Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-40903 | |
Entity Registrant Name | HEALTHCARE TRIANGLE, INC. | |
Entity Central Index Key | 0001839285 | |
Entity Tax Identification Number | 84-3559776 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 7901 Stoneridge Drive | |
Entity Address, Address Line Two | Suite 220 | |
Entity Address, City or Town | Pleasanton | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94588 | |
City Area Code | (925) | |
Local Phone Number | 270-4812 | |
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Trading Symbol | HCTI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,634,232 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 4,144 | $ 1,770 |
Accounts receivable | 6,702 | 9,672 |
Other current assets | 233 | 362 |
Total current assets | 11,079 | 11,804 |
Property and equipment, net | 76 | 74 |
Operating lease right-of-use assets | 43 | 172 |
Intangible assets, net | 11,427 | 10,458 |
Goodwill | 1,289 | 1,289 |
Due from affiliates | 950 | 816 |
Total assets | 24,864 | 24,613 |
Current liabilities | ||
Accounts payable | 1,468 | 1,873 |
Warrant liability | 55 | 55 |
Payroll protection program | 1,069 | |
Short term borrowing | 2,453 | 2,209 |
Operating lease liabilities | 41 | 176 |
Other current liabilities | 1,043 | 869 |
Total current liabilities | 5,060 | 6,251 |
Long-term liabilities | ||
Contingent consideration | 2,227 | 2,227 |
Total current and long-term liabilities | 7,287 | 8,478 |
Stockholders' equity | ||
Preferred stock, par value $ 0.00001 ; 10,000,000 authorized | ||
Common stock, par value $0.00001; 100,000,000 authorized 39,466,671 and 35,260,834 shares issued and outstanding as of September 30, 2022 and December 31, 2021 respectively | 0 | 0 |
Additional paid-in capital | 24,996 | 18,799 |
Retained earnings | (7,419) | (2,664) |
Total stockholders' equity | 17,577 | 16,135 |
Total liabilities and stockholders' equity | 24,864 | 24,613 |
Series A Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, par value $ 0.00001 ; 10,000,000 authorized | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred stock voting shares | 6,000 | 6,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 39,466,671 | 35,260,834 |
Common Stock, Shares, Outstanding | 39,466,671 | 35,260,834 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Net revenue | $ 11,950 | $ 8,078 | $ 34,594 | $ 26,081 |
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 8,522 | 5,352 | 25,113 | 17,829 |
Operating expenses | ||||
Research and development expenses | 1,471 | 2,204 | 3,183 | 3,775 |
Sales and marketing | 1,815 | 1,328 | 5,206 | 2,801 |
General and administrative | 1,480 | 753 | 4,282 | 3,062 |
Depreciation and amortization | 909 | 211 | 2,464 | 633 |
Total operating expenses | 5,675 | 4,496 | 15,135 | 10,271 |
Income from operation (loss) | (2,247) | (1,770) | (5,654) | (2,019) |
Other income (PPP loan forgiveness) | 1,087 | |||
Interest expense | (55) | (221) | (129) | (480) |
Income (loss) before income taxes | (2,302) | (1,991) | (4,696) | (2,499) |
Provision for income taxes | 37 | 1 | 51 | 5 |
Net income (loss) | $ (2,339) | $ (1,992) | $ (4,747) | $ (2,504) |
Net income (loss) per common share—basic and diluted | $ (0.07) | $ (0.07) | $ (0.13) | $ (0.09) |
Weighted average shares outstanding used in per common share computations: | ||||
Basic | 36,022,893 | 28,839,889 | 36,022,893 | 28,839,889 |
Diluted | 36,022,893 | 28,839,889 | 36,022,893 | 28,839,889 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 0 | $ 1,042 | $ 3,286 | $ 4,328 | |
Beginning balance, shares at Dec. 31, 2020 | 27,900,000 | ||||
Common share warrants | |||||
Shares issued for services | $ 0 | 836 | 836 | ||
Shares issued for services, shares | 2,088,750 | ||||
Share-based compensation | 47 | 47 | |||
Net loss | (2,504) | (2,504) | |||
Ending balance, value at Sep. 30, 2021 | $ 0 | 1,925 | 782 | 2,707 | |
Ending balance, shares at Sep. 30, 2021 | 29,988,750 | ||||
Beginning balance, value at Jun. 30, 2021 | $ 0 | 1,670 | 2,774 | 4,444 | |
Beginning balance, shares at Jun. 30, 2021 | 29,398,750 | ||||
Shares issued for services | $ 0 | 236 | 236 | ||
Shares issued for services, shares | 590,000 | ||||
Share-based compensation | 19 | 19 | |||
Net loss | (1,992) | (1,992) | |||
Ending balance, value at Sep. 30, 2021 | $ 0 | 1,925 | 782 | 2,707 | |
Ending balance, shares at Sep. 30, 2021 | 29,988,750 | ||||
Beginning balance, value at Dec. 31, 2021 | $ 0 | 18,799 | (2,664) | 16,135 | |
Beginning balance, shares at Dec. 31, 2021 | 6,000 | 35,260,834 | |||
Cash collected on common stock options | $ 0 | 10 | 10 | ||
Cash collected on common stock options, shares | 26,136 | ||||
Shares issued for services | $ 0 | 350 | 350 | ||
Shares issued for services, shares | 249,701 | ||||
Share-based compensation | 40 | (8) | 32 | ||
Issuance of common stock in connection with private placement | $ 0 | 3,580 | 3,580 | ||
Issuance of common stock in connection with private placement, shares | 3,930,000 | ||||
Issuance of warrants in connection with private placement | 2,308 | 2,308 | |||
Common stock repurchased | (91) | (91) | |||
Net loss | (4,747) | (4,747) | |||
Ending balance, value at Sep. 30, 2022 | $ 0 | 24,996 | (7,419) | 17,577 | |
Ending balance, shares at Sep. 30, 2022 | 6,000 | 39,466,671 | |||
Beginning balance, value at Jun. 30, 2022 | $ 0 | 19,186 | (5,080) | 14,106 | |
Beginning balance, shares at Jun. 30, 2022 | 6,000 | 35,536,671 | |||
Share-based compensation | 13 | 13 | |||
Issuance of common stock in connection with private placement | $ 0 | 3,580 | 3,580 | ||
Issuance of common stock in connection with private placement, shares | 3,930,000 | ||||
Issuance of warrants in connection with private placement | 2,308 | 2,308 | |||
Common stock repurchased | (91) | (91) | |||
Net loss | (2,339) | (2,339) | |||
Ending balance, value at Sep. 30, 2022 | $ 0 | $ 24,996 | $ (7,419) | $ 17,577 | |
Ending balance, shares at Sep. 30, 2022 | 6,000 | 39,466,671 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net income / (loss) | $ (4,747) | $ (2,504) |
Adjustment to reconcile net income / (loss) to net cash provided by (used in) operating activities | ||
Depreciation and amortization | 2,464 | 633 |
Income from payroll protection program | (1,069) | |
Common stock issued for services | 350 | 836 |
Warrant fair valuation expenses | 55 | |
Stock compensation expenses | 40 | 47 |
Increase / (decrease) in: | ||
Accounts receivable | 2,970 | 487 |
Other current assets | 129 | (463) |
Contract asset / Unbilled revenue | (764) | |
Due from related party | (134) | (381) |
Accounts payable and accrued expenses | (405) | (1,717) |
Deferred revenue | (31) | |
Other current liabilities | 176 | (76) |
Payment of lease liability | (146) | |
Net cash provided by / (used in) operating activities | (372) | (3,878) |
Cash flows from investing activities | ||
(Purchase) / sale of property and equipment | (26) | (50) |
Increase in intangible assets | (3,279) | |
Net cash provided by / (used in) investing activities | (3,305) | (50) |
Cash flows from financing activities | ||
Stock options exercised | 10 | |
Increase / (decrease) in short term borrowing | 244 | |
Increase / (decrease) in convertible note | 2,604 | |
Increase in additional paid-in capital | 5,888 | |
Repurchases of common stock | (91) | |
Increase in payroll protection program | 1,069 | |
Net cash provided by / (used in) financing activities | 6,051 | 3,673 |
Net increase / (decrease) in cash and cash equivalents | 2,374 | (255) |
Cash and cash equivalents | ||
Cash and cash equivalents at the beginning of the period | 1,770 | 1,403 |
Cash and cash equivalents at the end of the period | 4,144 | 1,148 |
Supplementary disclosure of cash flows information | ||
Interest | 129 | 480 |
Income taxes | $ 51 | $ 5 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization And Description Of Business | |
Organization and Description of Business | 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: 1. 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. 2. 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. 3. 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. 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 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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, 2021 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 September 30, 2022, the results of operations, comprehensive income (loss), stockholders’ deficit, and cash flows for the three and nine months ended September 30, 2022 and 2021. The results of operations for the three months ended September 30, 2022 and 2021 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, 2021 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. 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 Executive Officer. The Chief Executive 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 Revenue by Operating Segment Three Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 6,177 $ 2,307 $ 3,870 168 Managed Services and Support 3,708 4,673 (965) ( 21 Platform Services 2,065 1,098 967 88 Revenue $ 11,950 $ 8,078 $ 3,872 48 Nine Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 18,218 $ 8,248 $ 9,970 121 Managed Services and Support 11,879 14,204 (2,325 ) ( 16 Platform Services 4,497 3,629 868 24 Revenue $ 34,594 $ 26,081 $ 8,513 33 Operating profit (loss) by Operating Segment Operating profit by Operating Segment Three Months Ended Changes 2022 2021 Amount % Software Services $ (145) $ 80 $ (225) ( 281 Managed Services and Support 1,397 1,466 (69) ( 5 Platform Services (992) (1,545) 553 ( 36 Total segment operating profit 260 1 259 ( 259 Less: unallocated costs 2,507 1,771 736 42 Income (loss) from operations (2,247) (1,770) (477) ( 27 Other Income - - - 0 Interest expense 55 221 (166) ( 75 Net income (loss) before income tax $ (2,302) $ (1,991 ) $ (311 ) ( 16 Nine Months Ended Changes 2022 2021 Amount % Software Services $ (665) $ 1,070 $ (1,735) ( 162 Managed Services and Support 3,935 3,794 141 4 Platform Services (1,777) (1,640) (137) ( 8 Total segment operating profit 1,493 3,224 (1,731) ( 54 Less: unallocated costs 7,147 5,243 1,904 ( 36 Income (loss) from operations (5,654) (2,019) (3,635) ( 180 Other income 1,087 - 1,087 100 Interest expense 129 480 (351) 73 Net income (loss) before income tax $ (4,696) $ (2,499) $ 2,197 ( 88 ) Revenue from top 5 customers Three Months Ended September 30, 2022 Schedule of concentration (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 4,562 38 % Customer 2 1,840 15 % Customer 3 1,218 10 % Customer 4 1,063 9 % Customer 5 $ 534 4 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 2,004 25 % Customer 2 1,653 20 % Customer 3 1,400 17 % Customer 4 754 9 % Customer 5 $ 624 8 % Nine Months Ended September 30, 2022 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 12,912 37 % Customer 2 4,770 14 % Customer 3 3,726 11 % Customer 4 2,963 9 % Customer 5 $ 1,181 3 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 11,295 43 % Customer 2 2,607 10 % Customer 3 2,131 8 % Customer 4 1,799 7 % Customer 5 $ 1,630 6 % Revenue Recognition We recognize revenues as we transfer control of deliverables (services, solutions, and platform) to our clients in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We apply judgment in determining the customer’s ability and intention to pay based on a variety of factors including the customer’s historical payment experience. For performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Software Services The Company enters into contractual obligations with the customers to perform (i) Strategic advisory services which include assessment of the enterprise network, applications environment and advise on the design and tools; (ii) Implementation services which include deployment, upgrades, enhancements, migration, training, documentation and maintenance of various electronic health record systems and (iii) Development services which include customization of network and applications in the public cloud environment. Revenue from Strategic advisory, Implementation and Development services are distinct performance obligation and is recognized on time-and-material or fixed-price project basis. Revenues related to time-and-material are recognized over the period the services are provided using labor hours. Revenues related to fixed-price contracts are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized based on the percentage that each contract’s total labor cost to date bears to the total expected labor costs. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately, where appropriate. We may enter contracts that consist of multiple performance obligations. Such contracts may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For contracts with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we estimate standalone selling price by using the expected cost plus a margin approach. We establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change. Managed Services and Support The Company has standard contracts for its Managed Services and Support, however the statement of work contained in such contracts is unique for each customer. A typical Managed Services and Support contract would provide for some or all of the following types of services being provided to the customer: Cloud hosting, Continuous monitoring of applications, security and compliance and support. Revenue from Managed services and support is a distinct performance obligation and recognized based on SSP (standalone selling price), ratably on a straight-line basis over the period in which the services are rendered. Contract with customers includes subcontractor services or third-party cloud infrastructure services in certain integrated services arrangements. In these types of arrangements, revenue is recognized net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it controls the platform or service before it is transferred to the customer. The Company considers whether it has the primary obligation to fulfil the contract, pricing discretion and other factors to determine whether it controls the platform or service and therefore is acting as a principal or an agent. Payment for managed services and support is due monthly. Platform Services The Company has standard contracts for its Platform Services, however the statement of work contained in such contracts is unique for each customer. A typical Platform Services contract would provide for some or all of the following types of services being provided to the customer: Data Analytics, Backup and Recovery, through our Platform. The revenue from Platform services is a distinct performance obligation and recognized based on SSP. During the periods presented the Company generated revenue from Platform services on a fixed-price solutions delivery model. Revenues related to fixed-price contracts are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized based on the percentage that each contract’s total labor cost to date bears to the total expected labor costs. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately, where appropriate. Our contractual terms and conditions for Software services, Managed Services and Support and Platform services mandate that our services are documented and subject to inspection, testing at the time of delivery to customer. In addition, the Company needs to integrate seamlessly into the customers’ systems. Also, the customer has a right to cancel all, or part of the services rendered if it is not in accordance with statement of work and within the stipulated time. Contract Balances The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deferred revenue (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed upon contractual terms, generally monthly upon achievement of contractual milestones. Generally, billing occurs after revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These deposits are liquidated when revenue is recognized. The beginning and ending contract balances were as follows: Schedule of receivables and contract liabilities September 30, 2022 December 31, 2021 Accounts receivable $ 6,702 $ 9,672 Cash and Cash Equivalents The Company considers all highly liquid investments (including money market funds) with an original maturity at acquisition of three months or less to be cash equivalents. The Company maintains cash balances, which may exceed federally insured limits. The Company does not believe that this results in any significant credit risk. Accounts Receivable The Company extends credit to clients based upon management’s assessment of their creditworthiness on an unsecured basis. The Company provides an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. The Company includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. For the quarter ended September 30, 2022, the Company provide allowances for uncollectible accounts $ 222 and for year ended December 31, 2021 the Company did not provide allowances for uncollectible accounts. Based on the information available, management believes the Company’s accounts receivable are collectible. Property and Equipment Property and equipment are stated at cost. The Company provides for depreciation of property and equipment using the straight-line method over the estimated useful lives of the related assets ranging from 3 to 7 years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease terms or the useful lives of the improvements. The Company charges repairs and maintenance costs that do not extend the lives of the assets to expenses as incurred. Intangible Assets We capitalize certain costs incurred for the platform development when it is determined that it is probable that the platform will be completed and will be used as intended. Costs related to preliminary project activities, post-implementation activities, training, and maintenance are expensed as incurred. Customer relationship and platform development are amortized based on finite lives using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Goodwill Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized but is subject to an annual impairment test. The Company performs its annual goodwill impairment test on an annual basis in the fourth quarter of each fiscal year or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s goodwill is less than the carrying value of the reporting unit’s goodwill. The Company’s quarterly goodwill impairment test resulted in no impairment charges in the quarter ended September 30, 2022 and 2021. Software Development Costs Costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred and classified under research and development expenses until technological feasibility has been established, at which time any additional costs would be capitalized. The Company believes its current process for developing software is essentially completed concurrently with the establishment of technological feasibility. Software development costs charged to expense for the quarter ended September 30, 2022, and 2021 was $ 334 189 Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount the Company expects to collect and do not bear interest. The collectability of trade receivable balances is regularly evaluated based on a combination of factors such as customer creditworthiness, past transaction history with the customer, current economic industry trends and changes in customer payment pattern. Additionally, if it is determined that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material event impacting its business, a specific allowance for doubtful accounts may be recorded to reduce the related receivable to the amount expected to be recovered. Although we believe that our approach to estimates and judgments regarding our allowance for doubtful accounts is reasonable, actual results could differ and we may be exposed to increases or decreases in required allowances that could be material. Business Combinations As per ASC 805-50 a common-control transaction does not meet the definition of a business combination because there is no change in control over the net assets. The accounting for these transactions are addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied retroactively for all periods presented. We account for business combinations using the acquisition method, which requires the identification of the acquirer, the determination of the acquisition date and the allocation of the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our consolidated financial statements from the date of effective control. Valuation of Contingent Earn-out Consideration Acquisitions may include contingent consideration payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable, however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Any changes in the estimated fair value of contingent consideration may have a material impact on our operating results. Earnings (Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. Fair Value Measurements The Company measures its financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3—Inputs that are unobservable Money market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models. In connection with the acquisition of Devcool, Inc., the Company recognized a liability on the acquisition date for the estimated fair value of the contingent consideration based on the probability of achieving certain milestones pursuant to the acquisition agreement. The fair value measurement of the contingent consideration is based on significant unobservable inputs and management judgment; therefore, it is categorized under Level 3 at the balance sheet date in the table below. Schedule of balance sheet September 30, 2022 Fair value measured using Level 1 Level 2 Level 3 Total Financial liabilities: Warrant liabilities $ 55 $ 55 Contingent consideration — — $ 2,227 $ 2,227 Stock-Based Compensation The Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options over the instruments vesting period. Options awarded to purchase shares of common stock issued to non-employees do not need to be remeasured as per ASU 2018-07 principles. The Company adopted the “2020 Stock Incentive Plan” (Plan). The Company has reserved 4,000,000 Income taxes The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date. Advertising Costs The Company expenses advertising cost as incurred. Advertising expense for the quarters ended September 30, 2022, and 2021 were Nil. Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables. Credit risks associated with trade receivables is minimal due to the Company’s customer base which consist of large customer base and ongoing procedures, which monitor the credit worthiness of its customers. For the quarter ended September 30, 2022 and 2021 sales to top five customers accounted for approximately 76 79 62 88 The Company maintains cash balances in various financial institutions. The balances are generally insured by the Federal Deposit Insurance Corporation up to $ 250 As of September 30, 2022, and December 31, 2021, the Company had $ 1,453 719 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3) Property and Equipment Property and equipment consisted of the following: Schedule of property and equipment September 30, 2022 December 31, 2021 Furniture and equipment $ 106 $ 80 Less: Accumulated depreciation (30 ) (6 ) Net fixed assets $ 76 $ 74 Depreciation expenses for the quarter ended September 30, 2022, and September 30, 2021 were $ 8 6 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 4) Intangible Assets The Company’s intangible assets consist primarily of intellectual property and customer relationship it acquired through various acquisitions. We capitalize certain costs incurred for the platform development when it is determined that it is probable that the platform will be completed and will be used as intended. We amortize our intangible assets that have finite lives using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized Intangible assets consist of the following: Schedule of intangible assets September 30, 2022 December 31, 2021 Customer relationships $ 8,667 $ 8,667 Intellectual property 7,329 4,050 Product development 477 477 16,473 13,194 Accumulated amortization (5,046 ) (2,736 ) Net intangible assets $ 11,427 $ 10,458 Amortization expense for the quarter ended September 30, 2022 and September 30, 2021 were $ 857 206 Schedule of intangibles asset useful life Nature of Intangibles Useful Life Customer relationships 5 Intellectual property 5 Product development 5 Estimated annual amortization expense (including amortization expense associated with capitalized software costs) for each of the next six years are as follows: Schedule of amortization expense September 30, 2022 $ 1,714 2023 2,285 2024 2,285 2025 2,285 2026 2,285 2027 573 Total $ 11,427 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | 5) Leases The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company is currently operating from two office locations leased by its Parent. The Company does not have any signed lease agreement(s) to its name. The Company’s principal facility is located in Pleasanton, CA and has another facility in East Brunswick, NJ. The lease expires in 2023. Rent expense was $ 48 54 The Company utilized a portfolio approach in determining the discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and the Company’s estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company also considered its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the incremental borrowing rates. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. The components of lease expenses were as follows. Schedule of lease expenses Particulars September 30, 2022 December 31, 2021 Opening balance $ 176 $ — Additions 344 Finance cost accrued during the period 10 13 Payment of lease liability 145 181 Closing balance $ 41 $ 176 Supplemental balance sheet information related to leases was as follows: Schedule of balance sheet related to leases Three Months Ended September 30, 2022 Leases ROU assets $ 43 lease liabilities, included in current liabilities 41 lease liabilities, included in long-term liabilities — Total lease liabilities $ 41 Total future minimum payments required under the lease obligations as of September 30, 2022 are as follows: Schedule of cash flow related to leases Three Months Ended September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities: Cash flows from leases $ 43 ROU assets obtained in exchange for lease liabilities: 344 Leases Weighted average remaining lease term (in months): 12 Weighted average discount rate: 4.75 % Schedule of future minimum payments 2022 $ 49 Total Lease payments 49 Less: Amount Representing Interest (8 ) Total lease obligation $ 41 |
Due from Related Party
Due from Related Party | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Due from Related Party | 6) Due from Related Party The Company entered into a Master Service Agreement, Shared Services Agreement and Rental Sublease Agreement with its parent. As per the Master Services Agreement, parent provides technical resources according to the statement of work from the Company. The initial term of the agreement is twenty-four months which is extendable based on mutual consent. The parent charges for the services at cost plus margin. The invoices are settled within sixty days as per the agreement. As per the terms of the Shared Services and Rental Sublease Agreement, the cost incurred by the parent on behalf of the Company are settled at cost. The Shared Services Agreement includes Development infrastructure, Sales support, Recruitment and Immigration support, Project coordination, HR and Operation support, Management /Advisory services. The Company received shared services amounting to $ 383 238 The Company does not have any signed lease agreement on its name and currently operates from two office locations leased by the Parent. The Company has entered into a sublease agreement with the Parent and paid rent of $ 48 54 The balance receivable from related parties as of September 30, 2022, was $ 950 816 |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | 7) Business Combination Effective May 8, 2020, the Company acquired the entire equity of Cornerstone Advisory Services LLC in exchange for a promissory note. In accordance with the terms of the Equity Purchase Agreement dated May 8, 2020, the Company acquired 100 7,000 7,000 4,700 2,300 Acquisition of Devcool, Inc. 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 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 operation from November 01, 2021 (effective date) and the financials have been consolidated from this date. The aggregate purchase price for the acquisition of Devcool Inc was $ 7,773 1. $ 4,500 2. $ 700 700 a) 209,295 b) 83,718 3. A sum of up to $ 2,500 a) up to $ 250 b) up to $ 1,000 c) up to $ 250 d) up to $ 1,000 4. The Company also issued the Seller a secured non-interest-bearing promissory note in the principal amount of $ 2,209 April 30, 2022 1,709 Based on the preliminary purchase price allocation, we recorded $ 1,289 Presented below is the summary of the foregoing acquisitions Allocation of purchase price Schedule of allocation of purchase price Asset component September 30, 2022 Intangibles $ 6,018 Goodwill 1,289 Working capital — Current assets Cash 970 Accounts receivables 3,142 Other current assets Other Current Assets 11,419 Current liabilities Accounts payable 758 Short term borrowing 2,209 Other current liabilities 679 Current liabilities 3,646 Net working capital acquired 7,773 Total purchase price $ 7,773 |
Equity Transactions
Equity Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Equity Transactions | 8) Equity Transactions The company has made a private placement of 3,930,000 2,167,561 6,097,561 1.066 1.065 The Purchaser also received the Preferred Investment Options. The aggregate gross proceeds to the Company from the Private Placement were approximately $ 6,500,000 5,888,183 The Company repurchased its common shares in the following months as part of share repurchase program plan announced on June 21, 2022. Schedule of repurchase program plan Month Shares purchased Average cost per share Amount July, 2022 54,174 $ 0.80 $ 44 August, 2022 28,919 0.52 15 September, 2022 63,365 0.50 32 Total 146,458 $ 0.62 $ 91 |
Debt Securities
Debt Securities | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt Securities | 9) Debt Securities A. Convertible Note The Company during the period commencing December 29, 2020, and ending on February 10, 2021, entered into several Securities Purchase Agreements with certain investors pursuant to which we issued $ 4,244 10 0 106 B. Common Stock Warrants In connection with the issuance of Convertible Notes, the Company also issued Warrants to each holder of Convertible Notes which entitles the holder thereof to purchase a number of shares of our common stock equal to 50% of the number of shares that Convertible Note issued with such Warrant is convertible into at a price equal to $ 2.88 The warrants are subject to certain customary adjustments in the event of stock dividends and splits, issuance of options, subsequent rights offerings, and pro rata distributions. Warrant holders have “piggyback” registration rights as set forth therein and a breach of such rights with respect to any Warrant would result in an increase by 25% of the shares of our common stock underlying such Warrant. As of September 30, 2022, none of the warrants have been exercised by the note holders and hence no proceeds have been received towards any of the warrants. The Warrants have been valued using the Black-Scholes-Merton Option (“BSM”) pricing model that is based on the individual characteristics of the warrants on the valuation date, which include the Company’s stock fair value and assumptions for expected volatility, expected life and risk-free interest rate, as well as the present value of the minimum cash payment component of the instrument for the warrants, when applicable. Changes in the assumptions used could have a material impact on the resulting fair value of each warrant. The primary inputs affecting the value of the warrant liability are the Company’s stock price and volatility in the Company’s stock price, as well as assumptions about the probability and timing of certain events, such as a change in control or future equity offerings. Increases in the fair value of the underlying stock or increases in the volatility of the stock price generally result in a corresponding increase in the fair value of the warrant liability; conversely, decreases in the fair value of the underlying stock or decreases in the volatility of the stock price generally result in a corresponding decrease in the fair value of the warrant liability. The Company has recognized cost of nil for the quarter ended September 30, 2022, and nil for the quarter ended September 30, 2021. C. Payroll protection program loan The company received payroll protection program loan (PPP) 2 nd 1,087 D. Short Term borrowing The Company has obtained a credit facility from Seacoast business funding (SBF) a division of Seacoast National Bank during the quarter ended September 30, 2022. The funding is against the accounts receivables of the company and its subsidiary. The SBF facility charges an interest of prime rate plus 1 2,453 E. Warrant Liability The Company has allocated the proceeds from convertible note between promissory notes and warrants; as of September 30, 2022, the Company has reported a Warrant liability of $ 55 Schedule of fair value of warrant liabilities Fair value assumptions September 30, 2022 Estimated fair value of common stock warrant $ 0.37 Exercise price $ 0.40 Expected volatility 45 52 Expected terms (in years) 2 Risk-free interest rate 1.48 2.18 Dividend Yield 0 % |
Provision for Income Taxes
Provision for Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | 10) Provision for Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Management evaluates all available evidence about future taxable income and other possible sources of realization of deferred tax assets. A valuation allowance is established to reduce deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. To the extent the Company establishes a valuation allowance or increased the allowance in any given period, an expense is recognized within the provision for income taxes in the statement of income. The Company recognizes the tax benefit from uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income tax matters as other expense in the statement of income. Based on management’s evaluations, there are no uncertain tax positions requiring recognition as of the date of these financial statements. The components of the Company’s net deferred tax assets as of September 30, 2022 and December 31, 2021, were as follows (in thousands): Schedule of deferred tax assets September 30, 2022 December 31, 2021 Deferred tax assets: Net operating loss carry forward $ 1,527 $ 1,445 Stock-based compensation (11 ) (18 ) Other income (PPP loan forgiveness) 293 — Fair value of warrant — (15 ) Total Deferred tax asset 1,809 1,412 Less: Valuation allowance $ (1,809 ) $ (1,412 ) Deferred tax asset. net of valuation allowance — — Deferred tax liabilities — — Net deferred tax asset — — Income tax expense / (benefit) was computed as follows: Schedule of income tax expense benefit September 30, 2022 September 30, 2021 Federal income tax $ — $ — State income tax 37 1 Total Income taxes, Current provision 37 1 Deferred income taxes (benefit) — — Total Income tax (benefit) $ 37 $ 1 The Company’s effective tax rate is 2 0 The Company files a consolidated federal tax return with its parent and records its share of the consolidated federal tax expense on a separate return basis. The Company’s current tax expense is nil. There is no liability in 2021 on account of losses. The Company’s federal and state income tax returns are generally subject to possible examination by the taxing authorities until the expiration of the related statute of limitations on those tax returns which is generally three years from the original filing deadline. The Company regularly reviews its deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies. The Company’s judgment regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute the business plans and/or tax planning strategies. Should there be a change in the ability to recover deferred tax assets, the Company’s income tax provision would increase or decrease in the period in which the assessment is changed. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2022 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 11) New Accounting Pronouncements i) ASU 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in an interim period. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements. ii) ASU 2021-10—Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this Update are effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendments is permitted. The Company is currently evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements |
Legal Matters
Legal Matters | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | 12) Legal Matters The Company is not involved in any action, arbitration and/or other legal proceedings that it expects to have a material adverse effect on the business, financial condition, results of operations or liquidity of the Company. All legal cost is expensed as incurred. |
Share Based Compensation
Share Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Compensation Related Costs [Abstract] | |
Share Based Compensation | 13) Share Based Compensation We estimate the fair value of our stock options using the Black-Scholes option pricing model. This requires the input of subjective assumptions, including the fair value of our underlying common stock, the expected term of stock options, the expected volatility of the price of our common stock, risk-free interest rates, and the expected dividend yield of our common stock, the most critical of which, prior to our IPO, was the estimated fair value of common stock. The assumptions used in our option pricing model represent our best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense could be materially different in the future. The resulting fair value, net of actual forfeitures, is recognized on a straight-line basis over the period during which an employee is required to provide service in exchange for the award These assumptions used in the Black-Scholes option pricing model, other than the fair value of our common stock, are estimated as follows: • Expected volatility. Since a public market for our common stock did not exist prior to our IPO in October 2021 and, therefore, we do not have an extensive trading history of our common stock, we estimated the expected volatility based on the volatility of similar publicly-held entities (guideline companies) over a period equivalent to the expected term of the awards. In evaluating the similarity of guideline companies to us, we considered factors such as industry, stage of life cycle, size, and financial leverage. We intend to continue to consistently apply this process using the same or similar guideline companies to estimate the expected volatility until sufficient historical information regarding the volatility of the share price of our common stock becomes available. • Expected term. We estimate the expected term using the simplified method, as we do not have sufficient historical exercise activity to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method calculates the average period the stock options are expected to remain outstanding as the midpoint between the vesting date and the contractual expiration date of the award. • Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for maturities corresponding with the expected term of the option • Expected dividend yield. We have never declared or paid any dividends and do not presently plan to pay dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero. We are required to estimate the fair value of the common stock underlying our stock-based awards when performing fair value calculations Historically for all periods prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation, we exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock including: • contemporaneous valuations performed at periodic intervals by unrelated third-party specialists • our actual operating and financial performance. • relevant precedent transactions involving our capital stock; • likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given prevailing market conditions and the nature and history of our business; • market multiples of comparable companies in our industry; • stage of development. • industry information such as market size and growth; • illiquidity of stock-based awards involving securities in a private company; and I The Company issued 807,500 0.40 The Company issued 452,000 0.40 The Company issued non-qualified stock options (“Director Stock Option”) on January 01, 2021 to three of our directors, Vivek Prakash, Lakshmanan Kannappan and Shibu Kizhakevilayil 50,000 0.40 The Company, and Mr. Venkatachari entered into a four year employment agreement dated July 12, 2021 pursuant to which Mr. Venkatachari will perform the duties of the Company’s Chief Executive Officer and receive an annual base salary of $ 300 250,000 0.40 Schedule of stock option activity Options Shares of Stock No. of Options Weighted Average Price No. of Shares Weighted Average Price Total Equity 2020 Stock Incentive plan total shares 4,000,000 $ 0.40 — — 4,000,000 Incentive Stock Options (ISO) 1,131,500 $ 0.40 — — 1,131,500 Non-Qualified Stock Options (NSO) 452,000 $ 0.40 — — 452,000 Non-Qualified Stock Options (NSO) - Directors Stock Options 230,000 $ 0.40 — — 230,000 Cancelled/expired — — — — — Balance outstanding as at December 31, 2021 1,813,500 — — — 1,813,500 Balance available under the plan as at December 31, 2021 2,186,500 — — — 2,186,500 Transferred back to plan (263,135 ) — — — (263,135 ) Stock options issued 399,701 — — — 399,701 Balance available under the plan as of September 30, 2022 2,049,934 — — — 2,049,934 The Company issued and valued options using the Black-Scholes model for all 2022 issuances with the following significant assumptions. Schedule of assumptions Fair value assumptions 2022 Estimated fair value of common stock warrant $ 0.37 Exercise price $ 0.40 Expected volatility 45 52 Expected terms (in years) 4 Risk-free interest rate 1.48 2.18 Dividend yield 0 % The Company recognized compensation expenses related to ISO/NSO stock options of $ 13 19 |
Defined Contribution Retirement
Defined Contribution Retirement Plan | 9 Months Ended |
Sep. 30, 2022 | |
Defined Contribution Retirement Plan | |
Defined Contribution Retirement Plan | 14) Defined Contribution Retirement Plan The Company established the savings plan (hereinafter referred to as the “Plan”) to provide eligible employees with a means of deferring current compensation from income tax. This plan is offered to all employees who have attained twenty-one years of age and have competed six consecutive months of service with the employer. The Company, at its discretion, may make matching contributions and/or elective contributions at the end of the year to eligible participants. The Company has not made any matching contributions for the quarter ended September 30, 2022. |
Net Income per share
Net Income per share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Income per share | 15) Net Income per share The Company presents basic and diluted earnings per share ("EPS") data for its common stock. Basic EPS is calculated by dividing the net income attributable to stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is determined by adjusting the net income attributable to stockholders of the Company and the weighted average number of shares of common stock outstanding during the period for the effects of all dilutive potential common shares, including awards under stock-based compensation arrangements. The Company's unvested restricted stock awards are considered participating securities under FASB Codification topic, Earnings Per Share, because they entitle holders to non-forfeitable rights to dividends until the awards vest or are forfeited. When a company has a security that qualifies as a "participating security," the Codification requires the use of the two-class method when computing basic EPS. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net income to allocate to common stockholders, income is allocated to both common stock and participating securities based on their respective weighted average shares outstanding for the period, with net income attributable to common stockholders ultimately equaling net income less net income attributable to participating securities. Diluted EPS for the Company's common stock is computed using the more dilutive of the two-class method or the treasury stock method. Schedule of earning per shares Three Months Ended 2022 2021 Net income (loss) attributable to common stockholders $ (2,339 ) $ (1,992) Weighted average shares outstanding used in basic per common share computations 36,022,893 28,839,889 Weighted average shares outstanding used in diluted per common share computations 36,022,893 28,839,889 Basic /Diluted EPS $ (0.07 ) $ (0.07) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16) Subsequent Events For the quarter ended September 30, 2022, the Company has evaluated subsequent events through November 9, 2022 the date, which the financial statements were available to be issued. No reportable subsequent events have occurred through November 9, 2022, which would have a significant effect on the financial statements as of September 30, 2022 excluding the items mentioned below. The Company has repurchased 49,011 16 0.33 The Company has issued 2,167,561 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | 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 | 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 | 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 Executive Officer. The Chief Executive 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 Revenue by Operating Segment Three Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 6,177 $ 2,307 $ 3,870 168 Managed Services and Support 3,708 4,673 (965) ( 21 Platform Services 2,065 1,098 967 88 Revenue $ 11,950 $ 8,078 $ 3,872 48 Nine Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 18,218 $ 8,248 $ 9,970 121 Managed Services and Support 11,879 14,204 (2,325 ) ( 16 Platform Services 4,497 3,629 868 24 Revenue $ 34,594 $ 26,081 $ 8,513 33 Operating profit (loss) by Operating Segment Operating profit by Operating Segment Three Months Ended Changes 2022 2021 Amount % Software Services $ (145) $ 80 $ (225) ( 281 Managed Services and Support 1,397 1,466 (69) ( 5 Platform Services (992) (1,545) 553 ( 36 Total segment operating profit 260 1 259 ( 259 Less: unallocated costs 2,507 1,771 736 42 Income (loss) from operations (2,247) (1,770) (477) ( 27 Other Income - - - 0 Interest expense 55 221 (166) ( 75 Net income (loss) before income tax $ (2,302) $ (1,991 ) $ (311 ) ( 16 Nine Months Ended Changes 2022 2021 Amount % Software Services $ (665) $ 1,070 $ (1,735) ( 162 Managed Services and Support 3,935 3,794 141 4 Platform Services (1,777) (1,640) (137) ( 8 Total segment operating profit 1,493 3,224 (1,731) ( 54 Less: unallocated costs 7,147 5,243 1,904 ( 36 Income (loss) from operations (5,654) (2,019) (3,635) ( 180 Other income 1,087 - 1,087 100 Interest expense 129 480 (351) 73 Net income (loss) before income tax $ (4,696) $ (2,499) $ 2,197 ( 88 ) Revenue from top 5 customers Three Months Ended September 30, 2022 Schedule of concentration (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 4,562 38 % Customer 2 1,840 15 % Customer 3 1,218 10 % Customer 4 1,063 9 % Customer 5 $ 534 4 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 2,004 25 % Customer 2 1,653 20 % Customer 3 1,400 17 % Customer 4 754 9 % Customer 5 $ 624 8 % Nine Months Ended September 30, 2022 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 12,912 37 % Customer 2 4,770 14 % Customer 3 3,726 11 % Customer 4 2,963 9 % Customer 5 $ 1,181 3 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 11,295 43 % Customer 2 2,607 10 % Customer 3 2,131 8 % Customer 4 1,799 7 % Customer 5 $ 1,630 6 % |
Revenue Recognition | Revenue Recognition We recognize revenues as we transfer control of deliverables (services, solutions, and platform) to our clients in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We apply judgment in determining the customer’s ability and intention to pay based on a variety of factors including the customer’s historical payment experience. For performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. |
Software Services | Software Services The Company enters into contractual obligations with the customers to perform (i) Strategic advisory services which include assessment of the enterprise network, applications environment and advise on the design and tools; (ii) Implementation services which include deployment, upgrades, enhancements, migration, training, documentation and maintenance of various electronic health record systems and (iii) Development services which include customization of network and applications in the public cloud environment. Revenue from Strategic advisory, Implementation and Development services are distinct performance obligation and is recognized on time-and-material or fixed-price project basis. Revenues related to time-and-material are recognized over the period the services are provided using labor hours. Revenues related to fixed-price contracts are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized based on the percentage that each contract’s total labor cost to date bears to the total expected labor costs. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately, where appropriate. We may enter contracts that consist of multiple performance obligations. Such contracts may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For contracts with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we estimate standalone selling price by using the expected cost plus a margin approach. We establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change. |
Managed Services and Support | Managed Services and Support The Company has standard contracts for its Managed Services and Support, however the statement of work contained in such contracts is unique for each customer. A typical Managed Services and Support contract would provide for some or all of the following types of services being provided to the customer: Cloud hosting, Continuous monitoring of applications, security and compliance and support. Revenue from Managed services and support is a distinct performance obligation and recognized based on SSP (standalone selling price), ratably on a straight-line basis over the period in which the services are rendered. Contract with customers includes subcontractor services or third-party cloud infrastructure services in certain integrated services arrangements. In these types of arrangements, revenue is recognized net of costs when the Company is acting as an agent between the customer and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it controls the platform or service before it is transferred to the customer. The Company considers whether it has the primary obligation to fulfil the contract, pricing discretion and other factors to determine whether it controls the platform or service and therefore is acting as a principal or an agent. Payment for managed services and support is due monthly. |
Platform Services | Platform Services The Company has standard contracts for its Platform Services, however the statement of work contained in such contracts is unique for each customer. A typical Platform Services contract would provide for some or all of the following types of services being provided to the customer: Data Analytics, Backup and Recovery, through our Platform. The revenue from Platform services is a distinct performance obligation and recognized based on SSP. During the periods presented the Company generated revenue from Platform services on a fixed-price solutions delivery model. Revenues related to fixed-price contracts are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized based on the percentage that each contract’s total labor cost to date bears to the total expected labor costs. The cost-to-cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately, where appropriate. Our contractual terms and conditions for Software services, Managed Services and Support and Platform services mandate that our services are documented and subject to inspection, testing at the time of delivery to customer. In addition, the Company needs to integrate seamlessly into the customers’ systems. Also, the customer has a right to cancel all, or part of the services rendered if it is not in accordance with statement of work and within the stipulated time. |
Contract Balances | Contract Balances The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deferred revenue (contract liabilities) on the Consolidated Balance Sheet. Amounts are billed as work progresses in accordance with agreed upon contractual terms, generally monthly upon achievement of contractual milestones. Generally, billing occurs after revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers, particularly on our international contracts, before revenue is recognized, resulting in contract liabilities. These deposits are liquidated when revenue is recognized. The beginning and ending contract balances were as follows: Schedule of receivables and contract liabilities September 30, 2022 December 31, 2021 Accounts receivable $ 6,702 $ 9,672 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments (including money market funds) with an original maturity at acquisition of three months or less to be cash equivalents. The Company maintains cash balances, which may exceed federally insured limits. The Company does not believe that this results in any significant credit risk. |
Accounts Receivable | Accounts Receivable The Company extends credit to clients based upon management’s assessment of their creditworthiness on an unsecured basis. The Company provides an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. The Company includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. For the quarter ended September 30, 2022, the Company provide allowances for uncollectible accounts $ 222 and for year ended December 31, 2021 the Company did not provide allowances for uncollectible accounts. Based on the information available, management believes the Company’s accounts receivable are collectible. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. The Company provides for depreciation of property and equipment using the straight-line method over the estimated useful lives of the related assets ranging from 3 to 7 years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease terms or the useful lives of the improvements. The Company charges repairs and maintenance costs that do not extend the lives of the assets to expenses as incurred. |
Intangible Assets | Intangible Assets We capitalize certain costs incurred for the platform development when it is determined that it is probable that the platform will be completed and will be used as intended. Costs related to preliminary project activities, post-implementation activities, training, and maintenance are expensed as incurred. Customer relationship and platform development are amortized based on finite lives using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. |
Goodwill | Goodwill Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized but is subject to an annual impairment test. The Company performs its annual goodwill impairment test on an annual basis in the fourth quarter of each fiscal year or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s goodwill is less than the carrying value of the reporting unit’s goodwill. The Company’s quarterly goodwill impairment test resulted in no impairment charges in the quarter ended September 30, 2022 and 2021. |
Software Development Costs | Software Development Costs Costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred and classified under research and development expenses until technological feasibility has been established, at which time any additional costs would be capitalized. The Company believes its current process for developing software is essentially completed concurrently with the establishment of technological feasibility. Software development costs charged to expense for the quarter ended September 30, 2022, and 2021 was $ 334 189 |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Trade accounts receivable are stated at the amount the Company expects to collect and do not bear interest. The collectability of trade receivable balances is regularly evaluated based on a combination of factors such as customer creditworthiness, past transaction history with the customer, current economic industry trends and changes in customer payment pattern. Additionally, if it is determined that a customer will be unable to fully meet its financial obligation, such as in the case of a bankruptcy filing or other material event impacting its business, a specific allowance for doubtful accounts may be recorded to reduce the related receivable to the amount expected to be recovered. Although we believe that our approach to estimates and judgments regarding our allowance for doubtful accounts is reasonable, actual results could differ and we may be exposed to increases or decreases in required allowances that could be material. |
Business Combinations | Business Combinations As per ASC 805-50 a common-control transaction does not meet the definition of a business combination because there is no change in control over the net assets. The accounting for these transactions are addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control. Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle is applied retroactively for all periods presented. We account for business combinations using the acquisition method, which requires the identification of the acquirer, the determination of the acquisition date and the allocation of the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our consolidated financial statements from the date of effective control. |
Valuation of Contingent Earn-out Consideration | Valuation of Contingent Earn-out Consideration Acquisitions may include contingent consideration payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable, however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Any changes in the estimated fair value of contingent consideration may have a material impact on our operating results. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. |
Fair Value Measurements | Fair Value Measurements The Company measures its financial assets at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are observable and reflect quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3—Inputs that are unobservable Money market funds and U.S. treasury securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Available-for-sale debt securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models. In connection with the acquisition of Devcool, Inc., the Company recognized a liability on the acquisition date for the estimated fair value of the contingent consideration based on the probability of achieving certain milestones pursuant to the acquisition agreement. The fair value measurement of the contingent consideration is based on significant unobservable inputs and management judgment; therefore, it is categorized under Level 3 at the balance sheet date in the table below. Schedule of balance sheet September 30, 2022 Fair value measured using Level 1 Level 2 Level 3 Total Financial liabilities: Warrant liabilities $ 55 $ 55 Contingent consideration — — $ 2,227 $ 2,227 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options over the instruments vesting period. Options awarded to purchase shares of common stock issued to non-employees do not need to be remeasured as per ASU 2018-07 principles. The Company adopted the “2020 Stock Incentive Plan” (Plan). The Company has reserved 4,000,000 |
Income taxes | Income taxes The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date. |
Advertising Costs | Advertising Costs The Company expenses advertising cost as incurred. Advertising expense for the quarters ended September 30, 2022, and 2021 were Nil. |
Concentrations | Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade receivables. Credit risks associated with trade receivables is minimal due to the Company’s customer base which consist of large customer base and ongoing procedures, which monitor the credit worthiness of its customers. For the quarter ended September 30, 2022 and 2021 sales to top five customers accounted for approximately 76 79 62 88 The Company maintains cash balances in various financial institutions. The balances are generally insured by the Federal Deposit Insurance Corporation up to $ 250 As of September 30, 2022, and December 31, 2021, the Company had $ 1,453 719 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Operating segment | Schedule of Operating segment Revenue by Operating Segment Three Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 6,177 $ 2,307 $ 3,870 168 Managed Services and Support 3,708 4,673 (965) ( 21 Platform Services 2,065 1,098 967 88 Revenue $ 11,950 $ 8,078 $ 3,872 48 Nine Months Ended Changes 2022 2021 Amount % (In thousands, except percentages) Software Services $ 18,218 $ 8,248 $ 9,970 121 Managed Services and Support 11,879 14,204 (2,325 ) ( 16 Platform Services 4,497 3,629 868 24 Revenue $ 34,594 $ 26,081 $ 8,513 33 |
Operating profit by Operating Segment | Operating profit by Operating Segment Three Months Ended Changes 2022 2021 Amount % Software Services $ (145) $ 80 $ (225) ( 281 Managed Services and Support 1,397 1,466 (69) ( 5 Platform Services (992) (1,545) 553 ( 36 Total segment operating profit 260 1 259 ( 259 Less: unallocated costs 2,507 1,771 736 42 Income (loss) from operations (2,247) (1,770) (477) ( 27 Other Income - - - 0 Interest expense 55 221 (166) ( 75 Net income (loss) before income tax $ (2,302) $ (1,991 ) $ (311 ) ( 16 Nine Months Ended Changes 2022 2021 Amount % Software Services $ (665) $ 1,070 $ (1,735) ( 162 Managed Services and Support 3,935 3,794 141 4 Platform Services (1,777) (1,640) (137) ( 8 Total segment operating profit 1,493 3,224 (1,731) ( 54 Less: unallocated costs 7,147 5,243 1,904 ( 36 Income (loss) from operations (5,654) (2,019) (3,635) ( 180 Other income 1,087 - 1,087 100 Interest expense 129 480 (351) 73 Net income (loss) before income tax $ (4,696) $ (2,499) $ 2,197 ( 88 ) |
Schedule of concentration | Schedule of concentration (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 4,562 38 % Customer 2 1,840 15 % Customer 3 1,218 10 % Customer 4 1,063 9 % Customer 5 $ 534 4 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 2,004 25 % Customer 2 1,653 20 % Customer 3 1,400 17 % Customer 4 754 9 % Customer 5 $ 624 8 % Nine Months Ended September 30, 2022 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 12,912 37 % Customer 2 4,770 14 % Customer 3 3,726 11 % Customer 4 2,963 9 % Customer 5 $ 1,181 3 % 2021 (In thousands, except percentages) Customer Amount % of Revenue Customer 1 $ 11,295 43 % Customer 2 2,607 10 % Customer 3 2,131 8 % Customer 4 1,799 7 % Customer 5 $ 1,630 6 % |
Schedule of receivables and contract liabilities | Schedule of receivables and contract liabilities September 30, 2022 December 31, 2021 Accounts receivable $ 6,702 $ 9,672 |
Schedule of balance sheet | Schedule of balance sheet September 30, 2022 Fair value measured using Level 1 Level 2 Level 3 Total Financial liabilities: Warrant liabilities $ 55 $ 55 Contingent consideration — — $ 2,227 $ 2,227 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment September 30, 2022 December 31, 2021 Furniture and equipment $ 106 $ 80 Less: Accumulated depreciation (30 ) (6 ) Net fixed assets $ 76 $ 74 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Schedule of intangible assets September 30, 2022 December 31, 2021 Customer relationships $ 8,667 $ 8,667 Intellectual property 7,329 4,050 Product development 477 477 16,473 13,194 Accumulated amortization (5,046 ) (2,736 ) Net intangible assets $ 11,427 $ 10,458 |
Schedule of intangibles asset useful life | Schedule of intangibles asset useful life Nature of Intangibles Useful Life Customer relationships 5 Intellectual property 5 Product development 5 |
Schedule of amortization expense | Schedule of amortization expense September 30, 2022 $ 1,714 2023 2,285 2024 2,285 2025 2,285 2026 2,285 2027 573 Total $ 11,427 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of lease expenses | Schedule of lease expenses Particulars September 30, 2022 December 31, 2021 Opening balance $ 176 $ — Additions 344 Finance cost accrued during the period 10 13 Payment of lease liability 145 181 Closing balance $ 41 $ 176 |
Schedule of balance sheet related to leases | Schedule of balance sheet related to leases Three Months Ended September 30, 2022 Leases ROU assets $ 43 lease liabilities, included in current liabilities 41 lease liabilities, included in long-term liabilities — Total lease liabilities $ 41 |
Schedule of cash flow related to leases | Schedule of cash flow related to leases Three Months Ended September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities: Cash flows from leases $ 43 ROU assets obtained in exchange for lease liabilities: 344 Leases Weighted average remaining lease term (in months): 12 Weighted average discount rate: 4.75 % |
Schedule of future minimum payments | Schedule of future minimum payments 2022 $ 49 Total Lease payments 49 Less: Amount Representing Interest (8 ) Total lease obligation $ 41 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of allocation of purchase price | Schedule of allocation of purchase price Asset component September 30, 2022 Intangibles $ 6,018 Goodwill 1,289 Working capital — Current assets Cash 970 Accounts receivables 3,142 Other current assets Other Current Assets 11,419 Current liabilities Accounts payable 758 Short term borrowing 2,209 Other current liabilities 679 Current liabilities 3,646 Net working capital acquired 7,773 Total purchase price $ 7,773 |
Equity Transactions (Tables)
Equity Transactions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of repurchase program plan | Schedule of repurchase program plan Month Shares purchased Average cost per share Amount July, 2022 54,174 $ 0.80 $ 44 August, 2022 28,919 0.52 15 September, 2022 63,365 0.50 32 Total 146,458 $ 0.62 $ 91 |
Debt Securities (Tables)
Debt Securities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of fair value of warrant liabilities | Schedule of fair value of warrant liabilities Fair value assumptions September 30, 2022 Estimated fair value of common stock warrant $ 0.37 Exercise price $ 0.40 Expected volatility 45 52 Expected terms (in years) 2 Risk-free interest rate 1.48 2.18 Dividend Yield 0 % |
Provision for Income Taxes (Tab
Provision for Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets | Schedule of deferred tax assets September 30, 2022 December 31, 2021 Deferred tax assets: Net operating loss carry forward $ 1,527 $ 1,445 Stock-based compensation (11 ) (18 ) Other income (PPP loan forgiveness) 293 — Fair value of warrant — (15 ) Total Deferred tax asset 1,809 1,412 Less: Valuation allowance $ (1,809 ) $ (1,412 ) Deferred tax asset. net of valuation allowance — — Deferred tax liabilities — — Net deferred tax asset — — |
Schedule of income tax expense benefit | Schedule of income tax expense benefit September 30, 2022 September 30, 2021 Federal income tax $ — $ — State income tax 37 1 Total Income taxes, Current provision 37 1 Deferred income taxes (benefit) — — Total Income tax (benefit) $ 37 $ 1 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Compensation Related Costs [Abstract] | |
Schedule of stock option activity | Schedule of stock option activity Options Shares of Stock No. of Options Weighted Average Price No. of Shares Weighted Average Price Total Equity 2020 Stock Incentive plan total shares 4,000,000 $ 0.40 — — 4,000,000 Incentive Stock Options (ISO) 1,131,500 $ 0.40 — — 1,131,500 Non-Qualified Stock Options (NSO) 452,000 $ 0.40 — — 452,000 Non-Qualified Stock Options (NSO) - Directors Stock Options 230,000 $ 0.40 — — 230,000 Cancelled/expired — — — — — Balance outstanding as at December 31, 2021 1,813,500 — — — 1,813,500 Balance available under the plan as at December 31, 2021 2,186,500 — — — 2,186,500 Transferred back to plan (263,135 ) — — — (263,135 ) Stock options issued 399,701 — — — 399,701 Balance available under the plan as of September 30, 2022 2,049,934 — — — 2,049,934 |
Schedule of assumptions | Schedule of assumptions Fair value assumptions 2022 Estimated fair value of common stock warrant $ 0.37 Exercise price $ 0.40 Expected volatility 45 52 Expected terms (in years) 4 Risk-free interest rate 1.48 2.18 Dividend yield 0 % |
Net Income per share (Tables)
Net Income per share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of earning per shares | Schedule of earning per shares Three Months Ended 2022 2021 Net income (loss) attributable to common stockholders $ (2,339 ) $ (1,992) Weighted average shares outstanding used in basic per common share computations 36,022,893 28,839,889 Weighted average shares outstanding used in diluted per common share computations 36,022,893 28,839,889 Basic /Diluted EPS $ (0.07 ) $ (0.07) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information [Line Items] | ||||
Revenue | $ 11,950 | $ 8,078 | $ 34,594 | $ 26,081 |
Changes amount | $ 3,872 | $ 8,513 | ||
Changes percentage | 48% | 33% | ||
Software Services [Member] | ||||
Product Information [Line Items] | ||||
Revenue | $ 6,177 | 2,307 | $ 18,218 | 8,248 |
Changes amount | $ 3,870 | $ 9,970 | ||
Changes percentage | 168% | 121% | ||
Managed Services And Support [Member] | ||||
Product Information [Line Items] | ||||
Revenue | $ 3,708 | 4,673 | $ 11,879 | 14,204 |
Changes amount | $ (965) | $ (2,325) | ||
Changes percentage | 21% | 16% | ||
Platform Services [Member] | ||||
Product Information [Line Items] | ||||
Revenue | $ 2,065 | $ 1,098 | $ 4,497 | $ 3,629 |
Changes amount | $ 967 | $ 868 | ||
Changes percentage | 88% | 24% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information [Line Items] | ||||
Total segment operating profit | $ 260 | $ 1 | $ 1,493 | $ 3,224 |
Total segment operating profit amount changes | $ 259 | $ (1,731) | ||
Total segment operating profit | 259% | 54% | ||
Less: unallocated costs | $ 2,507 | 1,771 | $ 7,147 | 5,243 |
Less: unallocated costs amount changes | $ 736 | $ 1,904 | ||
Less: unallocated costs | 42% | 36% | ||
Income from operations | $ (2,247) | (1,770) | $ (5,654) | (2,019) |
Income from operations amount changes | $ (477) | $ (3,635) | ||
Income from operations | 27% | 180% | ||
Other income | $ 1,087 | |||
Other income amount changes | $ 1,087 | |||
Other Income | 0% | 100% | ||
Interest expense | $ 55 | 221 | $ 129 | 480 |
Interest expense amount changes | $ (166) | $ (351) | ||
Interest expense | 75% | 73% | ||
Net income (loss) before income tax expenses | $ (2,302) | (1,991) | $ (4,696) | (2,499) |
Net income (loss) before income tax expenses amount changes | $ (311) | $ 2,197 | ||
Net income (loss) before income tax expenses | 16% | 88% | ||
Software Services [Member] | ||||
Product Information [Line Items] | ||||
Total segment operating profit | $ (145) | 80 | $ (665) | 1,070 |
Total segment operating profit amount changes | $ (225) | $ (1,735) | ||
Total segment operating profit | 281% | 162% | ||
Managed Services And Support [Member] | ||||
Product Information [Line Items] | ||||
Total segment operating profit | $ 1,397 | 1,466 | $ 3,935 | 3,794 |
Total segment operating profit amount changes | $ (69) | $ 141 | ||
Total segment operating profit | 5% | 4% | ||
Platform Services [Member] | ||||
Product Information [Line Items] | ||||
Total segment operating profit | $ (992) | $ (1,545) | $ (1,777) | $ (1,640) |
Total segment operating profit amount changes | $ 553 | $ (137) | ||
Total segment operating profit | 36% | 8% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | $ 11,950 | $ 8,078 | $ 34,594 | $ 26,081 |
Customer 1 [Member] | ||||
Revenue | $ 4,562 | $ 2,004 | $ 12,912 | $ 11,295 |
Concentration Risk, Percentage | 38% | 25% | 37% | 43% |
Customer 2 [Member] | ||||
Revenue | $ 1,840 | $ 1,653 | $ 4,770 | $ 2,607 |
Concentration Risk, Percentage | 15% | 20% | 14% | 10% |
Customer 3 [Member] | ||||
Revenue | $ 1,218 | $ 1,400 | $ 3,726 | $ 2,131 |
Concentration Risk, Percentage | 10% | 17% | 11% | 8% |
Customer 4 [Member] | ||||
Revenue | $ 1,063 | $ 754 | $ 2,963 | $ 1,799 |
Concentration Risk, Percentage | 9% | 9% | 9% | 7% |
Customer 5 [Member] | ||||
Revenue | $ 534 | $ 624 | $ 1,181 | $ 1,630 |
Concentration Risk, Percentage | 4% | 8% | 3% | 6% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Accounts receivable | $ 6,702 | $ 9,672 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) $ in Thousands | Sep. 30, 2022 USD ($) |
Defined Benefit Plan Disclosure [Line Items] | |
Warrant liabilities | $ 55 |
Contingent consideration | 2,227 |
Fair Value, Inputs, Level 3 [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Warrant liabilities | 55 |
Contingent consideration | 2,227 |
Fair Value, Inputs, Level 1 [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Contingent consideration | |
Fair Value, Inputs, Level 2 [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Contingent consideration |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Product Information [Line Items] | |||
Business Development | $ 334 | $ 189 | |
Cash, FDIC Insured Amount | 250 | ||
Cash Equivalents, at Carrying Value | $ 1,453 | $ 719 | |
Five Major Customers [Member] | Accounts Receivable [Member] | |||
Product Information [Line Items] | |||
Concentration Risk, Percentage | 76% | 79% | |
Five Major Customers [Member] | Revenue Benchmark [Member] | |||
Product Information [Line Items] | |||
Concentration Risk, Percentage | 62% | 88% | |
Stock Incentive Plan 2020 [Member] | |||
Product Information [Line Items] | |||
Common Stock, Capital Shares Reserved for Future Issuance | 4,000,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Abstract] | ||
Furniture and equipment | $ 106 | $ 80 |
Less: Accumulated depreciation | (30) | (6) |
Net fixed assets | $ 76 | $ 74 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 8 | $ 6 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 16,473 | $ 13,194 |
Accumulated amortization | (5,046) | (2,736) |
Net Intangible Assets | 11,427 | 10,458 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | 8,667 | 8,667 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | 7,329 | 4,050 |
Product Development [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets gross | $ 477 | $ 477 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) | 9 Months Ended |
Sep. 30, 2022 | |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Intellectual Property [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Product Development [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 5 years |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 | $ 1,714 | |
2023 | 2,285 | |
2024 | 2,285 | |
2025 | 2,285 | |
2026 | 2,285 | |
2027 | 573 | |
Total | $ 11,427 | $ 10,458 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 857 | $ 206 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Opening balance | $ 176 | |
Additions | 344 | |
Finance cost accrued during the year | 10 | 13 |
Payment of lease liability | 145 | 181 |
Closing Balance | $ 41 | $ 176 |
Leases (Details 1)
Leases (Details 1) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | |||
ROU assets | $ 43 | ||
lease liabilities, included in current liabilities | 41 | ||
lease liabilities, included in long-term liabilities | |||
Total lease liabilities | $ 41 | $ 176 |
Leases (Details 2)
Leases (Details 2) $ in Thousands | 3 Months Ended |
Sep. 30, 2022 USD ($) | |
Leases [Abstract] | |
Cash flows from leases | $ 43 |
ROU assets obtained in exchange for lease liabilities: | $ 344 |
Weighted average remaining lease term | 12 months |
Weighted average discount rate | 4.75% |
Leases (Details 3)
Leases (Details 3) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Leases [Abstract] | |
2022 | $ 49 |
Total Lease payments | 49 |
Less: Amount Representing Interest | (8) |
Total lease obligation | $ 41 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Rent expense | $ 48 | $ 54 | $ 48 | $ 54 |
Due from Related Party (Details
Due from Related Party (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |||||
Due from Other Related Parties, Noncurrent | $ 383 | $ 238 | $ 383 | $ 238 | |
Operating Leases, Rent Expense, Net | 48 | $ 54 | 48 | $ 54 | |
Due from Related Parties | $ 950 | $ 950 | $ 816 |
Business Combination (Details)
Business Combination (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
Intangibles | $ 6,018 |
Goodwill | 1,289 |
Working capital | |
Current assets | |
Cash | 970 |
Accounts receivables | 3,142 |
Other Current Assets | 11,419 |
Current liabilities | |
Accounts payable | 758 |
Short term borrowing | 2,209 |
Other current liabilities | 679 |
Current liabilities | 3,646 |
Net working capital acquired | 7,773 |
Total purchase price | $ 7,773 |
Business Combination (Details N
Business Combination (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
May 08, 2020 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Proceeds from sale of other assets | $ 4,500 | |
Weighted average price of stock amount | $ 700 | |
Unvested common stock | 83,718 | |
Earnout payment | $ 2,500 | |
Debt Instrument, Face Amount | $ 2,209 | |
Debt Instrument, Maturity Date | Apr. 30, 2022 | |
Repayments of short term debt | $ 1,709 | |
Goodwill, Gross | 1,289 | |
Year 1 Equity Earnout [Member] | ||
Business Acquisition [Line Items] | ||
Proceeds from sale of other assets | 1,000 | |
Number of shares issued, value | 250 | |
Year 2 Equity Earnout [Member] | ||
Business Acquisition [Line Items] | ||
Proceeds from sale of other assets | 1,000 | |
Number of shares issued, value | 250 | |
Devcool Inc [Member] | ||
Business Acquisition [Line Items] | ||
Aggregate purchase price | $ 7,773 | |
Share Purchase Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Unvested common stock | 209,295 | |
Cornerstone Advisory Services L L C [Member] | ||
Business Acquisition [Line Items] | ||
Equity Method Investment, Ownership Percentage | 100% | |
Cornerstone Advisory Services L L C [Member] | Equity Purchase Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Business Combination, Consideration Transferred | $ 7,000 | |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | 7,000 | |
Net working capital | 4,700 | |
Intangibles consideration | $ 2,300 | |
Mr. Deokule [Member] | ||
Business Acquisition [Line Items] | ||
Number of shares issued, value | $ 700 |
Equity Transactions (Details)
Equity Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Aug. 31, 2022 | Jul. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Shares purchased | 146,458 | ||||
Average cost per share | $ 0.62 | $ 0.62 | $ 0.62 | ||
Purchased amount | $ 91 | $ 91 | |||
Common Stock [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Shares purchased | 63,365 | 28,919 | 54,174 | ||
Average cost per share | $ 0.50 | $ 0.52 | $ 0.80 | $ 0.50 | $ 0.50 |
Purchased amount | $ 32 | $ 15 | $ 44 |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares purchase | 146,458 |
Share price | $ / shares | $ 1.066 |
Share price | $ / shares | $ 1.065 |
Gross proceeds private placement | $ | $ 5,888,183 |
Private Placement [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
Number of shares issued | 3,930,000 |
Warrant purchased | 2,167,561 |
Number of shares purchase | 6,097,561 |
Gross proceeds private placement | $ | $ 6,500,000 |
Debt Securities (Details)
Debt Securities (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares | |
Debt Instrument [Line Items] | |
Estimated fair value of common stock warrant | $ 0.37 |
Exercise price | $ 0.40 |
Expected terms | 2 years |
Dividend Yield | 0% |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 45% |
Risk-free interest rate | 1.48% |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 52% |
Risk-free interest rate | 2.18% |
Debt Securities (Details Narrat
Debt Securities (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |||
Convertible Notes Payable | $ 4,244 | ||
Debt Instrument, Interest Rate During Period | 10% | ||
Interest Expense, Long-Term Debt | $ 0 | $ 106 | |
Debt Instrument, Convertible, Conversion Price | $ 2.88 | ||
Other income | $ 1,087 | $ 1,087 | |
Short-Term Debt, Interest Rate Increase | 1% | ||
Short-Term Bank Loans and Notes Payable | $ 2,453 | ||
Fair Value Adjustment of Warrants | $ 55 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carry forward | $ 1,527 | $ 1,445 |
Stock-based compensation | (11) | (18) |
Other income (PPP loan forgiveness) | 293 | |
Fair value of warrant | (15) | |
Total Deferred tax asset | 1,809 | 1,412 |
Less: Valuation allowance | (1,809) | (1,412) |
Deferred tax asset. net of valuation allowance | ||
Deferred tax liabilities | ||
Net deferred tax asset |
Provision for Income Taxes (D_2
Provision for Income Taxes (Details 1) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax | ||
State income tax | 37 | 1 |
Total Income taxes, Current provision | 37 | 1 |
Deferred income taxes (benefit) | ||
Total Income tax (benefit) | $ 37 | $ 1 |
Provision for Income Taxes (D_3
Provision for Income Taxes (Details Narrative) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, Percent | 2% | 0% |
Share Based Compensation (Detai
Share Based Compensation (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares exercisable beginning balance | 1,813,500 | 4,000,000 |
Incentive Stock Options (ISO) | 1,131,500 | |
Non-Qualified Stock Options (NSO) | 452,000 | |
Non-Qualified Stock Options (NSO) - Directors Stock Options | 230,000 | |
Cancelled/expired | ||
Shares exercisable beginning balance | 2,186,500 | |
Transferred back to plan | (263,135) | |
Stock options issued | 399,701 | |
Shares exercisable ending balance | 2,049,934 | 2,186,500 |
Equity Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares exercisable beginning balance | 1,813,500 | 4,000,000 |
Weighted average price, outstanding beginning | $ 0.40 | |
Incentive Stock Options (ISO) | 1,131,500 | |
Weighted Average Price, Incentive Stock Options (ISO) | $ 0.40 | |
Non-Qualified Stock Options (NSO) | 452,000 | |
Weighted Average Price, Non-Qualified Stock Options (NSO) | $ 0.40 | |
Non-Qualified Stock Options (NSO) - Directors Stock Options | 230,000 | |
Weighted Average Price, Non-Qualified Stock Options (NSO) - Directors Stock Options | $ 0.40 | |
Cancelled/expired | ||
Weighted average price cancelled | ||
Weighted average price, outstanding ending | ||
Shares exercisable beginning balance | 2,186,500 | |
Transferred back to plan | (263,135) | |
Stock options issued | 399,701 | |
Shares exercisable ending balance | 2,049,934 | 2,186,500 |
Share Based Compensation (Det_2
Share Based Compensation (Details 1) | 9 Months Ended |
Sep. 30, 2022 $ / shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Estimated fair value of common stock warrant | $ 0.37 |
Exercise price | $ 0.40 |
Expected terms | 2 years |
Dividend Yield | 0% |
Minimum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected volatility | 45% |
Risk-free interest rate | 1.48% |
Maximum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected volatility | 52% |
Risk-free interest rate | 2.18% |
Options Held [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Estimated fair value of common stock warrant | $ 0.37 |
Exercise price | $ 0.40 |
Expected terms | 4 years |
Options Held [Member] | Minimum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected volatility | 45% |
Risk-free interest rate | 1.48% |
Options Held [Member] | Maximum [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Expected volatility | 52% |
Risk-free interest rate | 2.18% |
Share Based Compensation (Det_3
Share Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | |
Venkatachari [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of options issued | 250,000 | ||
Exercise price | $ 0.40 | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 300 | ||
Share-Based Payment Arrangement, Noncash Expense | $ 13 | $ 19 | |
Incentive Stock Options [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of options issued | 807,500 | ||
Exercise price | $ 0.40 | ||
Non Qualified Stock Options [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of options issued | 452,000 | ||
Exercise price | $ 0.40 | ||
Director Stock Option [Member] | Vivek Prakash [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of options issued | 50,000 | ||
Exercise price | $ 0.40 |
Net Income per share (Details)
Net Income per share (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | ||
Net income (loss) attributable to common stockholders | $ (2,339) | $ (1,992) |
Weighted average shares outstanding used in basic per common share computations | 36,022,893 | 28,839,889 |
Weighted average shares outstanding used in diluted per common share computations | 36,022,893 | 28,839,889 |
Basic /Diluted EPS | (0.07) | (0.07) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Subsequent Event [Line Items] | ||||
Repurchase shares | 146,458 | |||
Repurchase value | $ 91 | $ 91 | ||
Share price | $ 0.62 | $ 0.62 | ||
Common Stock, Shares, Issued | 39,466,671 | 39,466,671 | 35,260,834 | |
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Repurchase shares | 49,011 | |||
Repurchase value | $ 16 | |||
Share price | $ 0.33 | |||
Common Stock, Shares, Issued | 2,167,561 |