UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 001-40903

HEALTHCARE TRIANGLE, INC.

(Exact name of registrant as specified in its charter)

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

7901 Stoneridge Drive, Suite 220 Pleasanton, CA	94588
(Address of principal executive officer)	(Zip Code)

(925) 270-4812
(Registrant’s telephone number, including area code)

Title of each class	Ticker Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value	HCTI	The Nasdaq Stock Market LLC

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

As of May 09, 2023, 42,778,762 shares of the registrant’s common stock, $0.00001 par value per share, were issued and outstanding.

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

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors," contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involving substantial risks and uncertainties. The words "believe," "may," "will," "potentially," "plan," "could," "should," "predict," "ongoing," "estimate," "continue," "anticipate," "intend," "project," "expect," "seek," or the negative of these words, or terms or similar expressions conveying uncertainty of future events or outcomes, or that concern our expectations, strategy, plans or intentions, are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or expected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements discussed under the heading "Risk Factors" and in our publicly available filings and press releases. These statements include, among other things, those regarding:

•

our ability to continue to add new customers and increase sales to our existing customers;

•

our ability to develop new solutions and bring them to market in a timely manner;

•

our ability to timely and effectively scale and adapt our existing solutions;

•

our dependence on establishing and maintaining a strong brand;

•

the occurrence of service interruptions and security or privacy breaches and related remediation efforts and fines;

•

system failures or capacity constraints;

•

the rate of growth of, and anticipated trends and challenges in, our business and in the market for our products;

•

our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability to achieve and maintain future profitability;

•

our ability to continue to efficiently acquire customers, maintain our high customer retention rates and maintain the level of our customers' lifetime spend;

•

our ability to provide high quality customer care;

•

the effects of increased competition in our markets and our ability to compete effectively;

•

our ability to grow internationally;

•

the impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such fluctuations;

•

our ability to effectively manage our growth and associated investments, including our migration of the vast majority of our infrastructure to the public cloud;

•

our ability to maintain our relationships with our partners;

•

adverse consequences of our substantial level of indebtedness and our ability to repay our debt;

•

our ability to maintain, protect and enhance our intellectual property;

•

our ability to maintain or improve our market share;

•

sufficiency of cash and cash equivalents to meet our needs for at least the next 12 months;

•

beliefs and objectives for future operations;

•

our ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States (U.S.) and internationally;

•

economic and industry trends or trend analysis;

•

our ability to attract and retain qualified employees and key personnel;

•

anticipated income tax rates, tax estimates and tax standards;

•

interest rate changes;

•

the future trading prices of our common stock;

•

our expectations regarding the outcome of any regulatory investigation or litigation;

•

the amount and timing of future repurchases of our common stock under any share repurchase program;

•

the potential impact of shareholder activism on our business and operations;

•

the length and severity of the coronavirus (COVID-19) pandemic and its impact on our business, customers and employees; as well as other statements regarding our future operations, financial condition, growth prospects and business strategies.

We operate in very competitive and rapidly-changing environments, and new risks emerge from time-to-time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur, and actual results could differ materially and adversely from those implied in our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our forward looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances described in the forward looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this report to conform such statements to actual results or to changes in our expectations, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context suggests otherwise, references to "Healthcare Triangle," "company," "we," "us" and "our" refer to Healthcare Triangle Inc. and its consolidated subsidiary.

PART I

FINANCIAL INFORMATION

Item 1. Financial statements

HEALTHCARE TRIANGLE, INC.

Condensed Consolidated Balance Sheets


	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.

HEALTHCARE TRIANGLE, INC.

Condensed Consolidated Statements of Operations


	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.

HEALTHCARE TRIANGLE, INC.

Consolidated Statements of Changes in Stockholders' Equity


	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.

HEALTHCARE TRIANGLE, INC.

Condensed Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2023			2022
	(In thousands)
Cash flows from operating activities
Net income (loss)	$	(3,278	)	$	(2,011	)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		874			711
Common stock issued for services		51			350
Stock compensation expenses		139			15
Changes in operating assets and liabilities:
(Increase)/ decrease in:
Accounts receivable		80			2,933
Other current assets		155			(1,031	)
Due from related party		(276	)		(451	)
Increase/ (decrease) in:
Accounts payable and accrued expenses		(174	)		(295	)
Other current liabilities		824			130
Payment of lease liability		—
Net cash provided by/(used in) operating activities		(1,605	)		351

SEC Form 10-Q filed by Healthcare Triangle Inc.