Financial Performance - Net revenue for the three months ended March 31, 2022, was $11,056,000, representing a 39.4% increase from $7,953,000 in the same period of 2021[24]. - The cost of revenue for the same period was $8,162,000, up 41.5% from $5,773,000 year-over-year[24]. - Net loss for the three months ended March 31, 2022, was $2,011,000, compared to a net loss of $814,000 in the prior year, indicating a significant increase in losses[24]. - The company reported a total revenue of $11,056,000 for the three months ended March 31, 2022, compared to $7,953,000 for the same period in 2021, representing an increase of approximately 39%[56]. - Revenue increased by $3 million, or 39%, to $11.1 million for the quarter ended March 31, 2022, compared to $7.95 million for the same period in 2021[210]. - Net income for the quarter ended March 31, 2022, was a loss of $2.011 million, or 18% of total revenue, compared to a loss of $814,000, or 10% of total revenue, for the same period in 2021[209]. Revenue Breakdown - Revenue from the top five customers accounted for 76% of total revenue in Q1 2022, with Customer 1 contributing $3,833,000 (35%) and Customer 2 contributing $1,965,000 (18%)[57]. - For the quarter ended March 31, 2022, sales to the top five customers accounted for approximately 76% of total revenue, down from 83% in the same quarter of 2021[104]. - Software Services revenue increased by 100% to $5,456,000 in Q1 2022 from $2,725,000 in Q1 2021[72]. - Managed Services and Support revenue slightly increased by 1% to $4,269,000 in Q1 2022 compared to $4,226,000 in Q1 2021[72]. - Platform Services revenue grew by 33% to $1,331,000 in Q1 2022 from $1,002,000 in Q1 2021[72]. - Managed Services and Support revenue decreased by $2.1 million, or 73%, to $0.8 million for the quarter ended March 31, 2022, compared to $3 million for the same period in 2021[214]. - Platform Services revenue decreased by $0.5 million, or 100%, to nil for the quarter ended March 31, 2022, compared to $0.5 million for the same period in 2021[215]. Expenses and Costs - Research and development expenses increased to $1,066,000 for the three months ended March 31, 2022, compared to $757,000 in the same period of 2021, marking a rise of 40.8%[24]. - Sales and Marketing expenses increased to $1.740 million, or 16% of total revenue for the quarter ended March 31, 2022, compared to 8% in the same quarter of 2021[209]. - General and Administrative expenses were $1.351 million, or 12% of total revenue for the quarter ended March 31, 2022, compared to 16% in the same quarter of 2021[209]. - Cost of revenue increased by $2.3 million, or 41%, to $8.2 million for the quarter ended March 31, 2022, compared to $5.7 million for the same quarter in 2021[216]. - Research and Development expenses rose by $0.3 million, or 41%, to $1 million for the quarter ended March 31, 2022, compared to $0.7 million for the same quarter in 2021[218]. - Sales and Marketing expenses increased by $1 million, or 161%, to $1.7 million for the quarter ended March 31, 2022, compared to $0.7 million for the same quarter in 2021[219]. - General and Administrative expenses increased by $0.1 million, or 7%, to $1.3 million for the quarter ended March 31, 2022, compared to $1.2 million for the same quarter in 2021[220]. Assets and Liabilities - Total assets decreased to $22,267,000 as of March 31, 2022, down from $24,613,000 at the end of 2021, reflecting a decline of 9.5%[22]. - Total stockholders' equity fell to $14,499,000 as of March 31, 2022, down from $16,135,000 at the end of 2021, a decrease of 10.1%[22]. - The company reported a cash and cash equivalents balance of $1,562,000 at the end of March 31, 2022, down from $1,770,000 at the end of 2021, a decrease of 11.8%[28]. - Accounts Receivable decreased to $6,739,000 as of March 31, 2022, down from $9,672,000 as of December 31, 2021[75]. - The company has a current liability of $2,209,000 related to short-term borrowing as of March 31, 2022[129]. Acquisitions and Investments - The company acquired Devcool Inc. for a purchase price of $7.7 million, which is expected to enhance its technology capabilities in the healthcare sector[33]. - The company acquired Cornerstone Advisory Services LLC for a total consideration of $7,000,000, allocated to net working capital of $4,700,000 and intangibles of $2,300,000[123]. - The acquisition of Devcool, Inc. had an aggregate purchase price of $777,293, including cash payments and equity issuance[125]. - The company recorded a total purchase price of $7,773,000 for recent acquisitions, including $1,289,000 of goodwill which is not tax deductible[129]. Employee and Stock Options - The Company has a total of 73 full-time employees and 261 sub-contractors, including 170 certified cloud engineers and 104 Epic Certified EHR experts[172]. - The Company issued 100,000 shares for services rendered and 149,701 shares for employee stock options, recognizing expenses of $350,000 during the quarter ended March 31, 2022[131]. - The Company issued 807,500 Incentive Stock Options (ISO) at an exercise price of $0.40, vesting over a four-year period[158]. - The Company issued 452,000 Non-Qualified Stock Options (NSO) at an exercise price of $0.40 per option, vesting over a four-year period[159]. - The Company recognized compensation expenses related to ISO/NSO stock options of $14,000 for the three months ended March 31, 2022, and $14,000 for the same period in 2021[165]. Tax and Regulatory Matters - The company recognized total income tax expenses of $21,000 for the quarter ended March 31, 2022, compared to $3,000 for the same period in 2021[145]. - The Company has reported a net deferred tax asset of $0 as of March 31, 2022, after accounting for a valuation allowance of $533,000[144]. - The Company received a PPP loan amounting to $1.1 million, which is forgivable under certain conditions[177]. - The company has applied for a waiver for its Payroll Protection Program loan and is awaiting approval, with interest recognized at a rate of 1% per annum[138]. Future Outlook and Strategy - The company focuses on leveraging technologies such as Big Data, AI, and Machine Learning to improve healthcare outcomes and operational efficiencies[32]. - The company aims to address interoperability challenges in healthcare systems, enhancing digital infrastructure for hospitals and health systems[34]. - The company anticipates that the shift to virtual approaches will create unique opportunities for growth in cloud technology and services[37]. - The Company is in the early stages of marketing its CloudEz, DataEz, and Readabl.AI platforms as SaaS offerings, which are expected to provide recurring revenues[174]. - The company is classified as an "emerging growth company" and will remain so until certain revenue or debt thresholds are met, potentially until December 21, 2026[46].
Healthcare Triangle(HCTI) - 2022 Q1 - Quarterly Report