
| | | |
$ | 499 | |
Shares issued for services | |
| | | |
| | | |
| 30,000 | | |
$ | - | | |
| 51 | | |
| | | |
$ | 51 | |
Net loss | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (5,064 | ) | |
$ | (5,064 | ) |
Balance at June 30, 2023 | |
| 6,000 | | |
$ | - | | |
| 4,277,863 | | |
$ | - | | |
$ | 25,683 | | |
$ | (17,632 | ) | |
$ | 8,051 | |
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHCARE
TRIANGLE, INC.
Unaudited
Condensed Consolidated Statements of Cash Flows
| |
Six Months Ended June 30, | |
| |
2024 | | |
2023 | |
| |
(In thousands) | |
Cash flows from operating activities | |
| | |
| |
Net income (loss) | |
$ | (3,372 | ) | |
$ | (5,064 | ) |
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 691 | | |
| 1,674 | |
Warrant Liability | |
| 379 | | |
| | |
Common stock issued for services | |
| — | | |
| 51 | |
Stock compensation expenses | |
| 51 | | |
| 177 | |
Amortization of debt discount | |
| 145 | | |
| 75 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
(Increase)/ decrease in: | |
| | | |
| | |
Accounts receivable | |
| 1,231 | | |
| 1,116 | |
Other current assets | |
| 525 | | |
| — | |
Due from related party | |
| (59 | ) | |
| 698 | |
Increase/ (decrease) in: | |
| | | |
| | |
Accounts payable and accrued expenses | |
| (16 | ) | |
| (555 | ) |
Other current liabilities | |
| (560 | ) | |
| (922 | ) |
Net cash provided by/ (used in) operating activities | |
| (985 | ) | |
| (2,750 | ) |
Cash flows from investing activities | |
| | | |
| | |
(Purchase)/sale of property and equipment | |
| — | | |
| (2 | ) |
Net cash provided by/ (used in) investing activities | |
| — | | |
| (2 | ) |
Cash flows from financing activities | |
| | | |
| | |
Increase/(decrease) in short term borrowing | |
| (1,176 | ) | |
| 1,044 | |
Shares issued for cash | |
| 956 | | |
| 499 | |
Net cash provided by/ (used in) financing activities | |
| (220 | ) | |
| 1,543 | |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| (1,205 | ) | |
| (1,209 | ) |
Cash and cash equivalents | |
| | | |
| | |
Cash and cash equivalents at the beginning of the period | |
$ | 1,234 | | |
$ | 1,341 | |
Cash and cash equivalents at the end of the period | |
$ | 29 | | |
$ | 132 | |
| |
| | | |
| | |
Supplementary disclosure of cash flows information | |
| | | |
| | |
Interest | |
| 280 | | |
| 248 | |
Income taxes | |
| 6 | | |
| 24 | |
Non-cash investing and financing activities | |
| | | |
| | |
Non-Cash Conversion of debt into common stock | |
$ | 1,181 | | |
$ | — | |
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
1)
Organization and Description of Business
Healthcare
Triangle Inc. (“the Company”) was incorporated under the laws of the State of Nevada on October 29, 2019, and then converted
into a Delaware corporation on April 24, 2020, to provide IT and data services to the Healthcare and Life Sciences (‘HCLS”)
industry. On January 1, 2020, the Company acquired the Life Sciences Business of SecureKloud Technologies Inc. (“Parent”)
and on May 8, 2020, the Company acquired Cornerstone Advisors Group LLC (Healthcare Business) from its Parent.
Company reinforces
healthcare progress through breakthrough technology and extensive industry know-how. Company support healthcare providers and payors,
hospitals and pharma/life sciences organizations in their effort to improve health outcomes by enabling the adoption of new technologies,
data enlightenment, business agility and accelerate responding to immediate business needs and competitive threats. The highly
regulated HCLS industry turn to Company for expertise in digital transformation on the cloud, security and compliance, develops,
data lifecycle management, healthcare interoperability, clinical and business performance optimization.
Company
concentrates on accelerating value to the three healthcare sectors:
|
1. |
Pharmaceutical
companies, which require improved efficiencies in the clinical trial process. Company modernizes their IT infrastructure to advance
the clinical trial process to drug discovery and delivery. |
|
2. |
Hospitals
and health systems, which face interoperability challenges as mergers, acquisitions and partnerships drive increasing need for integrated
healthcare infrastructures. Company’s health IT expertise optimizes providers’ enterprise digital structure needs connecting
disparate systems and applying analytics capabilities. |
|
3. |
Life
sciences, payers and all healthcare organizations must protect and secure personal health information (PHI), a regulatory compliance
mandate that Company addresses and manages for its customers. |
As
an organization with the deep-rooted cloud expertise, Company’s technology significantly relies on Big Data, Analytics, DevOps,
Security/Compliance, Identity Access Management (IAM), Machine Learning (ML), Artificial Intelligence (AI), Internet of Things (IoT)
and Blockchain.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
Devcool
Inc
Devcool
Inc (“the Company”) was incorporated under the laws of the State of California on September 25, 2016. The Company solves
complex technology problems and delivers innovation to healthcare industry. The Company has successfully implemented projects for top
Healthcare insurance companies and hospitals across United States of America. On December 10, 2021, Healthcare Triangle, Inc (the “Company”)
entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Devcool, Inc., a California corporation (“Devcool”),
Go To Assistance Inc., a California corporation (“Seller”), and Mr. Sandeep Deokule, current Chief Executive Officer of Devcool
(“SD”). Pursuant to the Share Purchase Agreement, the Company will acquire 5,000,000 shares of Devcool’s Class B Common
Stock, par value $0.00001, which represents all of the issued and outstanding capital stock of Devcool (the “Acquisition”).
The closing of the Acquisition occurred on December 10, 2021 (the “Closing Date”). The Company exercised control by virtue
of taking over the operations from November 01, 2021 (effective date) and the financials have been consolidated from this date.
Impact
of the COVID-19 Pandemic
COVID-19
has created uncertainty for our employees, members, and customers. We consider the impact of the pandemic on our business by evaluating
the health of our operations, any changes to our revenue outlook, and the degree to which interest in Company’s solutions have
evolved during these unprecedented times. We measure our performance through several key metrics; and as gauged these performance metrics,
service levels have been high, and customer engagement and satisfaction have remained strong through these tough times. While the COVID-19
pandemic has not had a material adverse impact on our financial condition and results of operations to date, the future impact of the
COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread
of the outbreak, impact on our customers and our sales cycles, impact on our marketing efforts, and any reduction in spending by our
customers, all of which are uncertain and cannot be predicted. We have a diverse set of customers, while some have faced headwinds, others
have experienced growth. Because of COVID-19, Healthcare and Life Sciences organizations are accelerating research, rethinking patient
care, and maintaining clinical and operational continuity during this unprecedented time for the global health system. COVID-19 has necessitated
the adoption of digital communication channels and remote working technology within the Healthcare and Life Sciences industry at a rapid
pace and our proprietary platforms and solutions addresses these challenges. Our business is focused on providing digital platform solutions
to healthcare organizations and it is our mission to adequately address COVID-19 challenges for the benefit of our customers and society
in general. As a result, consumers have better personal care, convenience, and value. COVID-19 is expected to drive increased utilization
of technology during and after the pandemic, and such shift to a virtual approach creates a unique opportunity for our business to shape
the new virtual-oriented experiences of businesses through our cloud technology and services and our value proposition resonates with
a broader audience of companies as they turn their focus to safely reopening their workplaces and managing the ongoing health and well-being
of employees and their families.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
2)
Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s
operating losses raise substantial doubt about its ability to continue as a going concern and the financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
The
Company entered into an ATM Sales Agreement (“ATM Agreement”) with Dawson James Securities, Inc. (the “DJ ATM”)
pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-276382), which was declared effective by the U.S. Securities
and Exchange Commission on January 31, 2024. Pursuant to the ATM Agreement, the Company sells newly issued shares into the trading market
through our designated sales agent at prevailing market prices. As of the date of this Plan, the Company has sold $956,000 of shares
through the DJ ATM. The Company currently has $1,444,000 of capacity under the DJ ATM and, market conditions permitting, plans to sell
off its entire capacity within the next few months and then amend the DJ ATM to increase capacity enabled by additional shares included
in the public float from the prior ATM sales. The Company projects this increased capacity could be approximately $500,000.
The
Company and an institutional investor, (“Investor”), entered into a securities purchase agreement on December 28, 2023 to
issue to the Investor senior secured 15% original issue discount convertible promissory notes (the “Notes”) in the aggregate
principal amount of up to $5,200,000 which will result in gross proceeds to the Company in the amount of up to $4,420,000 due to the
original issue discount, and warrants (the “Warrants”). Further to the first tranche therein, the Company issued a Note to
the Investor in the principal amount of $2,000,000, of which the Company has repaid an amount equal to $1,181,250, vide issuance of its
registered Common Stock to the amount of 749,004 shares of common stock leading to an increase in stockholder equity to the tune of $1,181,250.
The Company anticipates repaying the entire obligations under its first tranche by or before December 31, 2024.
The
Parent Company, SecureKloud Technologies, Inc, is willing to invest $5 million additional equity through FY24 to support the Company’s
working capital and investment requirements.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
3)
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, 2023 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, 2024, the results of operations, comprehensive income (loss), stockholders’
deficit, and cash flows for the three months ended June 30, 2024 and 2023. The results of operations for the three months ended June
30, 2024 and 2023 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,
2023 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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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 Financial Officer. The Chief Financial 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.
Schedule of operating segment
| |
Three months Ended June 30, | | |
Changes | |
| |
(In thousands) | | |
| |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
Software Services | |
$ | 663 | | |
$ | 5,185 | | |
$ | (4,522 | ) | |
| (87 | )% |
Managed Services and Support | |
| 2,253 | | |
| 2,865 | | |
| (612 | ) | |
| (21 | )% |
Platform Services | |
| 68 | | |
| 476 | | |
| (408 | ) | |
| (86 | )% |
Revenue | |
$ | 2,984 | | |
$ | 8,526 | | |
$ | (5,542 | ) | |
| (65 | )% |
| |
Six months Ended June 30, | | |
Changes | |
| |
(In thousands) | | |
| |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
Software Services | |
$ | 2,235 | | |
$ | 11,643 | | |
$ | (9,408 | ) | |
| (81 | )% |
Managed Services and Support | |
| 4,724 | | |
| 5,906 | | |
| (1,182 | ) | |
| (20 | )% |
Platform Services | |
| 134 | | |
| 815 | | |
| (681 | ) | |
| (84 | )% |
Revenue | |
$ | 7,093 | | |
$ | 18,364 | | |
$ | (11,271 | ) | |
| (61 | )% |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
Operating profit by Operating Segment
| |
Three months Ended
June 30, | | |
Changes | |
| |
(In thousands) | | |
| |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
Software Services | |
$ | (170 | ) | |
| (644 | ) | |
| 474 | | |
| 74 | % |
Managed Services and Support | |
| 706 | | |
| 822 | | |
| (116 | ) | |
| (14 | )% |
Platform Services | |
| (181 | ) | |
| 84 | | |
| (265 | ) | |
| 315 | % |
Total segment operating (loss) profit | |
| 355 | | |
| 262 | | |
| 93 | | |
| 35 | % |
Less: unallocated costs | |
| 1,733 | | |
| 1,857 | | |
| (124 | ) | |
| (7 | )% |
Income (loss) from operations | |
| (1,378 | ) | |
| (1,595 | ) | |
| 217 | | |
| 14 | % |
Other Income | |
| — | | |
| — | | |
| — | | |
| 0 | % |
Interest expense | |
| (131 | ) | |
| (186 | ) | |
| 55 | | |
| 30 | % |
Net income (loss) before income tax expenses | |
$ | (1,509 | ) | |
| (1,781 | ) | |
| 272 | | |
| 15 | % |
| |
Six months Ended
June 30, | | |
Changes | |
| |
(In thousands) | | |
| |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
Software Services | |
$ | (1,000 | ) | |
| (1,779 | ) | |
| 779 | | |
| 44 | % |
Managed Services and Support | |
| 1,763 | | |
| 1,374 | | |
| 389 | | |
| 28 | % |
Platform Services | |
| (298 | ) | |
| (379 | ) | |
| 81 | | |
| 21 | % |
Total segment operating (loss) profit | |
| 465 | | |
| (784 | ) | |
| 1,249 | | |
| 159 | % |
Less: unallocated costs | |
| 3,552 | | |
| 4,020 | | |
| (468 | ) | |
| (12 | )% |
Income (loss) from operations | |
| (3,087 | ) | |
| (4,804 | ) | |
| 1,717 | | |
| 36 | % |
Other Income | |
| — | | |
| 12 | | |
| (12 | ) | |
| (100 | )% |
Interest expense | |
| (279 | ) | |
| (248 | ) | |
| (31 | ) | |
| (13 | )% |
Net income (loss) before income tax expenses | |
$ | (3,366 | ) | |
| (5,040 | ) | |
| 1,674 | | |
| 33 | % |
Revenue
from top 5 customers
Three
Months Ended June 30, 2024
Schedule
of concentration
Customer | |
Amount
(In thousands) | | |
% of
Revenue | |
Customer 1 | |
$ | 925 | | |
| 31 | % |
Customer 2 | |
| 486 | | |
| 16 | % |
Customer 3 | |
| 221 | | |
| 7 | % |
Customer 4 | |
| 215 | | |
| 7 | % |
Customer 5 | |
$ | 193 | | |
| 7 | % |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
Three
Months Ended June 30, 2023
Schedule of concentration
Customer | |
Amount
(In thousands) | | |
% of
Revenue | |
Customer 1 | |
$ | 4,519 | | |
| 53 | % |
Customer 2 | |
| 912 | | |
| 11 | % |
Customer 3 | |
| 622 | | |
| 7 | % |
Customer 4 | |
| 539 | | |
| 6 | % |
Customer 5 | |
$ | 319 | | |
| 4 | % |
Six
Months Ended June 30, 2024
Schedule of concentration
Customer | |
Amount
(In thousands) | | |
% of
Revenue | |
Customer 1 | |
$ | 1,645 | | |
| 23 | % |
Customer 2 | |
| 962 | | |
| 14 | % |
Customer 3 | |
| 851 | | |
| 12 | % |
Customer 4 | |
| 710 | | |
| 10 | % |
Customer 5 | |
$ | 547 | | |
| 8 | % |
Six
Months Ended June 30, 2023
Schedule of concentration
Customer | |
Amount
(In thousands) | | |
% of
Revenue | |
Customer 1 | |
$ | 9,449 | | |
| 51 | % |
Customer 2 | |
| 1,771 | | |
| 10 | % |
Customer 3 | |
| 1,330 | | |
| 7 | % |
Customer 4 | |
| 984 | | |
| 5 | % |
Customer 5 | |
$ | 920 | | |
| 5 | % |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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), ratably
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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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 agreed-upon 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,
2024 | | |
December 31,
2023 | |
| |
(In thousands) | |
Accounts Receivable | |
| 2,005 | | |
| 3,236 | |
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 the 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,
2024 the Company did not provided an allowance for uncollectible accounts and year ended December 31, 2023 the Company provided $222
as 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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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 fully impaired goodwill in Q4 FY 2023 due
to the loss of a major customer.
The
Company’s quarterly goodwill impairment test resulted in no impairment charges in the quarter ended June 30, 2024 and 2023.
Allowance
for Doubtful Accounts
Trade
accounts receivable is 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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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, 2024 | |
| |
Fair Value Measured Using | |
| |
(In thousands) | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Financial liabilities: | |
| | |
| | |
| | |
| |
Warrant Liabilities | |
| | | |
| | | |
$ | 1,333 | | |
$ | 1,333 | |
Acquisition-related contingent consideration | |
| — | | |
| — | | |
$ | 500 | | |
$ | 500 | |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
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 861,764 shares of the Company’s Common
stock.
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. Valuation allowances are recorded to reduce deferred
tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.
Advertising
Costs
The Company expenses advertising cost as incurred.
Advertising expense for the quarters ended June 30, 2024 and 2023 were $145 and $97 respectively.
Concentrations
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables.
Credit risks associated with trade receivables is minimal due to the Company’s customer base which consist of large customer base
and ongoing procedures, which monitor the credit worthiness of its customers. For the quarter ended June 30, 2024 and 2023 revenue from
the top five customers accounted for approximately 68% and 81% of total revenue respectively. For the quarter ended June 30, 2024 and
year ended December 31, 2023 accounts receivable from five major customers accounted for approximately 72% and 78% of the total accounts
receivables.
The
Company maintains cash balances in various financial institutions. The balances are generally insured by the Federal Deposit Insurance
Corporation up to $250,000 (valid through June 30, 2024) per institution.
As
of June 30, 2024 and December 31, 2023, the Company had $0 and $667 respectively, of uninsured cash balances. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
4)
Property and Equipment
Property
and equipment consisted of the following:
Schedule of property and equipment
| |
June 30,
2024 | | |
December 31,
2023 | |
| |
(In thousands) | |
Furniture and Equipment | |
$ | 132 | | |
$ | 132 | |
Less: Accumulated depreciation | |
| (108 | ) | |
| (88 | ) |
Net Fixed Assets | |
$ | 24 | | |
$ | 44 | |
Depreciation
expenses for the quarter ended June 30, 2024, and June 30, 2023 were $9 and $10 respectively.
5)
Intangible Assets
The
Company’s intangible assets consist primarily of intellectual property and customer relationship it acquired through various acquisitions.
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. We amortize our intangible assets that have 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.
Intangible
assets consist of the following:
| | June 30, 2024 | | | December 31, 2023 | |
| | Weighted
average
Remaining
Useful life
(Years) | | | Gross
Carrying
Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Gross Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | |
| | (In thousands) | | | (In thousands) | |
Customer relationships | | 0 | | | $ | 8,081 | | | $ | 8,081 | | | | — | | | $ | 8,081 | | | $ | 8,081 | | | $ | — | |
Intellectual property | | 2.76 | | | | 7,329 | | | | 4,028 | | | | 3,301 | | | | 7,329 | | | | 3,357 | | | | 3,972 | |
Product development | | 0 | | | | 477 | | | | 477 | | | | — | | | | 477 | | | | 477 | | | | — | |
Total Intangible Assets | | | | | $ | 15,887 | | | $ | 12,586 | | | $ | 3,301 | | | $ | 15,887 | | | $ | 11,915 | | | $ | 3,972 | |
Amortization
expense for the quarter ended June 30, 2024 and June 30, 2023 were $336 and $792 respectively. This amortization expense relates to capitalized
software expenses, intellectual property, and customer lists.
Schedule of intangibles asset useful life
Nature of Intangibles | | Useful Life | |
Customer relationships | | 5 years | |
Intellectual property | | 5 years | |
Product development | | 5 years | |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
Estimated
annual amortization expense (including amortization expense associated with capitalized software costs) for each of the next six years
are as follows:
Schedule of amortization expense
June 30, | |
| |
2024 | |
$ | 672 | |
2025 | |
| 1,343 | |
2026 | |
| 1,286 | |
2027 | |
| — | |
Total | |
$ | 3,301 | |
6)
Due from Related Party
Securekloud
Technologies Inc, (Parent) is a Nevada based corporation, focusing on digital transformation for Avionics, Technology and Manufacturing
Industry. As a pioneer in enabling cloud transformation for global enterprises, Securekloud Technologies Inc is building on foundation
of cloud capabilities by creating innovative platforms that are time-tested and designed to drive success in its digital transformation
journey. HTI uses the capabilities and resources of the parent for the execution of the projects for its customers.
Securekloud
Technologies Inc owns 45.40% of Healthcare Triangle Inc as of June 30, 2024.
The
Company entered into a Master Service Agreement, Shared Services Agreement and Rental Sublease Agreement with its parent. As per the
Master Services Agreement, parent provides technical resources according to the statement of work from the Company. The initial term
of the agreement is twenty-four months, which is extendable based on mutual consent. The parent charges for the services at cost. The
Company received services amounting to $755 and $756 for the quarter ended June 30, 2024, and 2023 respectively. The Company has paid
for these services during the year.
As
per the terms of the Shared Services and Rental Sublease Agreement, the costs incurred by the parent on behalf of the Company are settled
at cost. The Shared Services Agreement includes Development infrastructure, Sales support, Recruitment and Immigration support, Project
coordination, HR and Operation support, Management /Advisory services. The Company received services amounting to $52 and $71 for the
quarter ended June 30, 2024, and 2023 respectively. The Company has paid for these services during the year.
The
Company does not have any signed lease agreement on its name and currently operates from two office locations leased by the Parent. The
Company has entered into a sublease agreement with the Parent and paid rent of $34 and $67 for the quarter ended June 30, 2024, and 2023
respectively.
The
Company has earned $13 from sale to related parties for the quarter ended June 30, 2024, and $9 for the quarter ended June 30, 2023.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
7)
Business Combination
Effective
May 8, 2020, the Company acquired the entire equity of Cornerstone Advisory Services LLC in exchange for a promissory note. In accordance
with the terms of the Equity Purchase Agreement dated May 8, 2020, the Company acquired 100% of the equity of Cornerstone Advisory Services
LLC for a total consideration of $7,000. The total purchase price of $7,000 was allocated to net working capital of $4,700 and intangibles
of $2,300, taking into consideration projected revenue from the acquired list of Subsidiary’s customers over a period of five years.
Acquisition
of Devcool, Inc.
On
December 10, 2021, Healthcare Triangle, Inc. (the “Company”) entered into a Share Purchase Agreement (the “Share Purchase
Agreement”) with Devcool, Inc., a California corporation (“Devcool”), Go To Assistance Inc., a California corporation
(“Seller”), and Mr. Sandeep Deokule, current Chief Executive Officer of Devcool (“SD”). Pursuant to the Share
Purchase Agreement, the Company will acquire 5,000,000 shares of Devcool’s Class B Common Stock, par value $0.00001, which represents
all of the issued and outstanding capital stock of Devcool (the “Acquisition”). The closing of the Acquisition occurred on
December 10, 2021 (the “Closing Date”). The Company exercised control by virtue of taking over the operation from November
01, 2021 (effective date) and the financials have been consolidated from this date.
The
aggregate purchase price for the acquisition of Devcool Inc was $7,773 consisting of;
| 1. | $4,500
payable to the Seller in cash on the Closing Date; |
| 2. | $700
worth of equity of the Company’s common stock (the “Common Stock”) whereby the number of shares of common stock issuable
to Mr. Deokule will be calculated by dividing $700 by the volume weighted average price of the Company’s common stock as reported
by Bloomberg Financial Markets or if Bloomberg Financial Markets is not then reporting such prices, by a comparable reporting service
of national reputation (“VWAP”) for the 20 trading days immediately prior to the closing date of the Transaction. Such shares
of common stock were issued as follows: |
| a) | 20,930
shares of unvested Common Stock were issued to the Seller, which shall vest upon Devcool meeting one of two gross revenue targets set
forth in the Share Purchase Agreement; and |
| b) | 8,372
shares of unvested Common Stock were issued as retention bonus to certain key personnel of Devcool to be retained by Devcool post-Closing
(the “Retention Personnel”), subject to the Retention Personnel continuing to perform services to Devcool (or its affiliates)
up to and through the second anniversary of the closing date, which shares shall vest equally monthly on the corresponding day of the
closing date over a period of 24 successive months; and |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
| 3. | A
sum of up to $2,500 as post-closing earnout payment (the “Earnout”), subject to Devcool’s achievement of the applicable
yearly earnout targets set forth in the Share Purchase Agreement, which Earnout shall be payable as follows: |
| a) | up
to $250 worth of Common Stock (calculated based on the average of the VWAPs for the 20 trading days immediately prior to December 31,
2022) issuable to SD or the Seller as SD’s nominee for achievement of the Year 1 Equity Earnout (as defined in Annexure B to the
Share Purchase Agreement); |
| b) | up
to $1,000 payable to the Seller or its nominees in cash upon achieving the Year 1 Cash Earnout; and |
| c) | up
to $250 worth of Common Stock (calculated based on the average of the VWAPs for the 20 trading days immediately prior to December 31,
2023) issuable to SD or the Seller as SD’s nominee for achievement of the Year 2 Equity Earnout (as defined in Annexure B to the
Share Purchase Agreement). |
| d) | up
to $1,000 payable to the Seller or its nominees in cash upon achieving the Year 2 Cash Earnout; and |
| 4. | The
Company also issued the Seller a secured non-interest-bearing promissory note in the principal amount of $2,209 that matures on April
30, 2022 (the “Note”) that reflects an amount owed to the Seller by the Company equal to the difference between the amount
of accrued and outstanding accounts receivable on the Closing Date less the amount of accrued and outstanding accounts payable on the
Closing Date. |
Based
on the preliminary purchase price allocation, we recorded $1,289 of goodwill which is not tax deductible.
Presented
below is the summary of the foregoing acquisitions
Allocation
of purchase price
Schedule of allocation of purchase price
Asset Component | |
Amount | |
Intangible Assets | |
$ | 6,018 | |
Goodwill | |
| 1,289 | |
Working Capital | |
| — | |
Current Assets | |
| | |
Cash | |
| 970 | |
Accounts Receivables | |
| 3,142 | |
Other Current Assets | |
| | |
Other Current Assets | |
| 11,419 | |
Current Liabilities | |
| | |
Accounts Payable | |
| 758 | |
Short term borrowing | |
| 2,209 | |
Other Current liabilities | |
| 679 | |
Current liabilities | |
| 3,646 | |
Net Working Capital Acquired | |
| 7,773 | |
Total Purchase price | |
$ | 7,773 | |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
8)
Debt Securities
A.
Convertible Notes
In
accordance with the terms outlined in the Security Purchase Agreement and First Tranche Note executed by the Company on December 28,
2023, the Company has commenced repayment of the convertible note. During the six months ended June 30, 2024, the company issued 794,004
shares at an average price of $1.66 and converted promissory note value of $1,181. The conversions resulted in no gains or losses as
they were done as per the terms in the Convertible note agreement.
The convertible note outstanding as of June 30,
2024, is $585, reported under short-term borrowings.
Convertible note | |
June 30,
2024 | | |
December 31,
2023 | |
Short term borrowing | |
| 585 | | |
| 1,112 | |
Long-term liabilities | |
| - | | |
| 888 | |
Total Outstanding Debt | |
| 585 | | |
| 2,000 | |
Date of Conversion | |
Installment | | |
Loan | | |
Interest | | |
Repayment | | |
Conversion
price | | |
No of
shares | |
2/14/2024 | |
1 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.93 | | |
| 68,005 | |
2/14/2024 | |
2 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.93 | | |
| 68,005 | |
3/1/2024 | |
3 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.92 | | |
| 68,359 | |
3/1/2024 | |
4 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.92 | | |
| 68,359 | |
3/1/2024 | |
5 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.92 | | |
| 68,359 | |
3/19/2024 | |
6 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.72 | | |
| 76,308 | |
4/23/2024 | |
7 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.27 | | |
| 103,346 | |
5/9/2024 | |
8 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.15 | | |
| 114,130 | |
5/9/2024 | |
9 | | |
$ | 125,000 | | |
$ | 6,250 | | |
$ | 131,250 | | |
| 1.15 | | |
| 114,133 | |
Total | |
| | |
$ | 1,125,000 | | |
$ | 56,250 | | |
$ | 1,181,250 | | |
| 1.66 | | |
| 749,004 | |
Common
Stock Warrants
The
Company has issued warrants which entitles the holder thereof to purchase a number of shares of our common stock with such warrant. The
warrants are convertible into common stock at a price equal to $7.99 per share.
The
warrants are subject to certain customary adjustments in the event of stock dividends and splits, issuance of options, subsequent rights
offerings, and pro rata distributions.
As
of June 30, 2024, none of the warrants have been exercised by the note holders and hence no proceeds have been received towards any of
the warrants.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
The
Warrants have been valued using the Black-Scholes-Merton Option (“BSM”) pricing model that is based on the individual characteristics
of the warrants on the valuation date, which include the Company’s stock fair value and assumptions for expected volatility, expected
life and risk-free interest rate, as well as the present value of the minimum cash payment component of the instrument for the warrants,
when applicable. Changes in the assumptions used could have a material impact on the resulting fair value of each warrant. The primary
inputs affecting the value of the warrant liability are the Company’s stock price and volatility in the Company’s stock price,
as well as assumptions about the probability and timing of certain events, such as a change in control or future equity offerings. Increases
in the fair value of the underlying stock or increases in the volatility of the stock price generally result in a corresponding increase
in the fair value of the warrant liability; conversely, decreases in the fair value of the underlying stock or decreases in the volatility
of the stock price generally result in a corresponding decrease in the fair value of the warrant liability.
Schedule
of common stock warrants
Warrants | | Number of Warrants | | | Weighted Average Exercise price | | | Weighted Average Remaining Contractual Term | | | Aggregate Intrinsic value | |
Outstanding on January 1, 2024 | | | 967,256 | | | $ | 7.99 | | | | 4.07 | | | | 3,785 | |
Granted | | | — | | | | — | | | | — | | | | — | |
Exercised | | | — | | | | — | | | | — | | | | — | |
Forfeited or expired | | | — | | | | — | | | | — | | | | — | |
Outstanding on June 30, 2024 | | | 967,256 | | | $ | 7.99 | | | | 3.82 | | | | 3,785 | |
Exercisable on June 30, 2024 | | | 279,653 | | | $ | 7.99 | | | | 3.82 | | | | 1,333 | |
The
following table summarizes the activities for our unvested warrants for the quarter ended June 30, 2024
Schedule of unvested warrants
| |
Number of
Warrants | | |
Weighted
average
Grant Date
Fair Value
Per warrant | |
Unvested on January 1, 2024 | |
| 784,329 | | |
$ | 3.91 | |
Granted | |
| — | | |
| | |
Vested | |
| (96,726 | ) | |
$ | 3.91 | |
Forfeited | |
| — | | |
| | |
Unvested on June 30, 2024 | |
| 687,603 | | |
$ | 3.91 | |
The
Company has recognized cost of $190 for the quarter ended June 30, 2024, and $190 for the quarter ended June 30, 2023.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
B.
Warrant Liability
The
Company has allocated the proceeds from convertible note between promissory notes and warrants; as of June 30, 2024, the Company has
reported a Warrant liability of $1,333 at fair value, with subsequent changes in their respective fair values recognized in the consolidated
statement of operations at each reporting date.
The
fair value of the warrant liabilities was measured using a binomial lattice model. Significant inputs into the model at the inception
and reporting period measurement dates are as follows:
Schedule of fair value of warrant liabilities | |
| |
| |
| |
Fair value assumptions | |
June 30,
2024 | |
Estimated fair value of common stock warrant | |
$ | 3.91 | |
Exercise price | |
$ | 7.99 | |
Expected volatility | |
| 45%-52 | % |
Expected terms (in years) | |
| 5 | |
Risk-free interest rate | |
| 4.60%-5.46 | % |
Dividend Yield | |
| 0 | % |
C.
Short Term borrowing
Seacoast Business Funding:
The
Company has obtained a credit facility from Seacoast business funding (SBF), a division of Seacoast National Bank. The funding is against
the accounts receivables of the company and its subsidiary. The SBF facility charges an interest of prime rate plus 1% on a floating
basis. The balance as of June 30, 2024, is $1,141 and $3,429 for the period ended December 31, 2023.
Convertible Note:
The Company entered into a securities purchase
agreement on December 28, 2023 and issued convertible promissory notes in the principal amount of $2,000. The balance as of June 30, 2024,
is $585,
Short term borrowing | |
June 30,
2024 | | |
December 31,
2023 | |
Seacoast business funding (SBF) | |
$ | 1,141 | | |
$ | 2,317 | |
Convertible note | |
$ | 585 | | |
$ | 1,112 | |
Total short-term borrowing | |
$ | 1,726 | | |
$ | 3,429 | |
9)
Provision for Income Taxes
The
Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. Management evaluates all available evidence about future taxable income and other possible sources of realization
of deferred tax assets. A valuation allowance is established to reduce deferred tax assets to an amount that represents management’s
best estimate of the amount of such deferred tax assets that more likely than not will be realized. To the extent the Company establishes
a valuation allowance or increased the allowance in any given period, an expense is recognized within the provision for income taxes
in the statement of income.
The
Company recognizes the tax benefit from uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest
benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and
penalties related to income tax matters as other expense in the statement of income. Based on management’s evaluations, there are
no uncertain tax positions requiring recognition as of the date of these financial statements.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
The
components of the Company’s net deferred tax assets as of June 30, 2024 and December 31, 2023, were as follows (in thousands):
Schedule of deferred tax assets | |
| | |
| |
| |
| | |
| |
| |
June 30, 2024 | | |
December 31, 2023 | |
Deferred tax assets: | |
| | |
| |
Net Operating loss carry forward | |
$ | 4,042 | | |
$ | 3,322 | |
Stock-based compensation | |
| (14 | ) | |
| (18 | ) |
Warrants | |
| (102 | ) | |
| (172 | ) |
Total Deferred tax asset | |
| 3,926 | | |
| 3,132 | |
Less: Valuation allowance | |
$ | (3,926 | ) | |
$ | (3,132 | ) |
Deferred tax asset. net of valuation allowance | |
| — | | |
| — | |
Deferred tax liabilities | |
| — | | |
| — | |
Net Deferred tax asset | |
| — | | |
| — | |
Income
tax expense (benefit) was computed as follows:
Schedule of income tax expense benefit | |
| | |
| |
| |
| | |
| |
| |
June 30,
2024 | | |
June 30,
2023 | |
Federal income tax | |
$ | — | | |
$ | — | |
State income tax | |
| 1 | | |
| 5 | |
Total Income taxes , Current provision | |
| 1 | | |
| 5 | |
Deferred Income taxes (benefit) | |
| — | | |
| — | |
Total Income expenses (benefit) | |
$ | 1 | | |
$ | 5 | |
The
Company’s effective tax rate is 0% for the quarter ended June 30, 2024 and 0% and for the quarter ended June 30, 2023 The future
effective income tax rate depends on various factors, such as the Company’s income (loss) before taxes, tax legislation and the
geographic composition of pre-tax income.
The
Company files a consolidated federal tax return with its parent and records its share of the consolidated federal tax expense on a separate
return basis. The Company’s current tax expense is nil. There is no liability in 2023 on account of losses.
The
Company’s federal and state income tax returns are generally subject to possible examination by the taxing authorities until the
expiration of the related statute of limitations on those tax returns which is generally three years from the original filing deadline.
The Company regularly reviews its deferred tax assets for recoverability based on historical taxable income, projected future taxable
income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies. The Company’s
judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully
execute the business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the
Company’s income tax provision would increase or decrease in the period in which the assessment is changed.
10)
New Accounting Pronouncements
i)
ASU 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts
with Customers. For public business entities, the amendments in this Update are effective for fiscal years beginning after December
15, 2022, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption of the amendments is permitted,
including adoption in an interim period. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on
its consolidated financial statements.
(ii)
ASU 2021-10—Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The
amendments in this Update are effective for all entities within their scope for financial statements issued for annual periods beginning
after December 15, 2021. Early application of the amendments is permitted. The Company is currently evaluating the impact that the adoption
of ASU 2016-02 will have on its consolidated financial statements.
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
11)
Legal Matters
The
Company is not involved in any action, arbitration and/or other legal proceedings that it expects to have a material adverse effect on
the business, financial condition, results of operations or liquidity of the Company. All legal costs are expensed as incurred.
12)
Share Based Compensation
We
estimate the fair value of our stock options using the Black-Scholes option pricing model. This requires the input of subjective assumptions,
including the fair value of our underlying common stock, the expected term of stock options, the expected volatility of the price of
our common stock, risk-free interest rates, and the expected dividend yield of our common stock, the most critical of which, prior to
our IPO, was the estimated fair value of common stock. The assumptions used in our option pricing model represent our best estimates.
These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions
are used, our stock-based compensation expense could be materially different in the future. The resulting fair value, net of actual forfeitures,
is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange for the award
These
assumptions used in the Black-Scholes option pricing model, other than the fair value of our common stock, are estimated as follows:
| ● | Expected
volatility. Since a public market for our common stock did not exist prior to our IPO in October 2021 and, therefore, we do not have
an extensive trading history of our common stock, we estimated the expected volatility based on the volatility of similar publicly-held
entities (guideline companies) over a period equivalent to the expected term of the awards. In evaluating the similarity of guideline
companies to us, we considered factors such as industry, stage of life cycle, size, and financial leverage. We intend to continue to
consistently apply this process using the same or similar guideline companies to estimate the expected volatility until sufficient historical
information regarding the volatility of the share price of our common stock becomes available. |
| ● | Expected
term. We estimate the expected term using the simplified method, as we do not have sufficient historical exercise activity to develop
reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method calculates
the average period the stock options are expected to remain outstanding as the midpoint between the vesting date and the contractual
expiration date of the award. |
| ● | Risk-free
interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for maturities corresponding
with the expected term of the option. |
| ● | Expected
dividend yield. We have never declared or paid any dividends and do not presently plan to pay dividends in the foreseeable future. Consequently,
we use an expected dividend yield of zero. |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
We
are required to estimate the fair value of the common stock underlying our stock-based awards when performing fair value calculations.
Historically
for all periods prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American
Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation,
we exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair
value of our common stock including:
| ● | contemporaneous
valuations performed at periodic intervals by unrelated third-party specialists |
| ● | our
actual operating and financial performance. |
| ● | relevant
precedent transactions involving our capital stock. |
| ● | likelihood
of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions and the
nature and history of our business. |
| ● | market
multiples of comparable companies in our industry. |
| ● | industry
information such as market size and growth. |
| ● | illiquidity
of stock-based awards involving securities in a private company; and |
In
valuing our common stock prior to our IPO, our board of directors determined the enterprise value of our company using both the income
approach and market approach valuation methods. The income approach estimates value based on the expectation of future cash flows that
a company will generate. These future cash flows are discounted to their present values using a discount rate based on the cost of capital
at a company’s stage of development. The market approach estimates value based on a comparison of the subject company to comparable
public companies in a similar line of business. From the comparable companies, a representative market value multiple is determined and
then applied to the subject company’s financial results to estimate the enterprise value of the subject company.
A
summary of option activity under the employee share option plan as of June 30, 2024, and changes during the year then period is presented
below.
Schedule
of stock option activity
| |
Options | | |
Shares of Stock | |
| |
No. of
Options | | |
Weighted
Average
Price | | |
No. of
Shares | | |
Weighted
Average
Price | | |
Total | |
Balance outstanding as at January 1, 2024 | |
| 538,265 | | |
| — | | |
| — | | |
| — | | |
| 538,265 | |
Granted | |
| (20,000 | ) | |
| 1.78 | | |
| | | |
| | | |
| (20,000 | ) |
Incentive Stock Options (ISO) | |
| — | | |
| — | | |
| — | | |
| — | | |
| | |
Non-Qualified Stock Options (NSO) | |
| — | | |
| | | |
| — | | |
| — | | |
| | |
Cancelled/expired/exercised | |
| 17,110 | | |
| | | |
| — | | |
| — | | |
| 17,110 | |
Balance available under the plan as of March 31, 2024 | |
| 535,375 | | |
| — | | |
| — | | |
| — | | |
| 535,375 | |
Cancelled/expired/exercised | |
| — | | |
| | | |
| — | | |
| — | | |
| | |
Issued | |
| (7,531 | ) | |
| | | |
| — | | |
| — | | |
| (7,531 | ) |
Balance available under the plan as of June 30, 2024 | |
| 527,844 | | |
| — | | |
| — | | |
| — | | |
| 527,844 | |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
The
following table summarizes the activities for our unvested options for the quarter ended June 30, 2024
Schedule of unvested options | |
| | |
| |
| |
| | |
| |
| |
Number of options | | |
Weighted average Grant Date Fair Value Per Option | |
Unvested on December 31, 2023 | |
| 135,377 | | |
| 4.00 | |
Granted | |
| — | | |
| — | |
Vested | |
| (21,807 | ) | |
| 3.58 | |
Forfeited | |
| (17,616 | ) | |
| 4.22 | |
Unvested on March 31, 2024 | |
| 95,954 | | |
| 4.00 | |
Granted | |
| — | | |
| — | |
Vested | |
| (12,799 | ) | |
| 3.84 | |
Forfeited | |
| — | | |
| | |
Unvested on June 30, 2024 | |
| 83,155 | | |
| 4.00 | |
The
weighted-average grant date fair value of options granted during the quarter ended June 30, 2024 was $0 and $0 during the quarter ended
March 31, 2024. The fair value as of the respective vesting dates of options that vested during the quarter ended June 30, 2024, was
$491 and $119 during the quarter ended March 31, 2024.
As
of June 30, 2024, there was $94 of unrecognized share-based compensation expense related to unvested options. This unrecognized compensation
expense is expected to be recognized over a weighted-average period of approximately two years based on vesting under the award
service conditions.
Schedule of assumptions | |
| | |
| |
| |
| | |
| |
Fair value assumptions | |
2024 | | |
2023 | |
Expected volatility | |
| 45%-52 | % | |
| 45%-52 | % |
Expected terms (in years) | |
| 2 | | |
| 2 | |
Risk-free interest rate | |
| 2.18%-3.57 | % | |
| 2.18%-3.57 | % |
Dividend Yield | |
| 0 | % | |
| 0 | % |
HEALTHCARE
TRIANGLE, INC.
Notes
To Condensed Consolidated Financial Statements
(Unaudited)
(In
thousands except share and per share data)
13)
Net Income per share
The
Company presents basic and diluted earnings per share (“EPS”) data for its common stock. Basic EPS is calculated by dividing
the net income attributable to stockholders of the Company by the weighted average number of shares of common stock outstanding during
the period. Diluted EPS is determined by adjusting the net income attributable to stockholders of the Company and the weighted average
number of shares of common stock outstanding during the period for the effects of all dilutive potential common shares, including awards
under stock-based compensation arrangements.
The
Company’s unvested restricted stock awards are considered participating securities under FASB Codification topic, Earnings
Per Share, because they entitle holders to non-forfeitable rights to dividends until the awards vest or are forfeited. When a company
has a security that qualifies as a “participating security,” the Codification requires the use of the two-class method when
computing basic EPS. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating
security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount
of net income to allocate to common stockholders, income is allocated to both common stock and participating securities based on their
respective weighted average shares outstanding for the period, with net income attributable to common stockholders ultimately equaling
net income less net income attributable to participating securities. Diluted EPS for the Company’s common stock is computed using
the more dilutive of the two-class method or the treasury stock method.
The
company has 261,777 warranties that are exercisable at weighted average price of $7.99 on June 30, 2024, and 90,923 warrant that are
exercisable at weighted average price of $28.80 at June 30, 2023.
The
company has 217,790 options that are vested and exercisable on June 30, 2024.
Schedule of earning per share | |
| | |
| |
| |
| | |
| |
| |
Three Months Ended June 30, | |
| |
2024 | | |
2023 | |
Net income attributable to common stockholders | |
$ | (1,510 | ) | |
$ | (1,786 | ) |
Weighted average shares outstanding used in basic per common share computations | |
| 5,316,376 | | |
| 4,273,142 | |
Basic /Diluted EPS | |
$ | (0.28 | ) | |
$ | (0.42 | ) |
14)
Subsequent Events
For
the quarter ended June 30, 2024, the Company has evaluated subsequent events through August 19, 2024. The company has issued 50,000 common
shares at $0.48 per share for services, after the quarter ended June 30, 2024, which the financial statements were available to be issued.
Item
2. Management’s discussion and analysis of financial condition and results of operations.
The
following discussion summarizes the significant factors affecting the operating results, financial condition, liquidity, and cash flows
of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and the related notes thereto, and the consolidated financial statements and the related
notes thereto all included elsewhere in this prospectus. The statements in this discussion regarding industry outlook, our expectations
regarding our future performance, liquidity, and capital resources, and all other non-historical statements in this discussion are forward-looking
statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our
management. Actual results could differ materially from those discussed in or implied by forward looking statements as a result of various
factors, including those discussed below and elsewhere in this report, and in the sections entitled “Special Note Regarding Forward-Looking
Statements” and “Risk Factors” contained in the Company’s final prospectus for its initial public offering filed
with the Securities and Exchange Commission (“SEC”).
Overview
Healthcare
Triangle, Inc. (the “Company”) is a leading healthcare information technology company focused on advancing innovative, industry-transforming
solutions in the areas of cloud services, data science, professional and managed services for the Healthcare and Life Sciences industry.
The
Company was formed on October 29, 2019, as a Nevada corporation and then converted into a Delaware corporation on April 24, 2020, to
provide IT and data services to the Healthcare and Life Sciences (“HCLS”) industry. The business commenced on January 1,
2020, after the Parent transferred its Life Sciences business to us. As of June 30, 2024, we had a total of 22 full time employees, 114
sub-contractors, including 90 certified cloud engineers, 19 Epic Certified EHR experts and 16 MEDITECH Certified EHR experts. Many of
the senior management team and the members of our board of directors hold advanced degrees and some are leading experts in software development,
regulatory science, and market access. During the quarter ended June 30, 2024, we generated revenues of approximately $ 2.9 million compared
to revenue of $ 8.5 million for the quarter ended June 30, 2023 which represents decrease of $ 5.6 million or 65% compared to the previous
year.
Our
approach leverages our proprietary technology platforms, extensive industry knowledge, and healthcare domain expertise to provide solutions
and services that reinforce healthcare progress. Through our platform, solutions, and services, we support healthcare delivery organizations,
healthcare insurance companies, pharmaceutical, and Life Sciences, biotech companies, and medical device manufacturers in their efforts
to improve data management, develop analytical insights into their operations, and deliver measurable clinical, financial, and operational
improvements.
We
offer a comprehensive suite of software, solutions, platforms, and services that enables some of the world’s leading healthcare
and pharma organizations to deliver personalized healthcare, precision medicine, advances in drug discovery, development and efficacy,
collaborative research and development, respond to real-world evidence, and accelerate their digital transformation. We combine our expertise
in the healthcare technology domain, cloud technologies, DevOps and automation, data engineering, advanced analytics, AI/ML, IoT, security,
compliance, and governance to deliver platforms and solutions that drive improved results in the complex workflows of Life Sciences,
biotech, healthcare providers, and payers. Our differentiated solutions, enabled by our intellectual property and delivered as a service,
provide advanced analytics, data science applications, and data aggregation in these highly regulated environments in a more compliant,
secure, and cost-effective manner to our customers.
Our
deep expertise in healthcare allows us to reinforce our clients’ progress by accelerating their innovation. Our healthcare IT services
include Electronic Health Records (EHR) and software implementation, optimization, extension to community partners, as well as application
managed services, and backup and disaster recovery capabilities on public cloud. Our 24x7 managed services are used by hospitals and
health systems, payers, Life Sciences, and biotech organizations in their effort to improve health outcomes and deliver deeper, more
meaningful patient and consumer experiences. Through our services, our customers achieve a return on investment in their technology by
delivering measurable improvements. Combined with our software and solutions, our services provide clients with an end-to-end partnership
for their technology innovation.
Our
Business Model
The
majority of our revenue is generated by our full-time employees who provide software services and Managed Services and Support to our
clients in the Healthcare and Life Sciences industry. Our software services include strategic advisory, implementation and development
services and Managed Services and Support include post implementation support and cloud hosting.
Impacts
of the COVID-19 Pandemic
The
COVID-19 pandemic has had, and is likely to continue to have, a severe and unprecedented impact on the world and on our business. Measures
to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face events, “shelter
in place” health orders and travel restrictions have had a significant effect on certain of our business operations. In response
to these business disruptions, which include a transition to remote working, reducing certain of our discretionary expenditures and eliminating
non-essential travel particularly with respect to COVID-19 impacted operation and complying with health and safety guidelines to protect
employees, contractors, and customers.
There
has been no major impact on account of COVID19 during the quarter ended June 30, 2024.
The
Company has obtained necessary funding to manage our short-term working capital requirements. The Company has not altered any credit
terms with its customers and the realization from the customers have generally been on time. The Company has been able to service its
debt and other obligations on time. There has been no material impact on the operational liquidity and capital resources on account of
COVID-19.
Key
Factors of Success
We
believe that our future growth, success, and performance are dependent on many factors, including those mentioned below. While these
factors present significant opportunities for us, they also represent the challenges that we must successfully address in order to grow
our business and improve our results of operations.
Investment
in scaling the business
We
need to continuously invest in sales, and marketing to promote our solutions to new and existing customers in various geographies, and
other operational and administrative functions in systems, controls and governance to support our expected growth and our transition
to a public company. We anticipate that our employee strength will increase because of these investments.
Adoption
of our solutions by new and existing customers
We
believe that our ability to increase our customer base will enable us to drive growth. Most of our customers initially deploy our solutions
within a division or geography and may only initially deploy a limited set of our available solutions. Our future growth is dependent
upon our existing customers’ continued success and renewals of our solutions agreements, deployment of our solutions to additional
divisions or geographies and the purchase of subscriptions to additional solutions. Our growth is also dependent on the adoption of our
solutions by new customers. Our customers are large organizations who typically have long procurement cycles which may lead to declines
in the pace of our new customer additions.
Subscription
services adoption
The
key factor to our success in generating substantial recurring subscription revenues in future will be our ability to successfully market
and persuade new customers to adopt our SaaS offerings. We are in the early stages of marketing our SaaS offerings such as DataEz, CloudEz
and Readabl.AI, and do not yet have enough information about our competition or customer acceptance to determine whether or not recurring
subscription revenue from these offerings will have a material impact on our revenue growth.
Mix
of solutions and software services revenues
Another
factor to our success is the ability to sell our solutions to the existing software services customers. During the initial period of
deployment by a customer, we generally provide a greater number of services including advisory, implementation and training. At the same
time, many of our customers have historically purchased our solutions after the deployment. Hence, the proportion of total revenues for
a customer associated with software services is relatively high during the initial deployment period. While our software services help
our customers achieve measurable improvements and make them stickier, they have lower gross margins than solution-based revenue. Over
time, we expect the revenues to shift towards recurring and subscription-based revenues.
Components
of Results of Operations
Revenues
We
provide our services and manage our business under these operating segments:
| ● | Managed
Services and Support |
Software
Services
The
Company earns revenue primarily through the sale of software services that is generated from providing strategic advisory, implementation,
and development services. The Company enters into Statement of Work (SOW) which provides for service obligations that need to be fulfilled
as agreed with the customer. The majority of our software services arrangements are billed on a time and materials basis and revenues
are recognized over time based on time incurred and contractually agreed upon rates. Certain software services revenues are billed on
a fixed fee basis and revenues are typically recognized over time as the services are delivered based on time incurred and customer acceptance.
We recognize revenue when we have the right to invoice the customer using the allowable practical expedient under ASC 606-10-55-18 since
the right to invoice the customer corresponds with the performance obligations completed.
Managed
Services and Support
Managed
Services and Support include post implementation support and cloud hosting. Managed Services and Support are a distinct performance obligation.
Revenue for Managed Services and Support is recognized ratably over the life of the contract.
Platform
Services
Platform
Services from CloudEz, DataEz are offered both as a solution delivery model and as Software as a Service (SaaS) on a subscription model.
readbl.ai is offered only as Software as a Service (SaaS) on a subscription model.
The
revenue from solutions delivery model contains a series of separately identifiable and distinct services that represent performance obligations
that are satisfied over time. During the periods presented the company generated Platform revenue on SaaS, which is recurring revenue.
Our
SaaS agreements are generally non-cancellable during the term, although customers typically will have the right to terminate their agreements
for cause in the event of material breach.
SaaS
revenues will be recognized ratably over the respective non-cancellable subscription term because of the continuous transfer of control
to the customer. Our subscription arrangements will be considered service contracts, and the customer will not have the right to take
possession of the software Segment wise revenue breakup.
Cost
of Revenue
Cost
of revenue consists primarily of employee-related costs associated with the rendering of our services, including salaries, benefits and
stock-based compensation expense, the cost of subcontractors, travel costs, cloud hosting charges and allocated overhead the cost of
providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due
to the direct labor costs and costs of subcontractors. Our business and operational models are designed to be highly scalable and leverage
variable costs to support revenue-generating activities.
While
we may grow our headcount overtime to capitalize on our market opportunities, we believe our increased investment in automation, electronic
health record integration capabilities, and economies of scale in our operating model, will position us to grow our platform solutions
revenue at a greater rate than our cost of revenue.
Operating
Expenses
Research
and Development
Research
and development expense (majorly our investment in innovation) consists primarily of employee-related expenses, including salaries, benefits,
incentives, employment taxes, severance, and equity compensation costs for our software developers, engineers, analysts, project managers,
and other employees engaged in the development and enhancement of our cloud-based platform applications. Research and development expenses
also include certain third-party consulting fees. Our research and development expense excludes any depreciation and amortization.
We
expect to continue our focus on developing new product offerings and enhancing our existing product offerings. As a result, we expect
our research and development expense to increase in absolute dollars, although it may vary from period to period as a percentage of revenue.
Sales
and Marketing
Sales
and marketing expense consists primarily of employee-related expenses, including salaries, benefits, commissions, travel, discretionary
incentive compensation, employment taxes, severance, and equity compensation costs for our employees engaged in sales, sales support,
business development, and marketing. Sales and marketing expense also includes operating expenses for marketing programs, research, trade
shows, and brand messages, and public relations costs.
We
expect our sales and marketing expenses to continue to increase in absolute dollar terms as we strategically invest to expand our business,
although it may vary from period to period as a percentage of total revenues.
General
and Administrative
Our
general and administrative expenses consist primarily of employee-related expenses including salaries, benefits, discretionary incentive
compensation, employment taxes, severance, and stock-based compensation expenses, for employees who are responsible for management information
systems, administration, human resources, finance, legal, and executive management. The general and administrative expenses also include
occupancy expenses (including rent, utilities, and facilities maintenance), professional fees, consulting fees, insurance, travel, contingent
consideration, transaction costs, integration costs, and other expenses. Our general and administrative expenses exclude depreciation
and amortization.
In
the nearest future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long
term, we expect general and administrative expenses to decrease as a percentage of revenue.
Depreciation
and Amortization Expenses
Our
depreciation and amortization expense consists primarily of depreciation of fixed assets, amortization of Customer relationship and capitalized
software development costs, and amortization of intangible assets. We expect our depreciation and amortization expense to increase as
we expand our business organically and through acquisitions.
Other
Income (Expense), Net
Other
income (expense), net consists of finance cost and gains or losses on foreign currency.
Deferred
revenues
Advanced
billings to clients in excess of revenue earned are recorded as deferred revenue until the revenue recognition criteria are met.
Unbilled
accounts receivable
Unbilled
accounts receivable is a contract asset related to the delivery of our professional services for which the related billings will occur
in a future period. Unbilled receivables are classified as accounts receivable on the consolidated balance sheet. Although we believe
that our approach to estimates and judgments regarding revenue recognition is reasonable, actual results could differ and we may be exposed
to increases or decreases in revenue that could be material.
Provision
for Income Taxes
Provision
for income taxes consists of federal and state income taxes in the United States, including deferred income taxes reflecting the net
tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes.
Results
of Operations
The
following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each
of the periods indicated:
| |
Three Months Ended June 30, | |
| |
2024 | | |
% Sales | | |
2023 % | | |
Sales | |
| |
(In thousands) | | |
(In thousands) | |
Revenue | |
$ | 2,984 | | |
| 100 | % | |
$ | 8,526 | | |
| 100 | % |
Cost of Revenue (exclusive of depreciation /amortization) | |
| 2,086 | | |
| 70 | % | |
| 6,579 | | |
| 77 | % |
Research and Development | |
| 207 | | |
| 7 | % | |
| 102 | | |
| 1 | % |
Sales and Marketing | |
| 631 | | |
| 21 | % | |
| 1,026 | | |
| 12 | % |
General and Administrative | |
| 904 | | |
| 30 | % | |
| 1,612 | | |
| 19 | % |
Depreciation and Amortization | |
| 534 | | |
| 18 | % | |
| 802 | | |
| 9 | % |
Other Income | |
| — | | |
| 0 | % | |
| — | | |
| 0 | % |
Interest expense | |
| 131 | | |
| 4 | % | |
| 186 | | |
| 2 | % |
Income tax | |
| 1 | | |
| 0 | % | |
| 5 | | |
| 0 | % |
Net income (loss) | |
$ | (1,510 | ) | |
| (51 | )% | |
$ | (1,786 | ) | |
| (21 | )% |
Three
Months Ended June 30, 2024 and June 30, 2023
Revenue
from operations
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Revenue | |
$ | 2,984 | | |
$ | 8,526 | | |
$ | (5,542 | ) | |
| (65 | )% |
Revenue
decreased by $5.5 million, or 65% to $2.9 million for the quarter ended June 30, 2024, as compared to $8.5 million for the quarter ended
June 30, 2023. Revenue from Software Services, Managed Services and support and Platform services have reduced resulting in net decrease
in revenue. The major revenue reduction is due to a reduction in revenue from a major customer.
Our
top 5 customers accounted for 68% of the revenue in quarter ended June 30, 2024, and 81% during quarter ended June 30, 2023, respectively.
The
following table has the breakdown of our revenues for the quarter ended June 30, 2024, and 2023 for each of our top 5 customers. Two
of the top 5 customers in 2024 are not the same for 2023.
Top
Five Customers Revenue for three months ended June 30, 2024 and 2023.
2024
(In thousands, except percentages) | |
| |
| |
| |
Customer | |
Amount | | |
% of Revenue | |
Customer 1 | |
$ | 925 | | |
| 31 | % |
Customer 2 | |
| 486 | | |
| 16 | % |
Customer 3 | |
| 221 | | |
| 7 | % |
Customer 4 | |
| 215 | | |
| 7 | % |
Customer 5 | |
$ | 193 | | |
| 7 | % |
2023
(In thousands, except percentages) | |
| |
| |
| |
Customer | |
Amount | | |
% of Revenue | |
Customer 1 | |
$ | 4,519 | | |
| 53 | % |
Customer 2 | |
| 912 | | |
| 11 | % |
Customer 3 | |
| 622 | | |
| 7 | % |
Customer 4 | |
| 539 | | |
| 6 | % |
Customer 5 | |
$ | 319 | | |
| 4 | % |
The
following table provides details of Customer 1 revenue by operating segments:
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Software Services | |
$ | 64 | | |
$ | 4,087 | | |
| (4,023 | ) | |
| (98 | )% |
Managed Services and Support | |
| 861 | | |
| 432 | | |
| 429 | | |
| 99 | % |
Platform Services | |
| — | | |
| — | | |
| — | | |
| 0 | % |
Total Revenue | |
$ | 925 | | |
$ | 4,519 | | |
| (3,594 | ) | |
| (80 | )% |
Revenue
from Customer 1 has decreased by $3.6 million, or 80% to $0.9 million for the quarter ended June 30, 2024, as compared to $4.5 million
for the quarter ended June 30, 2023.
Cost
of Revenue (exclusive of depreciation /amortization)
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Cost of Revenue (exclusive of depreciation /amortization) | |
$ | 2,086 | | |
$ | 6,579 | | |
$ | (4,493 | ) | |
| (68 | )% |
Cost
of revenue, excluding depreciation and amortization decreased by $4.5 million, or 68%, to $2.1 million for the quarter ended June 30,
2024, as compared to $6.6 million for the quarter ended June 30, 2023. The reduction is in proportion to reduction to revenue.
Research
and Development
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Research and Development | |
$ | 207 | | |
$ | 102 | | |
$ | 105 | | |
| 103 | % |
Research
and Development expenses increased by $0.11 million, or 103% to $0.21 million for the quarter ended June 30, 2024, as compared to $0.1
million for the quarter ended June 30, 2023. The cost has increased on account of new research being done on readabl.ai.
Sales
and Marketing
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Sales and Marketing | |
$ | 631 | | |
$ | 1,026 | | |
$ | (395 | ) | |
| (38 | )% |
Sales
and Marketing expenses decreased by $0.4 million, or 38% to $0.6 million for the quarter ended June 30, 2024, as compared to $1 million
for the quarter ended June 30, 2023, this is primarily due to reduction in headcount and stock compensation expenses.
General
and Administrative
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
General and Administrative | |
$ | 904 | | |
$ | 1,612 | | |
$ | (708 | ) | |
| (44 | )% |
General
and Administrative expenses decreased by $0.7 million, or 44% to $0.9 million for the quarter ended June 30, 2024, as compared to $1.6
million for the quarter ended June 30, 2023, this is primarily due to reduction in headcount.
Depreciation
and amortization
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Depreciation and amortization | |
$ | 534 | | |
$ | 802 | | |
$ | (268 | ) | |
| (33 | )% |
Depreciation
and amortization expenses decreased by $0.2 million, or 33% to $0.5 million for the quarter ended June 30, 2024, as compared to $0.8
million for the quarter ended June 30, 2023, this primarily due to completion of useful life for Customer relationships and Product Development.
Interest
expense
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Interest expense | |
$ | 131 | | |
$ | 186 | | |
$ | (55 | ) | |
| (30 | )% |
Interest
expenses increased by $0.05 million, or 30% to $0.13 million for the quarter ended June 30, 2024, as compared to $0.19 million for the
quarter ended June 30, 2023, the decrease was due to repayment of funding acquired.
Provision
for Income Taxes
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Income
taxes | |
$ | 1 | | |
$ | 5 | | |
$ | (4 | ) | |
| (80 | )% |
Income
tax increased by $0.004 million, or 80% to $0.001 million for the quarter ended June 30, 2024, as compared to $0.005 million for the
quarter ended June 30, 2023.
Revenue,
Cost of Revenue and Operating Profit by Operating Segment
We
manage and report our business under three operating segments which are Software Services, Managed Services and Support and Platform
Services.
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Software Services | |
$ | 663 | | |
$ | 5,185 | | |
$ | (4,522 | ) | |
| (87 | )% |
Managed Services and Support | |
| 2,253 | | |
| 2,865 | | |
| (612 | ) | |
| (21 | )% |
Platform Services | |
| 68 | | |
| 476 | | |
| (408 | ) | |
| (86 | )% |
Revenue | |
$ | 2,984 | | |
$ | 8,526 | | |
$ | (5,542 | ) | |
| (65 | )% |
Revenue
from Software Services decreased by $4.5 million, or 87% to $0.7 million for the quarter ended June 30, 2024, as compared to $5.2 million
for the quarter ended June 30, 2023. Revenue from Managed Services and Support decreased by $0.6 million, or 21% to $2.3 million for
the quarter ended June 30, 2024, as compared to $2.9 million for the quarter ended June 30, 2023. Revenue from Platform Services decreased
by $0.4 million, or 86% to $0.07 million for the quarter ended June 30, 2024, as compared to $0.5 million for the quarter ended June
30, 2023.
Factors
affecting revenues of Software Services, Managed Services and Support and Platform Services
Our
strategy is to achieve meaningful long-term revenue growth through sales of Managed Services and Support and Platform Services to existing
and new clients within our target market. In order to increase our cross-selling opportunity between our operating segments and realize
long time revenue growth, our focus has shifted more towards Managed Services and Support and Platform Services which is of recurring
nature when compared to Software Services segment which is of non-recurring nature. This also helps in retaining existing customers by
leveraging our Managed Services and Support and Platform Services as a growth agent. This renewed focus on driving demand for subscription
and platform-based model will help us in expanding our customer base and enhance customer retention which is a challenge for our existing
Software Services segment. Software Services contracts are driven by Time and Material and on-site employees delivering services at customers
location.
Cost
of Revenue
| |
Three Months Ended June 30, | | |
Changes | |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
| |
(In thousands, except percentages) | |
Software Services | |
$ | 497 | | |
$ | 4,245 | | |
$ | (3,748 | ) | |
| (88 | )% |
Managed Services and Support | |
| 1,547 | | |
| 2,044 | | |
| (497 | ) | |
| (24 | )% |
Platform Services | |
| 42 | | |
| 290 | | |
| (248 | ) | |
| (86 | )% |
Cost of Revenue | |
$ | 2,086 | | |
$ | 6,579 | | |
$ | (4,493 | ) | |
| (68 | )% |
Cost
of Revenue from Software Services decreased by $3.7 million, or 88% to $0.5 million for the quarter ended June 30, 2024, as compared
to $4.2 million for the quarter ended June 30, 2023. Cost of Revenue from Managed Services and Support decreased by $0.5 million, or
24% to $1.5 million for the quarter ended June 30, 2024, as compared to $2 million for the quarter ended June 30, 2023. Cost of Revenue
from Platform Services decreased by $0.2 million, or 85% to $0.04 million for the quarter ended June 30, 2024, as compared to $0.29 million
for the quarter ended June 30, 2023.
Segment
operating profits by reportable segment were as follows:
Operating profit by Operating Segment | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
| |
Three
months Ended
June 30, | | |
Changes | |
| |
(In thousands) | | |
| |
| |
2024 | | |
2023 | | |
Amount | | |
% | |
Software Services | |
$ | (170 | ) | |
$ | (644 | ) | |
$ | 474 | | |
| 74 | % |
Managed Services and Support | |
| 706 | | |
| 822 | | |
| (116 | ) | |
| (14 | )% |
Platform Services | |
| (181 | ) | |
| 84 | | |
| (265 | ) | |
| 315 | % |
Total segment operating (loss) profit | |
| 355 | | |
| 262 | | |
| 93 | | |
| 35 | % |
Less: unallocated costs | |
| 1,733 | | |
| 1,858 | | |
| (125 | ) | |
| (7 | )% |
Income (loss) from operations | |
| (1,378 | ) | |
| (1,596 | ) | |
| 218 | | |
| 14 | % |
Other Income | |
| — | | |
| — | | |
| — | | |
| 0 | % |
Interest expense | |
| (131 | ) | |
| (186 | ) | |
| 55 | | |
| 30 | % |
Net income (loss) before income tax expenses | |
$ | (1,509 | ) | |
$ | (1,782 | ) | |
$ | 273 | | |
| 15 | % |
Operating
loss from Software Services decreased by $0.5 million, or 74% to $0.2 million for the quarter ended June 30, 2024, as compared to
operating loss of $0.64 million for the quarter ended June 30, 2023. Operating profit from Managed Services and Support decreased by
$0.1 million, or 14% to $0.7 million for the quarter ended June 30, 2024, as compared to $0.8 million for the quarter ended June 30,
2023. Operating loss from Platform Services increased by $0.3 million, or 315% to $0.2 million for the quarter ended June 30, 2024,
as compared to $ 0.08 million for the quarter ended June 30, 2023.
Liquidity
and Capital Resources
Liquidity
The
current ratio measures a company’s ability to pay off its current liabilities (payable within one year) with its total current
assets such as cash, accounts receivable, and inventories. The higher the ratio, the better the company’s liquidity position. A
good current ratio is between 1.2 to 2, which means that a business has 2 times more current assets than liabilities to covers its debts.
The Company’s current ratio, based on the three months ended June 30, 2024, financial statement is 0.5 compared to 0.7 for the
financial year ended December 31, 2023.
The
Company’s current debt equity ratio, based on the three months ended June 30, 2024, financial statement is -3.54, for the quarter
ended June 30, 2024, compared to 9.80 for the quarter ended December 31, 2023. A debt-to-equity ratio below 1 means that a company has
lower exposure to debts than equity.
The
Company does not have inventory and hence the quick ratio is the same as current ratio.
Sources
of Liquidity
As
of June 30, 2024, our principal sources of liquidity consisted of cash and cash equivalents of $0.03 million. We believe that our cash
and cash equivalents as of June 30, 2024, and the future operating cash flows of the entity will provide adequate resources to fund ongoing
cash requirements. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the
next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market
transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these
additional sources of funds will be available or, if available, would have reasonable terms.
| |
As of June 30, 2024 | | |
As of June 30, 2023 | |
| |
(In thousands) | |
Cash and cash equivalents | |
$ | 29 | | |
$ | 132 | |
Short-term investments | |
| — | | |
| — | |
Total cash, cash equivalents and short-term investments | |
$ | 29 | | |
$ | 132 | |
As
of June 30, 2024, our principal sources of liquidity for working capital purposes were cash, cash equivalents and short-term investments
totaling $0.03 million.
We
have financed our operations primarily through financing activity and operating cash flows. We believe our existing cash, cash equivalents
and short-term investments generated from operations will be sufficient to meet our working capital over the next 12 months. Our future
capital requirements will depend on many factors including our growth rate, subscription renewal activity, the expansion of sales and
marketing activities and the ongoing investments in platform development.
Cash
Flows
The
following table presents a summary of our consolidated cash flows provided by (used in) operating, investing, and financing activities
for the periods indicated:
| |
As of June 30, 2024 | | |
As of June 30, 2023 | |
| |
(In thousands) | |
Cash flows provided by operating activities | |
$ | (985 | ) | |
$ | 2,750 | ) |
Cash flows used in investing activities | |
| — | | |
| (2 | ) |
Cash flows provided by financing activities | |
| (220 | ) | |
| 1,543 | |
Net increase in cash and cash equivalents | |
$ | (1,205 | ) | |
$ | (1,209 | ) |
Operating
Activities
Net
Cash generated (used) by operating activities during the six months ended June 30, 2024, was $ (0.99) million compared to $(2.75)
million for the six months ended June 30, 2023.
Investing
Activities
Net
cash used in investing activities was $0 for the six months ended June 30, 2024, and $ (0.002) million for the six months ended June
30, 2023.
Financing
Activities
Cash
(outflow)/inflow from financing activities was $(0.22) million
for the six months ended June 30, 2024, and $1.5 million for the six months ended June 30, 2023.
Off-Balance
Sheet Arrangements
We
do not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose
entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow
or limited purposes as defined by Item 303(a)(4) of SEC Regulation S-K, as of June 30, 2024.
Item
3. Quantitative and Qualitative Disclosures about Market Risk.
We
did not have investments and do not utilize derivative financial instruments to manage our interest rate risks.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting
Disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed
by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported
within the appropriate time periods, and that such information is accumulated and communicated to the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We, under the supervision of and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness
of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that the design and operation of our disclosure controls and procedures were effective as of June 30, 2023.
Changes
in Internal Control over Financial Reporting
There
were no changes to our internal control over financial reporting during the three months ended June 30, 2024, that have materially affected,
or are reasonable likely to materially effect, our internal controls over financial reporting.
PART
II
OTHER
INFORMATION
Item
1. Legal Proceedings.
From
time to time, we are involved in routine litigation that arises in the ordinary course of business. We are not currently involved in
any claims outside the ordinary course of business that are material to our financial condition or results of operations.
Item
1A. Risk Factors.
As
of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report
on Form 10-K , filed with the SEC on March 18, 2024. We may disclose changes to such factors or disclose additional factors from time
to time in our future filings with the SEC.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not
Applicable
Item
3. Defaults Upon Senior Securities.
Not
Applicable
Item
4. Mine Safety Disclosures.
Not
Applicable
Item
5. Other Information
None
Item
6. Exhibits
Exhibit
No. |
|
Description |
3.1 |
|
Certificate
of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement No. 333-259180,
initially filed on August 30, 2021) |
3.2 |
|
Bylaws
of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement No. 333-259180, initially
filed on August 30, 2021) |
3.3 |
|
Amendment
to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement
No. 333-259180, initially filed on August 30, 2021) |
3.4 |
|
Series
A Preferred Stock Certificate of Designation (incorporated by reference to Exhibit 3.4 to the Company’s Registration Statement
No. 333-259180, initially filed on August 30, 2021) |
3.5 |
|
Series
A Preferred Stock Amended and Restated Certificate of Designations (incorporated by reference to Exhibit 3.5 to the Company’s
Registration Statement No. 333-259180, initially filed on August 30, 2021) |
4.1 |
|
Form
of Underwriter’s Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement No. 333-259180,
initially filed on August 30, 2021) |
10.1 |
|
Form
of Common Stock Purchase Warrant issued pursuant to the Securities Purchase Agreement (incorporated by reference to Exhibit 10.5
to the Registrant’s Registration Statement No. 333-259180, initially filed on August 30, 2021) |
10.2 |
|
The
Company’s 2020 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement
No. 333-259180, initially filed on August 30, 2021) |
10.3 |
|
Form
of Grant (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement No. 333-259180, initially
filed on August 30, 2021) |
10.4 |
|
Master
Services Agreement dated January 1, 2021 between the Company and SecureKloud Technologies, Inc. (incorporated by reference to Exhibit
10.8 to the Company’s Annual Report on Form 10-K filed on March 28, 2023.) |
10.5 |
|
Shared
Services Agreement dated January 1, 2021 between the Company and SecureKloud Technologies, Inc. (incorporated by reference to Exhibit
10.9 to the Company’s Annual Report on Form 10-K filed on March 28, 2023.) |
10.6 |
|
Rental
Sublease Agreement dated January 1, 2021 between SecureKloud Technologies, Inc. and the Company (incorporated by reference to Exhibit
10.10 to the Company’s Annual Report on Form 10-K filed on March 28, 2023.) |
10.7 |
|
Offer
letter dated January 1, 2020 between the Company and Anand Kumar (incorporated by reference to Exhibit 10.12 to the Registrant’s
Registration Statement No. 333-259180, initially filed on August 30, 2021.) |
10.8 |
|
IT
Master Services Agreement effective as of May 1, 2017 between F. Hoffmann-La Roche Ltd and the Company (incorporated by reference
to Exhibit 10.14 to the Registrant’s Registration Statement No. 333-259180, initially filed on August 30, 2021.) |
10.9 |
|
Form
of Statement of Work under Master Services Agreement between F. Hoffmann-La Roche Ltd and the Company (incorporated by reference
to Exhibit 10.15 to the Registrant’s Registration Statement No. 333-259180, initially filed on August 30, 2021.) |
10.10 |
|
Form
of Common Stock Purchase Warrant to be issued to the Placement Agent for the Note and Warrant Private Offering (incorporated by reference
to Exhibit 10.16 to the Registrant’s Registration Statement No. 333-259180, as amended and filed on September 27,
2021.) |
10.11 |
|
Share
Purchase Agreement, dated December 10, 2021, among Healthcare Triangle, Inc., Devcool, Inc., Go To Assistance Inc., and Mr. Sandeep
Deokule. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 14, 2021.) |
10.12 |
|
Convertible
Promissory Note, dated December 10, 2021 made to Go To Assistance Inc. (Incorporated by reference to the Company’s Annual Report
on Form 10-K filed on March 8, 2022.) |
10.13 |
|
Consulting
Agreement dated December 10, 2021 between the Company and Sandeep Deokule (Incorporated by reference to the Company’s Annual
Report on Form 10-K filed on March 8, 2022.) |
21.1 |
|
List
of Subsidiaries of the Company (Incorporated by reference to the Company’s Annual Report on Form 10-K filed on March 8, 2022.) |
31.1* |
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 |
31.2* |
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
32.1+ |
|
Certification
of the Chief Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2+ |
|
Certification
of the Chief Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS |
|
Inline XBRL Instance Document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* | Filed
herewith |
+ | Furnished |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
|
HEALTHCARE
TRIANGLE, INC. |
|
|
Date:
August 19, 2024 |
/s/
Dave Rosa |
|
Dave
Rosa |
|
Chairman
of the Board and Director |
|
|
Date:
August 19, 2024 |
/s/
Anand Kumar |
|
Anand
Kumar |
|
Interim-CEO |
|
(Principal
executive officer) |
|
|
Date:
August 19, 2024 |
/s/
Thyagarajan Ramachandran |
|
Thyagarajan
Ramachandran |
|
Chief Financial Officer (principal financial and accounting officer) |
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