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What changed in Healthcare Triangle, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Healthcare Triangle, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+90 added−132 removedSource: 10-K (2024-03-18) vs 10-K (2023-03-28)

Top changes in Healthcare Triangle, Inc.'s 2023 10-K

90 paragraphs added · 132 removed · 86 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe federal government’s new regulations aim to help patients gain better control of their health data via smartphone apps, interoperability is expected to increase between providers, payers, and healthcare technology companies. We believe our Healthcare Interoperability solutions and proprietary platforms drive resilient interoperable health infrastructure as a catalyst for delivering better care and reducing costs.
Biggest changeAdditionally, recent laws and regulations, such as the 21st Century Cures Act, promote and prioritize interoperability and the free exchange of health information. The federal government’s new regulations aim to help patients gain better control of their health data via smartphone apps, interoperability is expected to increase between providers, payers, and healthcare technology companies.
Even as consumer demand for greater coordination grows, inflexible and disparate legacy technological systems present a significant barrier to meeting consumers’ wants and needs. 9 After decades of investing in EHR technology, the state of interoperability is insufficient and inhibits care coordination, health data exchange, clinical efficiency, and the quality of care provided to patients.
Even as consumer demand for greater coordination grows, inflexible and disparate legacy technological systems present a significant barrier to meeting consumers’ wants and needs. After decades of investing in EHR technology, the state of interoperability is insufficient and inhibits care coordination, health data exchange, clinical efficiency, and the quality of care provided to patients.
We believe the industry challenges and market dynamics described below are transforming the way data and analytics are used by healthcare organizations and provide us with a significant opportunity. • See https://solutionsreview.com/cloud-platforms/best-aws-managed-service-providers/. • https://www.absolutemarketsinsights.com/reports/healthcare-Cloud-Computing-Market--2019-2027-234 • https://www.bloomberg.com/press-releases/2020-04-16/healthcare-analytics-market-size-to-reach-usd-40-781- billion-by-2025-cagr-of-23-55-valuates-reports • https://www.alliedmarketresearch.com/press-release/us-healthcare-it-market.html • https://www.marketdataforecast.com/market-reports/medical-documents-management-market 8 Challenges associated with increasing complexity of healthcare data Across the healthcare landscape, a significant amount of data is being created every day, driven by patient care, payment systems, regulatory compliance, and recordkeeping.
We believe the industry challenges and market dynamics described below are transforming the way data and analytics are used by healthcare organizations and provide us with a significant opportunity. ● See https://solutionsreview.com/cloud-platforms/best-aws-managed-service-providers/. ● https://www.absolutemarketsinsights.com/reports/healthcare-Cloud-Computing-Market--2019-2027-234 ● https://www.bloomberg.com/press-releases/2020-04-16/healthcare-analytics-market-size-to-reach-usd-40-781-billion-by-2025-cagr-of-23-55-valuates-reports ● https://www.alliedmarketresearch.com/press-release/us-healthcare-it-market.html ● https://www.marketdataforecast.com/market-reports/medical-documents-management-market 3 Challenges associated with increasing complexity of healthcare data Across the healthcare landscape, a significant amount of data is being created every day, driven by patient care, payment systems, regulatory compliance, and recordkeeping.
Our readabl.ai platform uses state-of-the-art public cloud artificial intelligence and machine learning to recognize and extract healthcare information from documents, faxes, and narrative reports. • Technology Enabled Services: our ability to deliver world-class services in the areas of cloud technologies, data, AI/ML, security, compliance, governance and extend these capabilities with clinical and operational consultants that work across the healthcare industry to improve patient and consumer outcomes. 6 • Expertise in Compliance: our compliance and validation experts enable us to implement Health Insurance Portability and Accountability Act (HIPAA) requirements in GxP regulated establishments; GxP encompasses a broad range of compliance-related activities such as Good Laboratory Practices (GLP), Good Clinical Practices (GCP), and Good Manufacturing Practices (GMP).
Our readabl.ai platform uses state-of-the-art public cloud artificial intelligence and machine learning to recognize and extract healthcare information from documents, faxes, and narrative reports. ● Technology Enabled Services: our ability to deliver world-class services in the areas of cloud technologies, data, AI/ML, security, compliance, governance and extend these capabilities with clinical and operational consultants that work across the healthcare industry to improve patient and consumer outcomes. 1 ● Expertise in Compliance: our compliance and validation experts enable us to implement Health Insurance Portability and Accountability Act (HIPAA) requirements in GxP regulated establishments; GxP encompasses a broad range of compliance-related activities such as Good Laboratory Practices (GLP), Good Clinical Practices (GCP), and Good Manufacturing Practices (GMP).
The platforms address these needs through their major competencies: (i) large-scale data connectivity, integration, and validation capabilities, (ii) advanced predictive analytics and high-speed computing, (iii) toolsets to translate resulting insights into real-world impact, and (iv) purpose-built data visualization and reporting. 10 CloudEz Technology Platform CloudEz is an enterprise multi-cloud transformation and management platform that enables customers to manage their cloud infrastructure across private, hybrid, and public cloud infrastructures from providers such as AWS, Microsoft Azure, and Google Cloud.
The platforms address these needs through their major competencies: (i) large-scale data connectivity, integration, and validation capabilities, (ii) advanced predictive analytics and high-speed computing, (iii) toolsets to translate resulting insights into real-world impact, and (iv) purpose-built data visualization and reporting. 5 CloudEz Technology Platform CloudEz is an enterprise multi-cloud transformation and management platform that enables customers to manage their cloud infrastructure across private, hybrid, and public cloud infrastructures from providers such as AWS, Microsoft Azure, and Google Cloud.
DataEz Platform Architecture: DataEz platform architecture is composed of various stages of data pipeline management including ingestion, quarantine, pre-curated, data curated, analytics/data warehouse, visualization/data warehouse and visualization/data science. 12 DataEz: Data Lake Management, Analytics & Data Science platform architecture diagram Readabl.AI Despite significant investments in electronic health records, paper-based unstructured data, such as faxes and clinical reports, remain the prevalent methods to share information about patients as they navigate the continuum of care.
DataEz Platform Architecture: DataEz platform architecture is composed of various stages of data pipeline management including ingestion, quarantine, pre-curated, data curated, analytics/data warehouse, visualization/data warehouse and visualization/data science. 7 DataEz: Data Lake Management, Analytics & Data Science platform architecture diagram Readabl.AI Despite significant investments in electronic health records, paper-based unstructured data, such as faxes and clinical reports, remain the prevalent methods to share information about patients as they navigate the continuum of care.
CloudEz platform has several security controls including identity & access management, cloud security & governance, data security, security information & event management, network and application security. 11 DataEz technology platform Managing a data and data analytics platform is cumbersome with numerous moving components and current best practices that are prone to over-complication.
CloudEz platform has several security controls including identity & access management, cloud security & governance, data security, security information & event management, network and application security. 6 DataEz technology platform Managing a data and data analytics platform is cumbersome with numerous moving components and current best practices that are prone to over-complication.
Readabl.AI ensures that the necessary health information is available for patient care with reduced labor requirements and faster processing. 13 Readabl.AI is offered as a solution on public cloud marketplaces such as Google Cloud marketplace and is commercially available on a Software-as-a-Service (SaaS) subscription model.
Readabl.AI ensures that the necessary health information is available for patient care with reduced labor requirements and faster processing. 8 Readabl.AI is offered as a solution on public cloud marketplaces such as Google Cloud marketplace and is commercially available on a Software-as-a-Service (SaaS) subscription model.
These cutting-edge solutions consist of a public cloud-based data lake where the data from various devices and sensors are ingested and stored through automated provisioning, and a scalable dashboard that is capable of monitoring hundreds of thousands of patients at a time based on the cloud-stored data. • Clinical and Training Consulting: HTI also provides clinical and operational consultants to healthcare organizations to support the improvement of their business, clinical, and patient outcomes and experience. 15 Corporate Information Our principal executive office is located at 7901 Stoneridge Drive, Suite220, Pleasanton, CA 94588.
These cutting-edge solutions consist of a public cloud-based data lake where the data from various devices and sensors are ingested and stored through automated provisioning, and a scalable dashboard that is capable of monitoring hundreds of thousands of patients at a time based on the cloud-stored data. ● Clinical and Training Consulting: HTI also provides clinical and operational consultants to healthcare organizations to support the improvement of their business, clinical, and patient outcomes and experience. 10 Corporate Information Our principal executive office is located at 7901 Stoneridge Drive, Suite 220, Pleasanton, CA 94588.
Our Parent is 65.2% owned by SecureKloud Technologies Ltd., an Indian company that is publicly traded in India. 7 We are led by a diverse, global, and talented team of data scientists, thought leaders, software developers, and subject matter experts who seek to understand our customers’ challenges and are dedicated to tackling these challenges.
Our Parent is 60.71% owned by SecureKloud Technologies Ltd., an Indian company that is publicly traded in India. 2 We are led by a diverse, global, and talented team of data scientists, thought leaders, software developers, and subject matter experts who seek to understand our customers’ challenges and are dedicated to tackling these challenges.
Healthcare Cloud Backup and Disaster Recovery (BU/DR): Our cloud disaster recovery solution is a fully managed infrastructure solution that enables hospitals to host their DR instances on public cloud platforms such as AWS. Our solution specifically serves the MEDITECH market today.
Healthcare Cloud Backup and Disaster Recovery (BU/DR): Our cloud disaster recovery solution is a fully managed infrastructure solution that enables hospitals to host their DR instances on public cloud platforms such as AWS. Our solution specifically serves the MEDITECH market today. MEDITECH BU/DR solution will soon be available on AWS marketplace for healthcare customers. 5.
Background As of December 31, 2022, SecureKloud Technologies, Inc., f/k/a 8K Miles Software Services, Inc., a Nevada corporation (the “Parent”), owns approximately 61.14% of the Company.
Background As of December 31, 2023, SecureKloud Technologies, Inc., f/k/a 8K Miles Software Services, Inc., a Nevada corporation (the “Parent”), owns approximately 59.18% of the Company.
Challenges due to lack of coordination and interoperability The healthcare industry is fragmented and inefficient, with different legacy health insurers, hospital systems, provider groups, and pharmacy networks each possessing distinct incentive structures—some or all of which may diverge from consumers’ interests.
This means most organizations will turn into data organizations and will aggressively leverage data as a core asset to drive innovation in their businesses. 4 Challenges due to lack of coordination and interoperability The healthcare industry is fragmented and inefficient, with different legacy health insurers, hospital systems, provider groups, and pharmacy networks each possessing distinct incentive structures—some or all of which may diverge from consumers’ interests.
As of December 31, 2022, we had a total of 51 full time employees, 225 sub-contractors, including 122 certified cloud engineers, 107 Epic Certified EHR experts and 17 MEDITECH Certified EHR experts.
As of December 31, 2023, we had a total of 33 full time employees, 164 sub-contractors, including 95 certified cloud engineers, 66 Epic Certified EHR experts and 21 MEDITECH Certified EHR experts.
MEDITECH BU/DR solution will soon be available on AWS marketplace for healthcare customers. 14 Healthcare IT Services: Healthcare IT is a separate service we provide primarily to hospitals and healthcare centres. Our healthcare IT services are utilized by 100+ hospitals across the US.
Our service offerings include risk assessment, recommendations for most effective tools and processes, continuous monitoring of systems and backup and recovery plan. 9 Healthcare IT Services : Healthcare IT is a separate service we provide primarily to hospitals and healthcare centres. Our healthcare IT services are utilized by 100+ hospitals across the US.
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This means most organizations will turn into data organizations and will aggressively leverage data as a core asset to drive innovation in their businesses.
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We believe our Healthcare Interoperability solutions and proprietary platforms drive resilient interoperable health infrastructure as a catalyst for delivering better care and reducing costs.
Removed
Additionally, recent laws and regulations, such as the 21st Century Cures Act, promote and prioritize interoperability and the free exchange of health information. The COVID-19 pandemic in 2020 has helped to pave the way for advancements in EHR interoperability and standardization.
Added
Ransomware Protection: We are taking a proactive role in educating and equipping rural hospitals, community hospitals, and large health systems with critical resources for improving their preparedness, prevention, detection, response, and recovery from ransomware incidents.
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Impact of, and response to, COVID-19 pandemic Because of COVID-19, healthcare and Life Sciences organizations are accelerating research, rethinking patient care, and maintaining clinical and operational continuity during this unprecedented time for the global health system. COVID-19 has necessitated the adoption of digital communication channels and remote working technology within the Healthcare and Life Sciences industry at a rapid pace.
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We believe our proprietary platforms and solutions address these challenges. Our business is focused on providing digital platform solutions to healthcare organizations and it is our mission to adequately address COVID-19 challenges for the benefit of our customers and society in general. As a result, consumers have better personal care, convenience, and value.
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We believe that COVID-19 is expected to drive increased utilization of technology during and after the pandemic, and such shift to a virtual approach creates a unique opportunity for our business to shape the new virtual-oriented experiences of businesses through our cloud technology and services.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMany of the companies with which we compete for experienced employees have greater resources than we have and may offer compensation packages that are perceived to be better than ours. Additionally, changes in our compensation structure may be negatively received by employees and result in attrition or cause difficulty in the recruiting process.
Biggest changeWe have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with the appropriate level of qualifications. Many of the companies with which we compete for experienced employees have greater resources than we have and may offer compensation packages that are perceived to be better than ours.
The Privacy Standards grant a number of rights to individuals as to their PHI and restrict the use and disclosure of PHI by “Covered Entities,” defined as “health plans,” “healthcare providers,” and “healthcare clearinghouses.” 28 Any failure or perceived failure by us to comply with the aforementioned laws and regulations in connection with our products and services provided to our clients or used by third parties, or our related legal obligations, or any compromise of security that results in the unauthorized release or transfer protected information, may result in governmental enforcement actions, litigation, class action, or public statements against us by consumer advocacy groups or others and could cause our clients to lose trust in us, which could have an adverse effect on our business, financial condition, results of operations, reputation or prospects.
The Privacy Standards grant a number of rights to individuals as to their PHI and restrict the use and disclosure of PHI by “Covered Entities,” defined as “health plans,” “healthcare providers,” and “healthcare clearinghouses.” 23 Any failure or perceived failure by us to comply with the aforementioned laws and regulations in connection with our products and services provided to our clients or used by third parties, or our related legal obligations, or any compromise of security that results in the unauthorized release or transfer protected information, may result in governmental enforcement actions, litigation, class action, or public statements against us by consumer advocacy groups or others and could cause our clients to lose trust in us, which could have an adverse effect on our business, financial condition, results of operations, reputation or prospects.
Third parties may also attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords, or other information to gain access to the data contained on our platforms, including patient information. 17 While we and our third-party cloud providers have implemented security measures designed to protect against security breaches, these measures could fail or may be insufficient, particularly as techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until launched against a target, resulting in the unauthorized disclosure, modification, misuse, destruction, or loss of our or our customers’ data or other sensitive information.
Third parties may also attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords, or other information to gain access to the data contained on our platforms, including patient information. 12 While we and our third-party cloud providers have implemented security measures designed to protect against security breaches, these measures could fail or may be insufficient, particularly as techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until launched against a target, resulting in the unauthorized disclosure, modification, misuse, destruction, or loss of our or our customers’ data or other sensitive information.
Any such security breach could require us to comply with various breach notification laws, may affect our ability to operate, and may expose us to litigation, remediation and investigation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability, each of which could be material. 27 Various government and consumer agencies have called for new regulation and changes in industry practices and are continuing to review the need for greater regulation for the collection of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices.
Any such security breach could require us to comply with various breach notification laws, may affect our ability to operate, and may expose us to litigation, remediation and investigation costs, increased costs for security measures, loss of revenue, damage to our reputation, and potential liability, each of which could be material. 22 Various government and consumer agencies have called for new regulation and changes in industry practices and are continuing to review the need for greater regulation for the collection of information concerning consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices.
If, however, we or our subcontractors do not follow those procedures and policies, or they are not sufficient to prevent inaccurate claims from being submitted, we could be subject to liability. 29 In the event our software platforms and solutions are found to be subject to FDA’s regulations and approval in connection with the certain types of medical devices our software integrates with, we may have to incur additional costs or be subjected to potential criminal and civil penalties in case of the actual or perceived failure of us to comply with such regulations.
If, however, we or our subcontractors do not follow those procedures and policies, or they are not sufficient to prevent inaccurate claims from being submitted, we could be subject to liability. 24 In the event our software platforms and solutions are found to be subject to FDA’s regulations and approval in connection with the certain types of medical devices our software integrates with, we may have to incur additional costs or be subjected to potential criminal and civil penalties in case of the actual or perceived failure of us to comply with such regulations.
If one or more of our competitors or potential competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. 25 We compete on the basis of several factors, including: • breadth and depth of services, including our open architecture and the level of product integration across care settings; • integrated platform; • regulatory compliance; • reputation; • reliability, accuracy, and security; • client service; • the total cost of ownership; • innovation; and • industry acceptance, expertise, and experience.
If one or more of our competitors or potential competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively. 20 We compete on the basis of several factors, including: ● breadth and depth of services, including our open architecture and the level of product integration across care settings; ● integrated platform; ● regulatory compliance; ● reputation; ● reliability, accuracy, and security; ● client service; ● the total cost of ownership; ● innovation; and ● industry acceptance, expertise, and experience.
If a court were to find the choice of forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 37 These broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance.
If a court were to find the choice of forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 31 These broad market and industry fluctuations may materially adversely affect the market price of our common stock, regardless of our actual operating performance.
Centers for Medicare & Medicaid Services (“CMS”). 31 Although we believe that our service offerings will meet the requirements of HITECH and MACRA to allow our clients to qualify for financial incentives and avoid financial penalties for implementing and using our services, there can be no guaranty that our clients will achieve meaningful use (or its equivalent under MACRA’s Merit Based Incentive Payment System, Promoting Interoperability) or actually receive such planned financial incentives for our services.
Centers for Medicare & Medicaid Services (“CMS”). 26 Although we believe that our service offerings will meet the requirements of HITECH and MACRA to allow our clients to qualify for financial incentives and avoid financial penalties for implementing and using our services, there can be no guaranty that our clients will achieve meaningful use (or its equivalent under MACRA’s Merit Based Incentive Payment System, Promoting Interoperability) or actually receive such planned financial incentives for our services.
Because these regulations are subject to future changes and/or significant enforcement discretion by federal agencies, the ultimate impact of these regulations is unknown. 30 There is significant uncertainty in the healthcare industry, both as a result of recently enacted legislation and changing government regulation, which may have a material adverse impact on the businesses of our hospital clients and ultimately on our business, financial condition, and results of operations.
Because these regulations are subject to future changes and/or significant enforcement discretion by federal agencies, the ultimate impact of these regulations is unknown. 25 There is significant uncertainty in the healthcare industry, both as a result of recently enacted legislation and changing government regulation, which may have a material adverse impact on the businesses of our hospital clients and ultimately on our business, financial condition, and results of operations.
If enterprises do not perceive the benefits of our services, then the market for these services may not expand as much or develop as quickly as we expect, either of which would adversely affect our business, financial condition, or operating results. 21 Legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and still evolving.
If enterprises do not perceive the benefits of our services, then the market for these services may not expand as much or develop as quickly as we expect, either of which would adversely affect our business, financial condition, or operating results. 16 Legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain and still evolving.
If cloud-based solutions do not continue to achieve more widespread adoption in the Life Sciences industry, or there is a widespread reduction in demand for cloud-based solutions, our revenues could decrease and our business could be adversely affected. 32 Unfavorable conditions in our industry or the U.S. economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our operating results.
If cloud-based solutions do not continue to achieve more widespread adoption in the Life Sciences industry, or there is a widespread reduction in demand for cloud-based solutions, our revenues could decrease and our business could be adversely affected. 27 Unfavorable conditions in our industry or the U.S. economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our operating results.
The FDA can impose extensive requirements governing pre- and post-market conditions such as approval, labeling, and manufacturing, as well as governing product design controls and quality assurance processes. Failure to comply with FDA requirements can result in criminal and civil fines and penalties, product seizure, injunction, and civil monetary policies—each of which could have an adverse effect on our business.
The FDA can impose extensive requirements governing pre- and post-market conditions such as approval, labelling, and manufacturing, as well as governing product design controls and quality assurance processes. Failure to comply with FDA requirements can result in criminal and civil fines and penalties, product seizure, injunction, and civil monetary policies—each of which could have an adverse effect on our business.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 36 The elimination of personal liability against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. 30 The elimination of personal liability against our directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers and employees may result in substantial expenses.
Also, whether there is an actual or a perceived breach of our security, our reputation could suffer irreparable harm, causing our current and prospective customers to reject our products and services in the future, deterring data suppliers from supplying us data or customers from using our services, or changing consumer behavior adversely affecting our technology’s market coverage.
Also, whether there is an actual or a perceived breach of our security, our reputation could suffer irreparable harm, causing our current and prospective customers to reject our products and services in the future, deterring data suppliers from supplying us data or customers from using our services, or changing consumer behaviour adversely affecting our technology’s market coverage.
Furthermore, according to the FTC violating consumers’ privacy rights or failing to take appropriate steps to keep information about consumers secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act. 24 In addition, certain states have adopted robust privacy and security laws and regulations.
Furthermore, according to the FTC violating consumers’ privacy rights or failing to take appropriate steps to keep information about consumers secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act. 19 In addition, certain states have adopted robust privacy and security laws and regulations.
It is also possible that such problems could result in losses of data. 18 Since our customers use our platforms and services for important aspects of their business, any errors, defects, disruptions, service degradations, or other performance problems with our solutions could hurt our reputation and may damage our customers’ businesses.
It is also possible that such problems could result in losses of data. 13 Since our customers use our platforms and services for important aspects of their business, any errors, defects, disruptions, service degradations, or other performance problems with our solutions could hurt our reputation and may damage our customers’ businesses.
In the event that any of our third-party facilities arrangements is terminated, or if there is a lapse of service or damage to a facility, we could experience interruptions in our platforms as well as delays and additional expenses in arranging new facilities and services. 16 Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platforms.
In the event that any of our third-party facilities arrangements is terminated, or if there is a lapse of service or damage to a facility, we could experience interruptions in our platforms as well as delays and additional expenses in arranging new facilities and services. 11 Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platforms.
These actions may be taken even if they are opposed by other stockholders, including public stockholders like you. 35 Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.
These actions may be taken even if they are opposed by other stockholders, including public stockholders like you. 29 Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.
Any failure by us to introduce planned products or other new products or to introduce these products on schedule could have an adverse effect on our revenue growth and operating results. 19 If we cannot adapt to changing technologies, our products and services may become obsolete and our business could suffer.
Any failure by us to introduce planned products or other new products or to introduce these products on schedule could have an adverse effect on our revenue growth and operating results. 14 If we cannot adapt to changing technologies, our products and services may become obsolete and our business could suffer.
In the event we are unable to manage our lengthy and unpredictable sales cycle, our business may be adversely affected. 20 Our revenues have historically been concentrated among our top customers, and the loss of any of these customers could reduce our revenues and adversely impact our operating results.
In the event we are unable to manage our lengthy and unpredictable sales cycle, our business may be adversely affected. 15 Our revenues have historically been concentrated among our top customers, and the loss of any of these customers could reduce our revenues and adversely impact our operating results.
These products or services may compete with ours, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 22 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products or services may compete with ours, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 17 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Any of the foregoing could harm our business, financial condition, results of operations, and prospects and could help our competitors develop products and services that are similar to or better than ours. 23 Any failure to protect our intellectual property that is not registered could impair our business.
Any of the foregoing could harm our business, financial condition, results of operations, and prospects and could help our competitors develop products and services that are similar to or better than ours. 18 Any failure to protect our intellectual property that is not registered could impair our business.
Any of these factors could materially and adversely impact our business, financial condition, and operating results. 26 We are subject to numerous regulatory requirements of the healthcare industry and is susceptible to a changing regulatory environment.
Any of these factors could materially and adversely impact our business, financial condition, and operating results. 21 We are subject to numerous regulatory requirements of the healthcare industry and is susceptible to a changing regulatory environment.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. Our Parent owns approximately 61% of our common stock and will be able to exert a controlling influence over our business affairs and matters submitted to stockholders for approval.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. Our Parent owns approximately 59.18% of our common stock and will be able to exert a controlling influence over our business affairs and matters submitted to stockholders for approval.
Our Parent owns approximately 61% of our common stock. As a result, our Parent has control over all matters submitted to our stockholders for approval, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, the approval of any business combination, and any other significant corporate transaction.
Our Parent owns approximately 59.18% of our common stock. As a result, our Parent has control over all matters submitted to our stockholders for approval, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, the approval of any business combination, and any other significant corporate transaction.
Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights.
Furthermore, our efforts to enforce our intellectual property rights may be met with defences, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights.
Historically, our revenue has been concentrated among a small number of customers. In the fiscal year ended December 31, 2022, our top customer and our top five customers accounted for 39% and 73% of our revenue, respectively.
Historically, our revenue has been concentrated among a small number of customers. In the fiscal year ended December 31, 2023, our top customer and our top five customers accounted for 23% and 77% of our revenue, respectively.
These types of problems may be caused by a variety of factors, including human or software errors, viruses, cyber-attacks, fraud, spikes in customer usage, problems associated with our third-party computing infrastructure and network providers, infrastructure changes, and denial of service issues.
In addition, we have experienced, and may in the future experience, service disruptions, degradations, outages, and other performance problems. These types of problems may be caused by a variety of factors, including human or software errors, viruses, cyber-attacks, fraud, spikes in customer usage, problems associated with our third-party computing infrastructure and network providers, infrastructure changes, and denial of service issues.
If the market for our offerings does not achieve widespread adoption or there is a reduction in demand for our offerings in our market caused by a lack of customer acceptance, technological challenges, lack of accessible machine data, competing technologies and products, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders, early terminations, reduced renewal rates or decreased revenues, any of which would adversely affect our business operations and financial results.
In addition, while many large hospital systems and payers use our solutions, many of these entities use only certain of our offerings, and we may not be successful in driving broader adoption of our solutions among these existing users, which would limit our revenue growth. 28 If the market for our offerings does not achieve widespread adoption or there is a reduction in demand for our offerings in our market caused by a lack of customer acceptance, technological challenges, lack of accessible machine data, competing technologies and products, decreases in corporate spending, weakening economic conditions, or otherwise, it could result in reduced customer orders, early terminations, reduced renewal rates or decreased revenues, any of which would adversely affect our business operations and financial results.
If we fail to attract new employees or fail to retain and motivate our current employees, our business and future growth prospects could be adversely affected. Defects or disruptions in our cloud software solutions could result in diminished demand for our platforms and services, a reduction in our revenues, and subject us to substantial liability.
Defects or disruptions in our cloud software solutions could result in diminished demand for our platforms and services, a reduction in our revenues, and subject us to substantial liability. We have from time to time found defects in our solutions, and new defects may be detected in the future.
You should consider our business and prospects in light of the risks and difficulties we may encounter in this new and unproven market. Risks Related Ownership of Our Securities The market for our common stock is new and may not develop to provide investors with adequate liquidity. We only recently conducted our initial public offering in October of 2021.
You should consider our business and prospects in light of the risks and difficulties we may encounter in this new and unproven market. If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.
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COVID-19 pandemic catalyzed the demand for such professional’s savvy in the healthcare industry as well. We have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with the appropriate level of qualifications.
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Additionally, changes in our compensation structure may be negatively received by employees and result in attrition or cause difficulty in the recruiting process. If we fail to attract new employees or fail to retain and motivate our current employees, our business and future growth prospects could be adversely affected.
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We have from time to time found defects in our solutions, and new defects may be detected in the future. In addition, we have experienced, and may in the future experience, service disruptions, degradations, outages, and other performance problems.
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Recent Changes in our senior management team or change in other key personnel could have a negative effect on our ability to execute our business strategy. Our success depends in a large part upon the continued service of our senior management team or other key personnel.
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Recently, our founder and former Chief Executive Officer, Suresh Venkatachari, was suspended from his roles as our Chairman and Chief Executive Officer and he subsequently resigned from our board of directors and will likely not return as the Company’s Chief Executive Officer.
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Currently, our management team is led by our Chief Operating Officer, Roy Sookhoo who was appointed on January 5, 2023. Additionally, in December of 2022, three of our independent directors resigned and were replaced by three new independent directors in January 2023. The success of our new board of directors and Mr.
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Sookhoo in leading our management team is critical to our vision, strategic direction, culture, products, and technology. We do not maintain key-man insurance for Mr. Sookhoo or any other member of our senior management team. Any leadership transitions can be inherently difficult to manage, and an unsuccessful transition may cause disruption to our business.
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In addition, change in the senior management team may create uncertainty among investors concerning our future direction and performance. Any disruption in our operations or uncertainty around our ability to execute could have an adverse effect on our business, financial condition, or results of operations.
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In addition, while many large hospital systems and payers use our solutions, many of these entities use only certain of our offerings, and we may not be successful in driving broader adoption of our solutions among these existing users, which would limit our revenue growth.
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Therefore, the market for our common stock is new, and we cannot assure you that an active trading market for our common stock will develop, or if it does develop, it may not be maintained.
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You may not be able to sell your common stock quickly or at the market price if trading in our securities is not active. 33 If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
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On June 3, 2022, we received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Market, or Nasdaq, notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market, referred to as the minimum bid price rule.
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In accordance with Nasdaq Listing Rules, we were provided an initial period of 180 calendar days, or until November 30, 2022, to regain compliance with the minimum bid price rule.
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We did not regain compliance with the minimum bid price rule by the initial compliance date, and applied for an additional duration of 180 calendar days to regain compliance with the minimum bid price rule, a period expiring on May 30, 2023.
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Apart from the aforementioned notice, on December 29, 2022, further Nasdaq notified us that due to the resignations of Mr. Jeffrey S. Mathiesen, Mr. John Leo and Ms.
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April Bjornstad from the our board of directors, audit committee and compensation committee, we no longer complied with Nasdaq’s independent director, audit committee and compensation committee requirements as set forth in Listing Rule (i) 5605(b)(1) which requires that a majority of the board of directors be composed of “independent directors” as defined by Rule 5605(a)(2); (ii) Rule 5605(c)(2) which requires that the board continue to have an audit committee of at least three members, each of whom must be an independent director as defined under Rule 5605(a)(2); and (iii) Rule 5605(d)(2) which requires that the board continue to have a compensation committee of at least two members who must be independent directors as defined under Rule 5605(a)(2).
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In response to this, Nasdaq gave us until January 27, 2023 to submit a compliance plan, which was submitted on January 27, 2023 and accepted by the Nasdaq on January 27, 2023 granting us an extension of up to 180 days from December 29, 2022 for the Company to evidence compliance.
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To date, we have not regained compliance with the minimum bid price rule, but have regained compliance with respect to Nasdaq’s independent director, audit committee and compensation committee requirements as set forth in Listing Rule 5605(b)(1), Rule 5605(c)(2), and Rule 5605(d)(2).
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If, at any time during the additional compliance period the bid price for our common stock closes at $1.00 or more per share for a minimum of 10 consecutive business days, the Nasdaq Listing Qualifications Department staff will provide written notification to us that we are in compliance with the minimum bid price rule, unless the staff exercises its discretion to extend this 10-day period pursuant to the Nasdaq Listing Rules.
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On October 19, 2022, we filed a definitive proxy statement for a Special Meeting of Stockholders that was held on November 17, 2022 at which meeting we approved the resolution to give our board the discretion to effect a reverse stock split of our common stock in a range of split ratios from 1-for-2 to 1-for-10 at any time prior to May 29, 2023.
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If we do not regain compliance with the minimum bid price rule by the required date and we are not eligible for any additional compliance period at that time, the Nasdaq Listing Qualifications Department staff will provide us written notification that our common stock may be delisted.
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At that time, we may appeal the staff’s delisting determination to a Nasdaq Listing Qualifications Panel. We expect that our common stock would remain listed pending the panel’s decision.
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However, there can be no assurance that, even if we appeal the staff’s delisting determination to the Nasdaq Listing Qualifications Panel, such appeal would be successful. 34 There are many factors that may adversely affect our minimum bid price, including those described throughout this section titled “Risk Factors.” Many of these factors are outside of our control.
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As a result, we may not be able to sustain compliance with the minimum bid price rule in the long term.
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Any potential delisting of our common stock from the Nasdaq Capital Market would likely result in decreased liquidity and increased volatility for our common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions.
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Any potential delisting of our common stock from the Nasdaq Capital Market would also make it more difficult for our stockholders to sell our common stock in the public market. If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease and maintain our primary offices at 7901 Stoneridge Drive, Suite # 220 Pleasanton CA, USA 94588.We also have our satellite lease offices at 2 Tower Centre Blvd, 8th Floor, Suite # 804, East Brunswick, NJ 08816. We currently do not own any real estate.
Biggest changeItem 2. Properties We lease and maintain our primary offices at 7901 Stoneridge Drive, Suite # 220 Pleasanton CA, USA 94588.We also have our satellite lease offices at 666 Plainsboro Road, Suite 448, Plainsboro, NJ 08536, USA. We currently do not own any real estate.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan 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 (1) The Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
Biggest changeNumber of Securities Remaining Available for Number of Future Issuance Securities to be Under Equity issued Upon Compensation Exercise of Weighted Average Plans (Excluding Outstanding Exercise Price of Securities Options, Warrants, Outstanding Reflected in Plan category: and Rights (a) Options (b) column (a)) (c) Equity compensation plans approved by stockholders (1) 276,500 $ 3.7 1,023,050 Total 276,500 $ 3.7 1,023,050 (1) The Plan permits grants of equity awards to employees, directors, consultants and other independent contractors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is trading on the Nasdaq Capital Market under the symbol “HCTI.” Holders As of March 2, 2023, there were 49 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is trading on the Nasdaq Capital Market under the symbol “HCTI.” Holders As of March 18, 2024, there were 49 stockholders of record of our common stock.
Recent Sales of Unregistered Securities None 39 Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2022, regarding our common stock that may be issued under the Plan.
Recent Sales of Unregistered Securities None 34 Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2023, regarding our common stock that may be issued under the Plan.
Our board of directors and shareholders have approved a total reserve of 4,000,000 shares for issuance under the Plan. (2) The total reserve of 4,000,000 shares represents 8.75%of the equity on a fully diluted basis. We have not issued any options outside of the Plan.
Our board of directors and shareholders have approved a total reserve of 600,000 shares for issuance under the Plan. (2) The total reserve of 600,000 shares represents 13.92%of the equity on a fully diluted basis. We have not issued any options outside of the Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated: 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) % 46 Twelve Months Ended December 31, 2022, and 2021 Revenue from operations Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Revenue $ 45,886 $ 35,270 $ 10,616 30 % Revenue increased by $10.6 million, or 30% to $45.9 million for the twelve months ended December 31, 2022, as compared to $35.2 million for the twelve months ended December 31, 2021.
Biggest changeResults of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated: Twelve Months Ended December 31, (In thousands) 2023 % of Sales 2022 % of Sales Revenue $ 33,203 100 % $ 45,886 100 % Cost of revenue (exclusive of depreciation /amortization) 26,426 80 % 34,591 75 % Research and development 799 2 % 5,954 13 % Sales and marketing 4,670 14 % 6,808 15 % General and administrative 5,424 16 % 5,575 12 % Depreciation and amortization 7,232 22 % 3,374 7 % Other income (12 ) 0 % (1,081 ) (2 )% Interest expense 968 3 % 212 0 % Income taxes 35 0 % 63 0 % Net (loss) $ (12,339 ) (37 )% $ (9,610 ) (21 )% 40 Twelve Months Ended December 31, 2023, and 2022 Revenue from operations Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Revenue $ 33,203 $ 45,886 $ (12,683 ) (28 )% Revenue decreased by $12.7 million, or 28% to $33.2 million for the twelve months ended December 31, 2023, as compared to $45.9 million for the twelve months ended December 31, 2022.
Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the expansion of sales and marketing activities and the ongoing investments in platform development. Liquidity The current ratio measures a company's ability to pay off its current liabilities (payable within one year) with its total current assets such as cash, accounts receivable, and inventories.
Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the expansion of sales and marketing activities and the ongoing investments in platform development. 45 Liquidity The current ratio measures a company’s ability to pay off its current liabilities (payable within one year) with its total current assets such as cash, accounts receivable, and inventories.
Unbilled receivables are classified as accounts receivable on the consolidated balance sheet. 45 Although we believe that our approach to estimates and judgments regarding revenue recognition is reasonable, actual results could differ and we may be exposed to increases or decreases in revenue that could be material.
Unbilled receivables are classified as accounts receivable on the consolidated balance sheet. Although we believe that our approach to estimates and judgments regarding revenue recognition is reasonable, actual results could differ and we may be exposed to increases or decreases in revenue that could be material.
Combined with our software and solutions, our services provide clients with an end-to-end partnership for their technology innovation. 41 Our Business Model The majority of our revenue is generated by our full-time employees/consultants who provide software services and Managed Services and Support to our clients in the Healthcare and Life Sciences industry.
Combined with our software and solutions, our services provide clients with an end-to-end partnership for their technology innovation. Our Business Model The majority of our revenue is generated by our full-time employees/consultants who provide software services and Managed Services and Support to our clients in the Healthcare and Life Sciences industry.
While we may grow our headcount overtime to capitalize on our market opportunities, we believe our increased investment in automation, electronic health record integration capabilities, and economies of scale in our operating model, will position us to grow our platform solutions revenue at a greater rate than our cost of revenue. 44 Operating Expenses Research and Development Research and development expense (majorly our investment in innovation) consists primarily of employee-related expenses, including salaries, benefits, incentives, employment taxes, severance, and equity compensation costs for our software developers, engineers, analysts, project managers, and other employees engaged in the development and enhancement of our cloud-based platform applications.
While we may grow our headcount overtime to capitalize on our market opportunities, we believe our increased investment in automation, electronic health record integration capabilities, and economies of scale in our operating model, will position us to grow our platform solutions revenue at a greater rate than our cost of revenue. 38 Operating Expenses Research and development Research and development expense (majorly our investment in innovation) consists primarily of employee-related expenses, including salaries, benefits, incentives, employment taxes, severance, and equity compensation costs for our software developers, engineers, analysts, project managers, and other employees engaged in the development and enhancement of our cloud-based platform applications.
Components of Results of Operations Revenues We provide our services and manage our business under these operating segments: • Software Services • Managed Services and Support • Platform Services 43 Software Services The Company earns revenue primarily through the sale of software services that is generated from providing strategic advisory, implementation, and development services.
Components of Results of Operations Revenues We provide our services and manage our business under these operating segments: ● Software Services ● Managed Services and Support ● Platform Services 37 Software Services The Company earns revenue primarily through the sale of software services that is generated from providing strategic advisory, implementation, and development services.
Off-Balance Sheet Arrangements We do not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes as defined by Item 303(a)(4) of SEC Regulation S-K, as of December 31, 2022. 53
Off-Balance Sheet Arrangements We do not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes as defined by Item 303(a)(4) of SEC Regulation S-K, as of December 31, 2023. 46
We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. Operating Activities Net cash used in operating activities was $(2.6) million for the twelve months ended December 31, 2022, and net cash used from operations was $(7.1) million for the twelve months ended December 31, 2021.
We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms. Operating Activities Net cash used in operating activities was $1.6 million for the twelve months ended December 31, 2023, and net cash used in operations was $2.6 million for the twelve months ended December 31, 2022.
Software Services revenue increased by $1 million or 8% to $14.5 million for the twelve months ended December 31, 2022, as compared to $13.5 million for the twelve months ended December 31, 2021.
Software Services revenue increased by $1 million or 8% to $15.6 million for the twelve months ended December 31, 2023, as compared to $14.5 million for the twelve months ended December 31, 2022.
Investing Activities Net cash used in investing activities was $3.3 million for the twelve months ended December 31, 2022, and $7.6 million for the twelve months ended December 31, 2021. Financing Activities Cash flows from financing activities was $5.5 million for the twelve months ended December 31, 2022, and $15.1 million for the twelve months ended December 31, 2021.
Investing Activities Net cash used in investing activities was $0.01 million for the twelve months ended December 31, 2023, and $3.3 million for the twelve months ended December 31, 2022. Financing Activities Cash flows from financing activities was $1.5 million for the twelve months ended December 31, 2023, and $5.5 million for the twelve months ended December 31, 2022.
We believe that our cash and cash equivalents as of December 31, 2022, and the future operating cash flows of the entity will provide adequate resources to fund ongoing cash requirements for the next twelve months.
Sources of Liquidity As of December 31, 2023, our principal sources of liquidity consisted of cash and cash equivalents of $1.2 million. We believe that our cash and cash equivalents as of December 31, 2023, and the future operating cash flows of the entity will provide adequate resources to fund ongoing cash requirements for the next twelve months.
Operating loss from Platform Services increased by $1.4 million, or 48 % to $(4.5) million for the twelve months ended December 31, 2022, as compared to $(3.1) million for the twelve months ended December 31, 2021 Liquidity and Capital Resources 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 As of December 31, 2022 As of December 31, 2021 (In thousands) Cash flows used in operating activities $ (2,600 ) $ (7,112 ) Cash flows used in investing activities (3,319 ) (7,629 ) Cash flows provided by financing activities 5,490 15,108 Net increase in cash and cash equivalents $ (429 ) $ 367 As of December 31, 2022, our principal sources of liquidity for working capital purposes were cash, cash equivalents and short-term investments totaling $1.3 million.
Operating loss from Platform Services decreased by $3.8 million, or 86 % to $0.7 million for the twelve months ended December 31, 2023, as compared to $4.5 million for the twelve months ended December 31, 2022 Liquidity and Capital Resources As of As of December 31, December 31, 2023 2022 (In thousands) Cash and cash equivalents $ 1,234 $ 1,341 Total cash, cash equivalents and short-term investments $ 1,234 $ 1,341 As of As of December 31, December 31, 2023 2022 (In thousands) Cash flows used in operating activities $ (1,612 ) $ (2,600 ) Cash flows used in investing activities (13 ) (3,319 ) Cash flows provided by financing activities 1,518 5,490 Net increase (decrease) in cash and cash equivalents $ (107 ) $ (429 ) As of December 31, 2023, our principal sources of liquidity for working capital purposes were cash, cash equivalents and short-term investments totaling $1.2 million.
The following table has the breakdown of our revenues for the twelve months ended December 31, 2022 and 2021 for each of our top 5 customers. Several of the top 5 customers in 2022 are not the same for 2021.
The following table has the breakdown of our revenues for the twelve months ended December 31, 2023 and 2022 for each of our top 5 customers.
The higher the ratio, the better the company's liquidity position. A good current ratio is between 1.2 to 2, which means that a business has 2 times more current assets than liabilities to covers its debts.
The higher the ratio, the better the company’s liquidity position. A good current ratio is between 1.2 to 2, which means that a business has 2 times more current assets than liabilities to covers its debts. The Company’s current ratio, as of December 31, 2023 is 0.7 compared to 1.3 as of December 31, 2022.
Revenue from Platform Services increased by $0.1 million, or 26% to $4.8 million for the twelve months ended December 31, 2022, as compared to $3.8 million for the twelve months ended December 31, 2021.
Revenue from Platform Services decreased by $3.2 million, or 66% to $1.6 million for the twelve months ended December 31, 2023, as compared to $4.8 million for the twelve months ended December 31, 2022.
Provision for Income Taxes Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Income tax $ 63 $ 24 $ 39 163 % Income tax increased by $0.04 million, or 163% to $0.06 million for the twelve months ended December 31, 2022, as compared to $0.02 million for the twelve months ended December 31, 2021, this represents state taxes.
Provision for income taxes Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Income tax $ 35 $ 63 $ (28 ) (44 )% Income tax decreased by $0.03 million, or 44% to $0.04 million for the twelve months ended December 31, 2023, as compared to $0.06 million for the twelve months ended December 31, 2022, this represents state taxes.
Operating profit from Managed Services and Support decreased by $0.4 million, or 9% to $4.4 million for the twelve months ended December 31, 2022, as compared to $4.9 million for the twelve months ended December 31, 2021.
Operating profit from Managed Services and Support decreased by $1.7 million, or 39% to $2.8 million for the twelve months ended December 31, 2023, as compared to $4.5 million for the twelve months ended December 31, 2022.
Managed Services and Support revenue increased by $0.1 million, or 4% to $3.2 million for the twelve months ended December 31, 2022, as compared to $3.1 million for the twelve months ended December 31, 2021. 48 Cost of Revenue (exclusive of depreciation /amortization) Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Cost of Revenue (exclusive of depreciation /amortization) $ 34,591 $ 24,748 $ 9,843 40 % Cost of revenue, excluding depreciation and amortization increased by $9.8 million, or 40%, to $34.6 million for the twelve months ended December 31, 2022, as compared to $24.8 million for the twelve months ended December 31, 2021.
Managed Services and Support revenue decreased by $1.5 million, or 47% to $1.7 million for the twelve months ended December 31, 2023, as compared to $3.3 million for the twelve months ended December 31, 2022. 41 Cost of revenue (exclusive of depreciation /amortization) Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Cost of revenue (exclusive of depreciation /amortization) $ 26,426 $ 34,591 $ (8,165 ) (24 )% Cost of revenue, excluding depreciation and amortization decreased by $8.2 million, or 24%, to $26.4 million for the twelve months ended December 31, 2023, as compared to $34.6 million for the twelve months ended December 31, 2022.
The increase in cost of Software Services is due to increase in Software Services revenue. Cost of Revenue from Managed Services and Support decreased by $3.4 million, or 24% to $10.7 million for the twelve months ended December 31, 2022, as compared to $14.1 million for the twelve months ended December 31, 2021.
Cost of Revenue from Managed Services and Support decreased by $3.0 million, or 28% to $7.7 million for the twelve months ended December 31, 2023, as compared to $10.7 million for the twelve months ended December 31, 2022.
During the twelve months ended December 31, 2022, we generated revenues of approximately $45.9 million compared to revenue of $35.2 million for the twelve months ended December 31, 2021, which represents an increase of $10.6 million or 30% compared to the previous year.
During the twelve months ended December 31, 2023, we generated revenues of approximately $33.2 million compared to revenue of $45.9 million for the twelve months ended December 31, 2022, which represents a decrease of $12.7 million or 28% compared to the previous year.
Research and Development Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Research and Development $ 5,953 $ 5,257 $ 696 13 % Research and Development expenses increased by $0.7 million, or 13% to $5.9 million for the twelve months ended December 31, 2022, as compared to $5.2 million for the twelve months ended December 31, 2021.
Research and development Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Research and development $ 799 $ 5,954 $ (5,155 ) (87 )% Research and development expenses decreased by $5.2 million, or 87% to $0.8 million for the twelve months ended December 31, 2023, as compared to $5.9. million for the twelve months ended December 31, 2022.
As of December 31, 2022, we had a total of 51 full time employees, 225 sub-contractors, including 122 certified cloud engineers, 107 Epic Certified EHR experts and 17 MEDITECH Certified EHR experts.
As of December 31, 2023, we had a total of 33 full time employees, 164 sub-contractors, including 95 certified cloud engineers, 66 Epic Certified EHR experts and 21 MEDITECH Certified EHR experts.
We do not yet have enough information about our competition or customer acceptance of our SaaS offerings to determine whether or not recurring subscription revenue will have a material impact on our revenue growth.
We do not yet have enough information about our competition or customer acceptance of our SaaS offerings to determine whether or not recurring subscription revenue will have a material impact on our revenue growth. 36 Key Factors of Success We believe that our future growth, success, and performance are dependent on many factors, including those mentioned below.
We expect our depreciation and amortization expense to increase as we expand our business organically and through acquisitions. Other Income (Expense), Net Other income (expense), net consists of finance cost and gains or losses on foreign currency. Deferred revenues Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the revenue recognition criteria are met.
We expect our depreciation and amortization expense to increase as we expand our business organically and through acquisitions. Other income (expense), Net Other income (expense), net consists of finance cost and gains or losses on foreign currency.
A debt-to-equity ratio below 1 means that a company has lower exposure to debts than equity. The Company does not have inventory and hence the quick ratio is the same as current ratio. Sources of Liquidity As of December 31, 2022, our principal sources of liquidity consisted of cash and cash equivalents of $1.3 million.
The Company’s current debt equity ratio, as on December 31, 2023 is 9.8, compared to 0.2 as on December 31, 2022. A debt-to-equity ratio below 1 means that a company has lower exposure to debts than equity. The Company does not have inventory and hence the quick ratio is the same as current ratio.
Top Five Customers’ Revenue for Twelve months ended December 31, 2022 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 % Top Five Customers’ Revenue for Twelve months ended December 31, 2021 Customer Amount(In thousands) % of Revenue Customer 1 $ 12,678 36 % Customer 2 3,214 9 % Customer 3 2,907 8 % Customer 4 2,675 8 % Customer 5 $ 1,799 5 % The following table provides details of Customer 1 revenue by operating segments: 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 % Revenue from Customer 1 increased by $1 million, or 8% to $17.7 million for the twelve months ended December 31, 2022, as compared to $16.6 million for the twelve months ended December 31, 2021.
Top Five Customers’ Revenue for Twelve months ended December 31, 2023 Customer Amount (In thousands) % of Revenue Customer 1 $ 17,292 52 % Customer 2 3,114 9 % Customer 3 2,217 7 % Customer 4 1,751 5 % Customer 5 $ 1,359 4 % Top Five Customers’ Revenue for Twelve months ended December 31, 2022 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 % The following table provides details of Customer 1 revenue by operating segments: Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Software services $ 15,569 $ 14,519 $ 1,092 8 % Managed services and support 1,723 3,267 (1,544 ) (47 )% Platform services — — — — Total Revenue $ 17,292 $ 17,744 $ (452 ) (3 )% Revenue from Customer 1 decreased by $0.5 million, or 3% to $17.3 million for the twelve months ended December 31, 2023, as compared to $17.8 million for the twelve months ended December 31, 2022.
Unbilled accounts receivable Unbilled accounts receivable is a contract asset related to the delivery of our professional services for which the related billings will occur in a future period.
Deferred revenues Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the revenue recognition criteria are met. 39 Unbilled accounts receivable Unbilled accounts receivable is a contract asset related to the delivery of our professional services for which the related billings will occur in a future period.
Revenue, Cost of Revenue and Operating Profit by Operating Segment Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Software Services $ 25,883 $ 12,430 $ 13,453 108 % Managed Services and Support 15,178 19,003 (3,825 ) (20 )% Platform Services 4,825 3,837 988 75 % Revenue $ 45,886 $ 35,270 $ 10,616 30 % We currently provide our services and manage our business under three operating segments which are Software Services, Managed Services and Support and Platform Services. 50 Revenue from Software Services increased by $13.5 million, or 108% to $25.8 million for the twelve months ended December 31, 2022, as compared to $12.4 million for the twelve months ended December 31, 2021.
Revenue, Cost of Revenue and Operating Profit by Operating Segment Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Software Services $ 21,132 $ 25,883 $ (4,751 ) (18 )% Managed Services and Support 10,452 15,178 (4,726 ) (31 )% Platform Services 1,619 4,825 (3,206 ) (66 )% Revenue $ 33,203 $ 45,886 $ (12,683 ) (28 )% We currently provide our services and manage our business under three operating segments which are Software Services, Managed Services and Support and Platform Services. 43 Revenue from Software Services decreased by $4.8 million, or 18% to $21.1 million for the twelve months ended December 31, 2023, as compared to $25.9 million for the twelve months ended December 31, 2022.
Sales and Marketing Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Sales and Marketing $ 6,650 $ 4,761 $ 1,889 40 % Sales and Marketing expenses increased by $1.9 million, or 40% to $6.7 million for the twelve months ended December 31, 2022, as compared to $4.8 million for the twelve months ended December 31, 2021, this is primarily due to additional investments in Sales and Marketing.
Sales and marketing Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Sales and marketing $ 4,670 $ 6,808 $ (2,138 ) (31 )% Sales and marketing expenses decreased by $2.1 million, or 31% to $4.7 million for the twelve months ended December 31, 2023, as compared to $6.8 million for the twelve months ended December 31, 2022.
Revenue from Managed Services and Support decreased by $3.8 million, or 20% to $15.2 million for the twelve months ended December 31, 2022, as compared to $19 million for the twelve months ended December 31, 2021. The revenue from Managed Services and Support revenue has decreased on account of the decrease in revenue from hosting services.
Revenue from Managed Services and Support decreased by $4.7 million, or 31% to $10.5 million for the twelve months ended December 31, 2023, as compared to $15.2 million for the twelve months ended December 31, 2022.
Cost of Revenue Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Software Services $ 20,533 $ 9,031 $ 11,502 127 % Managed Services and Support 10,697 14,094 (3,397 ) (24 )% Platform Services 3,361 1,623 1,738 107 % Cost of Revenue $ 34,591 $ 24,748 $ 9,843 40 % Cost of Revenue from Software Services increased by $11.5 million, or 127% to $20.5 million for the twelve months ended December 31, 2022, as compared to $9 million for the twelve months ended December 31, 2021.
Cost of Revenue Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Software Services $ 17,260 $ 20,533 $ (3,273 ) (16 )% Managed Services and Support 7,696 10,697 (3,001 ) (28 )% Platform Services 1,470 3,361 (1,891 ) (56 )% Cost of Revenue $ 26,426 $ 34,591 $ (8,165 ) (24 )% Cost of Revenue from Software Services decreased by $3.3 million, or 16% to $17.3 million for the twelve months ended December 31, 2023, as compared to $20.5 million for the twelve months ended December 31, 2022.
Interest expense Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Interest expense $ 212 $ 567 $ (355) (63) % Interest expenses decreased by $0.4 million, or 63% to $0.2 million for the twelve months ended December 31, 2022, as compared to $0.6 million for the twelve months ended December 31, 2021, this is primarily due to interest on convertible note in 2021 this was subsequently converted into equity at the time of IPO.
Interest expense Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Interest expense $ 968 $ 212 $ 756 357 % Interest expenses increased by $0.8 million, or 357% to $1.0 million for the twelve months ended December 31, 2023, as compared to $0.2 million for the twelve months ended December 31, 2022, this is primarily due to short term funding.
Cost of Revenue from Platform Services increased by $1.7 million, or 107% to $3.3 million for the twelve months ended December 31, 2022, as compared to $1.6 million for the twelve months ended December 31, 2021. 51 Segment operating profits by reportable segment were as follows: 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 )% Operating loss from Software Services increased by $3.2 million, or 178% to $(1.4) million for the twelve months ended December 31, 2022, as compared to $1.8 million for the twelve months ended December 31, 2021.
Cost of Revenue from Platform Services decreased by $1.9 million, or 56% to $1.5 million for the twelve months ended December 31, 2023, as compared to $3.4 million for the twelve months ended December 31, 2022. 44 Segment operating profits by reportable segment were as follows: Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Software Services $ (2,507 ) $ (1,381 ) $ (1,126 ) (82 )% Managed Services and Support 2,755 4,481 (1,726 ) (39 )% Platform Services (649 ) (4,489 ) 3,840 86 % Total segment operating profit (loss) (401 ) (1,389 ) 988 (71 )% Less: unallocated costs 10,947 9,027 1,920 21 % Income from operations (11,348 ) (10,416 ) (932 ) (9 )% Other Income 12 1,081 (1,069 ) (99 )% Interest expense 968 212 (757 ) (359 )% Net (loss) before income tax $ (12,304 ) $ (9,547 ) $ (2,757 ) (29 )% Operating loss from Software Services increased by $1.1 million, or 82% to $2.5 million for the twelve months ended December 31, 2023, as compared to $1.4 million for the twelve months ended December 31, 2022.
General and Administrative Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % General and Administrative $ 5,734 $ 4,440 $ 1,293 29 % General and Administrative expenses increased by $1.3 million, or 29 % to $5.7 million for the twelve months ended December 31, 2022, as compared to $4.4 million for the twelve months ended December 31, 2021, this is primarily due to increase in general liability insurance cost on account of becoming a public company. 49 Depreciation and amortization Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Depreciation and amortization $ 3,374 $ 1,422 $ 1,952 137 % Depreciation and amortization expenses increased by $1.9 million, or 137% to $3.3 million for the twelve months ended December 31, 2022, as compared to $1.4 million for the twelve months ended December 31, 2021, this is mainly on account amortization from acquisition of Devcool Inc.
General and administrative Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % General and administrative $ 5,424 $ 5,575 $ (151 ) (3 )% General and administrative expenses decreased by $0.2 million, or 3 % to $5.4 million for the twelve months ended December 31, 2023, as compared to $5.6 million for the twelve months ended December 31, 2022. 42 Depreciation and amortization Twelve Months Ended December 31, (In thousands) Changes 2023 2022 Amount % Depreciation and amortization $ 7,232 $ 3,374 $ 3,859 114 % Depreciation and amortization expenses increased by $3.9 million, or 114% to $7.2 million for the twelve months ended December 31, 2023, as compared to $3.4 million for the twelve months ended December 31, 2022.
We expect this trend to continue and have a net positive impact on overall results of the operations. 47 Our top 5 customers accounted for 72% of revenue during the twelve months ended December 31, 2022 and 66% during the twelve months ended December 31, 2021, respectively.
Revenue from Software Services, Managed Services and Support and Platform Services revenue have decreased in the current year. Our top 5 customers accounted for 77% of revenue during the twelve months ended December 31, 2023 and 72% during the twelve months ended December 31, 2022, respectively.
Removed
Impacts of the COVID-19 Pandemic The COVID-19 pandemic has had, and is likely to continue to have, a severe and unprecedented impact on the world and on our business.
Added
During the year 2023, the company raised an aggregate gross amount of $5.2 million through Senior Secured 15% Original Issue Discount Convertible Promissory Note. The first tranche of $2 million was received during the period ended December 31, 2023.
Removed
Measures to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face events, “shelter in place” health orders and travel restrictions have had a significant effect on certain of our business operations.
Removed
In response to these business disruptions, which include a transition to remote working, reducing certain of our discretionary expenditures and eliminating non-essential travel particularly with respect to COVID-19 impacted operation and complying with health and safety guidelines to protect employees, contractors, and customers.
Removed
The Company reported sequential growth in revenue in 2022; There has been no major impact on account of COVID-19 during the quarter ended December 31, 2022. The Company has obtained necessary funding to manage our short-term working capital requirements.
Removed
The Company has not altered any credit terms with its customers and the realization from the customers have generally been on time. The Company has been able to service its debt and other obligations on time.
Removed
There has been no material impact on the operational liquidity and capital resources on account of COVID-19. 42 Key Factors of Success We believe that our future growth, success, and performance are dependent on many factors, including those mentioned below.
Removed
Revenue from Software Services increased on acquisition of Devcool Inc. The Software Services are typically short-term engagements to provide software consulting and development services, which do not require continual third-party maintenance.
Removed
Managed Services and Support such as IT cloud hosting and support call for services on a continuous basis and allow for strengthening of client relationships which can lead to additional engagements from the client.
Removed
Therefore, the Company is determined to focus on increasing the Managed Services & Support and Platform Services revenue to enhance our relationship and long-term engagement with our customers. We have made additional investments in Sales & Marketing and Research & Development to grow Managed Services & Support and Platform Services revenue.
Removed
The increase was mainly due to an increase in operational expenses related to delivery of software services.
Removed
The increase was mainly due to engineering and other technical functions supporting our continued investment in our platforms.
Removed
The interest expenses during the current year represents interest on factoring facility availed during the current year.
Removed
Income from Software services increased on account of the acquisition of Devcool Inc. The total number of customers serviced during the twelve months ended December 31, 2022, increased to 53 from 48 for the twelve months ended December 31, 2021.
Removed
The decrease is on account of the decrease in cloud hosting revenue.
Removed
The Company’s current ratio, based on the twelve months ended December 31, 2022 financial statement is 1.3, compared to 1.9 for the financial year ended December 31, 2021. 52 The Company’s current debt equity ratio, based on the twelve months ended December 31, 2022 financial statement is 0.20, compared to 0.21 for the financial year ended December 31, 2021.
Removed
During the year 2022, we raised an aggregate gross amount of $6.5 million by private placement.

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