Healthcare Triangle, Inc 10-K for FY2022

Healthcare Triangle, Inc. (HCTI)

10-K 2023-03-28 For: 2022-12-31

Added on April 07, 2026

About this 10-K

Healthcare Triangle, Inc filed this 10-K on March 28, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $45.89M; up 30.1% from $35.27M a year earlier
Net loss: $9.61M; compared with a net loss of $5.95M 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 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 – FINANCIAL INFORMATION
Item 1 Business	6
Item 1A Risk Factors	16
Item 1B Unresolved Staff Comments	38
Item 2 Properties	38
Item 3 Legal Proceedings	38
Item 4 Mine Safety Disclosures	38
PART II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	39
Item 6 Selected Financial Data	40
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 8 Financial Statements and Supplementary Data	54
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	81
Item 9A Controls and Procedures	81
Item 9B Other Information	81
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections there Information	81
PART III
Item 10 Directors, Executive Officers and Corporate Governance	82
Item 11 Executive Compensation	89
Item 12 Security ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90
Item 13 Certain Relationships and Related party Transactions, and Director Independence	92
Item 14 Principal Accounting Fees and Services	92
PART IV
Item 15 Exhibit and Financial Statement Schedules	93

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⁾		1,345,201	$	0.39		1,959,299
Total		1,345,201	$	0.39		1,959,299

	Twelve Months Ended December 31,
	(In thousands)
	2022		% of Sales			2021			% of Sales
Revenue	$	45,886		100	%	$	35,270			100	%
Cost of Revenue (exclusive of depreciation /amortization)		34,591		75	%		24,748			70	%
Research and Development		5,953		13	%		5,257			15	%
Sales and Marketing		6,650		14	%		4,761			13	%
General and Administrative		5,734		12	%		4,440			13	%
Depreciation and Amortization		3,374		7	%		1,422			4	%
Other income		(1,081)		2	%		—			0	%
Interest expense		212		0	%		567			2	%
Income taxes		63		0	%		24			0	%
Net (loss)	$	(9,610)		(21)	%	$	(5,949	)		(17)	%

	Twelve Months Ended December 31,				Changes
	(In thousands)
	2022		2021		Amount		%
Revenue	$	45,886	$	35,270	$	10,616		30	%

Customer	Amount(In thousands)		% of Revenue
Customer 1	$	17,768		39	%
Customer 2		5,598		12	%
Customer 3		4,676		10	%
Customer 4		3,698		8	%
Customer 5	$	1,585		3	%

	Twelve Months Ended December 31,				Changes
	(In thousands)
	2022		2021		Amount		%
Software Services	$	14,519	$	13,480	$	1,039		8	%
Managed Services and Support		3,249		3,138		111		4	%
Platform Services		—		—		—			%
Total Revenue	$	17,768	$	16,618	$	1,150		7	%

	As of December 31, 2022		As of December 31, 2021
	(In thousands)
Cash and cash equivalents	$	1,341	$	1,770
Total cash, cash equivalents and short-term investments	$	1,341	$	1,770

Report of Independent Registered Public Accounting Firm	55
Financial Statements
Consolidated Balance Sheets as of December 31, 2022 and 2021	56
Consolidated Statements of Operations For The Years Ended December 31, 2022 and 2021	57
Consolidated Statements of Changes in Stockholders’ Equity For The Years Ended December 31, 2022 and 2021	58
Consolidated Statements of Cash Flows For The Years Ended December 31, 2022 and 2021	59
Notes to Consolidated Financial Statements	60


HEALTHCARE TRIANGLE INC
Consolidated Balance Sheets
	December 31,
	2022		2021
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	1,341	$	1,770
Accounts receivable		5,592		9,672
Other current assets		816		362
Total current assets		7,749		11,804
Property and equipment, net		80		74
Operating lease right-of-use assets		—		172
Goodwill		1,289		1,289
Intangible assets, net		10,570		10,458
Due from affiliates		1,075		816
Total assets	$	20,763	$	24,613

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	1,481	$	1,873
Warrant Liability		55		55
Payroll protection program loan		—		1,069
Short term borrowing		2,412		2,209
Operating lease liabilities		—		176
Other current liabilities		2,200		869
Total current liabilities		6,148		6,251
Long-term liabilities
Contingent Consideration		2,227		2,227
Total current and long-term liabilities		8,375		8,478

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 41,709,531 and 35,260,834 shares issued and outstanding as of December 31, 2022 and December 31, 2021 respectively		0		0
Additional paid-in capital		24,956		18,799
Retained earnings		(12,568)		(2,664)
Total stockholders' equity		12,478		16,135
Total liabilities and stockholders' equity	$	20,763	$	24,613

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


HEALTHCARE TRIANGLE INC
Consolidated Statements of Operations

	Years Ended December 31,
	2022		2021
	(In thousands)
Net revenue	$	45,886	$	35,270

Cost of revenue (exclusive of depreciation and amortization shown separately below)		34,591		24,748
Operating expenses
Research and Development		5,953		5,257
Sales and Marketing		6,808		4,761
General and Administrative		5,575		4,440
Depreciation and Amortization		3,374		1,422
Total operating expenses		21,711		15,880
Loss from operation		(10,416)		(5,358)
Other income (PPP loan forgiveness)		1,081		—
Interest expense		(212)		(567)
Loss before income tax		(9,547)		(5,925)
Provision for Income tax		(63)		(24)
Net loss	$	(9,610)	$	(5,949)
Net loss per common share—basic and diluted	$	(0.262)	$	(0.202)

Weighted average shares outstanding used in per common share computations:
Basic and diluted		36,740,650		29,427,863

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, 2020	—		—	27,900,000	$	0	$	1,042		$	3,286		$	4,328
Net loss			—	—		—		—			(5,949	)		(5,949	)
Shares issued for services to promoter			—	250,000		0		114			—			114
Shares issued for services				1,861,829		0		1,030			—			1,030
Series A Super Voting Preferred Stock	6,000		0											0
Issue of Options (ISO/NSO)				—		—		52			—			52
IPO Proceeds				3,262,500		0		11,796			—			11,796
Note Conversion				1,693,492		0		4,064			—			4,064
Shares Issued towards Devcool Acquisition				293,013		0		700			—			700
Balance at December 31, 2021	6,000	$	0	35,260,834	$	0	$	18,798		$	(2,663	)	$	16,135
Net loss			—	—		—		—			(9,610	)		(9,609	)
Shares issued for services				225,000		0		125			—			125
Issue of Options (ISO/NSO)				—		—		257			—			257
Issuance of common stock in connection with private placement				3,930,000		0		3,580			—			3,580
Issuance of warrants in connection with private placement				2,167,561		0		2,308			—			2,308
Common stock repurchased								(142	)		—			(142	)
Cash collected on common stock options				126,136				29			—			29
Prior Period adjustment											(296	)		(296	)
Balance at December 31, 2022	6,000	$	0	41,709,531	$	0	$	24,955		$	(12,569	)	$	12,387

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


HEALTHCARE TRIANGLE INC
Consolidated Statements of Cash Flows

	Years Ended December 31
	2022			2021
	(in thousands)
Cash flows from operating activities
Net income (loss)	$	(9,609	)	$	(5,950	)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		3,374			1,422
Common stock issued for services		124			1,144
Income from payroll protection program		(1,069	)
Interest on lease payment/payroll protection program		17			13
Stock compensation expenses		257			52
Warrant fair valuation expenses		—			55
Non cash expenses on acquisition		—			102
Changes in operating assets and liabilities:
Accounts receivable		4,081			(3,276	)
Other current assets		(454	)		(133	)
Due from related party		(259	)		(371	)
Accounts payable and accrued expenses		(392	)		(2,477	)
Other current liabilities		1,330			80
Contingent consideration		—			2,227
Net cash provided by/(used in) operating activities		(2,600	)		(7,112	)

Cash flows from investing activities
(Purchase)/sale of property and equipment		(40	)		(79	)
Increase in intangible assets		(3,279	)		(3,050	)
Investment in subsidiary		—			(4,500	)
Net cash provided by/(used in) investing activities		(3,319	)		(7,629	)

Cash flows from financing activities
Increase in capital					0
Stock options exercised		29			—
Increase / (decrease) in short term borrowing		203			—
Taxes paid		(294	)		—
Principal payment on finance leases		(194	)		(181	)
Proceeds from sale of common stock		5,888			14,220
Repurchases of common stock		(142	)
Increase in paycheck protection program loan		—			1,069
Net cash provided by/(used in) financing activities		5,490			15,108
Net increase (decrease) in cash and cash equivalents		(429	)		367

Cash and cash equivalents
Cash and cash equivalents at the beginning of the period		1,770			1,403
Cash and cash equivalents at the end of the period	$	1,341		$	1,770

Supplementary disclosure of cash flows information
Interest	$	212		$	567
Income taxes		63			24

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

Schedule of operating segment
	Twelve Months Ended December 31,				Changes
	(In thousands)
	2022		2021		Amount		%
Software Services	$	23,883	$	12,430	$	13,454		108	%
Managed Services and Support		15,178		19,003		(3,825)		(20)	%
Platform Services		4,825		3,837		988		26	%
Revenue	$	45,886	$	35,270	$	10,616		30	%

Operating profit by Operating Segment
	Twelve Months Ended December 31,				Changes
	(In thousands)
	2022		2021		Amount			%
Software Services	$	(1,381)	$	1,769	$	(3,150)			(178)	%
Managed Services and Support		4,481		4,909		(428)			(9)	%
Platform Services		(4,489)		(3,043)		(1,446)			(48)	%
Total segment operating profit (loss)		(1,389)		3,635		(5,024)			(138)	%
Less: unallocated costs		9,025		8,993		32			(0)	%
Income from operations		(10,414)		(5,358)		(5,056)			(94)	%
Other Income		1,081		-		1,081			100	%
Interest expense		211		567		(356	)		63	%
Net (loss) before income tax	$	(9,546)	$	(5,925)	$	3,621			(61)	%

Schedule of concentration
Customer	Amount(In thousands)		% of Revenue
Customer 1	$	17,768		39	%
Customer 2		5,598		12	%
Customer 3		4,676		10	%
Customer 4		3,698		8	%
Customer 5	$	1,585		3	%

Schedule of receivables and contract liabilities
	December 31, 2022		December 31, 2021
	(In thousands)
Accounts Receivable	$	5,592	$	9,672

Schedule of balance sheet
	December 31, 2022
		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
	December 31, 2022		December 31, 2021
	(In thousands)
Furniture and Equipment	$	119	$	80
Less: Accumulated depreciation		(39)		(6	)
Net Fixed Assets	$	80	$	74

Schedule of intangible assets
	December 31, 2022								December 31, 2021
	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	$	3,523	$	5,144	$	8,667	$	1,790	$	6,877
Intellectual property		4.39		7,329		2,013		5,316		4,050		803		3,247
Product development		0.5		477		367		110		477		143		334
Total Intangible Assets			$	16,473	$	5,903	$	10,570	$	13,194	$	2,736	$	10,458

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,
	(In thousands)
2023	$	2,108
2024		2,114
2025		2,114
2026		2,114
2027		2,114
2028		6
Total	$	10,570

Schedule of lease expenses
Particulars	December 31, 2022		December 31, 2021
	(In thousands)
Opening Balance	$	176	$	—
Additions				344
Finance cost accrued during the year		4		13
Payment of lease liability		180		181
Closing Balance	$	—	$	176

Schedule of balance sheet related to leases
		Year Ended December 31, 2022
Leases
ROU assets	$	—
lease liabilities, included in current liabilities		—
lease liabilities, included in long-term liabilities		—
Total lease liabilities	$	—

Schedule of cash flow related to leases
	Year Ended December 31, 2022
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from leases	$	180
ROU assets obtained in exchange for lease liabilities:		344
Leases
Weighted average remaining lease term (in months):		12
Weighted average discount rate:		4.75	%

Schedule of future minimum payments
2023	$	—
Total Lease payments		—
Less: Amount Representing Interest		—
Total lease obligation	$	—

Schedule of allocation of purchase price
Asset Component	December 31, 2022
	(In thousands)
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 repurchase program plan
Month	Shares purchased		Average cost per share		Amount
July, 2022		54,174	$	0.80	$	43
August, 2022		28,919		0.52		15
September, 2022		63,365		0.50		32
October, 2022		58,993		0.34		20
November, 2022		171,371		0.19		31
December, 2022		—		—		—
Total		376,822	$	0.62	$	141

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, 2021		841,848	$	2.94		—		—
Granted		67,407	$	1.06		—		—
Excised		—				—		—
Forfeited or expired		—				—		—
Outstanding on December 31, 2022		909,225	$	2.80		—		—
Exercisable on December 31, 2022		909,225	$	2.80		—		—

Schedule of unvested warrants
		Number of Warrants			Weighted average Grant Date Fair Value Per warrant
	Unvested on December 31, 2021		—
	Granted		67,407		$	1.06
	Vested		(67,407	)	$	1.06
	Forfeited		—
	Unvested on December 31, 2022		—

Schedule of fair value of warrant liabilities
Fair value assumptions	December 31, 2022
Estimated fair value of common stock warrant	$	0.18
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, 2022			December 31, 2021
	(In thousands)
Deferred tax assets:
Net Operating loss carry forward	$	2,578			1,445
Stock-based compensation		(27	)		(18	)
Other income (PPP loan forgiveness)		292
Fair Value of Warrant					(15	)
Total Deferred tax asset		2,843			1,412
Less: Valuation allowance	$	(2,843	)	$	(1,412	)
Deferred tax asset. net of valuation allowance		—			—
Deferred tax liabilities		—			—
Net Deferred tax asset		—			—

Schedule of income tax expense benefit
	December 31, 2022		December 31, 2021
	(In thousands)
Federal income tax	$	—	$	—
State income tax		63		24
Total Income taxes ,Current provision		63		24
Deferred Income taxes (benefit)		—		—
Total Income expenses/ (benefit)	$	63	$	24

Schedule of stock option activity
	Options				Shares of Stock
	No. of Options		Weighted Average Price		No. of Shares		Weighted Average Price		Total
Balance available under the plan on December 31, 2021		2,186,500		—		—		—		2,186,500
Incentive Stock Options (ISO)		449,701	$	0.28						449,701
Non-Qualified Stock Options (NSO)		255,000	$	0.19						255,000
Cancelled/expired		603,337								603,337
Balance outstanding on December 31, 2022		1,914,864								1,914,864
Balance available under the plan on December 31,2022		2,085,136								2,085,136