Healthcare Triangle, Inc ARS, filed Oct 19, 2022

Healthcare Triangle, Inc. (HCTI)

ARS 2022-10-19 For: 2021-12-31

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Added on October 16, 2026

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Delaware		84-3559776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4309 Hacienda Dr., Suite 150 Pleasanton, CA		94588
(Address of principal executive offices)		(Zip 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

Securities registered pursuant to Section 12(g) of the Act: None

PART I
Item 1 Business	5
Item 1A Risk Factors	15
Item 1B Unresolved Staff Comments	37
Item 2 Properties	37
Item 3 Legal Proceedings	37
Item 4 Mine Safety Disclosures	37
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	38
Item 6 [Reserved]	39
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 8 Financial Statements and Supplementary Data	34
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	86
Item 9A Controls and Procedures	86
Item 9B Other Information	86
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ther Information	86
PART III
Item 10 Directors, Executive Officers and Corporate Governance	87
Item 11 Executive Compensation	93
Item 12 Security ownership of Certain Beneficial Owners and Management and Related Stockhoilder Matters	94
Item 13 Certain Relationships and Related party Transactions, and Director Independence	95
Item 14 Principal Accounting Fees and Services	95
PART IV
Item 15 Exhibit and Financial Statement Schedules	96

Plan category:	Number of Securities to be issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)			Weighted Average Exercise Price of Outstanding Options (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c)
Equity compensation plans approved by stockholders ⁽¹⁾		1,813,500	⁽²⁾	$	0.40		2,186,500	⁽³⁾
Total		1,813,500		$	0.40		2,186,500

	Three Months Ended December 31,												Twelve Months Ended December 31,
	2021			% Sales			2020			% Sales			2021			% of Sales			2020			% of Sales
Revenue	$	9,188,823			100	%	$	8,994,843			100	%	$	35,269,737			100	%	$	31,338,936			100	%
Cost of Revenue (exclusive of depreciation /amortization)		6,919,638			75	%		6,590,291			73	%		24,748,429			70	%		22,753,067			73	%
Research & Development		1,482,727			16	%		273,663			3	%		5,257,439			15	%		1,743,079			6	%
Sales and Marketing		1,959,760			21	%		1,321,356			15	%		4,760,948			13	%		2,424,842			8	%
General and Administrative		1,378,620			15	%		111,702			1	%		4,440,405			13	%		2,438,042			8	%
Depreciation and Amortization		788,275			9	%		199,627			2	%		1,421,565			4	%		803,194			3	%
Other income ( PPP loan forgiveness)		—			0	%		(1,512,758	)		17	%		—			0	%		(1,512,758	)		5	%
Interest expense		86,886			1	%		53,726			1	%		566,735			2	%		78,646			0	%
Income tax expense		19,487			0	%		80,776			1	%		24,246			0	%		257,381			1	%
Net income	($	3,446,570	)		(38	%)	$	1,876,460			21	%	($	5,950,030	)		(17	%)	$	2,353,443			8	%

Three Months Ended Dec 31, 2021 and 2020

		Three Months Ended December 31,				Changes
		2021		2020		Amount		%
	Revenue	$	9,188,823	$	8,994,843	$	193,980		2	%

Customer	Amount		% of Revenue
Customer 1	$	2,674,584		29	%
Customer 2		1,383,185		15	%
Customer 3		1,131,041		12	%
Customer 4		775,905		8	%
Customer 5	$	609,573		7	%

	Three Months Ended December 31,					Changes
	2021		2020			Amount			%
Software Services	$	3,106,019	$	2,669,455		$	436,564			16	%
Managed Services and Support		3,684,447		4,078,814			(394,367	)		(10	%)
Platform Services		129,172		(157,978	)		287,150			182	%
Cost of Revenue	$	6,919,638	$	6,590,291		$	329,347			5	%

	Twelve Months Ended December 31,				Changes
	2021		2020		Amount			%
Software Services	$	1,642,462	$	2,533,263	$	(890,801	)		(35	%)
Managed Services and Support		9,261,569		12,855,875		(3,594,306	)		(28	%)
Platform Services		1,774,246		2,569,835		(795,589	)		(31	%)
Total Revenue	$	12,678,277	$	17,958,974	$	(5,280,696	)		(29	%)

	As of December 31, 2021		As of December 31, 2020
Cash and cash equivalents	$	1,769,554	$	1,402,700
Total cash, cash equivalents and short-term investments	$	1,769,554	$	1,402,700

	As of December 31, 2021			As of December 31, 2020
Cash flows used in operating activities	$	(7,293,296	)	$	(734,675	)
Cash flows used in investing activities		(7,628,761	)		(477,457	)
Cash flows provided by financing activities		15,288,911			1,640,000
Net increase in cash and cash equivalents	$	366,854		$	427,868

Report of Independent Registered Public Accounting Firm	58
Financial Statements
Consolidated Balance Sheets as of December 31, 2021 and 2020	59
Consolidated Statements of Operations For The Years Ended December 31, 2021 and 2020	60
Consolidated Statements of Changes in Stockholders’ Equity For The Years Ended December 31, 2021 and 2020	61
Consolidated Statements of Cash Flows For The Years Ended December 31, 2021 and 2020	62
Notes to Consolidated Financial Statements

Ram Associates

We have served as the Company’s auditor since 2020

Hamilton, NJ

March 7, 2022
PCAOB#5814


HEALTHCARE TRIANGLE INC
Consolidated Balance Sheets
	December 31,
	2021			2020
Assets
Current assets
Cash and cash equivalents	$	1,769,554		$	1,402,700
Accounts receivable		9,672,426			6,396,150
Other current assets		361,479			228,848
Total current assets		11,803,459			8,027,698
Property and equipment, net		74,254			15,786
Operating lease right-of-use assets		172,063			—
Goodwill		1,288,860			—
Intangible assets, net		10,457,623			2,619,076
Due from affiliates		816,242			445,003
Total assets	$	24,612,501		$	11,107,563

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	1,872,607		$	4,349,638
Convertible notes		—			754,400
Warrant Liability		55,348			885,600
Payroll protection program loan		1,068,530			—
Short term borrowing		2,208,841			—
Operating lease liabilities		176,144			—
Other current liabilities		869,406			789,555
Total current liabilities		6,250,876			6,779,193
Long-term liabilities
Contingent Consideration		2,226,731			—
Total current and long-term liabilities		8,477,607			6,779,193

Stockholders' equity
Preferred stock, par value $0.00001; 10,000,000 authorized		—			—
Series A, Super Voting Preferred Stock - 6,000 shares (1,000 votes per share)		1			—
Common stock, par value $0.00001; 100,000,000 authorized 35,260,834 and 27,900,000 shares issued and outstanding as of December 31, 2021 and December 31, 2020 respectively		353			279
Additional paid-in capital		18,798,500			1,042,021
Retained earnings		(2,663,960	)		3,286,070
Total stockholders' equity		16,134,894			4,328,370
Total liabilities and stockholders' equity	$	24,612,501		$	11,107,563

The accompanying notes are an integral part of these consolidated financial statements.


HEALTHCARE TRIANGLE INC
Consolidated Statements of Operations

	Years Ended December 31,
	2021			2020
Net revenue	$	35,269,737		$	31,338,936

Cost of revenue (exclusive of depreciation and amortization shown separately below)		24,748,429			22,753,067
Operating expenses
Research and development expenses		5,257,439			1,743,079
Sales and Marketing		4,760,948			2,424,842
General and Administrative		4,440,405			2,438,042
Depreciation and amortization		1,421,565			803,194
Operating income (loss) before other income/(expenses)		(5,359,049	)		1,176,712

Other income/(expenses)
Other income (PPP loan forgiveness)		—			1,512,758
Interest expense		(566,735	)		(78,646	)
Total other income/(expenses)		(566,735	)		1,434,112
Net income (loss) before income tax expenses		(5,925,784	)		2,610,824
Federal income tax		—			(181,314	)
State income tax		(24,246	)		(76,067	)
Total income tax (expense) / benefit		(24,246	)		(257,381	)
Net income (loss)	$	(5,950,030	)	$	2,353,443
Net income per common share—basic	$	(0.202	)	$	0.084
Net income per common share—diluted	$	(0.202	)	$	0.084
Weighted average shares outstanding used in per common share computations:
Basic		29,427,863			27,900,000
Diluted		29,427,863			27,900,000

The accompanying notes are an integral part of these consolidated financial statements.


	Preferred Stock			Common stock
	Shares		Amount	Shares		Amount		Additional paid-in capital		Retained earnings			Total stockholders' equity
Balance at December 31, 2019	—	$	—	27,900,000	$	279	$	1,042,021	$	932,627		$	1,974,927
Net income	—		—	—		—		—		2,353,443			2,353,443
Balance at December 31, 2020	—		—	27,900,000	$	279	$	1,042,021	$	3,286,070		$	4,328,370
Net loss				—		—		—		(5,950,030	)		(5,950,030	)
Shares issued for services to promoter			—	250,000		3		114,133		—			114,136
Shares issued for services				1,861,829		18		1,029,713		—			1,029,731
Series A Super Voting Preferred Stock	6,000		1										1
Issue of Options (ISO/NSO)				—		—		52,305		—			52,305
IPO Proceeds				3,262,500		33		11,795,967		—			11,796,000
Note Conversion				1,693,492		17		4,064,364		—			4,064,381
Shares Issued towards Devcool Acquisition				293,013		3		699,997		—			700,000
Balance at December 31, 2021	6,000	$	1	35,260,834	$	353	$	18,798,500	$	(2,663,960	)	$	16,134,894

The accompanying notes are an integral part of these consolidated financial statements.


HEALTHCARE TRIANGLE INC
Consolidated Statements of Cash Flows

	Years Ended December 31
	2021			2020
Cash flows from operating activities
Net income (loss)	$	(5,950,030	)	$	2,353,443
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		1,421,565			803,194
Common stock issued for services		1,143,866			—
Interest on lease payment		12,721			—
Stock compensation expenses		52,305			—
Warrant fair valuation expenses		55,348			—
Non cash expenses on acquisition		102,232			—
Changes in operating assets and liabilities:
(Increase)/ decrease in:
Accounts receivable		(3,276,276	)		(2,225,913	)
Other current assets		(132,631	)		(82,347	)
Due from related party		(371,239	)		(524,046	)
Increase/ (decrease) in:
Accounts payable and accrued expenses		(2,477,031	)		(750,387	)
Other current liabilities		79,851			(308,619	)
Contingent consideration		2,226,731			—
Payment of lease liability		(180,708	)		—
Net cash provided by/(used in) operating activities		(7,293,296	)		(734,675	)

Cash flows from investing activities
(Purchase)/sale of property and equipment		(78,761	)		—
Increase in intangible assets		(3,050,000	)		(477,457	)
Investment in subsidiary		(4,500,000	)		—
Net cash provided by/(used in) investing activities		(7,628,761	)		(477,457	)

Cash flows from financing activities
Increase in capital		50			—
Increase/(decrease) in convertible note		—			1,640,000
Increase in additional paid-in capital		14,220,331			—
Increase in paycheck protection program loan		1,068,530			—
Net cash provided by/(used in) financing activities		15,288,911			1,640,000
Net increase (decrease) in cash and cash equivalents		366,854			427,868

Cash and cash equivalents
Cash and cash equivalents at the beginning of the period		1,402,700			974,832
Cash and cash equivalents at the end of the period	$	1,769,554		$	1,402,700

Supplementary disclosure of cash flows information
Interest	$	566,735		$	78,646
Income taxes		24,246			257,381

The accompanying notes are an integral part of these consolidated financial statements.

Schedule of operating segment
	Twelve Months Ended December 31,				Changes
	2021		2020		Amount			%
Software Services	$	12,429,726	$	12,892,078	$	(462,352	)		(4	%)
Managed Services and Support		19,003,324		15,199,744		3,803,580			25	%
Platform Services		3,836,687		3,247,114		589,573			18	%
Revenue	$	35,269,737	$	31,338,936	$	3,930,801			13	%

Operating profit by Operating Segment
	Twelve Months Ended December 31,						Changes
	2021			2020			Amount			%
Software Services	$	1,769,499		$	1,277,775		$	491,724			38	%
Managed Services and Support		4,909,252			3,475,121			1,434,131			41	%
Platform Services		(3,043,439	)		199,594			(3,243,033	)		(1625	%)
Total segment operating profit		3,635,312			4,952,490			(1,317,178	)		(27	%)
Less: unallocated costs		8,994,361			2,263,021			6,731,341			297	%
Income from operations		(5,359,050	)		2,689,470			(8,048,519	)		(299	%)
Interest expense		(566,735	)		(78,647	)		(488,088	)		(621	%)
Net income (loss) before income tax expenses	$	(5,925,784	)	$	2,610,824		$	(8,536,607	)		(327	%)

Schedule of concentration
Customer	Amount		% of Revenue
Customer 1	$	12,678,277		36	%
Customer 2		3,214,299		9	%
Customer 3		2,907,265		8	%
Customer 4		2,674,584		8	%
Customer 5	$	1,799,010		5	%

Schedule of revenue
	Twelve Months Ended December 31,				Changes
	2021		2020		Amount			%
Software Services	$	12,429,726	$	12,892,078	$	(462,352	)		(4	)%
Managed Services and Support		19,003,324		15,199,744		3,803,580			25	%
Platform Services		3,836,687		3,247,114		589,573			18	%
Revenue	$	35,269,737	$	31,338,936	$	3,930,801			13	%

	Twelve Months Ended December 31,

		Software Services				Managed Services				Platform Services				Total Revenue
		2021		2020		2021		2020		2021		2020		2021		2020
Timing of Revenue Recognition
Transferred to a point of time	$	12,429,726	$	12,892,078	$	—	$	—	$	3,836,687	$	3,247,114	$	16,266,413	$	16,139,192
Transferred over time		—		—		19,003,324		15,199,744		—		—		19,003,324		15,199,744
Total Revenue	$	12,429,726	$	12,892,078	$	19,003,324	$	15,199,744	$	3,836,687	$	3,247,114	$	35,269,737	$	31,338,936

Schedule of receivables and contract liabilities
	December 31, 2021		December 31, 2020
Accounts Receivable		9,672,426		6,396,150

Schedule of property and equipment
	December 31, 2021			December 31, 2020
Furniture and Equipment	$	80,434		$	87,790
Less: Accumulated depreciation		(6,180	)		(72,004	)
Net Fixed Assets	$	74,254		$	15,786

Schedule of intangible assets
	December 31, 2021			December 31, 2020
Customer relationships	$	8,666,693		$	2,648,941
Intellectual property		4,050,000			1,000,000
Product development		477,457			477,457
		13,194,150			4,126,398
Accumulated amortization		(2,736,527	)		(1,507,322	)
Net Intangible Assets	$	10,457,623		$	2,619,076

Schedule of intangibles asset useful life
Nature of Intangibles	Useful Life
Customer relationships	5 years
Intellectual property	5 years
Product development	5 years

Schedule of amortization expense
December 31,
2022	$	2,638,830
2023		1,956,787
2024		1,813,550
2025		1,813,550
2026		1,813,550
2027		421,356
Total	$	10,457,623

Schedule of lease expenses
Particulars	December 31, 2021		December 31, 2020
Opening Balance	$	—	$	—
Additions		344,131		—
Finance cost accrued during the year		12,721		—
Payment of lease liability		180,708		—
Closing Balance	$	176,144	$	—

Schedule of balance sheet related to leases
	Year Ended December 31, 2021
Leases
ROU assets	$	172,063
lease liabilities, included in current liabilities		176,144
lease liabilities, included in long-term liabilities		—
Total lease liabilities	$	176,144

Schedule of cash flow related to leases
	Year Ended December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from leases	$	180,708
ROU assets obtained in exchange for lease liabilities:		344,131
Leases
Weighted average remaining lease term (in months):		12
Weighted average discount rate:		4.75	%

Schedule of future minimum payments
2022	$	180,708
Total Lease payments		180,708
Less: Amount Representing Interest		(12,721	)
Total lease obligation	$	167,987

Schedule of allocation of purchase price
Asset Component	December 31, 2021
Intangible Assets	$	6,017,752
Goodwill		1,288,860
Working Capital		—
Current Assets
Cash		969,760
Accounts Receivables		3,142,900
Other Current Assets		22
		11,419,294
Current Liabilities
Accounts Payable		758,114
Short term borrowing		2,208,841
Other Current liabilities		679,400
		3,646,355
Net Working Capital Acquired		7,772,939
Total Purchase price	$	7,772,939

Schedule of fair value of warrant liabilities
Fair value assumptions	December 31,2021
Estimated fair value of common stock warrant	$	1.81
Exercise price	$	0.40
Expected volatility		45%-52%
Expected terms (in years)		2
Risk-free interest rate		1.48%-2.18%
Dividend Yield		0	%

Schedule of deferred tax assets
	December 31, 2021			December 31, 2020
Deferred tax assets:
Net Operating loss carry forward	$	1,445,323			—
Stock-based compensation		(17,979	)		—
Fair Value of Warrant		(14,944	)		—
Total Deferred tax asset		1,412,441			—
Less: Valuation allowance	$	(1,412,441	)		—
Deferred tax asset. net of valuation allowance		—			—
Deferred tax liabilities		—			—
Net Deferred tax asset		—			—

Schedule of income tax expense benefit
	December 31, 2021		December 31, 2020
Federal income tax	$	—	$	181,314
State income tax		24,246		76,067
Total Income taxes ,Current provision		24,246		257,381
Deferred Income taxes (benefit)		—		—
Total Income expenses/ (benefit)	$	24,246	$	257,381