Financial Performance - Net revenue for the three months ended June 30, 2024, was $2,984 thousand, compared to $8,526 thousand for the six months ended June 30, 2024, representing a decrease of approximately 65% year-over-year[12]. - The cost of revenue for the three months ended June 30, 2024, was $2,086 thousand, while for the six months it was $6,579 thousand, indicating a significant increase in costs[12]. - Total operating expenses for the three months ended June 30, 2024, were $2,276 thousand, down from $3,542 thousand for the six months, reflecting a reduction of about 36%[12]. - The net loss for the three months ended June 30, 2024, was $1,510 thousand, compared to a net loss of $1,786 thousand for the six months, showing a slight improvement[12]. - The company reported a loss from operations of $1,378 thousand for the three months ended June 30, 2024, compared to a loss of $1,595 thousand for the six months, indicating a narrowing of losses[12]. - Net income for June 2024 was a loss of $3,372,000, an improvement from a loss of $5,064,000 in 2023, indicating a reduction in losses[15]. - The weighted average shares outstanding used in calculating net loss per common share for the three months ended June 30, 2024, was 5,616,781 shares, resulting in a net loss per share of $(0.28)[12]. - Basic and diluted earnings per share (EPS) for the quarter ended June 30, 2024, were $(0.28), an improvement from $(0.42) in the prior year[118]. Revenue Breakdown - Total revenue for the three months ended June 30, 2024, was $2,984,000, a decrease of 65% compared to $8,526,000 in the same period of 2023[34]. - Software Services revenue for the six months ended June 30, 2024, was $2,235,000, down 81% from $11,643,000 in the same period of 2023[34]. - Managed Services and Support revenue for the three months ended June 30, 2024, was $2,253,000, a decrease of 21% from $2,865,000 in the same period of 2023[34]. - Revenue from the top five customers accounted for approximately 68% of total revenue for the quarter ended June 30, 2024, down from 81% in the same quarter of 2023[73]. - The top customer contributed 31% of revenue for the three months ended June 30, 2024, amounting to $925,000, down from 53% and $4,519,000 in the same period of 2023[36][38]. Cash Flow and Liquidity - Cash flows from operating activities showed a net cash used of $985,000 in June 2024, compared to $2,750,000 in the same period of 2023, reflecting improved cash management[15]. - The company reported cash and cash equivalents at the end of the period of $29,000, down from $132,000 in 2023, indicating a significant decrease in liquidity[15]. - The total short-term borrowing as of June 30, 2024, is $1,726, a decrease from $3,429 as of December 31, 2023[98]. - The company has a substantial level of indebtedness, which poses risks to its financial stability and ability to repay debt[6]. Investments and Future Prospects - Future growth prospects depend on the company's ability to attract and retain customers, develop new solutions, and manage competition effectively[6]. - The company is focused on maintaining high customer retention rates and enhancing its brand presence in the market[6]. - The parent company, SecureKloud Technologies, Inc., is willing to invest an additional $5 million in equity to support the company's working capital and investment requirements[25]. - The company anticipates gross proceeds of up to $4,420,000 from the issuance of senior secured convertible promissory notes, with an initial tranche of $2,000,000 already issued[24]. - The company has sold $956,000 of shares through its ATM Sales Agreement and plans to utilize an additional capacity of $1,444,000 in the near future[23]. Operational Efficiency - Research and development expenses for the three months ended June 30, 2024, were $207 thousand, while sales and marketing expenses were $631 thousand, highlighting ongoing investment in these areas[12]. - The company is focused on digital transformation in the healthcare sector, leveraging technologies such as AI, ML, and IoT to improve operational efficiencies[18]. - The impact of COVID-19 has not materially affected the company's financial condition, but it has accelerated the adoption of digital solutions in the healthcare sector[20]. Acquisitions and Goodwill - The company has consolidated financials from its acquisition of Devcool, Inc., which enhances its capabilities in solving complex technology problems in the healthcare industry[19]. - The aggregate purchase price for the acquisition of Devcool Inc was $7,773, including $4,500 in cash and $700 in equity[85]. - The Company recorded $1,289 of goodwill from the acquisition of Devcool, which is not tax deductible[88]. - The Company fully impaired goodwill in Q4 FY 2023 due to the loss of a major customer[59]. Shareholder Information - The company has issued warrants convertible into common stock at a price of $7.99 per share, with none exercised as of June 30, 2024[92]. - As of June 30, 2024, the company has 967,256 outstanding warrants with a weighted average exercise price of $7.99 and an aggregate intrinsic value of $3,785[95]. - The company reported a warrant liability of $1,333 at fair value as of June 30, 2024, with the estimated fair value of common stock warrants at $3.91[97]. - The company has not declared or paid any dividends and does not plan to do so in the foreseeable future[109]. Tax and Compliance - The company's effective tax rate is 0% for the quarter ended June 30, 2024, consistent with the previous year[102]. - The company has no uncertain tax positions requiring recognition as of the date of these financial statements[100]. - The company is currently evaluating the impact of new accounting pronouncements on its consolidated financial statements[105]. Internal Controls and Risk Management - There were no changes to internal control over financial reporting during the three months ended June 30, 2024, that materially affected the company's controls[178]. - The company did not utilize derivative financial instruments to manage interest rate risks, indicating a conservative approach to market risk[177].
Healthcare Triangle(HCTI) - 2024 Q2 - Quarterly Report