Healthcare Triangle, Inc 10-Q for FY2023 Q1

Healthcare Triangle, Inc. (HCTI)

10-Q 2023-05-09 For: 2023-03-31

Added on April 07, 2026

About this 10-Q

Healthcare Triangle, Inc filed this 10-Q on May 9, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $9.84M; down 11.0% from $11.06M a year earlier
Net loss: $3.28M; compared with a net loss of $2.01M a year earlier

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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

Note About Forward-Looking Statements	3
PART I – FINANCIAL INFORMATION
Item 1. Financial statements	5
Unaudited Condensed Consolidated Balance sheets	5
Unaudited Condensed Consolidated Statements of Operations	6
Unaudited Condensed Consolidated Statements of Stockholders' Equity	7
Unaudited Condensed Consolidated Statements of Cash Flows	8
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
Item 4. Controls and Procedures	41
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Mine Safety Disclosures	42
Item 5. Other Information	42
Item 6. Exhibits	43
Signatures	44


	March 31,			December 31,
	2023			2022
	(Unaudited)			(Audited)
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	267		$	1,341
Accounts receivable		5,512			5,592
Other current assets		661			816
Total current assets		6,440			7,749
Property and equipment, net		67			80
Intangible assets, net		9,713			10,570
Goodwill		1,289			1,289
Due from affiliates		1,351			1,075
Total assets	$	18,860		$	20,763

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	1,307		$	1,481
Warrant Liability		55			55
Short term borrowing		2,945			2,412
Other current liabilities		3,023			2,200
Total current liabilities		7,330			6,148

Long-term liabilities
Contingent Consideration		2,227			2,227
Total current and long-term liabilities		9,557			8,375

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)		0			0
Common stock, par value $0.00001; 100,000,000 authorized 41,859,531 and 41,709,531 shares issued and outstanding as of March 31, 2023 and December 31, 2022 respectively		0			0
Additional paid-in capital		25,146			24,956
Retained earnings		(15,843	)		(12,568	)
Total stockholders' equity		9,303			12,388
Total liabilities and stockholders' equity	$	18,860		$	20,763

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


	Three Months Ended March 31,
	2023			2022
	(In thousands)
Net revenue	$	9,838		$	11,056

Cost of revenue (exclusive of depreciation and amortization shown separately below)		8,245			8,162

Operating expenses
Research and development		539			1,066
Sales and Marketing		1,761			1,740
General and Administrative		1,628			1,351
Depreciation and amortization		874			711
Total operating expenses		4,802			4,868
Loss from operation		(3,209	)		(1,974	)
Other income		12
Interest expense		(62	)		(16	)
Loss before income tax		(3,259	)		(1,990	)
Provision for Income tax		(19	)		(21	)
Net loss	$	(3,278	)	$	(2,011	)
Net loss per common share—basic and diluted		(0.078	)		(0.057	)
Weighted average shares outstanding used in per common share computations:
Basic and diluted		41,859,531			35,507,184

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
									(In thousands)
Balance at December 31, 2021		6,000	$	1		35,260,834	$	0	$	18,799	$	(2,664	)	$	16,135
Issue of Options (ISO/NSO)										15					15
Cash collected on ISO/NSO						26,136		0		10					10
Shares issued for services						249,701		0		350					350
Net loss		—		—		—		—		—		(2,011	)		(2,011	)
Balance at March 31, 2022		6,000	$	1		35,536,671		0		19,174		(4,675	)		14,499
Balance at December 31, 2022		6,000	$	1		41,709,531	$	0	$	24,956	$	(12,568	)	$	12,388
Issue of Options (ISO/NSO)										142					142
Shares issued for services						150,000		0		51					51
Net loss		—		—		—		—		—		(3,278	)		(3,278	)
Balance at March 31, 2023		6,000	$	1		41,859,531		0		25,149		(15,846	)		9,303

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

•		the fair value of assets acquired, and liabilities assumed for business combinations.
•		Share based compensation including warrants

Schedule of operating segment

	Three months Ended March 31,				Changes
	(In thousands)
	2023		2022		Amount			%
Software Services	$	6,459	$	5,456	$	1,003			18	%
Managed Services and Support		3,041		4,269		(1,228	)		(29	)%
Platform Services		338		1,331		(993	)		(75	)%
Revenue	$	9,838	$	11,056	$	(1,218	)		(11	)%

Operating profit by Operating Segment

	Three months Ended March 31,						Changes
	(In thousands)
	2023			2022			Amount			%
Software Services	$	(1,135	)	$	(199	)	$	(936	)		(470	%)
Managed Services and Support		552			1,254			(702	)		(56	%)
Platform Services		(463	)		(572	)		109			19	%
Total segment operating (loss) profit		(1,046	)		483			(1,529	)		(317	%)
Less: unallocated costs		2,163			2,457			(294	)		(12	%)
Income (loss) from operations		(3,209	)		(1,974	)		(1,235	)		(63	%)
Other Income		12			—			12			(100	%)
Interest expense		(62	)		(16	)		(46	)		(288	%)
Net income (loss) before income tax expenses	$	(3,259	)	$	(1,990	)	$	(1,269	)		(64	%)

Schedule of concentration
Customer	Amount (In thousands)		% of Revenue
Customer 1	$	4,930		50	%
Customer 2		920		9	%
Customer 3		859		9	%
Customer 4		792		8	%
Customer 5	$	388		4	%

Schedule of concentration

Customer	Amount (In thousands)		% of Revenue
Customer 1	$	3,833		35	%
Customer 2		1,965		18	%
Customer 3		966		9	%
Customer 4		899		8	%
Customer 5	$	623		6	%

Schedule of receivables and contract liabilities
	March 31, 2023		December 31, 2022
	(In thousands)
Accounts Receivable		5,512		5,592

Schedule of balance sheet

	March 31, 2023
	Fair Value Measured Using
	(In thousands)
	Level 1	Level 2		Level 3		Total
Financial liabilities:
Warrant Liabilities				$	55	$	55
Acquisition-related contingent consideration	—		—	$	2,227	$	2,227

Schedule of property and equipment
	March 31, 2023			December 31, 2022
	(In thousands)
Furniture and Equipment	$	123		$	119
Less: Accumulated depreciation		(56	)		(39	)
Net Fixed Assets	$	67		$	80

Schedule of intangible assets
	March 31, 2023								December 31, 2022
	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		2.97	$	8,667	$	3,957	$	4,710	$	8,667	$	3,523	$	5,144
Intellectual property		4.39		7,329		2,349		4,980		7,329		2,013		5,316
Product development		0.5		477		454		23		477		367		110
Total Intangible Assets			$	16,473	$	6,760	$	9,713	$	16,473	$	5,903	$	10,570

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

March 31,
2023	$	1,251
2024		2,114
2026		2,114
2026		2,114
2027		2,114
2028		6
Total	$	9,713

Schedule of allocation of purchase price

Asset Component	March 31, 2023
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

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, 2023		909,225	$	2.88		—		—
Granted		—		—		—		—
Excised		—		—		—		—
Forfeited or expired		—		—		—		—
Outstanding on March 31, 2023		909,225	$	2.88		—		—
Exercisable on March 31, 2023		909,225	$	2.88		—		—

Schedule of unvested warrants
	Number of Warrants		Weighted average Grant Date Fair Value Per warrant
Unvested on December 31, 2022	—
Granted	—	$
Vested	—	$
Forfeited	—	$
Unvested on March 31, 2023	—

Schedule of fair value of warrant liabilities

Fair value assumptions	March 31, 2023
Estimated fair value of common stock warrant	$	0.40
Exercise price	$	2.88
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

	March 31, 2023			December 31, 2022
Deferred tax assets:
Net Operating loss carry forward	$	880		$	2,578
Stock-based compensation		(38	)		(27	)
Other income (PPP loan forgiveness)					292
Total Deferred tax asset		842			2,843
Less: Valuation allowance	$	(842	)	$	(2,843	)
Deferred tax asset. net of valuation allowance		—			—
Deferred tax liabilities		—			—
Net Deferred tax asset		—			—

Schedule of income tax expense benefit

	March 31, 2023		March 31, 2022
Federal income tax	$	—	$	—
State income tax		19		21
Total Income taxes , Current provision		19		21
Deferred Income taxes (benefit)		—		—
Total Income expenses (benefit)	$	19	$	21

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 December 31, 2022		2,085,136		—		—		—		2,085,136
Additions to the plan		2,000,000
Incentive Stock Options (ISO)				—		—		—		2,000,000
Non-Qualified Stock Options (NSO)		880,757		0.36		—		—		880,757
Cancelled/expired/exercised		123,864		0.40		—		—		123,864
Balance available under the plan as of March 31, 2023		3,328,243		—		—		—		3,328,243

Schedule of unvested options
	Number of options			Weighted average Grant Date Fair Value Per Option
Unvested on December 31, 2022		696,000			0.53
Granted		880,757			0.36
Vested		(546,625	)		0.51
Forfeited		—			—
Unvested on March 31, 2023		1,030,132			0.40

Schedule of assumptions
Fair value assumptions	2023		2022
Expected volatility		45%-52%		45%-52%
Expected terms (in years)		2		3
Risk-free interest rate		2.18%-3.57%		1.48%-2.18%
Dividend Yield		0%		0%

Schedule of earning per shares
	Three Months Ended March 31,
	2023			2022
Net income attributable to common stockholders	$	(3,278	)	$	(2,011	)
Weighted average shares outstanding used in basic per common share computations		41,859,531			35,507,184
Basic /Diluted EPS	$	(0.078	)	$	(0.057	)

	Three Months Ended March 31,
	2023			% Sales			2022			% Sales
	(In thousands)						(In thousands)
Revenue	$	9,838			100	%	$	11,056			100	%
Cost of Revenue (exclusive of depreciation /amortization)		8,245			84	%		8,162			74	%
Research and Development		539			5	%		1,066			10	%
Sales and Marketing		1,761			18	%		1,740			16	%
General and Administrative		1,628			17	%		1,351			12	%
Depreciation and Amortization		874			9	%		711			6	%
Other Income		12			0	%		—			0	%
Interest expense		62			1	%		16			0	%
Income tax		19			0	%		21			0	%
Net income (loss)	$	(3,278	)		(33	%)	$	(2,011	)		(18	%)

(In thousands, except percentages)
Customer	Amount		% of Revenue
Customer 1	$	4,930		50	%
Customer 2		920		9	%
Customer 3		859		9	%
Customer 4		792		8	%
Customer 5	$	388		4	%

	Three Months Ended March 31,				Changes
	2023		2022		Amount		%
	(In thousands, except percentages)
Software Services	$	5,493	$	4,310	$	1,183		27	%
Managed Services and Support		2,489		3,015		(526)		(17)	%
Platform Services		263		837		(574)		(69)	%
Cost of Revenue	$	8,245	$	8,162	$	83		1	%

	As of March 31, 2023		As of March 31, 2022
	(In thousands)
Cash and cash equivalents	$	267	$	1,562
Short-term investments		—		—
Total cash, cash equivalents and short-term investments	$	267	$	1,562

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

		HEALTHCARE TRIANGLE, INC.

Date: May 09, 2023		/s/ Dave Rosa
		Dave Rosa
		Chairman of the Board and Director

Date: May 09, 2023		/s/ Lakshmanan Kannappan
		Lakshmanan Kannappan
		Head of Strategic Partnership
		(Principal executive officer)

Date: May 09, 2023		/s/ Thyagarajan Ramachandran
		Thyagarajan Ramachandran
		Chief Financial Officer (principal financial and accounting officer, and principal executive officer)