CareCloud, Inc S-1, filed Aug 20, 2020

CareCloud, Inc. (CCLD)

S-1 2020-08-20

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Added on October 22, 2026

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		Emerging growth company [ ]

Title of Each Class of Securities to be Registered	Amount to be registered ⁽¹⁾		Proposed maximum offering price per share ⁽⁴⁾		Proposed maximum offering price		Amount of registration fee
Preferred Stock, $0.001 par value per share ⁽²⁾		960,000	$	25.83	$	24,796,800	$	3,219
Common Stock, $0.001 par value per share issuable upon exercise of warrants ⁽³⁾		4,250,000	$	10.80		45,900,000		5,958
Total					$	70,696,800	$	9,177

(1)	Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement also covers such additional shares as may hereafter be offered or issued to prevent dilution resulting from stock splits, stock dividends, recapitalizations or certain other capital adjustments.
(2)	Represents shares of preferred stock issued on January 8, 2020 and June 16, 2020 in connection with two acquisitions.
(3)	Represents shares of common stock issuable upon exercise of warrants issued on January 8, 2020 and June 16, 2020 in connection with two acquisitions.

(4)	Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 (c) and (g) of the Securities Act based upon the average of the high and low share price per share of the registrant’s common stock trading on the Nasdaq Global Market under the symbol “MTBC” on August 19, 2020 and the registrant’s Series A Preferred Stock trading on the Nasdaq Global Market under the symbol “MTBCP” on August 19, 2020.

	Page

Important Notice About Information In This Prospectus	ii

Special Note Regarding Forward-Looking Statements	iii

Prospectus Summary	1

The Offering	6

Risk Factors	10

Use of Proceeds	32

Dilution	33

Selling Stockholders	34

Capitalization	36

Unaudited Pro Forma Condensed Combined Financial Information	37

Market Price and Dividends	44

Description of our Capital Stock	46

Description of the Series A Preferred Stock	49

Certain U.S. Federal Income Tax Considerations	56

Plan of Distribution	62

Legal Matters	63

Experts	63

Where You Can Find More Information	63

Incorporation of Information by Reference	64

Disclosure of Commission Position on Indemnification for Securities Act Liabilities	64

	●	our ability to manage our growth, including acquiring, partnering with, and effectively integrating the recent acquisitions of Meridian Medical Management, CareCloud Corporation and other acquired businesses into our infrastructure and avoiding legal exposure and liabilities associated with acquired companies and assets;

	●	our ability to retain our clients and revenue levels, including effectively migrating new clients and maintaining or growing the revenue levels of our new and existing clients;

	●	our ability to maintain operations in Pakistan and Sri Lanka in a manner that continues to enable us to offer competitively priced products and services;

	●	our ability to keep pace with a rapidly changing healthcare industry;

	●	our ability to consistently achieve and maintain compliance with a myriad of federal, state, foreign, local, payor and industry requirements, regulations, rules, laws and contracts;

	●	our ability to maintain and protect the privacy of confidential and protected Company, client and patient information;

	●	our ability to develop new technologies, upgrade and adapt legacy and acquired technologies to work with evolving industry standards and third-party software platforms and technologies, and protect and enforce all of these and other intellectual property rights;

	●	our ability to attract and retain key officers and employees, and the continued involvement of Mahmud Haq as Executive Chairman and Stephen Snyder as Chief Executive Officer, all of which are critical to our ongoing operations, growing our business and integrating of our newly acquired businesses;

	●	our ability to comply with covenants contained in our credit agreement with our senior secured lender, Silicon Valley Bank and other future debt facilities;

	●	our ability to pay our monthly preferred dividends to the holders of our Series A Preferred Stock;

	●	our ability to compete with other companies developing products and selling services competitive with ours, and who may have greater resources and name recognition than we have;

	●	our ability to respond to the uncertainty resulting from the recent spread of the COVID-19 pandemic and the impact it may have on our operations, the demand for our services, and economic activity in general; and

	●	our ability to keep and increase market acceptance of our products and services.

	●	Revenue cycle management (“RCM”) services, which include end-to-end medical billing, eligibility, analytics, and related services, all of which can often be provided either with our technology platform or through a third-party system;

	●	Proprietary healthcare IT solutions, which are often bundled with our RCM services, including:

	○	Electronic health records (“EHR”), which are easy to use, integrated with our business services, and allow our healthcare provider clients to reduce paperwork;

	○	Practice management (“PM”) software and related tools, which support our clients’ day-to-day business operations and workflows;

	○	Mobile Health (“mHealth”) solutions, including smartphone applications that assist patients and healthcare providers in the provision of healthcare services;

	○	Telehealth solutions, which allow healthcare providers to conduct remote patient visits;

	○	Healthcare claims clearinghouse, which enables our clients to electronically scrub and submit claims to, and process payments from, insurance companies; and

	○	Business intelligence, customized applications, interfaces and a variety of other technology solutions that support our healthcare clients;

	●	Group purchasing services which include our negotiation of discounts with pharmaceutical manufacturers and the extension of those discounts to our physician members; and

	●	Comprehensive practice management services, which are offered under long-term management service agreements pursuant to which we provide certain practices with the administrative support, facilities, supplies, equipment, marketing, RCM, accounting, healthcare IT and other non-clinical services required to efficiently operate their practices.

	Actual												Pro Forma ⁽¹⁾
	Year ended December 31,						Six Months ended June 30,						Year ended December 31,			Six Months ended June 30,
	2018			2019			2019			2020			2019			2020
	(in thousands, except per share data)
Net revenue	$	50,546		$	64,439		$	31,830		$	41,446		$	150,692		$	59,654
Operating expenses:
Direct operating costs		31,253			41,186			21,244			26,123			100,251			40,357
Selling and marketing		1,612			1,522			744			3,206			9,626			3,720
General and administrative		16,264			17,912			9,306			10,986			31,287			12,903
Research and development		1,030			871			473			4,479			14,895			4,774
Change in contingent consideration		73			(344	)		(64	)		-			(344	)		-
Depreciation and amortization		2,854			3,006			1,593			3,738			12,373			4,574
Restructuring, impairment and unoccupied lease charges		-			219			-			361			4,414			1,759
Total operating expenses		53,086			64,372			33,296			48,893			172,502			68,087

Operating (loss) income		(2,540	)		67			(1,466	)		(7,447	)		(21,810	)		(8,433	)

Interest expense - net		(250	)		(121	)		(50	)		(222	)		(121	)		(222	)
Other income (expense) - net		494			(625	)		464			331			(150	)		(62	)
Loss before income taxes		(2,296	)		(679	)		(1,052	)		(7,338	)		(22,081	)		(8,717	)
Income tax (benefit) provision		(158	)		193			15			(44	)		370			(10	)
Net loss	$	(2,138	)	$	(872	)	$	(1,067	)	$	(7,294	)	$	(22,451	)	$	(8,707	)

Preferred stock dividend		4,824			6,386			2,979			5,920			9,026			6,149
Net loss attributable to common shareholders	$	(6,962	)	$	(7,258	)	$	(4,046	)	$	(13,214	)	$	(31,477	)	$	(14,856	)

Net loss per common share, basic and diluted	$	(0.59	)	$	(0.60	)	$	(0.34	)	$	(1.07	)	$	(2.60	)	$	(1.20	)
Weighted average common shares used to compute basic and diluted loss per share		11,721			12,088			11,984			12,353			12,088			12,353

	As of June 30, 2020
	Actual		Pro Forma ⁽²⁾		Pro Forma As Adjusted⁽³⁾
	(in thousands)
Cash	$	12,532	$	28,382	$	62,728
Working capital (net) ⁽⁴⁾		2,710		18,560		52,906
Total assets		125,915		141,765		176,111
Total debt		9,933		183		183
Shareholders’ equity		79,366		104,966		139,313

(2)	The pro forma condensed consolidated balance sheet data reflects the issuance of 1,104,000 shares of Series A Preferred Stock offered by prospectus filed on July 16, 2020, with net proceeds of approximately $25.6 million, after deducting underwriting fees and other offering expenses payable by us, utilizing a portion of the net proceeds to fully repay a $9.75 million outstanding line of credit.

(3)	The pro forma as adjusted condensed consolidated balance sheet data gives effect to our issuance of 4,250,000 shares of common stock offered by this prospectus, as a result of exercising 4,250,000 warrants at an average exercise price of $8.09 per share, assuming net proceeds to us of approximately $34.3 million, after deducting estimated offering expenses payable by us.

(4)	Working capital is defined as current assets less current liabilities.

(5)	To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with adjusted EBITDA, a non-GAAP financial measure of earnings. Management uses adjusted EBITDA to provide an understanding of aspects of operating results before the impact of investing and financing charges and income taxes. Adjusted EBITDA may be useful to an investor in evaluating our operating performance and liquidity because this measure excludes non-cash expenses as well as expenses pertaining to investing or financing transactions. Management defines “adjusted EBITDA” as the sum of GAAP net income (loss) before provision for (benefit from) income taxes, net interest expense, foreign currency gains and losses, asset impairment charges and other non-operating expenses, stock-based compensation expense, depreciation and amortization including amortization of purchased intangible assets, integration costs, transaction costs, restructuring costs and changes in contingent consideration.

Issuer		MTBC, Inc.

Securities Offered by the Selling Stockholders		4,250,000 shares of common stock issuable upon the exercise of the warrants issued to the selling stockholders in connection with the acquisitions of Meridian and CareCloud.

		960,000 shares of 11% Series A Cumulative Redeemable Perpetual Preferred Stock (or “Series A Preferred Stock”) issued to the selling stockholders in connection with the acquisitions of Meridian and CareCloud.

Common stock to be outstanding after this offering if the Warrants are exercised in full ⁽¹⁾		16,950,213 shares of common stock

Series A Preferred Stock to be outstanding after this offering ⁽²⁾		5,468,720 shares of Series A Preferred Stock

Offering Plan		Selling stockholders may sell the shares of common stock and Series A Preferred Stock from time to time in various ways at different prices, including prevailing market prices in the public market or in negotiated transactions. See the section titled “Plan of Distribution” in this prospectus.

Use of Proceeds		We will not receive any of the proceeds from the sale of shares to be offered by the selling stockholder. However, we will receive proceeds upon any cash exercise of the common stock purchase warrants. Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we plan to use the net proceeds from the cash exercise of such warrants for working capital, general corporate purposes and growth initiatives, including organic growth and potential future acquisitions. See the section titled “Use of Proceeds” in this prospectus.

Dividend Policy for Common Stock		We do not anticipate paying cash dividends on our common stock in the foreseeable future.

(1)	The number of shares of common stock to be outstanding immediately after this offering as shown above is based on 12,700,213 shares of common stock outstanding as of August 19, 2020. The number of outstanding shares excludes 500,839 shares of common stock reserved for issuance pursuant to grants under our Equity Incentive Plan, 1,712,920 shares of common stock reserved for future issuance under our Equity Incentive Plan and 353,489 shares of common stock underlying existing warrants which are not being registered in this prospectus.

(2)	The number of shares of Series A Preferred Stock to be outstanding immediately after this offering as shown above is based on 5,468,720 shares of Series A Preferred Stock outstanding as of August 19, 2020. The number of outstanding shares excludes 44,000 shares of Series A Preferred Stock reserved for issuance pursuant to grants under our Equity Incentive Plan and 376,632 shares of Series A Preferred Stock reserved for future issuance under our Equity Incentive Plan.

No Maturity, Sinking Fund or Mandatory Redemption		The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. Shares of the Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchase them. We are not required to set aside funds to redeem the Series A Preferred Stock.

Optional Redemption		The Series A Preferred Stock is not redeemable by us prior to November 4, 2020. On and after November 4, 2020, we may, at our option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price equal to $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the redemption date. Please see the section entitled “Description of the Series A Preferred Stock—Redemption—Optional Redemption.”
Special Optional Redemption		Upon the occurrence of a Change of Control, we may, at our option, redeem the Series A Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for cash at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the redemption date. A “Change of Control” is deemed to occur when the following have occurred and are continuing: the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the “Exchange Act (other than Mahmud Haq, the chairman of our board of directors and our principal shareholder, any member of his immediate family, and any “person” or “group” under Section 13(d)(3) of the Exchange Act, that is controlled by Mr. Haq or any member of his immediate family, any beneficiary of the estate of Mr. Haq, or any trust, partnership, corporate or other entity controlled by any of the foregoing), of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of our stock entitling that person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in the election of our directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and following the closing of any transaction referred to above, neither we nor the acquiring or surviving entity has a class of common securities (or American Depositary Receipts representing such securities) listed on the NYSE, the NYSE MKT or Nasdaq or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or Nasdaq.

Liquidation Preference		If we liquidate, dissolve or wind up, holders of the Series A Preferred Stock will have the right to receive $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the date of payment, before any payment is made to the holders of our common stock. Please see the section entitled “Description of the Series A Preferred Stock—Liquidation Preference.”

Ranking		The Series A Preferred Stock will rank, with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, (1) senior to all classes or series of our common stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on a parity with all equity securities issued by us with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; (3) junior to all equity securities issued by us with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock with respect to rights to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up; and (4) effectively junior to all of our existing and future indebtedness (including indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries. Please see the section entitled “Description of the Series A Preferred Stock–Ranking.”

Limited Voting Rights		Holders of Series A Preferred Stock will generally have no voting rights. However, if we do not pay dividends on the Series A Preferred Stock for eighteen or more monthly dividend periods (whether or not consecutive), the holders of the Series A Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock in the election referred to below) will be entitled to vote for the election of two additional directors to serve on our board of directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series A Preferred Stock, subject to certain limitations described in the section entitled “Description of the Series A Preferred Stock—Voting Rights.” In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock (voting together as a class with all other series of parity preferred stock we may issue upon which like voting rights have been conferred and are exercisable) is required at any time for us to authorize or issue any class or series of our capital stock ranking senior to the Series A Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our certificate of incorporation so as to materially and adversely affect any rights of the Series A Preferred Stock or to take certain other actions. Please see the section entitled “Description of the Series A Preferred Stock—Voting Rights.”

Information Rights		During any period in which we are not subject to Section 13 or 15(d) of the Exchange Act and any shares of Series A Preferred Stock are outstanding, we will use our best efforts to (i) transmit by mail (or other permissible means under the Exchange Act) to all holders of Series A Preferred Stock, as their names and addresses appear on our record books and without cost to such holders, copies of the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that we would have been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if we were subject thereto (other than any exhibits that would have been required) and (ii) promptly, upon request, supply copies of such reports to any holders or prospective holder of Series A Preferred Stock, subject to certain exceptions described in this prospectus. We will use our best efforts to mail (or otherwise provide) the information to the holders of the Series A Preferred Stock within 15 days after the respective dates by which a periodic report on Form 10-K or Form 10-Q, as the case may be, in respect of such information would have been required to be filed with the SEC, if we were subject to Section 13 or 15(d) of the Exchange Act, in each case, based on the dates on which we would be required to file such periodic reports if we were a “non-accelerated filer” within the meaning of the Exchange Act.

Listing		Our common stock is listed on the Nasdaq Global Market under the symbol “MTBC.” Our Series A Preferred Stock is listed on the Nasdaq Global Market under the symbol “MTBCP.”

Risk Factors		Please read the section entitled “Risk Factors” beginning on page 10 for a discussion of some of the factors you should carefully consider before deciding to invest in our common stock or our Series A Preferred Stock.

Transfer Agent		The registrar, transfer agent and dividend and redemption price disbursing agent in respect of the common stock and the Series A Preferred Stock is VStock Transfer, LLC.

Certain U.S. Federal Income Tax Considerations		For a discussion of the federal income tax consequences of purchasing, owning and disposing of the Series A Preferred Stock, please see the section entitled “Certain U.S. Federal Income Tax Considerations.” You should consult your tax advisor with respect to the U.S. federal income tax consequences of owning the Series A Preferred Stock in light of your own particular situation and with respect to any tax consequences arising under the laws of any state, local, foreign or other taxing jurisdiction.
Book Entry and Form		The common stock and the Series A Preferred Stock will be represented by one or more global certificates in definitive, fully registered form deposited with a custodian for, and registered in the name of, a nominee of The Depository Trust Company (“DTC”).

	●	demand and pricing for our products and services;

	●	the encounter volumes of our customer base;

	●	government or commercial healthcare reimbursement policies;

	●	physician and patient acceptance of any of our current or future products;

	●	introduction of competing products;

	●	our operating expenses which fluctuate due to growth of our business;

	●	timing and size of any new product or technology acquisitions we may complete; and

	●	variable sales cycle and implementation periods for our products and services.

	●	a shift in our investor base;

	●	prevailing interest rates, changes in which may have an adverse effect on the market price of the Series A Preferred Stock;

	●	our history of timely dividend payments for our Series A Preferred Stock;

	●	the annual yield from dividends on the Series A Preferred Stock as compared to yields on other financial instruments;

	●	general economic and financial market conditions;

	●	government action or regulation;

	●	changes in accounting standards, policies, guidance, interpretations or principles;

	●	changes to the market and industry conditions as a result of the recent global outbreak of the COVID-19 coronavirus;

	●	the financial condition, operations, stock price performance and prospects of our competitors;

	●	announcements by us or our competitors of significant acquisitions, dispositions or software developments;

	●	changes in financial estimates or recommendations by securities analysts with respect to us or our competitors in our industry;

	●	our issuance of additional preferred equity or debt securities; and

	●	actual or anticipated variations in annual and quarterly operating results of us and our competitors.

	●	reduction of customer revenue as a result of changes to the ACA;

	●	a rollback of the expansion of Medicaid or other governmental programs;

	●	reduction of customer revenue resulting from increased competition or other changes in the marketplace for physician services;

	●	failure of our customers to adopt or maintain effective business practices;

	●	actions by third-party payers of medical claims to reduce reimbursement;

	●	government regulations and government or other payer actions or inaction reducing or delaying reimbursement;

	●	interruption of customer access to our system; and

	●	our failure to provide services in a timely or high-quality manner.

	●	be time-consuming and expensive to defend, whether meritorious or not;

	●	require us to stop providing products or services that use the technology that allegedly infringes the other party’s intellectual property;

	●	divert the attention of our technical and managerial resources;

	●	require us to enter into royalty or licensing agreements with third parties, which may not be available on terms that we deem acceptable;

	●	prevent us from operating all or a portion of our business or force us to redesign our products, services or technology platforms, which could be difficult and expensive and may make the performance or value of our product or service offerings less attractive;

	●	subject us to significant liability for damages or result in significant settlement payments; and/or

	●	require us to indemnify our customers.

Exercise price per share			$	8.09
Pro forma net tangible book value per share as of June 30, 2020	$	1.88
Increase per share attributable to new investors		1.53
Pro forma as adjusted net tangible book value per share after this offering			$	3.41
Dilution in net tangible book value per share to new investors			$	4.68

	●	245,522 shares of common stock issued under our Equity Incentive Plan subsequent to that date;

	●	533,050 shares of common stock reserved for issuance pursuant to unvested grants under our Equity Incentive Plan;

	●	1,733,756 shares of common stock reserved for future issuance under our Equity Incentive Plan; and

	●	4,603,489 shares of common stock underlying existing warrants.

Name and Address of Selling Stockholder	Common Shares Beneficially Owned Prior to This Offering					Number of Shares Underlying Warrants Offered Hereby ⁽¹⁾		Common Shares Beneficially Owned After This Offering
	Number ⁽¹⁾		Percentage					Number		Percentage
Runway Growth Credit Fund Inc. ⁽²⁾ 205 N Michigan Ave., Suite #4200 Chicago Il, 60601		2,000,000		11.8	%		2,000,000		0		0	%

Midcap Funding XLVII Trust ⁽³⁾ 7255 Woodmont Ave, Suite 300 Bethesda, MD 20814		1,430,651		8.4	%		1,430,651		0		0	%

Apollo Credit Funds ICAV, ⁽⁴⁾ an Umbrella Irish Collective Asset-Management Vehicle with Segregated Liability between its Sub-Funds, acting in respect of its Sub-Fund, Apollo Helius Multi-Credit Fund I c/o Joseph D. Glatt 9 West 57^th Street, 37^th Floor New York, NY 10019		369,349		2.2	%		369,349		0		0	%

GMM II Holdings, LLC ⁽⁵⁾ c/o The Gores Group, LLC 9800 Wilshire Boulevard Beverly Hills, CA 90212		250,000		1.5	%		250,000		0		0	%

Terence Leahy ⁽⁶⁾ 44 Chestnut Street Charlestown, MA 02129		94,339		.56	%		94,339		0		0	%

David Kralic ⁽⁷⁾ 49 Castle Rock Lane Bolton, CT 06043		47,170		.28	%		47,170		0		0	%

Alan Paperny ⁽⁸⁾ 94 Brentwood Drive Glastonbury, CT 06033		28,302		.17	%		28,302		0		0	%

David Jones ⁽⁹⁾ 16 Millgate Road Kingston, MA 02364		14,151		.083	%		14,151		0		0	%

Charles Panicker ⁽¹⁰⁾ 3615 University Park LN Irving, TX 75062		9,434		.056	%		9,434		0		0	%

Claudia Maiorana ⁽¹¹⁾ 1539 Bakerstown Road Tarentum, PA 15084		6,604		.039	%		6,604		0		0	%
Total of Selling Shareholders:		4,250,000		25.1	%		4,250,000		0		0	%

Name and Address of Selling Stockholder	Series A Preferred Shares Beneficially Owned Prior to This Offering					Series A Preferred Shares Offered Hereby		Series A Preferred Shares Beneficially Owned After This Offering
	Number		Percentage					Number		Percentage
Runway Growth Credit Fund Inc. ⁽²⁾ 205 N Michigan Ave., Suite #4200 Chicago Il, 60601		760,000		14.0	%		760,000		0		0	%

Midcap Funding XLVII Trust ⁽³⁾ 7255 Woodmont Ave, Suite 300 Bethesda, MD 20814		151,013		2.8	%		151,013		0		0	%

Apollo Credit Funds ICAV,⁽⁴⁾ an Umbrella Irish Collective Asset-Management Vehicle with Segregated Liability between its Sub-Funds, acting in respect of its Sub-Fund, Apollo Helius Multi-Credit Fund I c/o Joseph D. Glatt 9 West 57^th Street, 37^th Floor New York, NY 10019		38,987		.72	%		38,987		0		0	%

Terence Leahy ⁽⁶⁾ 44 Chestnut Street Charlestown, MA 02129		4,878		.090	%		4,878		0		0	%

David Kralic ⁽⁷⁾ 49 Castle Rock Lane Bolton, CT 06043		2,439		.045	%		2,439		0		0	%

Alan Paperny ⁽⁸⁾ 94 Brontwood Drive Glastonbury, CT 06033		1,463		.027	%		1,463		0		0	%

David Jones ⁽⁹⁾ 16 Millgate Road Kingston, MA 02364		732		.013	%		732		0		0	%

Charles Panicker ⁽¹⁰⁾ 3615 University Park LN Irving, TX 75062		488		.009	%		488		0		0	%
Total of Selling Shareholders:		960,000		17.7	%		960,000		0		0	%

(1)	Represents shares of common stock issuable if the Warrants are exercised in full. The managers of each entity selling stockholder have shared voting and investment power over these securities.

(2)	R. David Spreng (“Mr. Spreng”), the Chief Executive Officer, President and Chief Investment Officer, and Thomas B. Raterman (“Mr. Raterman”), the Chief Financial Officer, of Runway Growth Capital LLC, the external investment adviser of Runway Growth Credit Fund Inc. (“Runway”), have shared voting control and investment discretion over the securities reported herein that are held by Runway. As a result, each of Mr. Spreng and Mr. Raterman may be deemed to have beneficial ownership of the securities reported herein that are held by Runway. Runway acquired the Series A Preferred Shares and the Warrants as partial consideration for the purchase of CareCloud, and at the time of its acquisition of the Series A Preferred Shares and the Warrants described herein, Runway did not have any arrangements or understandings with any person to distribute such securities.

(3)	Howard Widra (“Mr. Widra”), the manager of Midcap Funding XLVII Trust (“Midcap”), has voting control and investment discretion over the securities reported herein that are held by Midcap. As a result, Mr. Widra may be deemed to have beneficial ownership of the securities reported herein that are held by Midcap. Midcap acquired the Series A Preferred Shares and the Warrants as partial consideration for the purchase of Meridian, and at the time of its acquisition of the Series A Preferred Shares and the Warrants described herein, Midcap did not have any arrangements or understandings with any person to distribute such securities.

(4)	Joseph D. Glatt (“Mr. Glatt”) is the Vice President and Secretary of ACF Europe Management, LLC, the delegated portfolio manager of Apollo Credit Funds ICAV (“Apollo ICAV”), an Umbrella Irish Collective Asset Management Vehicle with Segregated Liability between its Sub-Funds, acting in respect of its Sub-Fund, Apollo Helius Multi-Credit Fund I (the “Apollo Fund”), which has voting control and investment discretion over the securities reported herein that are held by the Apollo Fund. As a result, Mr. Glatt has the authority to sign on behalf of the delegated portfolio manager of Apollo ICAV including in respect of the securities reported herein that are held by the Apollo Fund. The Apollo Fund acquired the Series A Preferred Shares and the Warrants as partial consideration for the purchase of Meridian, and at the time of its acquisition of the Series A Preferred Shares and the Warrants described herein, the Apollo Fund did not have any arrangements or understandings with any person to distribute such securities. Apollo ICAV is an affiliate of Apollo Global Securities, LLC, an SEC registered broker-dealer and a member of the Financial Industry Regulatory Authority.

(5)	Alec E. Gores (“Mr. Gores”), the manager of GMM II Holdings, LLC (“GMM II”), has voting control and investment discretion over the securities reported herein that are held by GMM II. As a result, Mr. Gores may be deemed to have beneficial ownership of the securities reported herein that are held by GMM II. GMM II acquired the Warrants as partial consideration for the purchase of Meridian from GMM II, and at the time of its acquisition of the Warrants described herein, GMM II did not have any arrangements or understandings with any person to distribute such securities.

(6)	Terence Leahy was the former Chief Executive Officer of Meridian Medical Management and is currently a consultant to MTBC, Inc.

(7)	David Kralic was the former Chief Financial Officer of Meridian Medical Management and is currently EVP of Meridian, a wholly-owned subsidiary of MTBC. Inc.

(8)	Alan Paperny was the former EVP and General Counsel of Meridian Medical Management.

(9)	David Jones was, and still is, the Chief Information Officer of Meridian Medical Management.

(10)	Charles Panicker was the former SVP of Operations and SVP of Customer Success of Meridian Medical Management.

(11)	Claudia Maiorana was, and still is, the SVP of Customer Success of Meridian Medical Management.

	●	on an actual basis;

	●	on a pro forma basis, reflecting the issuance and sale of 1,104,000 shares of Series A Preferred Stock offered by a prospectus filed on July 20, 2020 with total net proceeds of approximately $25.6 million, after deducting underwriting fees and other offering expenses payable by us, and utilizing a portion of the net proceeds to fully repay a $9.75 million outstanding line of credit; and

	●	on a pro forma as adjusted basis, reflecting the issuance of 4,250,000 shares of common stock offered by this prospectus, as a result of exercising 4,250,000 warrants at an average exercise price of $8.09 per share, assuming net proceeds to us of approximately $34.3 million, after deducting estimated offering expenses payable by us.

	As of June 30, 2020
	Actual			Pro Forma			Pro Forma As Adjusted
	(in thousands, except share data)
Cash	$	12,532		$	28,382		$	62,728
Debt, current portion	$	129		$	129		$	129
Long-term debt, net of current portion		9,804			54			54
Total debt		9,933			183			183
Shareholders’ equity
Preferred stock, $0.001 par value, authorized 7,000,000 shares; issued and outstanding, 4,360,998 shares actual, 5,464,998 pro forma and as adjusted		4			5			5
Common stock, $0.001 par value - authorized, 29,000,000 shares; issued, 13,195,490 shares actual and pro forma and 17,691,012 as adjusted; outstanding, 12,454,691 shares actual and pro forma and 16,950,213 as adjusted		13			13			18
Additional paid-in capital		113,798			139,397			173,739
Accumulated deficit		(32,370	)		(32,370	)		(32,370	)
Accumulated other comprehensive loss		(1,417	)		(1,417	)		(1,417	)
Less: 740,799 common shares held in treasury, at cost		(662	)		(662	)		(662	)
Total shareholders’ equity		79,366			104,966			139,313
Total capitalization	$	89,299		$	105,149		$	139,496

	●	44,000 shares of Series A Preferred Stock reserved for issuance pursuant to grants under our Equity Incentive Plan; and

	●	380,354 shares of Series A Preferred Stock reserved for future issuance under our Equity Incentive Plan.

	●	Our acquisition of Meridian Billing Management Co. and Origin Holdings, Inc. (collectively, “Meridian”), which consists of all of the assets and liabilities of Meridian with an effective date of June 16, 2020;

	●	Our acquisition of CareCloud Corporation (“CareCloud”), which consists of all of the assets and liabilities of CareCloud with an effective date of January 8, 2020; and

	●	Our acquisition of Etransmedia Technology, Inc., and its wholly owned subsidiaries, (“ETM”), which consists of substantially all of the assets and the assumption of certain liabilities of ETM with an effective date of April 1, 2019.

				January 1, 2019 to						MTBC +
				March 31, 2019						Previously Acquired						Pro Forma				Pro Forma
	MTBC			ETM			CareCloud			Subtotal			Meridian			Adjustments				Combined
	(in thousands, except per share data)
Net revenue	$	64,439		$	2,067		$	33,354		$	99,860		$	50,832		$	-			$	150,692
Operating expenses:
Direct operating costs		41,186			2,716			21,169			65,071			35,180			-				100,251
Selling and marketing		1,522			-			6,782			8,304			1,322			-				9,626
General and administrative		17,912			1,141			6,501			25,554			6,465			(732	)	(1)		31,287
Research and development		871			-			13,733			14,604			291			-				14,895
Change in contingent consideration		(344	)		-			-			(344	)		-			-				(344	)
Depreciation and amortization		3,006			20			3,208			6,234			6,880			(741	)	(2)		12,373
Restructuring and impairment charges		219			-			-			219			4,195			-				4,414
Total operating expenses		64,372			3,877			51,393			119,642			54,333			(1,473	)			172,502

Operating income (loss)		67			(1,810	)		(18,039	)		(19,782	)		(3,501	)		1,473				(21,810	)

Interest expense - net		(121	)		-			(4,212	)		(4,333	)		(2,544	)		6,756		(3)		(121	)
Other (expense) income - net		(625	)		-			558			(67	)		(83	)		-				(150	)
Loss before income taxes		(679	)		(1,810	)		(21,693	)		(24,182	)		(6,128	)		8,229				(22,081	)
Income tax provision		193			2			16			211			159			-		(4)		370
Net (loss) income	$	(872	)	$	(1,812	)	$	(21,709	)	$	(24,393	)	$	(6,287	)	$	8,229			$	(22,451	)

Preferred stock dividend		6,386			-			-			6,386			-			2,640		(3)		9,026
Net loss attributable to common shareholders	$	(7,258	)	$	(1,812	)	$	(21,709	)	$	(30,779	)	$	(6,287	)	$	5,589			$	(31,477	)

Weighted-average common shares outstanding:
Basic and diluted		12,088																			12,088
Loss per share:
Basic and diluted	$	(0.60	)																	$	(2.60	)

				January 1 to			MTBC + Previously			January 1 to June 16,
				8, 2020			Acquired			2020			Pro Forma				Pro Forma
	MTBC			CareCloud			Subtotal			Meridian			Adjustments				Combined
	(in thousands, except per share data)
Net revenue	$	41,446		$	618		$	42,064		$	17,590		$	-			$	59,654
Operating expenses:
Direct operating costs		26,123			343			26,466			13,891			-				40,357
Selling and marketing		3,206			108			3,314			406			-				3,720
General and administrative		10,986			148			11,134			2,438			(669	)	(1)		12,903
Research and development		4,479			196			4,675			99			-				4,774
Depreciation and amortization		3,738			124			3,862			3,287			(2,575	)	(2)		4,574
Restructuring and impairment charges		361			-			361			1,398			-				1,759
Total operating expenses		48,893			919			49,812			21,519			(3,244	)			68,087

Operating (loss) income		(7,447	)		(301	)		(7,748	)		(3,929	)		3,244				(8,433	)

Interest expense - net		(222	)		-			(222	)		(995	)		995		(3)		(222	)
Other income (expense) - net		331			(1	)		330			(392	)		-				(62	)
(Loss) income before income taxes		(7,338	)		(302	)		(7,640	)		(5,316	)		4,239				(8,717	)
Income tax provision		(44	)		-			(44	)		34			-		(4)		(10	)
Net (loss) income	$	(7,294	)	$	(302	)	$	(7,596	)	$	(5,350	)	$	4,239			$	(8,707	)

Preferred stock dividend		5,920			-			5,920			-			229		(3)		6,149
Net loss attributable to common shareholders	$	(13,214	)	$	(302	)	$	(13,516	)	$	(5,350	)	$	4,010			$	(14,856	)

Weighted-average common shares outstanding:
Basic and diluted		12,353																12,353
Loss per share
Basic and diluted	$	(1.07	)														$	(1.20	)

	ETM		CareCloud		Meridian			Total Expense
	(in thousands)
Pro forma amortization expense	$	70	$	3,466	$	5,059		$	8,595
As recorded in the historical financial statements		3		2,913		6,420			9,336
Pro forma adjustment	$	67	$	553	$	(1,361	)	$	(741	)

(3)	Interest and Dividends— The interest expense incurred by Meridian and CareCloud of approximately $2.5 million and $4.2 million, respectively for the year ended December 31, 2019 and the interest expense incurred by Meridian for the six months ended June 30, 2020 of approximately $995,000 has been eliminated to reflect the full payment of outstanding debt balances as of the acquisition date. Dividends of approximately $2.6 million and $229,000, respectively have been included for year ended December 31, 2019 and the six months ended June 30, 2020 as an adjustment to reflect the amounts that would have been recorded as a result of the issuance of the Company’s Preferred Stock as part of the consideration for the acquisition.

(4)	Benefit for Income Tax — The income tax effects reflected in the pro forma adjustments are based on an estimated Federal statutory rate of 21% for the year ended December 31, 2019 and the six months ended June 30, 2020. We did not record a benefit for income taxes for the year ended December 31, 2019 and the six months ended June 30, 2020, in the unaudited pro forma condensed combined statement of operations since the Company has a valuation allowance recorded against its Federal and state deferred tax assets as of December 31, 2019 and June 30, 2020.

										Previously
										Acquired						Pro Forma			Pro Forma
	MTBC			ETM			CareCloud			Subtotal			Meridian			Adjustments			Combined
	(in thousands)
Net revenue	$	64,439		$	2,067		$	33,354		$	99,860		$	50,832		$	-		$	150,692

GAAP net loss	$	(872	)	$	(1,812	)	$	(21,709	)	$	(24,393	)	$	(6,287	)	$	8,229		$	(22,451	)

Provision for income taxes		193			2			16			211			159			-			370
Net interest expense		121			-			4,212			4,333			2,544			(6,756	)		121
Foreign exchange / other expense		827			-			-			827			-			-			827
Stock-based compensation expense		3,215			-			-			3,215			-			-			3,215
Depreciation and amortization		3,006			20			3,208			6,234			6,880			(741	)		12,373
Integration and transaction costs (1)		1,736			-			-			1,736			-			(732	)		1,004
Restructuring and impairment charges (2)		219			-			-			219			4,195			-			4,414
Change in contingent consideration		(344	)		-			-			(344	)		-			-			(344	)
Adjusted EBITDA	$	8,101		$	(1,790	)	$	(14,273	)	$	(7,962	)	$	7,491		$	-		$	(471	)

							MTBC +
				January 1 to 8,			Previously
				2020			Acquired						Pro Forma			Pro Forma
	MTBC			CareCloud			Subtotal			Meridian			Adjustments			Combined
	(in thousands)
Net revenue	$	41,446		$	618		$	42,064		$	17,590		$	-		$	59,654

GAAP net loss	$	(7,294	)	$	(302	)	$	(7,596	)	$	(5,350	)	$	4,239		$	(8,707	)

Provision for income taxes		(44	)		-			(44	)		34			-			(10	)
Net interest expense		222			-			222			995			(995	)		222
Foreign exchange / other expense		(313	)		-			(313	)		-			-			(313	)
Stock-based compensation expense		3,188			-			3,188			-			-			3,188
Depreciation and amortization		3,738			124			3,862			3,287			(2,575	)		4,574
Integration and transaction costs (1)		1,100			-			1,100			107			(669	)		538
Restructuring, impairment and unoccupied lease charges (2)		361			-			361			1,398			-			1,759
Adjusted EBITDA	$	958		$	(178	)	$	780		$	471		$	-		$	1,251