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 June 30, 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, $0.0001 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 August 09, 2023, 4,277,863 shares of the registrant’s common stock, $0.0001 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	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	42
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	44
Signatures	45

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 confirm 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


	June 30,			December 31,
	2023			2022
	(Unaudited)			(Audited)
	(In thousands)
Assets
Current assets
Cash and cash equivalents	$	132		$	1,341
Accounts receivable		4,476			5,592
Other current assets		816			816
Total current assets		5,424			7,749
Property and equipment, net		57			80
Intangible assets, net		8,921			10,570
Goodwill		1,289			1,289
Due from affiliates		1,377			1,075
Total assets	$	16,068		$	20,763

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	926		$	1,481
Warrant Liability		55			55
Short term borrowing		3,531			2,412
Other current liabilities		1,278			2,200
Total current liabilities		5,790			6,148

Long-term liabilities
Contingent Consideration		2,227			2,227
Total current and long-term liabilities		8,017			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 $0.0001; 10,000,000 authorized 4,277,863 and 4,170,953 shares issued and outstanding as of June 30, 2023 and December 31, 2022 respectively		—			0
Additional paid-in capital		25,683			24,956
Retained earnings		(17,632	)		(12,568	)
Total stockholders' equity		8,051			12,388
Total liabilities and stockholders' equity	$	16,068		$	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 June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	(In thousands)						(In thousands)
Net revenue	$	8,526		$	11,588		$	18,364		$	22,644
Cost of revenue (exclusive of depreciation and amortization shown separately below)		6,579			8,429			14,824			16,591
Operating expenses
Research and development		102			646			641			1,712
Sales and Marketing		1,026			1,651			2,787			3,391
General and Administrative		1,612			1,451			3,240			2,802
Depreciation and amortization		802			844			1,676			1,555
Total operating expenses		3,542			4,592			8,344			9,460
Loss from operation		(1,595	)		(1,433	)		(4,804	)		(3,407	)
Other income		—			1,087			12			1,087
Interest expense		(186	)		(58	)		(248	)		(74	)
Loss before income tax		(1,781	)		(404	)		(5,040	)		(2,394	)
Provision for Income tax		(5	)		(1	)		(24	)		(22	)
Net loss	$	(1,786	)	$	(405	)	$	(5,064	)	$	(2,416	)
Net loss per common share—basic and diluted		(0.42	)		(0.11	)		(1.20	)		(0.68	)
Weighted average shares outstanding used in per common share computations:
Basic and diluted		4,228,379			3,548,429			4,228,379			3,548,429

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)
Three Months Ended June 30, 2023 and 2022
Balance at March 31, 2023		6,000	$	1		4,185,940	$	0	$	25,149	$	(15,846	)	$	9,303
Net Loss											$	(1,786	)	$	(1,786	)
Preferential Issue						76,923	$	0	$	499				$	499
Issue of stock option (ISO/NSO)									$	35				$	35
Shares issued for services						15,000	$	0						$	0
Balance at June 30, 2023		6,000	$	1		4,277,863	$	0	$	25,683	$	(17,632)		$	8,051

Six Months Ended June 30, 2023 and 2022
Balance at December 31, 2022		6,000	$	1		4,170,940	$	0	$	24,956	$	(12,568)		$	12,388
Issue of Options (ISO/NSO)										177				$	177
Preferential Issue						76,923	$	0	$	499				$	499
Shares issued for services						30,000		0	$	51				$	51
Net loss		—		—		—		—		—	$	(5,064)		$	(5,064	)
Balance at June 30, 2023		6,000	$	1		4,277,863		0		25,683		(17,632)			8,051

Three Months Ended June 30, 2022
Balance at March 31, 2022		6,000	$	1		3,553,667	$	0	$	19,174	$	(4,675)		$	14,499
Stock Compensation Expenses										12					12
Net Loss												(405)			(405)
Balance at June 30, 2022		6,000	$	1		3,553,667	$	0	$	19,186	$	(5,080)		$	14,106

Six Months Ended June 30, 2022
Balance at December 31, 2021		6,000	$	1		3,526,083	$	0	$	18,799	$	(2,664)		$	16,135
Stock Compensation Expenses										27				$	27
Cash collected on common stock options						2,614	$	0		10				$	10
Shares issued for services						24,970	$	0		350				$	350
Net loss												(2,416)		$	(2,416)
Balance at June 30, 2022		6,000	$	1		3,553,667	$	0	$	19,186	$	(5,080)		$	14,106

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

HEALTHCARE TRIANGLE, INC.

Condensed Consolidated Statements of Cash Flows


	Six Months Ended June 30,
	2023			2022
	(In thousands)
Cash flows from operating activities
Net income (loss)	$	(5,064	)	$	(2,416	)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		1,676			1,555
Common stock issued for services		51			350
Income from PPP		—			(1,068	)
Stock compensation expenses		174			32
Changes in operating assets and liabilities:
(Increase)/ decrease in:
Accounts receivable		1,116			3,125
Other current assets		(0	)		(306	)
Due from related party		698			(534	)
Increase/ (decrease) in:
Accounts payable and accrued expenses		(555	)		(603	)
Other current liabilities		(922	)		564
Payment of lease liability		—			(97	)
Net cash provided by/ (used in) operating activities		(2,826	)		602
Cash flows from investing activities
(Purchase)/sale of property and equipment		(2	)		(22	)
Increase in intangible assets		—			(2,000	)
Net cash provided by/ (used in) investing activities		(2	)		(2022	)
Cash flows from financing activities
Employee stock options exercised		—			10
Increase/(decrease) in short term borrowing		1,119			1,003
Payment of lease liabilities		—			—
Increase in additional paid-up capital		500			—
Net cash provided by/ (used in) financing activities		1,619			1,013

Net increase (decrease) in cash and cash equivalents		(1,209	)		(407	)
Cash and cash equivalents
Cash and cash equivalents at the beginning of the period	$	1,341		$	1,770
Cash and cash equivalents at the end of the period	$	132		$	1,363

Supplementary disclosure of cash flows information
Interest		248			74
Income taxes		24			22

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

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

1) Organization and Description of Business

Healthcare Triangle Inc. (“the Company”) was incorporated under the laws of the State of Nevada on October 29, 2019, and then converted into a Delaware corporation on April 24, 2020, to provide IT and data services to the Healthcare and Life Sciences (‘HCLS”) industry. On January 1, 2020, the Company acquired the Life Sciences Business of SecureKloud Technologies Inc. (“Parent”) and on May 8, 2020, the Company acquired Cornerstone Advisors Group LLC (Healthcare Business) from its Parent.

Company reinforces healthcare progress through breakthrough technology and extensive industry know-how. Company support healthcare providers and payors, hospitals and pharma/life sciences organizations in their effort to improve health outcomes by enabling the adoption of new technologies, data enlightenment, business agility and accelerate responding to immediate business needs and competitive threats. The highly regulated HCLS industry turn to Company for expertise in digital transformation on the cloud, security and compliance, develops, data lifecycle management, healthcare interoperability, clinical and business performance optimization.

Company concentrates on accelerating value to the three healthcare sectors:

Pharmaceutical companies, which require improved efficiencies in the clinical trial process. Company modernizes their IT infrastructure to advance the clinical trial process to drug discovery and delivery.

Hospitals and health systems, which face interoperability challenges as mergers, acquisitions and partnerships drive increasing need for integrated healthcare infrastructures. Company's health IT expertise optimizes providers' enterprise digital structure needs connecting disparate systems and applying analytics capabilities.

Life sciences, payers and all healthcare organizations must protect and secure personal health information (PHI), a regulatory compliance mandate that Company addresses and manages for its customers.

As an organization with the deep-rooted cloud expertise, Company’s technology significantly relies on Big Data, Analytics, DevOps, Security/Compliance, Identity Access Management (IAM), Machine Learning (ML), Artificial Intelligence (AI), Internet of Things (IoT) and Blockchain.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Devcool Inc

Devcool Inc (“the Company”) was incorporated under the laws of the State of California on September 25, 2016. The Company solves complex technology problems and delivers innovation to healthcare industry. The Company has successfully implemented projects for top Healthcare insurance companies and hospitals across United States of America. On December 10, 2021, Healthcare Triangle, Inc (the “Company”) entered into a Share Purchase Agreement (the "Share Purchase Agreement") with Devcool, Inc., a California corporation ("Devcool"), Go To Assistance Inc., a California corporation ("Seller"), and Mr. Sandeep Deokule, current Chief Executive Officer of Devcool (“SD”). Pursuant to the Share Purchase Agreement, the Company will acquire 5,000,000 shares of Devcool’s Class B Common Stock, par value $0.0001, which represents all of the issued and outstanding capital stock of Devcool (the “Acquisition”). The closing of the Acquisition occurred on December 10, 2021 (the “Closing Date”). The Company exercised control by virtue of taking over the operations from November 01, 2021 (effective date) and the financials have been consolidated from this date.

Impact of the COVID-19 Pandemic

COVID-19 has created uncertainty for our employees, members, and customers. We consider the impact of the pandemic on our business by evaluating the health of our operations, any changes to our revenue outlook, and the degree to which interest in Company’s solutions have evolved during these unprecedented times. We measure our performance through several key metrics; and as gauged these performance metrics, service levels have been high, and customer engagement and satisfaction have remained strong through these tough times. While the COVID-19 pandemic has not had a material adverse impact on our financial condition and results of operations to date, the future impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, impact on our marketing efforts, and any reduction in spending by our customers, all of which are uncertain and cannot be predicted. We have a diverse set of customers, while some have faced headwinds, others have experienced growth. 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 and our proprietary platforms and solutions addresses 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. 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 and our value proposition resonates with a broader audience of companies as they turn their focus to safely reopening their workplaces and managing the ongoing health and well-being of employees and their families.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

2) Summary of Significant Accounting Policies

Basis of consolidated financial statements

The accompanying condensed consolidated financial statements include the accounts of Healthcare Triangle and its wholly owned subsidiary. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying statements of operations include expenses for certain functions historically performed by the Parent company, including general corporate services, such as legal, accounting, treasury, information technology, human resources and administration. These expenses are based primarily on direct usage when identifiable, direct capital expenditures or other relevant allocations during the respective periods. We believe the assumptions underlying the accompanying condensed consolidated financial statements, including the assumptions regarding these expenses from this related party, are reasonable. Actual results may differ from these expenses, assumptions and estimates. The amounts recorded in the accompanying condensed consolidated financial statements are not necessarily indicative of the actual amount of such indirect expenses that would have been recorded had we been a separate independent entity.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements and the related footnote disclosures have been prepared by us in accordance with GAAP for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The year-end December 31, 2022 condensed consolidated balance sheet data included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly our financial position as of June 30, 2023, the results of operations, comprehensive income (loss), stockholders’ deficit, and cash flows for the three months ended June 30, 2023 and 2022. The results of operations for the three months ended June 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year. The information contained herein should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC. Management considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Accounting Policies

Use of Estimates

The preparation of financial statements is in conformity with GAAP which requires us to make estimates, judgments and assumptions that affect the financial statements and the notes thereto. These estimates are based on information available as of the date of the financial statements. On a regular basis, management evaluates these estimates and assumptions. Items subject to such estimates and assumptions include, but are not limited to:

•

the standalone selling price for each distinct performance obligation

•

the determination of the period of benefit for amortization of deferred costs.

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

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (i) December 21, 2026 (the last day of the fiscal year following the fifth anniversary of our IPO), (ii) the last day of the first fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day of the first fiscal year in which we are deemed to be a “large accelerated filer”, as defined in the rules under the Exchange Act, and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the “JOBS Act,” and any reference herein to “emerging growth company” has the meaning ascribed to it in the JOBS Act.

We have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report on Form 10-K and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholders may be different from the information you might receive from other public reporting companies in which you hold equity interests. In particular, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act) for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, so long as we remain an emerging growth company, we will not be subject to the same implementation timing of new or revised accounting standards as other public companies that are not emerging growth companies until these standards apply to private companies unless we elect to early adopt as permitted by the relevant guidance for private companies.

Segment Information

The management has chosen to organize the Company around differences in products and services and segregated the reporting segments as Software Services, Managed Services and Support, and Platform Services.

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company defines the term ‘chief operating decision maker’ to be the Chief Financial Officer. The Chief Financial Officer along with the management team reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, the Company has determined that it operates in three distinct reportable operating segments, and all required financial segments information can be found in the consolidated financial statements.

Expenses included in segment operating profit consist principally of direct selling, delivery costs and research and development expenses. Certain Sales and Marketing expenses, General and Administrative expenses, depreciation, and amortization are not allocated to individual segments in internal management reports used by the chief operating decision maker. Accordingly, such expenses are excluded from segment operating profit and are included below as “unallocated costs” and adjusted against our total income from operations. Additionally, management has determined that it is not practical to allocate identifiable assets by segment, since such assets are used interchangeably among the segments.

Schedule of operating segment

	Three months Ended June 30,				Changes
	(In thousands)
	2023		2022		Amount			%
Software Services	$	5,185	$	6,585	$	(1,400	)		(21	)%
Managed Services and Support		2,865		3,903		(1,038	)		(27	)%
Platform Services		476		1,100		(624	)		(57	)%
Revenue	$	8,526	$	11,588	$	(3,062	)		(26	)%

	Six months Ended June 30,				Changes
	(In thousands)
	2023		2022		Amount			%
Software Services	$	11,643	$	12,041	$	(398	)		(3)	%
Managed Services and Support		5,906		8,172		(2,266	)		(28)	%
Platform Services		815		2,431		(1,616	)		(66)	%
Revenue	$	18,364	$	22,644	$	(4,280	)		(19)	%

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Operating profit by Operating Segment

	Three months Ended June 30,						Changes
	(In thousands)
	2023			2022			Amount			%
Software Services	$	(643	)	$	(321	)	$	(322	)		(101	%)
Managed Services and Support		822			1,284			(462	)		(36	%)
Platform Services		(384	)		(212	)		296			140	%
Total segment operating (loss) profit		(263	)		751			(488	)		(65	%)
Less: unallocated costs		1,858			2,184			(326	)

SEC Form 10-Q filed by Healthcare Triangle Inc.