CARECLOUD(CCLDP) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents CareCloud, Inc.'s unaudited condensed consolidated financial statements and management's analysis for the reporting period Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents CareCloud, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and shareholders' equity | Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :---------------------- | :--------- | | Cash | 6,805 | 5,145 | 1,660 | 32.26% | | Accounts receivable - net | 13,887 | 12,774 | 1,113 | 8.71% | | Total current assets | 28,617 | 24,800 | 3,817 | 15.39% | | TOTAL ASSETS | 73,556 | 71,614 | 1,942 | 2.71% | | Total current liabilities | 16,949 | 19,580 | (2,631) | -13.44% | | Total liabilities | 19,379 | 21,840 | (2,461) | -11.27% | | Total shareholders' equity | 54,177 | 49,774 | 4,403 | 8.85% | Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | NET REVENUE | 27,632 | 25,962 | 1,670 | 6.43% | | Total operating expenses | 25,613 | 25,833 | (220) | -0.85% | | OPERATING INCOME | 2,019 | 129 | 1,890 | 1465.12% | | INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | 1,989 | (202) | 2,191 | -1084.65% | | NET INCOME (LOSS) | 1,948 | (241) | 2,189 | -908.30% | | Preferred stock dividend | 2,811 | 1,312 | 1,499 | 114.25% | | NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | (863) | (1,553) | 690 | -44.43% | | Net loss per common share: basic and diluted | (0.04) | (0.10) | 0.06 | -60.00% | Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the company's net income or loss and other comprehensive income or loss, showing total comprehensive income | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | | NET INCOME (LOSS) | 1,948 | (241) | 2,189 | | Foreign currency translation adjustment | (58) | 28 | (86) | | COMPREHENSIVE INCOME (LOSS) | 1,890 | (213) | 2,103 | Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in shareholders' equity, including net income, preferred stock conversions, and dividend declarations - Total shareholders' equity increased from $49,774 thousand at January 1, 2025, to $54,177 thousand at March 31, 2025, driven by net income and conversion of preferred stock[28] - The Company converted 3,541,701 shares of Series A Preferred Stock into 25,981,248 shares of common stock during the three months ended March 31, 2025, including accrued dividends[28] - Preferred stock dividends of $2,811 thousand were earned and declared for the three months ended March 31, 2025, compared to $1,312 thousand (restated) for the same period in 2024[28][29] Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | Net cash provided by operating activities | 5,113 | 4,066 | 1,047 | 25.75% | | Net cash used in investing activities | (1,510) | (1,868) | 358 | -19.16% | | Net cash used in financing activities | (1,932) | (1,374) | (558) | 40.61% | | NET INCREASE IN CASH | 1,660 | 807 | 853 | 105.70% | | CASH - End of the period | 6,805 | 4,138 | 2,667 | 64.45% | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1. ORGANIZATION AND BUSINESS This note describes CareCloud, Inc.'s core business as a healthcare technology provider and its operational structure - CareCloud, Inc. is a leading provider of technology-enabled services and solutions for healthcare revenue cycle management, offering proprietary cloud-based solutions to healthcare providers across the U.S.[36] - The company's portfolio includes technology-enabled business solutions (AI-driven RCM), cloud-based software (practice management, patient engagement), digital health services (value-based care, remote patient care), healthcare IT professional services & staffing, and medical practice management services[37] - CareCloud maintains corporate offices in New Jersey and offshore offices in Pakistan and Sri Lanka for client support[38] Note 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the basis of financial statement preparation and summarizes the significant accounting policies applied by the company - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial reporting and Regulation S-X, Rule 8-03, and include all necessary adjustments[39] - No changes to significant accounting policies occurred during the three months ended March 31, 2025, from the disclosures in the Annual Report on Form 10-K/A for 2024[41] - Recent accounting pronouncements, including ASU 2023-01 (Leases), ASU 2023-06 (Disclosure Improvements), ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), ASU 2024-02 (Codification Improvements), ASU 2024-03 and ASU 2025-01 (Expense Disaggregation Disclosures), are discussed, with most not expected to have a material impact on financial statements, primarily affecting disclosures[42][43][44][45][46][48][49][50] Note 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS This note provides a breakdown of the company's prepaid expenses and other current assets as of the reporting dates | Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :---------------------- | :------------------------------- | :------------------------------- | | Prepayments to vendors | 1,459 | 1,099 | | Prepaid credit card | 601 | - | | Prepaid insurance | 399 | 494 | | Prepaid commissions | 217 | 243 | | Other | 167 | 121 | | Total | 2,843 | 1,957 | Note 4. GOODWILL AND INTANGIBLE ASSETS-NET This note details the company's goodwill and net intangible assets, including changes due to amortization and acquisitions - Goodwill remained stable at $19,186 thousand for both March 31, 2025, and December 31, 2024, with approximately $90,000 allocated to the Medical Practice Management segment and the balance to Healthcare IT[52][53] | Intangible Asset Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------- | :------------------------------- | :------------------------------- | | Contracts and relationships acquired | 47,726 | 47,597 | | Capitalized software | 35,913 | 35,108 | | Non-compete agreements | 1,236 | 1,236 | | Other intangible assets | 8,417 | 8,417 | | Total intangible assets | 93,292 | 92,358 | | Less: Accumulated amortization | 76,415 | 73,660 | | Intangible assets - net | 16,877 | 18,698 | - Amortization expense for intangible assets decreased to $2.8 million for Q1 2025 from $3.4 million for Q1 2024, with a weighted-average amortization period of approximately two years[54] Note 5. NET LOSS PER COMMON SHARE This note presents the calculation of net loss per common share, including the impact of preferred stock dividends | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 (Restated) | | :-------------------------------------------------- | :-------------------------------- | :--------------------------------------- | | Net loss attributable to common shareholders ($ in thousands) | (863) | (1,553) | | Weighted-average common shares used to compute basic and diluted loss per share | 23,813,943 | 16,014,309 | | Net loss attributable to common shareholders per share - basic and diluted | (0.04) | (0.10) | - Net loss attributable to common shareholders improved from $(1,553) thousand in Q1 2024 to $(863) thousand in Q1 2025, reflecting a decrease in loss per share from $(0.10) to $(0.04)[56] - The dividend payable at March 31, 2025, was $1,299 thousand, representing two months of declared but unpaid dividends, compared to $5,438 thousand at December 31, 2024 (four months)[19][57] Note 6. ACCRUED EXPENSES AND DEBT This note details the company's accrued expenses and debt obligations, including its revolving line of credit | Category | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :---------------------- | :------------------------------- | :------------------------------- | | Accrued expenses | 3,271 | 3,528 | | Payable to managed practices | 1,385 | 1,116 | | Taxes and other | 346 | 307 | | Total | 5,002 | 4,951 | - The Company's revolving line of credit with SVB was reduced to $10 million in October 2024, with no borrowings outstanding as of March 31, 2025[60][61] - CareCloud was in compliance with all covenants of its SVB credit agreement as of March 31, 2025, and December 31, 2024[62] Note 7. LEASES This note provides information on the company's operating leases, including right-of-use assets, liabilities, and lease costs - The Company has operating leases for office and temporary living space, as well as office equipment, with ROU assets and liabilities recorded on the balance sheet[64] | Lease Metric | March 31, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Operating lease ROU assets, net | 3,097 | 3,133 | | Current operating lease liabilities | 1,355 | 1,287 | | Non-current operating lease liabilities | 1,776 | 1,847 | | Total operating lease liabilities | 3,131 | 3,134 | | Weighted average remaining lease term (years) | 5.0 | 5.0 | | Weighted average discount rate | 13.8% | 14.2% | | Lease Expense Category | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :--------------------- | :--------------------------------------- | :--------------------------------------- | | Operating lease cost | 576 | 637 | | Short-term lease cost | 5 | 4 | | Variable lease cost | 7 | 5 | | Total - net lease cost | 588 | 646 | Note 8. COMMITMENTS AND CONTINGENCIES This note discloses the company's various commitments and contingent liabilities, including legal claims and settlements - The Company settled a legal claim with Ramapo Anesthesiologists, PC for $117,000 in Q1 2024, with CareCloud's portion being $32,000[71] - A former customer's complaint for $750,000 in damages was settled for $200,000 in July 2024, after the Company's cross-claim for $21,698 was awarded[72] - Another dispute with a former customer was settled for $100,000 in January 2025, which was accrued at December 31, 2024[74] Note 9. RELATED PARTIES This note details transactions and relationships with related parties, including sales, rent expenses, and consulting agreements - Sales to a related party (wife of Executive Chairman) were $20,000 in Q1 2025 and $24,000 in Q1 2024, with an accounts receivable balance of $5,000 at March 31, 2025[77] - Related party rent expense for corporate offices, temporary housing, and offshore facilities from the Executive Chairman was approximately $71,000 in Q1 2025 and $70,000 in Q1 2024[78] - A consulting agreement with an entity owned by a former non-independent director (now Co-CEO) involved issuance of Series B Preferred Stock and monthly payments, which was terminated April 30, 2024[80] Note 10. RESTRUCTURING COSTS This note outlines the company's restructuring efforts, including workforce reductions and associated one-time termination benefits - The Company committed to a workforce reduction in October 2023 to align resources and improve profitability in the Healthcare IT segment[84] - Restructuring expenses of $114,000 were incurred during Q1 2025, following $606,000 in 2024 and $645,000 in 2023, primarily for one-time termination benefits[85][86] Note 11. SHAREHOLDERS' EQUITY This note details changes in shareholders' equity, including preferred stock dividends, authorized shares, and stock conversions - Monthly cash dividends for Series A and Series B Preferred Stock were suspended in December 2023, reducing deferred payments from $1.3 million to $1.1 million per month after a September 2024 amendment to Series A dividend rate[87][88] - In January 2025, common stock shareholders approved an increase in authorized common shares from 35 million to 85 million[89] - Dividends resumed in February 2025, with two months of payments declared. On March 6, 2025, the Board converted 3,541,701 Series A Preferred Stock shares into common stock, reducing monthly cash dividends to approximately $455,000[90][91] Note 12. REVENUE This note describes the company's revenue recognition policies and provides a breakdown of revenue by source - Revenue is recognized as performance obligations are satisfied, typically as a percentage of collected payments for revenue cycle management services or over time for software and professional services[94] | Revenue Source | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Technology-enabled business solutions | 17,705 | 17,283 | | Professional services | 5,891 | 4,422 | | Printing and mailing services | 879 | 861 | | Group purchasing services | 168 | 155 | | Medical practice management services | 2,989 | 3,241 | | Total | 27,632 | 25,962 | - The estimated future revenue from remaining revenue cycle management performance obligations was approximately $3.5 million as of March 31, 2025, expected to be recognized over the next three months[117] Note 13. STOCK-BASED COMPENSATION This note details the company's stock-based compensation plans, including available shares for grant and related expenses - As of March 31, 2025, 499,683 shares of common stock and 16,000 shares of Series B Preferred Stock were available for grant under the Equity Incentive Plan[124] | RSU Activity (Shares) | Common Stock | Series A Preferred Stock | Series B Preferred Stock | | :-------------------------------- | :----------- | :----------------------- | :----------------------- | | Outstanding and unvested at Jan 1, 2025 | 242,500 | - | 19,199 | | Vested | (88,300) | - | - | | Outstanding and unvested at Mar 31, 2025 | 154,200 | - | 19,199 | | Outstanding and unvested at Jan 1, 2024 | 753,495 | - | 57,199 | | Granted | - | - | 34,000 | | Vested | (326,501) | - | (14,000) | | Forfeited | (217,115) | - | (24,000) | | Outstanding and unvested at Mar 31, 2024 | 209,879 | - | 53,199 | | Stock-Based Compensation Expense (Benefit) | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | | :----------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Direct operating costs | - | (45) | | General and administrative | 105 | (696) | | Research and development | 3 | 54 | | Selling and marketing | - | (21) | | Total stock-based compensation expense (benefit) | 108 | (708) | Note 14. INCOME TAXES This note provides information on the company's income tax expense, deferred tax assets, and valuation allowances - Income tax expense was $41,000 for Q1 2025 (state and foreign taxes) and $39,000 for Q1 2024 (state and foreign taxes), with no deferred income tax for either period[131] - A valuation allowance has been recorded against federal and state deferred tax assets due to historical cumulative losses and uncertainty regarding future U.S. taxable income[133] Note 15. FAIR VALUE OF FINANCIAL INSTRUMENTS This note discusses the fair value measurements of the company's financial instruments, categorized by valuation input levels - The Company held no Level 1 financial instruments at March 31, 2025, or December 31, 2024[134] - Level 2 financial instruments include notes payable, carried at cost approximating fair value[135] - Level 3 instruments include contingent consideration related to a completed acquisition, valued at $107,000 at March 31, 2025, based on discounted cash flow analysis[136][137] Note 16. SEGMENT REPORTING This note provides financial information for CareCloud's two reportable segments: Healthcare IT and Medical Practice Management - CareCloud operates two reportable segments: Healthcare IT (RCM, SaaS, other services) and Medical Practice Management (management of three medical practices)[138][141] | Segment Performance (Q1 2025, $ in thousands) | Healthcare IT | Medical Practice Management | Total | | :------------------------------------ | :------------ | :-------------------------- | :---- | | Net revenue | 24,643 | 2,989 | 27,632 | | Total operating expenses | 20,744 | 3,291 | 24,035 | | Segment operating income (loss) | 3,899 | (302) | 3,597 | | Segment Performance (Q1 2024, $ in thousands) | Healthcare IT | Medical Practice Management | Total | | :------------------------------------ | :------------ | :-------------------------- | :---- | | Net revenue | 22,721 | 3,241 | 25,962 | | Total operating expenses | 21,965 | 3,162 | 25,127 | | Segment operating income | 756 | 79 | 835 | Note 17. RESTATEMENT This note explains the restatement of prior period financial statements, specifically regarding preferred stock dividends - The Q1 2024 condensed consolidated statement of operations was restated to include $1.3 million of earned but undeclared preferred stock dividends for March 2024[143][144] | Metric (Q1 2024, $ in thousands, except per share) | Before Restatement | Restatement Adjustments | After Restatement | | :------------------------------------------------- | :----------------- | :---------------------- | :---------------- | | Preferred stock dividend | 5 | 1,307 | 1,312 | | Net loss attributable to common shareholders | (246) | (1,307) | (1,553) | | Net loss per common share: basic and diluted | (0.02) | (0.08) | (0.10) | Note 18. SUBSEQUENT EVENTS This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - In April 2025, the Company acquired an audiology-focused revenue cycle management company, with consideration to be paid over 3.5 years based on collected revenue[146] - A Form S-3 was filed and became effective on April 24, 2025, allowing the Company to sell various securities in the public market[146] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on CareCloud's financial condition and operational results, covering risks, business overview, key performance measures, revenue, expenses, and liquidity Financial Risks This section highlights specific financial risks faced by the company, particularly concerning cash balances and deposit insurance - CareCloud maintains cash balances at Silicon Valley Bank exceeding FDIC insurance limits and holds approximately $790,000 in offshore banks in Pakistan and Sri Lanka without deposit insurance[150] Overview This section provides a general overview of CareCloud's business, its services, competitive advantages, and technological integrations - CareCloud is a healthcare IT company providing technology-enabled RCM and cloud-based solutions (EHR, PM, BI, telehealth, PXM) to healthcare providers across the U.S.[151] - The company leverages proprietary software and a highly educated offshore workforce (approximately 3,400 team members at 17% of U.S. cost) in Pakistan and Sri Lanka, providing a competitive cost advantage[154][156] - CareCloud has integrated AI into its products, including CareCloud cirrusAI for clinical decision support, virtual support, and AI-driven appeals, enhancing workflows and revenue management[153][155] Key Performance Measures This section discusses the non-GAAP financial measures used by management to evaluate the company's underlying business performance - Management uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Operating Income, and Adjusted Net Income to analyze underlying business results, excluding items such as stock-based compensation, depreciation, amortization, and restructuring costs[157][159][160][161][162][163] | Non-GAAP Metric | Three Months Ended March 31, 2025 ($ in thousands) | Three Months Ended March 31, 2024 ($ in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------- | :--------- | | Adjusted EBITDA | 5,595 | 3,687 | 1,908 | 51.75% | | Non-GAAP adjusted operating income | 2,342 | 595 | 1,747 | 293.61% | | Non-GAAP adjusted operating margin | 8.5% | 2.3% | 6.2% | 269.57% | | Non-GAAP adjusted net income | 2,290 | 220 | 2,070 | 940.91% | | Non-GAAP adjusted earnings per share | 0.05 | 0.01 | 0.04 | 400.00% | Key Metrics This section presents key operational metrics, including the number of providers and medical practices served by CareCloud - As of March 31, 2025 and 2024, CareCloud served an estimated 40,000 providers across approximately 2,600 independent medical practices and hospitals, plus about 150 non-medical practice service organizations[166] Sources of Revenue This section breaks down the company's revenue by source, including technology-enabled solutions, other IT services, and medical practice management - Technology-enabled business solutions (subscription-based RCM, EHR, practice management software) accounted for approximately 64% of revenue in Q1 2025 (down from 67% in Q1 2024)[167] - Other healthcare IT services (printing, mailing, group purchasing, professional services) contributed approximately 25% of revenue in Q1 2025 (up from 21% in Q1 2024)[167] - Medical practice management services generated approximately 11% of revenue in Q1 2025 (down from 12% in Q1 2024), based on costs plus a percentage of operating profit[168] Operating Expenses This section describes the various categories of operating expenses, including direct costs, selling, general, administrative, and R&D - Direct operating costs primarily include salaries, benefits for service personnel, claims processing, and costs to operate managed practices[169] - Selling and marketing expenses cover compensation, commissions, travel, and advertising[170] - General and administrative expenses consist of administrative personnel costs, facility leases, insurance, software licenses, and professional fees[170] - Research and development expenses are mainly personnel, software, and third-party contractor costs[171] - Depreciation and amortization expenses are charged over estimated asset lives (3-5 years for depreciation, 3-12 years for amortization of intangibles)[172] - Restructuring costs are primarily severance and separation costs from operational optimization[173] - Interest and other income (expense) includes interest on investments, late fees, debt interest, and foreign currency transaction gains/losses[174] - Income tax provision reflects state minimum and foreign income taxes, with a valuation allowance against deferred tax assets due to historical losses[175] Critical Accounting Policies and Estimates This section discusses the company's critical accounting policies and estimates, particularly regarding capitalized software and policy changes - The carrying amount of internally-developed capitalized software in use decreased from $12.3 million at December 31, 2024, to $10.5 million at March 31, 2025, as amortization exceeded new capitalization[177] - No material changes occurred in critical accounting policies and estimates from those described in the 2024 Annual Report on Form 10-K/A[178] Results of Operations This section compares CareCloud's financial performance for Q1 2025 against Q1 2024, detailing changes in revenue, expenses, and profitability | Metric | Q1 2025 (% of Revenue) | Q1 2024 (% of Revenue) | | :-------------------------- | :--------------------- | :--------------------- | | Net revenue | 100.0% | 100.0% | | Direct operating costs | 56.0% | 58.5% | | Selling and marketing | 4.1% | 6.8% | | General and administrative | 15.7% | 14.4% | | Research and development | 4.4% | 3.5% | | Depreciation and amortization | 12.1% | 15.1% | | Restructuring costs | 0.4% | 1.2% | | Total operating expenses | 92.7% | 99.5% | | Operating income | 7.3% | 0.5% | | Net income (loss) | 7.1% | (0.9%) | - Net revenue increased by $1.7 million (6%) to $27.6 million in Q1 2025, driven by a $1.5 million increase in professional services and a $422,000 increase in technology-enabled business solutions, partially offset by a $252,000 decrease in medical practice management services[180][181] - Total operating expenses decreased by $220,000 (1%) to $25.6 million in Q1 2025, primarily due to a $639,000 (36%) decrease in selling and marketing expenses and a $651,000 (19%) decrease in amortization expense, partially offset by increases in general and administrative ($611,000 or 16%) and research and development ($322,000 or 35%) expenses[182][183][184][185][187] - Operating income significantly increased to $2.0 million in Q1 2025 from $129,000 in Q1 2024, and net income improved to $1.9 million from a net loss of $(241) thousand[21] - Interest expense decreased by $307,000 (84%) to $58,000 in Q1 2025, mainly due to lower interest on the line of credit[190] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and capital management - As of March 31, 2025, the Company had $6.8 million in cash and $11.7 million in net working capital[194] - Cash provided by operations increased by $1.0 million (26%) to $5.1 million in Q1 2025, while cash used in investing activities decreased by $358,000 (19%) to $1.5 million[199][200][201] - Cash used in financing activities increased by $558,000 (41%) to $1.9 million in Q1 2025, primarily due to $1.7 million in preferred stock dividends paid[199][202] - The Company expects sufficient liquidity for the next twelve months, supported by efforts to improve profitability, manage expenses, and grow revenue[196] Contractual Obligations and Commitments This section outlines the company's significant contractual obligations and commitments, including credit lines and operating leases - The Company's contractual obligations include its line of credit, with all covenants in compliance as of March 31, 2025, and operating leases for property and equipment[203] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements or unconsolidated entities for the reporting periods - As of March 31, 2025, and 2024, CareCloud had no relationships with unconsolidated entities or financial partnerships for off-balance sheet arrangements[204] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, CareCloud, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - CareCloud is a smaller reporting company and is not required to provide information under this item[205] Item 4. Controls and Procedures Management, with Co-CEOs and Interim CFO participation, evaluated disclosure controls and procedures as effective on March 31, 2025, with no material changes to internal control over financial reporting except for a process improvement - CareCloud's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025[206][208] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter, except for a process improvement to disclosure controls and procedures[209] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings This section refers to the detailed discussion of legal proceedings within Note 8, Commitments And Contingencies, of the Condensed Consolidated Financial Statements - Legal proceedings are discussed in detail in Note 8, Commitments And Contingencies, of the Notes to Condensed Consolidated Financial Statements[211] Item 1A. Risk Factors This section refers to comprehensive risk factors in the Annual Report on Form 10-K/A and highlights risks related to maintaining cash balances exceeding federally insured limits - Readers should consider risk factors discussed in Part I—Item 1A. 'Risk Factors' in the Annual Report on Form 10-K/A filed on April 3, 2025[212] - A specific risk highlighted is maintaining cash balances at financial institutions, such as Silicon Valley Bank, in amounts exceeding federally insured limits, which could be impacted by volatility in the banking system[150][213] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to CareCloud, Inc. for the reporting period - This item is not applicable[214] Item 3. Defaults Upon Senior Securities The Board suspended monthly cash dividends for Series A and B Preferred Stock in December 2023, resulting in approximately $7.3 million in arrears, with payments resuming in February 2025 and applied to the earliest outstanding amounts - Monthly cash dividends for Series A and Series B Preferred Stock were suspended on December 11, 2023[215] - The suspension led to approximately $7.3 million in dividends in arrears as of the filing date[215] - Dividend payments resumed in February 2025, with one month of dividends in arrears paid each in February, March, and April, applied to the oldest outstanding amounts[215] Item 4. Mine Safety Disclosures This item is not applicable to CareCloud, Inc. for the reporting period - This item is not applicable[216] Item 5. Other Information During the quarter ended March 31, 2025, none of the Company's directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[217] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications from executive officers (Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350) and XBRL interactive data files - Exhibits include certifications from Co-Principal Executive Officers and Interim Chief Financial Officer (31.1, 31.2, 31.3, 32.1*, 32.2*, 32.3*) and XBRL interactive data files (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[218] Signatures The report is duly signed on behalf of CareCloud, Inc. by its Co-Chief Executive Officers, A. Hadi Chaudhry and Stephen Snyder, and Interim Chief Financial Officer and Corporate Controller, Norman S. Roth, on May 6, 2025 - The report was signed by A. Hadi Chaudhry (Co-Chief Executive Officer), Stephen Snyder (Co-Chief Executive Officer), and Norman S. Roth (Interim Chief Financial Officer and Corporate Controller) on May 6, 2025[222]