hcti-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-40903

HEALTHCARE TRIANGLE, INC.

(Exact name of registrant as specified in its charter)

Delaware		84-3559776
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7901 Stoneridge Drive, Suite 210 Pleasanton, CA		94588
(Address of principal executive officer)		(Zip Code)

(925) 270-4812
(Registrant’s telephone number, including area code)

Title of each class		Ticker Symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 par value		HCTI		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

As of August 12, 2026, 14,974,322 shares of the registrant’s common stock, $0.00001 par value per share, were issued and outstanding.

Table of Contents

Note About Forward-Looking Statements		ii
PART I – FINANCIAL INFORMATION		1
Item 1. Financial statements		1
Unaudited Condensed Consolidated Balance sheets		1
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss		2
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)		3
Unaudited Condensed Consolidated Statements of Cash Flows		4
Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk		40
Item 4. Controls and Procedures		40
PART II - OTHER INFORMATION		41
Item 1. Legal Proceedings		41
Item 1A. Risk Factors		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 3. Defaults Upon Senior Securities		41
Item 4. Mine Safety Disclosures		41
Item 5. Other Information		41
Item 6. Exhibits		42
Signatures		44

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors,” contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, involving substantial risks and uncertainties. The words “believe,” “may,” “will,” “potentially,” “plan,” “could,” “should,” “predict,” “ongoing,” “estimate,” “continue,” “anticipate,” “intend,” “project,” “expect,” “seek,” or the negative of these words, or terms or similar expressions conveying uncertainty of future events or outcomes, or that concern our expectations, strategy, plans or intentions, are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or expected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements discussed under the heading “Risk Factors” and in our publicly available filings and press releases. These statements include, among other things, those regarding:

●

our ability to continue to add new customers and increase sales to our existing customers;

●

our ability to develop new solutions and bring them to market in a timely manner;

●

our ability to timely and effectively scale and adapt our existing solutions;

●

our dependence on establishing and maintaining a strong brand;

●

the occurrence of service interruptions and security or privacy breaches and related remediation efforts and fines;

●

system failures or capacity constraints

●

the rate of growth of, and anticipated trends and challenges in, our business and in the market for our products;

●

our future financial performance, including our expectations regarding our revenue, cost of revenue, operating expenses, including changes in technology and development, marketing and advertising, general and administrative and customer care expenses, and our ability to achieve and maintain future profitability;

●

our ability to continue to efficiently acquire customers, maintain our high customer retention rates and maintain the level of our customers’ lifetime spend;

●

our ability to provide high-quality customer care;

●

the effects of increased competition in our markets and our ability to compete effectively;

●

our ability to grow internationally;

●

the impact of fluctuations in foreign currency exchange rates on our business and our ability to effectively manage the exposure to such fluctuations;

●

our ability to effectively manage our growth and associated investments, including our migration of the vast majority of our infrastructure to the public cloud;

●

our ability to maintain our relationships with our partners;

●

adverse consequences of our substantial level of indebtedness and our ability to repay our debt;

●

our ability to maintain, protect and enhance our intellectual property;

●

our ability to maintain or improve our market share;

●

our ability to continue generating cashflows and to maintain sufficiency of cash and cash equivalents to meet our needs for at least the next 12 months;

●

beliefs and objectives for future operations;

●

our ability to stay in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States (U.S.) and internationally;

●

economic and industry trends or trend analysis;

●

our ability to attract and retain qualified employees and key personnel;

●

anticipated income tax rates, tax estimates and tax standards;

●

interest and other embedded rate changes;

●

the future trading prices of our common stock;

●

our expectations regarding the outcome of any regulatory investigation or litigation;

●

the amount and timing of future repurchases of our common stock under any share repurchase program;

●

the potential impact of shareholder activism on our business and operations; and

●

the length and severity of pandemics and their impact on our business, customers and employees; as well as other statements regarding our future operations, financial condition, growth prospects and business strategies.

We operate in very competitive and rapidly changing environments, and new risks emerge from time-to-time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur, and actual results could differ materially and adversely from those implied in our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements for any reason after the date of this report to conform such statements to actual results or to changes in our expectations, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context suggests otherwise, references to “Healthcare Triangle,” “company,” “we,” “us” and “our” refer to Healthcare Triangle, Inc. and its consolidated subsidiaries.

iii

PART I

FINANCIAL INFORMATION

Item 1. Financial statements (In thousands of US $, unless otherwise noted)

HEALTHCARE TRIANGLE, INC.

Condensed Consolidated Balance Sheets

			June 30,			December 31,
	Note		2026			2025
			(Unaudited)			(Audited)
Assets
Current assets
Cash and cash equivalents			$	1,906		$	7,625
Accounts receivable, net		3		6,186			2,070
Other current assets		5		1,554			3,456
Total current assets				9,646			13,151
Advances, net		4		3,260			3,826
Furniture and equipment, net		7		1,192			5
Other intangible assets, net		6		54,825			2,808
Goodwill		6		2,946			2,946
Operating lease right-of-use assets		8		1,193			-
Other non-current assets				201			-
Deferred tax asset, net				377			-
Total assets			$	73,640		$	22,736

Liabilities and stockholders’ equity
Current liabilities
Accounts payable			$	1,199		$	744
Short-term debt		9		9,165			10,737
Operating lease liabilities – current		8		426			-
Other current liabilities		10		5,200			1,311
Total current liabilities				15,990			12,792
Non-current liabilities
Long-term debt		9		2,662			-
Operating lease liabilities - non-current		8		747			-
Contingent consideration		11		5,000			-
Other non-current liabilities				142			-
Total current and non-current liabilities				24,541			12,792
Stockholders’ equity		12
Preferred stock, par value $0.00001; 10,000,000 authorized
Series A super voting preferred stock - 20,000 shares (1,000 votes per share) issued and outstanding as of June 30, 2026, and December 31, 2025, respectively				-			-
Series B convertible preferred stock, 1,600,000 issued and outstanding as of June 30, 2026, and December 31, 2025, respectively				7,435			7,435
Series C convertible preferred stock (to be issued) – see note 12(B)				18,000			-
Common stock, par value $0.00001; 2,000,000,000 authorized, 2,027,719 and 142,426 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively				11			11
Common stock (to be issued) – see note 12(A)				12,000			-
Non-controlling interest				(89	)		(37	)
Additional paid-in capital				65,231			45,534
Accumulated deficit				(53,489	)		(42,999	)
Total stockholders’ equity				49,099			9,944
Total liabilities and stockholders’ equity			$	73,640		$	22,736

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

HEALTHCARE TRIANGLE, INC.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

		Three Months Ended June 30,						Six Months Ended June 30,
	Note	2026			2025			2026			2025
Net revenue		$	9,193		$	3,558		$	19,046		$	7,263
Cost of revenue (exclusive of depreciation and amortization shown separately below)			7,126			3,064			14,587			6,440
Gross margin			2,067			494			4,459			823
Operating expenses
Sales and marketing			720			616			2,500			990
General and administrative			4,821			1,182			8,038			2,380
Research and development			51			55			136			198
Bad debt expense			17			-			142			-
Depreciation and amortization	6,7		529			-			1,339			12
Total operating expenses			6,138			1,853			12,155			3,580
Loss from operations			(4,071	)		(1,359	)		(7,696	)		(2,757	)
Other income			438			13			446			124
Changes in fair value	9		(652	)		-			(3,088	)		-
Interest expense			(89	)		(21	)		(173	)		(435	)
Forex loss			(17	)		-			(80	)		-
Loss before income tax			(4,391	)		(1,367	)		(10,591	)		(3,068	)
Income tax expense			(24	)		-			(24	)		-
Net loss		$	(4,415	)	$	(1,367	)	$	(10,615	)	$	(3,068	)
Other comprehensive income (OCI)
Foreign currency translation gain/(loss)			237			-			73			-
Comprehensive loss		$	(4,178	)		(1,367	)	$	(10,542	)		(3,068	)
Comprehensive loss attributable to:
Stockholders		$	(4,150	)		(1,367	)	$	(10,490	)		(3,068	)
Non-controlling interest			(28	)		-			(52	)		-

Net loss per common share—basic and diluted, attributable to:
Stockholders	16		(1.56	)		(35.01	)		(7.13	)		(153.65	)
Weighted average shares outstanding used in per common share computations:
Basic and diluted			2,805,546			39,057			1,481,343			19,964

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

HEALTHCARE TRIANGLE, INC.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

	Preferred stock (Series A)				Preferred stock (Series B)				Preferred stock (Series C, to be issued)				Common stock				Common stock		Additional paid-in		Non-controlling			Accumulated			Total stockholders’
	Shares		Amount		Shares^(*)		Amount		Shares		Amount		Shares		Amount		to be issued⁽³⁾		capital		interest			deficit			equity
Three months ended June 30, 2026
Balance at March 31, 2026		20,000		-		1,600,000		7,435		-		18,000		1,846,424		11		12,000		64,651		(61	)		(49,339	)		52,697

Net loss		-		-		-		-		-		-		-		-		-		-		(28	)		(4,387	)		(4,415	)

Effects of exchange translation reserve (OCI)		-		-		-		-		-		-		-		-		-		-		-			237			237

Equity line of credit – Prefunded warrants		-		-		-		-		-		-		-		-		-		112		-			-			112

Common stock issued for cash		-		-		-		-		-		-		181,295		-		-		468		-			-			468

Balance at June 30, 2026		20,000		-		1,600,000		7,435		-		18,000		2,027,719		11		12,000		65,231		(89	)		(53,489	)		49,099

	Preferred stock (Series A)				Preferred stock (Series B)				Preferred stock (Series C, to be issued)				Common stock				Common stock		Additional paid-in		Non-controlling			Accumulated			Total stockholders’
	Shares		Amount		Shares^(*)		Amount		Shares		Amount		Shares		Amount		to be issued		capital		interest			deficit			equity
Six months ended June 30, 2026
Balance at December 31, 2025		20,000		-		1,600,000		7,435		-		-		142,426		11		-		45,534		(37	)		(42,999	)		9,944

Net loss		-		-		-		-		-		-		-		-		-		-		(52	)		(10,563	)		(10,615	)

Effects of exchange translation reserve (OCI)		-		-		-		-		-		-		-		-		-		-		-			73			73

Common stock and pre-funded warrants issued for acquisition⁽¹⁾		-		-		-		-		-		-		55,682		-		12,000		-		-			-			12,000

Preferred stock to be issued for acquisition⁽¹⁾		-		-		-		-		-		18,000		-		-		-		-		-			-			18,000

Common stock issued for cash		-		-		-		-		-		-		696,621		-		-		5,855		-			-			5,855

Equity line of credit – Prefunded warrants⁽²⁾		-		-		-		-		-		-		-		-		-		112		-			-			112

Conversion of debt to equity		-		-		-		-		-		-		451,437		-		-		10,167		-			-			10,167

Equity issued pursuant to a financing arrangement		-		-		-		-		-		-		681,553		-		-		3,563		-			-			3,563

Balance at June 30, 2026		20,000		-		1,600,000		7,435		-		18,000		2,027,719		11		12,000		65,231		(89	)		(53,489	)		49,099

^(*)	The reverse stock splits effected in August 2025 and February 2026 applied to the Company’s common stock and did not affect the number of Series B Preferred Stock shares outstanding. Accordingly, the Series B Preferred Stock share balances presented herein reflect the 1,600,000 shares originally issued. This presentation has no impact on the carrying value of the Series B Preferred Stock or total stockholders’ equity. Also see Note 17, Subsequent Events.

⁽¹⁾	See note 6(B) for details on common stock and pre-funded warrants to be issued, in connection with the acquisition.

⁽²⁾	See note 12(A)(ii) for details on equity line of credit – prefunded warrants.

⁽³⁾	Previously shown as part of Additional Paid-in Capital.

	Preferred stock (Series A)				Preferred stock (Series B)				Common stock				Additional paid-in			Accumulated			Total stockholders’ equity
	Shares		Amount		Shares		Amount		Shares		Amount		capital			deficit			(deficit)
Three months ended June 30, 2025
Balance at March 31, 2025		20,000	$	-		1,600,000	$	7,435		1,074	$	-	$	36,413		$	(35,272	)	$	8,576
Net loss		-		-		-		-		-		-		-			(1,367	)		(1,367	)
Prefunded warrants issued for cash		-		-		-		-		1,953		-		-			-			-
Series B (cashless warrants)		-		-		-		-		71,037		11		(11	)		-			-
Shares issued for acquisition		-		-		-		-		23,134		3		2,997			-			3,000
Balance at June 30, 2025		20,000	$	-		1,600,000	$	7,435		97,198	$	14	$	39,399		$	(36,639	)	$	10,209

Six months ended June 30, 2025
Balance at December 31, 2024		6,000	$	-		1,600,000	$	7,435		379	$	-	$	21,022		$	(33,571	)	$	(5,114	)
Net loss		-		-		-		-		-		-		-			(3,068	)		(3,068	)
Shares issued for acquisition		14,000		-		-		-		9		-		88			-			88
Common stock issued for cash		-		-		-		-		470		-		95			-			95
Prefunded warrants issued for cash		-		-		-		-		1,953		-		395			-			395
Series B (cashless warrants)		-		-		-		-		71,037		11		14,699			-			14,710
Expenses relating to funding		-		-		-		-		-		-		(1,524	)		-			(1,524	)
Shares issued for acquisition		-		-		-		-		23,134		3		2,997			-			3,000
Conversion of Debt to Equity		-		-		-		-		176		-		1,191			-			1,191
Shares issued for acquisition (Contingent Consideration)		-		-		-		-		40		-		400			-			400
Stock based compensation		-		-		-		-		-		-		36			-			36
Balance at June 30, 2025		20,000	$	-		1,600,000	$	7,435		97,198	$	14	$	39,399		$	(36,639	)	$	10,209

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

HEALTHCARE TRIANGLE, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

			Six Months Ended June 30,
	Note		2026			2025
			(In ‘000)
Cash flows from operating activities
Net loss			$	(10,615	)	$	(3,068	)
Adjustment to reconcile net loss to net cash provided by / (used in) operating activities
Depreciation and amortization				1,339			12
Net unrealised exchange loss				80			-
Change in fair value				3,088			-
Common stock issued for services				-			88
Amortization of debt discount				-			223
Other income				-			(124	)
Stock compensation expenses				-			36
Interest expenses				173			-
Interest expenses settled by equity				-			316
Interest expense on right-of-use liability				426			-
Bad debt expense		3		142			-
Gain on sale of furniture and equipment				(6	)		-
Provision for advances		4		626			-
Tax expense				24			-
Changes in working capital:
Accounts receivable				606			(752	)
Other current assets				(358	)		(133	)
Advances				(60	)		-
Due from affiliates				-			(2,823	)
Accounts payable				(2,387	)		(1,375	)
Other current liabilities				(775	)		(592	)
Net cash used in operating activities				(7,697	)		(8,192	)

Cash flows from investing activities
Purchase of furniture and equipment				(50	)		(3	)
Disposal of furniture and equipment				6
Purchase of intangible assets				(3	)		-
Acquisition of Teyame, net off cash acquired on business combination		6		(9,197	)		-
Acquisition of assets				-			(600	)
Net cash used in investing activities				(9,244	)		(603	)

Cash flows from financing activities
Proceeds from debt		9		76,594			-
Repayment of debt		9		(74,269	)		(1,674	)
Payment of lease liability		8		(381	)		-
Proceeds from equity issuance				9,418			13,677
Interest paid				(170	)		-
Net cash provided by financing activities				11,192			12,003

Effect of exchange rate changes on cash and cash equivalents				30			-

Net (decrease)/increase in cash and cash equivalents				(5,719	)		3,208

Cash and cash equivalents
Cash and cash equivalents at the beginning of the year				7,625			20
Cash and cash equivalents at the end of the period			$	1,906		$	3,228

Supplementary disclosure of cash flows information
Interest			$	-		$	435
Cashless warrants issued				-			14,710
Deferred offering cost				112			-
Conversion of debt to common stock				10,167			1,191
Acquisition of Teyame (see note 6[B] for details)				37,800			-
Operating right-of-use asset				1,193			-
Acquisition of assets			$	-		$	5,100

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

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Organization and Description of Business

Healthcare Triangle, Inc. (“HTI” or “the Company”) was incorporated under the laws of the State of Nevada on October 29, 2019, and 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. and on May 8, 2020, the Company acquired Cornerstone Advisors Group LLC (Healthcare Business) from SecureKloud.

Effective January 1, 2026, the Company, through its wholly owned subsidiaries, Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) (see note 6[B] for details), operate together as an integrated platform providing AI-powered omnichannel customer experience, marketing, and financial/insurance distribution services.

Teyame leverages its technology solutions to provide customer engagement services that combine artificial intelligence, telemarketing, and contact center operations to support customer acquisition, retention, and service. Its platform enables enterprises particularly in financial services, insurance, and healthcare to manage end-to-end customer interactions across multiple channels.

Datono complements this platform as an insurance brokerage entity, facilitating the marketing and sales of insurance products. Together, the companies form a vertically integrated model combining customer acquisition technology with distribution capabilities, particularly in regulated sectors such as insurance.

Liquidity Risk

The Company incurred loss from operations of $7,696, had negative operating cash flows of $7,697, and accumulated deficits of $53,489 as of June 30, 2026. Management evaluated these conditions and concluded that they have been sufficiently mitigated by the Company’s net assets of $49,099 (including cash and cash equivalents of $1,906) at June 30, 2026, and the subsequent stockholders’ approval of an Equity Line of Credit pursuant to which the Company can elect to issue shares of its common stock up to a value of $50,000 (see notes 12(D)[iii] and 17). In addition, the Company continues to have access to At-the-Market Sales Agreement dated November 18, 2025, pursuant to which the Company can issue its common stock at market prices. Accordingly, management has concluded that the Company has sufficient resources to fund operations and meet its obligations as they become due for a period of at least twelve months from the date these unaudited condensed consolidated financial statements are issued.

1) Basis of Preparation of Unaudited Condensed Consolidated Financial Statements

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. The December 31, 2025, consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly our financial position as of June 30, 2026, the results of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the six months ended June 30, 2026 and 2025. The results of operations for the periods presented are not necessarily indicative of the results to be expected for any future period. 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, 2025, 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 condensed consolidated financial statements.

All intercompany balances and transactions have been eliminated upon consolidation.

Certain balances from the prior fiscal year have been reclassified to conform to the current period presentation.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

2) Summary of Significant Accounting Policies

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 factors including historical payment experience, credit profile, and geographic and industry risk factors. For customers acquired through business combinations, collectability is assessed using the acquired entity’s collection history with those customers, supplemented by post-acquisition payment performance. A contract is recognized only where collectability of substantially all consideration is probable.

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.

The Company accounts for revenue from a contract after it is approved by the customer, and after ensuring that the rights of each party regarding the services to be transferred, the payment terms, the commercial substance, and the collectability are ascertained. In assessing collectability, the Company applies judgment and considers factors such as the customer’s credit profile, past payment behavior, and the nature and geography of the customer relationship.

Contract modifications, such as changes in scope, rates, or duration, are assessed to determine whether they should be accounted for as a separate contract or as part of the existing contract. A modification is treated as a separate contract when it adds services at a price that reflects their standalone selling price. Otherwise, the modification is combined with the existing contract, and the transaction price is updated on a prospective or cumulative catch-up basis, as appropriate.

When it becomes probable that total costs to satisfy a contract will exceed the transaction price, the expected loss is recognized in full in the period in which the loss becomes probable and can be reasonably estimated, regardless of whether work has commenced under the contract.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Revenue is earned and recognized in the following segments:

A. 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 into 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.

Contract modifications, such as extensions of statement of work duration or changes in resources and rates, are evaluated under ASC 606 and accounted for prospectively as a separate contract or modification of the existing contract, based on whether the modification adds distinct performance obligations at standalone selling prices.

When the estimated costs to complete a performance obligation exceed the expected transaction price, the full amount of the anticipated loss is recognized immediately in the period in which the loss becomes probable and estimable.

Certain contracts include variable consideration such as rate adjustments, which is estimated using the most likely amount method and included in the transaction price only to the extent that a significant revenue reversal is not probable. Estimates are reassessed at each reporting date.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

B. 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 Standalone Selling Price (SSP), 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 principal or agent.

C. Customer Engagement Services

The Customer Engagement Services segment, acquired through business combination (see note 6), provides customer search, marketing, telemarketing and customer-support services to financial institutions, insurance companies and intermediaries, and other customers. These services include the promotion and distribution of banking, credit and insurance products; outbound and inbound telemarketing; lead generation and customer-search campaigns; appointment setting; customer service and satisfaction surveys; and technology-enabled digital marketing and customer-interaction services supporting customers’ digital search and customer-care strategies.

The Company recognizes revenue from Customer Engagement Services in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when or as the Company satisfies its performance obligations by transferring the promised services to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.

Under these arrangements, the Company generally performs the customer-engagement services using its own personnel, processes, systems and operational infrastructure and is primarily responsible for fulfilling the promised services in accordance with contractual requirements and applicable quality standards. The Company has determined that it controls the specified services before they are transferred to the customer and, accordingly, acts as the principal in these arrangements and recognizes revenue on a gross basis.

Consideration under Customer Engagement Services arrangements is generally based on either a fee for each completed and validated outcome or an agreed hourly rate for services provided.

For success-based arrangements, revenue is recognized at a point in time when the applicable contractual outcome has been completed and validated by the customer in accordance with contractual terms. To the extent such consideration is variable, revenue is recognized only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur.

For hourly service arrangements, revenue is recognized over time as the services are performed because the customer simultaneously receives and consumes the benefits of the Company’s performance. Revenue is measured based on the contracted hourly rate and the actual hours of service provided during the applicable reporting period.

Revenue is presented net of estimated cancellations, penalties and other adjustments to the extent such amounts represent adjustments to the transaction price under the applicable customer contracts.

D. Corporate and Others

This segment includes Platform Services revenue, alongside unallocated corporate head office costs. 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 with contract terms unique to each customer. The Company delivers Platform Services through its proprietary platform. Where third-party technology or infrastructure is included in the arrangement, the Company evaluates whether it is acting as principal or agent based on whether it controls the service before transfer to the customer.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

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 in full in the period in which the loss becomes probable and estimable.

Our contractual terms and conditions for revenue 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.

Fair Value Measurements

	June 30, 2026
	Fair Value Measured Using
	Level 1		Level 2		Level 3		Total
Financial Assets:
Cash and cash equivalents	$	1,906		—		—	$	1,906
Financial liabilities:
2026 Convertible Notes^(*) (refer note 9[C])		—		—	$	3,724	$	3,724
Operating lease liabilities		—		—	$	1,173	$	1,173
Debt with credit institutions		—	$	8,103		—	$	8,103

^(*)	2026 Convertible Notes is part of short-term debt.

	December 31, 2025
	Fair Value Measured Using
	Level 1		Level 2		Level 3			Total
Financial Assets:
Cash and cash equivalents	$	7,625		—		—		$	7,625
Financial liabilities:
2025 Convertible Notes (refer note 9[B])	$	—		—		10,543	**	$	10,543

^(**)

Corresponding figures have been rearranged for the purposes of comparison.

Concentration

The Company monitors the credit worthiness of its customers through various factors, including review of their financial statements and other associated information. For the quarters ended June 30, 2026, and 2025, sales to five major customers accounted for approximately 55% and 58% of total revenue respectively. For the quarters ended June 30, 2026, and 2025, accounts receivable from five major customers accounted for approximately 55% and 52% of the total accounts receivable.

As of June 30, 2026, and December 31, 2025, the Company had $721 and $6,503 respectively, of uninsured cash balances. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

3) Accounts Receivable, net

	June 30, 2026			December 31, 2025
Accounts receivable, gross	$	6,512		$	2,272
Less: Allowance for doubtful accounts (current expected credit loss) – see 3.1 below		(326	)		(202	)
Accounts receivable, net	$	6,186		$	2,070

3.1) Current Expected Credit Loss movement*:

	June 30, 2026			December 31, 2025
Opening balance	$	202		$	185
Charge for the period / year		142			17
Adjustment during the period / year		(18	)		-
Closing balance	$	326		$	202

*	During the quarter ended June 30, 2026, and year ended December 31, 2025, the Company collected nil and $117 respectively. In addition, accounts receivable amounting to $18 were deemed uncollectible and adjusted against provision of current expected credit loss as of June 30, 2026.

4) Advances

	June 30, 2026			December 31, 2025
Advance to related party contractor - for AI tools and software development	$	3,200		$	3,200
Advance to related party contractors - for services		686			626
		3,886			3,826
Less: Provision for the period / year		(626	)		-
Total Advances	$	3,260		$	3,826

4.1) Provision during the period:

	June 30, 2026		December 31, 2025
Opening balance	$	-	$	-
Provision for the period / year		626		-
Closing balance	$	626	$	-

As of June 30, 2026 and December 31, 2025, the balances outstanding are $3,260, and $3,826 respectively. The balances are unsecured, non-interest bearing and are expected to be settled in the ordinary course of business, as outlined below:

$3,200 was advanced to SecureKloud Technologies Ltd. in connection with the design, develop and deliver an Integrated Health Advisory & Care Platform & Tools including certain artificial intelligence-enabled software tools and related intellectual property, intended to support the Company’s current and future product offerings at a cost not-to-exceed $3,200, and

$60 was advanced to Healthcare Triangle (Pvt.) Ltd. (a subsidiary of SecureKloud) for provision of certain services to the Company.

On June 24, 2026, the Company entered into a Securities Exchange Agreement with SecureKloud pursuant to which certain preferred equity securities held by SecureKloud were exchanged for shares of the Company’s common stock following receipt of stockholder approval subsequent to June 30, 2026. As part of the consideration under the Securities Exchange Agreement, advance amounting to $626 due from SecureKloud was included in the transaction. Accordingly, the Company recorded a full provision against the advance of $626 during the six months ended June 30, 2026. See also Note 17, Subsequent Events.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Related party transactions:

Following are the transactions with related parties during the periods presented:

Related Parties	Nature of transactions	Quarter ended June 30, 2026		Quarter ended June 30, 2025		Six-months ended June 30, 2026		Six-months ended June 30, 2025
SecureKloud Technologies Limited, India	Services received and paid	$	-	$	563	$	-	$	1,475
	Amounts advanced		-		407		-		793
Healthcare Triangle (Pvt.) Limited, India	Services received and paid		542		-		1,081		-
	Amounts advanced		60		-		60		-
SecureKloud Technologies, Inc.	Services received and paid		-		49		-		269
	Amounts advanced		-		832		-		1,398
	Services rendered		-		-		-		138
	Amounts collected by related party on behalf of the Company		-		75		-		380
Blockedge Technologies, Inc.	Services rendered		-		30		-		30
	Services received and paid		60		-		120		-
	Amounts advanced		-		91		-		145
Key management personnel	Remuneration		337		276		572		676
Board of Directors	Compensation	$	55	$	55	$	110	$	110

5) Other current assets

	June 30, 2026		December 31, 2025
Unbilled revenue		731		3	^*
Prepaid expenses	$	165	$	267
Advance to acquire Teyame (see note 6[B] for details)		-		3,000
Deposits		111		-
Seacoast receivable		150		-
Deferred offering costs - see note 12(A)		112		-
Others		285		186
Total	$	1,554	$	3,456

^*	Corresponding figures have been rearranged for the purposes of comparison.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

6) Goodwill and Other Intangible Assets

		June 30, 2026		December 31, 2025
Goodwill	(see ‘A’ below)	$	2,946	$	2,946

Other intangible assets, net	(see ‘B and C’ below)	$	54,825	$	2,808

On June 16, 2025 (the “Closing date”), Healthcare Triangle, Inc. (the “Company”), through its wholly owned subsidiary Quantum Nexus Inc., and Niyama Healthcare, Inc., a Delaware corporation, a provider of Mental Health and Hospital Information Systems technology, across India, Southeast Asia, and Europe (the “Seller”) entered into an Asset and Stock Transfer Agreement (ATA). Pursuant to the ATA, the Company agreed to purchase the Transferred Assets (comprising of contracts, intellectual property and related assets), and (ii) 100% shareholder equity interest in Ezovion Solutions Private Limited, Chennai, India - Hospital Information Systems SaaS Provider (the “Transferred Equity”), as a whole and as a going concern in exchange for the Purchase Price, which comprised the following:

(1) $1,494 in cash, (2) $4,601 in equity consideration; and (3) up to $1,200 (having a fair value of nil as of June 30, 2026, and December 31, 2025) in earn-out payments contingent on first-year financial performance targets to be agreed mutually.

The transaction resulted in recognition of goodwill with a carrying value of $2,946, as of June 30, 2026, and December 31, 2025. There are no impairment indicators as at June 30, 2026, and December 31, 2025.

On January 22, 2026, Healthcare Triangle, Inc. entered into a share purchase agreement to acquire Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) through its wholly owned subsidiary Teyame AI Holdings Inc., effective January 1, 2026. The aggregate purchase price for the Acquired Companies is up to $50,000, subject to the terms and conditions set forth in the Share Purchase Agreement. The consideration consists of a cash payout of $15,000, with the balance settled through issuance of a combination of the Company’s common stock, preferred stock, with an additional earnout component payable in the Company’s preferred stock upon achievement of specified post-closing performance targets.

The cash consideration includes: (i) $3,000 paid during 2025 pursuant to an advance agreement dated December 3, 2025, (ii) $6,000 paid during January, 2026 (iii) $3,200 paid during April, 2026, and (iv) $2,800 payable on the earlier of the conditions being met as outlined in the Share Purchase Agreement, or six months from the date of the Share Purchase Agreement (but in no event prior to April 29, 2026).

The equity consideration includes (a) restricted shares or pre-funded warrants of the Company’s common stock with an agreed value of $12,000 and (b) a series of the Company’s preferred stock with an agreed value of $18,000 that is convertible into the Company’s common stock, subject to stockholders’ approval. As of June 30, 2026, 55,482 restricted shares of common stock and 424,856 pre-funded warrants convertible to common stock were issued towards the $12,000 common stock issuance, whereas consideration in the form of preferred stocks, convertible to common stock at the Company’s discretion, have been issued subsequent to June 30, 2026 (see Subsequent Events note 17). The number of shares of common stock issued as part of the equity consideration, and the number of shares of common stock underlying the preferred stock, are determined by reference to a “Base Price” equal to the average of the volume-weighted average prices (“VWAPs”) of the Company’s common stock for the five trading days immediately prior to the Closing Date, as further defined in the Share Purchase Agreement. The preferred stock is not convertible into common stock until applicable stockholder approval is obtained as contemplated by the Share Purchase Agreement. The Share Purchase Agreement also includes a mechanism intended to limit issuance in excess of 19.99% of the Company’s outstanding common stock immediately prior to issuance, including the issuance of a pre-funded warrant for any excess shares in lieu of issuing shares in excess of such limitation at closing, and provides that the pre-funded warrant would have a nominal exercise price and be exercisable on a cashless basis, subject to the terms of the Share Purchase Agreement.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

The Share Purchase Agreement also provides for an earnout payable in the Company’s Series C preferred stock to certain key management employees of the Acquired Companies, with an aggregate value of up to $5,000, subject to achievement of specified annual targets as outlined in the Share Purchase Agreement.

Purchase consideration	Amount
Cash paid	$	12,200
Purchase consideration payable		2,800
Common stock (see also note 17)		12,000
Preferred stock (convertible into common stock - see also note 17)		18,000
Earnout consideration		5,000
Total	$	50,000

The Company is in the process of determining the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date in accordance with ASC 805, Business Combinations. As the initial accounting for the business combination is incomplete as of the date of these financial statements, the Company has not yet finalized the purchase price allocation. The provisional amounts recognized reflect management’s best estimates based on information available at this time. The final purchase price allocation, including the determination of fair values of identifiable intangible assets, property and equipment, deferred tax assets and liabilities, and any resulting goodwill, will be completed as soon as practicable and within the measurement period of up to one year from the acquisition date as permitted under ASC 805-10-25-15. Any adjustments to the provisional amounts identified during the measurement period will be recognized in the reporting period in which the adjustment is determined, with a corresponding adjustment to goodwill.

Other intangible assets

		June 30, 2026									December 31, 2025
	Useful	Gross			Amortization				Net		Gross				Net
	life	Carrying			expense for		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(Years)	Amount			the period		Amortization		Amount		Amount		Amortization		Amount
Intellectual property	3	$	3,402		$	605	$	1,265	$	2,137	$	3,402	$	660	$	2,742
Trademark	3		81			13		28		53		81		15		66
Software	3		449	*		3		434		15		35		35		-
Technology platform	3 - 4		7,062	*		395		4,574		2,488		-		-		-
Intangible assets, total		$	10,994		$	1,016	$	6,301	$	4,693	$	3,518	$	710		2,808

During the period ended June 30, 2026, the Company purchased intangible assets amounting to $3. Amortization expense for the quarter ended June 30, 2026 and 2025, were 376 and $0 respectively.

*	The Company acquired Software and Technology platform as part of the business combination effective January 1, 2026. See note 6(B) for details.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

7) Furniture and Equipment

Furniture and equipment consisted of the following:

	June 30, 2026			December 31, 2025

Furniture and equipment, at cost	$	5,287		$	67
Less: Accumulated depreciation		(4,095	)		(62	)
Furniture and equipment, net	$	1,192		$	5

During the period ended June 30, 2026, the Company purchased furniture and equipment amounting to $50 and disposed-off furniture and equipment having a net book value of nil, for $6. In addition, the Company acquired furniture and equipment with a cost of $5,169 and accumulated depreciation of $3,717 as part of the business combination (see note 6[B] for details).

Depreciation expenses for the quarters ended June 30, 2026, and 2025, were $153 and $0 respectively and for the six months ended June 30, 2026, and 2025, were $323 and $12 respectively.

8) Right-of-use Assets

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 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.

ROU Asset:

	June 30, 2026			December 31, 2025

Operating right-of-use assets, at cost	$	4,618	^*	$	-
Less: Accumulated amortization		(3,425	)^*		-
Operating right-of-use assets, net	$	1,193		$	-

^*	includes operating right-of-use assets acquired as part of business combination as explained in the note above.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

The Company’s principal facility is located in Pleasanton, CA. Lease rental for the quarter and six months ended June 30, 2026, were $17 and $36 respectively, whereas rental expenses for the quarter and six months ended June 30, 2025, were $45 and $89 respectively. The amortization of the ROU asset for the quarter and six months ended June 30, 2026, remained $11 and $15 respectively.

In addition, the Company acquired right-of-use assets and lease liability as part of the business combination (see note 6[B] for details). The Company acquired right-of-use assets with a cost of $4,096 and accumulated depreciation of $3,065 as part of the business combination (see note 6[B] for details). The lease relates to an office building located at Calle Rufino González 21, 28037 Madrid, a vehicle and a parking space. The lease terms are 84 months for the building, 48 months for the vehicle and 15 months for the parking space. The leases were measured using discount rates of 1.50% for building 6.99% for vehicle and 5.24% for parking space, resulting in lease liabilities of $796 for the building, $47 for vehicle and $152 for the parking space as of June 30, 2026. Lease rental expense for the quarter ended and six months ended June 30, 2026, were $223 and $426 respectively.

Lease liability:

Future minimum lease obligations under our non-cancellable lease agreement as of June 30, 2026, and December 31, 2025, are as follows:

Fiscal Year	June 30, 2026			December 31, 2025
2026	$	771			-
2027		387			-
2028		70			-
2029		-			-
Total		1,228			-
Less: Imputed interest		(55	)		-
Net present value of future minimum lease payments		1,173			-
Less: Operating lease liability, current		(426	)		-
Operating lease liability, non-current	$	747			-

	June 30, 2026		December 31, 2025

Operating lease liability, current	$	426		-
Operating lease liability, non-current	$	747		-

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

9) Short-Term Debt

	June 30, 2026		December 31, 2025
Recourse financing [refer (A) below]	$	-	$	161
Convertible notes [refer (B) and (C) below]		3,724		10,543
Debt with credit institutions – current [refer (D) below]		5,441		-
Others		-		33
Total	$	9,165	$	10,737

A. Recourse Financing

During 2022, the Company obtained a credit facility from Seacoast Business Funding (SBF), a division of Seacoast National Bank. The funding is against the accounts receivable of the Company and one of its subsidiaries. The maximum amount of advance under the arrangement is $10,000 and the bank may advance up to 90% of the unpaid domestic outstanding accounts under the recourse agreement.

The SBF facility incurred a factoring interest cost of 8.5% during the six months ended June 30, 2026, amounting to $16 and 8.5% for the period ended December 31, 2025, amounting to $81. The gross receivables against which advances were received from such arrangement as at June 30, 2026, and December 31, 2025, were $5,555 and $9,633 respectively.

The carrying amount of associated recourse financing liability was nil and $161, as of June 30, 2026, and December 31, 2025, respectively.

In addition, a recently acquired subsidiary of the Company with an acquisition date of January 1, 2026, utilizes recourse-based accounts receivable financing arrangement with a number of banks, whereby the subsidiary receives cash against the customer invoices. Under this arrangement, the maximum advance amount available to the subsidiary is $4,004, subject to invoice ageing and related terms. As the arrangement is with recourse, the subsidiary retains the credit risk associated with the underlying receivables and accordingly continues to recognize the related accounts receivable on its balance sheet. Amounts advanced by the bank are recognized as current liability at fair value, which approximates the actual proceeds received due to the short-term nature of the advances, generally ranging from 60 to 120 days. Interest incurred on the advances is recognized as finance expense in the period incurred. Since the arrangement does not constitute a transfer of receivables under applicable accounting standards, no gain or loss is recognized on the transaction.

This facility incurred a factoring interest rate ranging from 3.51% to 4.05% during six months ended June 30, 2026, whereas the interest cost during the six months ended June 30, 2026, amounting to $37. The gross receivables against which advances were received from such arrangement as at June 30, 2026, were $6,082.

The carrying amount of associated recourse financing liability was $3,935 as at June 30, 2026.

B. 2025 Convertible Notes

As of December 31, 2025, the 2025 Convertible Notes had a fair value of $10,543. During the period ended June 30, 2026, the Company repaid $3,340, converted $10,167 of the notes to common stock, and recognized a loss of $2,964 from changes in fair value.

On June 12, 2026, the Company used a portion of the proceeds from the issuance of the 2026 Convertible Notes (see note 9[C]) to settle the remaining obligations under the 2025 Convertible Notes. The remaining liability was remeasured to fair value immediately prior to settlement, and derecognized upon payment of the settlement consideration.

As a result of the repayments, conversions and changes in fair value during the six months ended June 30, 2026, the Company had no outstanding obligations under the 2025 Convertible Notes as of June 30, 2026.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

The following table represents changes in the fair value of the 2025 Debentures for the periods presented:

	June 30, 2026			December 31, 2025
Opening balance - fair value	$	10,543		$	12,000
Less: Debt repayment		(3,340	)		-
Less: Conversions to equity stock (fair value)		(10,167	)		(1,416	)
Changes in fair value (recognized in earnings)		2,964			(41	)
Closing balance - fair value	$	-		$	10,543

C. 2026 Convertible Notes

On June 12, 2026, the Company completed a private placement to unrelated institutional investors of 15% original issue discount senior convertible promissory notes (“2026 Debentures”) with an aggregate principal amount of approximately $4,235 for aggregate gross cash proceeds of $3,600. The difference between the aggregate face value of $4,235 and the proceeds of $3,600 represents an original issue discount of $635, which is reflected in the initial fair value measurement of the debentures. The notes mature on December 12, 2026. The 2026 Debentures are convertible into shares of the Company’s common stock at the holders’ option after the applicable contractual conversion date at a conversion price equal to 85% of the volume-weighted average price of the Company’s common stock for the three trading days immediately preceding conversion, subject to a floor price of $0.452 per share and certain adjustments.

The Company has the option to prepay the 2026 Debentures at 102.5% of the principal amount being prepaid plus accrued interest and other amounts owing. In addition, the Company is generally required to apply 25% of the net proceeds from specified subsequent financing transactions toward repayment of the notes unless waived by the applicable holder. The 2026 Debentures bear interest at 10% per annum upon the occurrence and continuation of an event of default. The Company may extend the maturity date for three months, in which case the outstanding principal amount is increased by 10%.

The Company elected the fair value option for these debentures under ASC 825, Financial Instruments, at initial recognition. Accordingly, the 2026 Debentures are recorded at fair value and remeasured at each reporting date, with changes in fair value recognized in earnings.

The fair value of these debentures is classified within Level 3 of the fair value hierarchy because the valuation uses significant unobservable inputs and management judgment. The Company engaged an independent third-party valuation specialist to estimate the fair value of the debentures using a Monte Carlo simulation model. The valuation model simulated multiple potential future stock-price paths and expected settlement outcomes and incorporated the contractual terms of the instruments, including the variable conversion feature, floor price, maturity, and other debt-specific provisions.

The following table represents changes in the fair value of the 2026 Debentures for the periods presented:

	June 30, 2026		December 31, 2025
Fair value at issuance	$	3,600	$	-
Changes in fair value (recognized in earnings)		124		-
Closing balance - fair value	$	3,724	$	-

^(*)	In connection with the issuance of the 2026 Debentures, the Company incurred expenses amounting to $481, which were recognized as financing costs in the condensed consolidated statement of operations and comprehensive loss for the period ended June 30, 2026.

As of June 30, 2026, significant assumptions used by an independent third-party valuer in the valuation included the Company’s common stock price of $1.81 per share, expected volatility of 90.07%, a risk-free rate of 3.98%, and a remaining contractual term of approximately 0.45 years. The valuation also reflected assumptions regarding expected conversion behavior and settlement outcomes over the remaining life of the instruments. In addition, the model was calibrated to observe transaction proceeds. No financing below the contractual floor price is expected in 2026, and accordingly no floor-reset event was incorporated into the June 30, 2026, valuation.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

D. Debt from credit institutions

Teyame and Datono have secured various credit facilities across multiple financial institutions. As of June 30, 2026, the total available credit facilities and loans amounted to $8,763, and the amount withdrawn and utilized as of that date was $8,103, of which $5,441 is due within a period of 12 months from the balance sheet date, whereas $2,662 is classified as long-term debt with maturity dates falling due beyond 1 year. These loans and facilities carry interest rates ranging from 1.3% - 5.24% and are obtained to cover the working capital and liquidity needs.

						As of			Drawdown		Repayments		As of
	Facility	Interest			Maturity	January 1,			during		during		June 30,		Short		Long
Credit institution	type	rate		Conditions	date	2026			the period		the period		2026		term		term
Ibercaja multipruducto	Working capital						21			-		21		-		-		-
Bankia	Term Loan		1.50%	Fixed rate	04/27/2026		20			-		20		-		-		-
Banco Bilbao Vizcaya Argentaria (BBVA)	”		4.60%	Eur 12m + 2.50%	04/27/2026		31			-		31		-		-		-
Bsantander	Working capital		4.32%	Eur 6m + 1.86%	05/11/2026		-			2,779		2,779		-		-		-
Bsantander	”		4.71%	Eur 6m + 2.25%	05/13/2026		-			7,716		7,716		-		-		-
Targobank	”		1.51%	Fixed rate	05/29/2026		38			-		38		-		-		-
Bankinter	”		5.23%	Eur 12m + 2.50%	07/23/2026		-			149		149		-		-		-
Bankinter	”		3.56%	Eur 3m + 1.25%	07/23/2026		179			283		222		240		240		-
Bankinter	”		5.23%	Eur 12m + 2.50%	07/23/2026		-			372		372		-		-		-
Bankinter Línea Pago Impuestos	”		1.1% trim.	One-time fee of 1.1% for 3 months	07/23/2026		114			-		114		-		-		-
BBVA	”		3.71%	Eur 3m + 1.40%	10/05/2026		(1	)		6,648		6,365		282		282		-
BBVA	”		3.71%	Eur 3m + 1.40%	10/05/2026		(2	)		4,493		4,208		283		283		-
Caixabank	”		3.51%	Eur 3m + 1.20%	10/22/2026		798			1,613		1,661		750		750		-
Caixabank	”		3.51%	Eur 3m + 1.20%	10/22/2026		1,255			2,509		2,509		1,255		1,255		-
Caixabank	”		1.30%	Fixed rate	10/26/2026		-			2,678		2,676		2		2		-
Caixabank	”		1.30%	Fixed rate	10/26/2026		-			5,739		5,512		227		227		-
Deutsche	Term Loan		4.38%	Eur 12m + 1.65%	11/23/2026		79			-		43		36		36		-
Caixabank	Working capital		4.23%	Eur 12m + 1.50%	11/27/2026		(5	)		12,325		11,983		337		337		-
Caixabank	”		4.23%	Eur 12m + 1.50%	11/27/2026		(2	)		6,937		6,885		50		50		-
Ibercaja Multiproducto Multiempresa	”		3.80%	Eur 6m + 1.25%	03/15/2027		440			794		778		456		456		-
Ibercaja Multiproducto Multiempresa	”		3.80%	Eur 3m + 1.25%	03/15/2027		62			123		93		92		92		-
Ibercaja	”		3.56%	Eur 3m + 1.25%	03/15/2027		123			2,072		2,025		170		170		-
Abanca	”		4.16%	Eur 3m + 1.85%	05/20/2027		228			568		512		284		284		-
BBVA Click & Pay	”		4.05%	Eur 6m + 1.5%	06/21/2027		250			258		250		258		258		-
BBVA Click & Pay	”		4.05%	Eur 6m + 1.5%	06/21/2027		285			285		285		285		285		-
Unicaja	”		3.71%	Eur 3m + 1.40%	06/23/2027		-			1,023		795		228		228		-
Abanca	”		1.80%	Fixed rate	07/05/2027		219			1,419		1,410		228		-		228
Deutsche	”		4.23%	Eur 12m + 1.50%	09/05/2027		-			5,079		4,908		171		-		171
Deutsche	”		4.24%	Eur 12m + 1.50%	09/05/2027		-			3,979		3,865		114		-		114
Bsabadell	Term Loan		4.80%	Eur 12m + 1.10%	04/29/2028		237			-		49		188		101		87
Deutsche	Working capital		4.05%	Eur 6m + 1.50%	07/04/2029		1,255			1,899		1,784		1,370		-		1,370
Deutsche	Working capital		4.05%	Eur 6m + 1.50%	07/04/2029		228			684		684		228		-		228
BBVA	Term Loan		4.00%	Fixed rate	06/03/2031		-			569		-		569		105		464
							5,852			72,993		70,742		8,103		5,441		2,662

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Fiscal Year	As of June 30, 2026		As of December 31, 2025
2026	$	3,462	$	-
2027		2,286		-
2028		188		-
2029		1,598		-
2031		569		-
Total	$	8,103	$	-

	June 30, 2026		December 31, 2025
Current	$	5,441	$	-
Non-current		2,662		-
Total	$	8,103	$	-

The debt with credit institutions was acquired as part of the Teyame and Datono business combination on January 1, 2026, and represents liabilities assumed at the acquisition date.

10) Other current liability

Particulars	June 30, 2026		December 31, 2025
Purchase consideration payable (refer note 6[B])	$	2,800	$	-
Professional fees payable		692		-
Unearned revenue		564		97
Commission accrual		407		411
Accrued payroll		263		216
Director’s fees		55		55
Insurance		-		179
Other		419		353	*
Total	$	5,200	$	1,311

*	Corresponding figures have been rearranged for the purposes of comparison.

11) Contingent consideration

On January 22, 2026, Healthcare Triangle, Inc. entered into a share purchase agreement to acquire Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) through its wholly owned subsidiary Teyame AI Holdings Inc., effective January 1, 2026. The aggregate purchase price for the Acquired Companies is up to $50,000, subject to the terms and conditions set forth in the Share Purchase Agreement. The consideration consists of a cash component and equity component, with an additional earnout component payable in the Company’s preferred stock upon achievement of specified post-closing performance targets. The Share Purchase Agreement also provides for an earnout payable in the Company’s preferred stock to certain key management employees of the Acquired Companies, with an aggregate value of up to $5,000, subject to achievement of specified annual targets as outlined in the Share Purchase Agreement. See note 6(B) for details.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

12) Stockholders’ Equity

All references to the number of common shares and price per Common Stock, for all periods presented, have been adjusted to reflect the following:

one-for-sixty reverse stock split effective February 10, 2026.

These reverse splits reduced the number of issued and outstanding shares of common stock in proportion to the split ratio, without changing the total authorized shares or the par value per share. The basic and diluted earnings consider the effect of reverse split across the reporting periods.

Accordingly, unless indicated otherwise, all the current period and historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents for the periods presented in this Report on Form 10-Q have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split. There was no change to the shares authorized or in the par value per share of common stock of $0.00001.

The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity. The Company issued fractional shares at the participant level in connection with the Reverse Stock Split.

A. Common Stock

i.	Equity Issuance and Pre-Funded Warrants for Business Combination

On January 22, 2026, Healthcare Triangle, Inc. entered into a share purchase agreement to acquire Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) through its wholly owned subsidiary Teyame AI Holdings Inc. The aggregate purchase price for the Acquired Companies is up to $50,000, subject to the terms and conditions set forth in the Share Purchase Agreement. The consideration consists of a cash component and equity component, split between common stock amounting to $12,000 and preferred stock amounting to $18,000 (to be issued), with an additional earnout component payable in the Company’s preferred stock upon achievement of specified post-closing performance targets. During the period ended June 30, 2026, 55,482 restricted shares of common stock and 424,856 pre-funded warrants convertible to common stock were issued towards the $12,000 common stock issuance, whereas preferred stock is yet to be issued. See note 6(B) for further details.

ii.	Pre-Funded Warrants

●

On February 26, 2026, the Company completed a registered direct offering pursuant to which it issued and sold an aggregate of 681,553 securities at a purchase price of $5.81 per security, consisting of 421,553 shares of common stock and 260,000 pre-funded warrants to purchase shares of common stock, which were exercised immediately upon issuance. The pre-funded warrants were issued in lieu of shares of common stock to certain investors whose purchase of common stock would otherwise have resulted in such investors exceeding applicable beneficial ownership limitations. Each pre-funded warrant had an exercise price of $0.00001 per share, was immediately exercisable, and remained exercisable until exercised in full, subject to the beneficial ownership limitations set forth in the warrant agreement. See below (D) for details.

The Company received net proceeds of approximately $3,563 after deducting commissions and other offering expenses of approximately $397. Consistent with U.S. GAAP, the Company recorded the net amount within additional paid-in capital on the accompanying consolidated balance sheet as the securities met all the criteria for equity classification.

●

In connection with the Equity Purchase Agreement (“ELOC”, see point [D] below), on June 12, 2026, the Company issued Hudson a five-year common stock purchase warrant (“ELOC warrant”) to purchase 50,000 shares of common stock at an exercise price of $0.00001 per share. The warrant is exercisable on a cash or cashless basis and was fully earned upon issuance. The warrant was issued as a commitment fee for Hudson Global’s agreement to enter into the ELOC. The Company determined that the warrant qualifies for equity classification. Accordingly, the grant-date fair value of the warrant of $112 has been recognized in other current assets as deferred ELOC offering cost, and will be adjusted against future ELOC financing, as and when the transactions occur.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

The Company effected a 1-for-60 reverse split of its issued and outstanding common stock on February 10, 2026. The reverse split reduced the number of issued and outstanding shares of common stock in proportion to the split ratio, without changing the total authorized shares or the par value per share. The basic and diluted earnings consider the effect of reverse split across the reporting periods.

The movement of warrants during the periods ended June 30 2026, and 2025, is shown below:

				Weighted		Average
				Average		Remaining
	Number of			Exercise		Contractual
Warrants	Warrants			price		Term
Outstanding on January 1, 2026		24,765		$	509.05		4.74
Granted during the period:
Registered direct offering		260,000			5.81		-
Pre-funded warrants (Teyame, see note 6[B])		424,856			-		4.69
ELOC warrant (see note above)		50,000			-		4.98
Exercised during the period		(260,000	)		5.81		-
Outstanding on June 30, 2026		499,621			25.23		4.70
Exercisable on June 30, 2026		499,621		$	25.23		4.70

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Contractual
Warrants	Warrants		price		Term
Outstanding on January 1, 2025		65	$	119,430		3.05
Outstanding on June 30, 2025		65		119,430		2.55
Exercisable on June 30, 2025		65	$	119,430		2.55

B. Preferred Stock Series C

On January 22, 2026, Healthcare Triangle, Inc. entered into a share purchase agreement to acquire Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) through its wholly owned subsidiary Teyame AI Holdings Inc. The aggregate purchase price for the Acquired Companies is up to $50,000, of which up to $23,000 (including $5,000 contingent earn-out consideration) is payable through issuance of Series C preferred stock. This preferred stock is subject to conversion to common stock in the ratio of 1:1 (one common stock for one preferred stock) at the discretion of the issuer, in accordance with the terms and conditions set forth in the Share Purchase Agreement. See note 6(B) and 17 for details.

C. Conversion of Debt to Equity

During the period ended June 30, 2026, the holders of the 2025 Debentures converted a portion of the Debentures into 27,086,245 shares of common stock (451,437 shares post reverse-split of one-for-sixty, effective February 10, 2026). See note 9(B) for details.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

D. Equity Financing

During the period ended June 30, 2026, the Company completed several equity financing activities designed to strengthen liquidity, support working capital needs, and fund general corporate and strategic initiatives.

On February 26, 2026, the Company entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell an aggregate of 681,553 securities at a purchase price of $5.81 per security, for aggregate gross proceeds of approximately $3,960, before placement agent fees of 7% and other offering expenses. The offering consisted of 421,553 shares of the Company’s common stock and 260,000 pre-funded warrants to purchase shares of common stock.

The pre-funded warrants were deemed cashless, and were issued in lieu of common stock to certain investors and are exercisable immediately for an aggregate of 260,000 shares of common stock, subject to customary anti-dilution adjustments, and remain exercisable until exercised in full. The pre-funded warrants also provide for cashless exercise in certain circumstances, including if an effective registration statement or current prospectus is not available for the issuance of the underlying shares.

The Company received net proceeds of approximately $3,563 after deducting commissions and other offering expenses of approximately $397. Consistent with U.S. GAAP, the commissions and offering costs are recorded as a reduction of additional paid-in capital within stockholders’ equity.

ii.

During the period ended June 30, 2026, the Company issued shares of its common stock pursuant to its At-the-Market Sales Agreement dated November 18, 2025. The Company sold an aggregate of 696,621 shares of its common stock at the prevailing market prices, generating gross proceeds of approximately $6,006. In accordance with the terms of the Sales Agreement, the Company paid commission totaling 3% of the gross proceeds from each sale, in addition to other customary offering expenses. Total commissions and offering-related costs of approximately $151 were incurred in connection with these issuances. The Company received net proceeds of approximately $5,855 after deducting commissions and other offering expenses. Consistent with U.S. GAAP, the net proceeds are recorded in the additional paid-in capital within stockholders’ equity.

iii.

Equity line of credit (ELOC)

On June 12, 2026, the Company entered into an Equity Purchase Agreement and a Registration Rights Agreement with Hudson Global Ventures, LLC (“Hudson”). Under the Equity Purchase Agreement, the Company has the right, but not the obligation, to sell to Hudson, from time to time and at the Company’s sole discretion, shares of the Company’s common stock for aggregate gross proceeds of up to $50,000 during a commitment period of up to 36 months, subject to earlier termination and the satisfaction of the conditions contained in the agreement.

Each purchase notice must represent an initial purchase amount of at least $25 and may not exceed the lesser of $2,500 or 200% of the Company’s average daily trading value, as defined in the agreement. The purchase price for shares sold under each purchase notice is equal to the lesser of: (i) 94% of the average of the three lowest traded prices of the Company’s common stock during the five trading days immediately preceding the applicable purchase notice date or (ii) 94% of the lowest traded price during the applicable valuation period.

The Company’s ability to sell shares under the Equity Purchase Agreement is subject to an effective resale registration statement, continued listing of the Company’s common stock on Nasdaq, minimum trading-price requirements and other customary closing conditions. Hudson may not purchase shares to the extent that its beneficial ownership would exceed 4.99% of the Company’s outstanding common stock. Unless stockholder approval is obtained, the aggregate number of shares issuable under the Equity Purchase Agreement and the warrant described below is limited to 399,805 shares, subject to adjustment for stock splits and similar transactions.

In connection with the Equity Purchase Agreement, the Company issued Hudson a five-year ELOC warrant to purchase 50,000 shares of common stock at an exercise price of $0.00001 per share. The warrant is exercisable on a cash or cashless basis and was fully earned upon issuance. The warrant was issued as a commitment fee for Hudson Global’s agreement to enter into the ELOC. The Company determined that the warrant qualifies for equity classification. The grant-date fair value of the warrant of $112 has been recognized in other current assets as deferred ELOC offering cost with a corresponding effect in Additional Paid-in Capital, and will be adjusted against future ELOC financing, as and when the transactions occur.

As of June 30, 2026, the Company had not issued any shares or received any proceeds under the Equity Purchase Agreement. Accordingly, the remaining available commitment was approximately $50,000, subject to the conditions and limitations described above.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

13) Segment Information

Schedule of operating segment

	Three months ended June 30,				Changes
	2026		2025		Amount			%
Software services	$	1,546	$	2,145	$	(599	)		(28	)%
Managed services and support		1,266		1,343		(77	)		(6	)%
Customer engagement services ^(*)		6,309		-		6,309			100	%
Corporate and others		72		70		2			3	%
Revenue	$	9,193	$	3,558	$	5,635			158	%

^(*)	represents segment acquired as part of business combination. See note 6(B) for details.

	Six months ended June 30,				Changes
	2026		2025		Amount			%
Software services	$	3,100	$	4,266	$	(1,166	)		(27	)%
Managed services and support		2,623		2,857		(234	)		(8	)%
Customer engagement services ^(*)		13,184		-		13,184			100	%
Corporate and others		139		140		(1	)		(1	)%
Revenue	$	19,046	$	7,263	$	11,783			167	%

^(*)	represents segment acquired as part of business combination. See note 6(B) for details.

Operating Results by Operating Segment

Three months ended June 30, 2026
	Software Services			Managed Services			Customer Engagement Services*			Corporate and Others			Total
Revenue	$	1,546		$	1,266		$	6,309		$	72		$	9,193
Less:
Cost of revenue		(1,254	)		(991	)		(4,666	)		(215	)		(7,126	)
Segmental gross profit / (loss)		292			275			1,643			(143	)		2,067
Sales and marketing		(115	)		(87	)		(28	)		(490	)		(720	)
General and administrative		(311	)		(99	)		(1,726	)		(2,685	)		(4,821	)
Research and development		-			-			6			(57	)		(51	)
Bad debts		(17	)		-			-			-			(17	)
Segmental profit / (loss)		(151	)		89			(105	)		(3,375	)		(3,542	)
Interest expenses		-			-			(79	)		(10	)		(89	)
Depreciation and amortization		(167	)		(137	)		(217	)		(8	)		(529	)
Other income		-			-			357			81			438
Forex loss		-			-			-			(17	)		(17	)
Changes in Fair Value		-			-			-			(652	)		(652	)
Loss before income taxes		(318	)		(48	)		(44	)		(3,981	)		(4,391	)
Income tax		-			-			(24	)		-			(24	)
Loss after income taxes	$	(318	)	$	(48	)	$	(68	)	$	(3,981	)	$	(4,415	)

^(*)	represents segment acquired as part of business combination. See note 6(B) for details.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Six months ended June 30, 2026
Particulars	Software Services			Managed Services			Customer engagement services			Corporate & Others			Total
Revenue from customers	$	3,100		$	2,623		$	13,184		$	139		$	19,046
Less:														-
Cost of revenue		(2,595	)		(2,051	)		(9,515	)		(426	)		(14,587	)
Segmental gross profit / (loss)		505			572			3,669			(287	)		4,459
Sales and marketing		(226	)		(166	)		(75	)		(2,033	)		(2,500	)
General and administrative		(613	)		(183	)		(3,188	)		(4,054	)		(8,038	)
Research and development		-			-			(25	)		(111	)		(136	)
Bad debts		(17	)		-			-			(125	)		(142	)
Segmental profit / (loss)	$	(351	)	$	223			381		$	(6,610	)	$	(6,357	)
Interest expenses		-			-			(150	)		(23	)		(173	)
Depreciation and amortization		(327	)		(278	)		(719	)		(15	)		(1,339	)
Other income		-			-			363			83			446
Forex loss		-			-			-			(80	)		(80	)
Changes in fair value		-			-			-			(3,088	)		(3,088	)
Loss before income taxes		(678	)		(55	)		(125	)		(9,733	)		(10,591	)
Income tax		-			-			(24	)		-			(24	)
Loss after income taxes	$	(678	)	$	(55	)		(149	)	$	(9,733	)	$	(10,615	)

^(*)	represents segment acquired as part of business combination. See note 6(B) for details.

Three months ended June 30, 2025
Particulars	Software Services			Managed Services			Corporate and others			Total
Revenue	$	2,145		$	1,343		$	70		$	3,558
Less:
Cost of revenue		(1,775	)		(1,055	)		(234	)		(3,064	)
Segmental gross profit / (loss)		370			288			(164	)		494
Sales and marketing		(177	)		(111	)		(328	)		(616	)
General and administrative		(104	)		(65	)		(1,013	)		(1,182	)
Research and development		-			-			(55	)		(55	)
Segmental profit / (loss)		89			112			(1,560	)		(1,359	)
Interest expenses		-			-			(21	)		(21	)
Depreciation and amortization		-			-			-			-
Other income		-			-			13			13
Profit / (loss) before income taxes		89			112			(1,568	)		(1,367	)
Income tax		-			-			-			-
Profit / (loss) after income taxes	$	89		$	112		$	(1,568	)	$	(1,367	)

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Six months ended June 30, 2025
Particulars	Software Services			Managed Services			Corporate and others			Total
Revenue	$	4,266		$	2,857		$	140		$	7,263
Less:
Cost of revenue		(3,833	)		(2,487	)		(120	)		(6,440	)
Segmental gross profit		433			370			20			823
Sales and marketing		(328	)		(221	)		(441	)		(990	)
General and administrative		(230	)		(154	)		(1,996	)		(2,380	)
Research and development		-			-			(198	)		(198	)
Segmental loss		(125	)		(5	)		(2,615	)		(2,745	)
Interest expenses		-			-			(435	)		(435	)
Depreciation and amortization		(7	)		(5	)		-			(12	)
Other income		-			-			124			124
Loss before income taxes		(132	)		(10	)		(2,926	)		(3,068	)
Income tax		-			-			-			-
Loss after income taxes	$	(132	)	$	(10	)	$	(2,926	)	$	(3,068	)

Revenue from top 5 customers

Schedule of concentration

	Three months ended June 30, 2026						Three months ended June 30, 2025
Customer	Amount			% of Revenue			Amount		% of Revenue
Customer 1	$	2,378	^(*)		26	%	$	707		20	%
Customer 2		836	^(*)		9	%		668		19	%
Customer 3		676	^(*)		7	%		337		9	%
Customer 4		667	^(*)		7	%		245		7	%
Customer 5	$	588			6	%	$	112		3	%

^(*)	represents customer acquired as part of business combination. See note 6(B) for details.

	Six months ended June 30, 2026						Six months ended June 30, 2025
Customer	Amount			% of Revenue			Amount		% of Revenue
Customer 1	$	4,516	^(*)		24	%	$	1,466		20	%
Customer 2		1,518	^(*)		8	%		1,327		18	%
Customer 3		1,329	^(*)		7	%		603		8	%
Customer 4		1,320	^(*)		7	%		429		6	%
Customer 5	$	1,225			6	%	$	345		5	%

^(*)	represents customer acquired as part of business combination. See note 6(B) for details.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

14) 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 costs are expensed as incurred.

15) Stock Based Compensation

	June 30, 2026		December 31, 2025
Opening share options outstanding		2,710		46
Vested / granted during the period / year		2		2,668
Forfeited / expired		-		(4	)
Closing share options outstanding		2712		2,710

Schedule of stock option activity

The employee options balance available under the plan (for issuance) were 3,997,292 and 3,138,280 as of June 30, 2026, and June 30, 2025, respectively.

The following table summarizes the activities for our unvested options for the period ended June 30, 2026.

	Number of			Weighted average Grant Date Fair Value
	Shares			Per Share
Unvested on January 1, 2026		3		$	24,222
Vested		(2	)		24,218
Unvested on June 30, 2026		1		$	24,225

The following table summarizes the activities for our unvested options for the period ended June 30, 2025.

	Number of			Weighted average Grant Date Fair Value
	Shares			Per Share
Unvested on January 1, 2025		7		$	24,322
Vested		(3	)		25,054
Unvested on June 30, 2025		4		$	24,200

16) Loss per share

	Three months ended
	June 30,
	2026			2025
Net loss attributable to common stockholders	$	(4,387	)	$	(1,367	)
Weighted average shares outstanding used in basic per common share computations		2,805,546			39,057
Basic / Diluted EPS – Stockholders^(*)	$	(1.56	)	$	(35.01	)

*	Due to net loss position, basic and diluted weighted average shares outstanding are the same.

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

	Six months ended
	June 30,
	2026			2025
Net loss attributable to common stockholders	$	(10,563	)	$	(3,068	)
Weighted average shares outstanding used in basic per common share computations		1,481,343			19,964
Basic / Diluted EPS – Stockholders^(*)	$	(7.13	)	$	(153.65	)

*	Due to net loss position, basic and diluted weighted average shares outstanding are the same.

17) Subsequent Events

Subsequent to June 30, 2026, the Company completed two draws under its Equity Purchase Agreement with Hudson Global Ventures, LLC. Pursuant to the draws, the Company issued an aggregate of 350,000 shares of common stock and received aggregate net proceeds of approximately $314, after deducting contractual clearing and transaction costs of approximately $23. The shares were issued subsequent to June 30, 2026, and, accordingly, no amounts related to these draws were recognized in the Company’s unaudited condensed consolidated financial statements as of June 30, 2026.

ii.

As explained in note 12(D)[iii], the Company issued Hudson Global Ventures LLC, a warrant to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.00001 per share as a commitment fee for entering into the Equity Purchase Agreement. On July 22, 2026, Hudson exercised the warrant in full on a cashless basis. Pursuant to the cashless exercise provisions of the warrant, the Company issued 50,000 shares of common stock to Hudson. Following the exercise, no shares remained issuable under the warrant. The cashless exercise did not result in any additional cash proceeds to the Company.

iii.

During July 2026, the Company issued an aggregate of 9,718,373 shares of common stock in connection with the Teyame Share Purchase Agreement. The shares issued consisted of 1,974,686 shares of common stock issued as acquisition consideration and 7,743,687 shares of common stock issued upon conversion of preferred stock related to the consideration for acquisition of Teyame and Datono. The shares were issued subsequent to June 30, 2026, and, accordingly, were not included in the Company’s common shares outstanding as of June 30, 2026 or in weighted-average shares outstanding for the three and six months then ended. The shares will be included in weighted-average shares outstanding from their respective issuance dates.

iv.

On July 17, 2026, the Company’s shareholders approved the issuance of 2,828,167 shares of common stock pursuant to the Securities Exchange Agreement dated June 24, 2026, with SecureKloud Technologies Ltd. Under the agreement, SecureKloud surrendered 1,600,000 shares of the Company’s Series B Convertible Preferred Stock in exchange for 2,828,167 shares of the Company’s common stock. As part of the consideration contemplated by the agreement, $626 of advance to SecureKloud was included in the transaction. The Company had fully provided for such advance as of June 30, 2026.

On July 29, 2026, the Company announced that it had entered into a non-binding letter of intent to acquire a 51% equity interest in CosmoAesthetics Pty Ltd, an Australian company operating under the name CosmoInnovations. CosmoInnovations is a Melbourne-based company engaged in the development of proprietary medical technology, consumer-health and related products. The proposed aggregate consideration is approximately $23,500 and is expected to consist of a combination of cash, equity securities of the Company and performance-linked milestone payments over a three-year period.

The proposed transaction remains subject to the completion of financial, legal and intellectual-property due diligence, the negotiation and execution of definitive agreements, receipt of applicable regulatory and other approvals and the satisfaction of customary closing conditions. Accordingly, there can be no assurance that the proposed transaction will be completed on the terms currently contemplated, or at all.

HEALTHCARE TRIANGLE, INC.
Notes To Condensed Consolidated Financial Statements

(Unaudited)
(In thousands except share and per share data)

18) New Accounting Pronouncements

Implemented

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. We adopted this ASU on a prospective basis effective January 1, 2026. While this ASU was adopted, we did not elect practical expedient permitted under this ASU. Therefore, the adoption has no impact on our consolidated financial statements.

Not Yet Due

ASU No. 2025-06. In September 2025, the FASB issued ASU No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which is intended to modernize internal-use software guidance by removing all references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. ASU No. 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statements.

ii.

ASU No. 2024-03. In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which is intended to improve disclosures about a public business entity’s expenses by requiring disaggregated disclosure, in the notes to the financial statements, of prescribed categories of expenses within relevant income statement captions. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The new standard may be applied either on a prospective or retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statement disclosures.

Recent accounting pronouncements adopted or pending adoption not discussed above are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

Item 2. Management’s discussion and analysis of financial condition and results of operations.

The following discussion summarizes the significant factors affecting the operating results, financial condition, liquidity, and cash flows of our Company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the related notes thereto, and the consolidated financial statements and the related notes thereto all included elsewhere in this Quarterly Report on Form 10-Q. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity, and capital resources, and all other non-historical statements in this discussion are forward-looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, and in the sections entitled “Note About Forward-Looking Statements” and “Risk Factors” contained in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”).

Overview

Healthcare Triangle, Inc. (the “Company”) is a leading healthcare information technology company focused on advancing innovative, industry-transforming solutions in the areas of cloud services, data science, professional and managed services for the Healthcare and Life Sciences industry.

The Company was formed on October 29, 2019, as a Nevada corporation and converted into a Delaware corporation on April 24, 2020, to provide IT and data services to the Healthcare and Life Sciences (“HCLS”) industry. The business commenced on January 1, 2020, after SecureKloud Technologies Inc. transferred its Life Sciences business to us. As of June 30, 2026, we had a total of 40 full time employees and 27 sub-contractors, including 32 certified cloud engineers, 22 Epic Certified EHR experts, 9 MEDITECH Certified EHR experts and 4 Admin sub-contractors. Many of the senior management team and the members of our board of directors hold advanced degrees and some are leading experts in the field of technology, investment banking and public markets.

During the period ended June 30, 2026, the Company effected a 1-for-60 reverse split of its issued and outstanding common stock on February 10, 2026. The reverse split reduced the number of issued and outstanding shares of common stock in proportion to the split ratio, without changing the total authorized shares or the par value per share.

Our approach leverages our proprietary technology platforms, extensive industry knowledge, and healthcare domain expertise to provide solutions and services that reinforce healthcare progress. Through our platform, solutions, and services, we support healthcare delivery organizations, healthcare insurance companies, pharmaceutical, and Life Sciences, biotech companies, and medical device manufacturers in their efforts to improve data management, develop analytical insights into their operations, and deliver measurable clinical, financial, and operational improvements.

We offer a comprehensive suite of software, solutions, platforms, and services that enables some of the world’s leading healthcare and pharma organizations to deliver personalized healthcare, precision medicine, advances in drug discovery, development and efficacy, collaborative research and development, respond to real-world evidence, and accelerate their digital transformation. We combine our expertise in the healthcare technology domain, cloud technologies, DevOps and automation, data engineering, advanced analytics, security, compliance, and governance to deliver platforms and solutions that drive improved results in the complex workflows of Life Sciences, biotech, healthcare providers, and payers. Our differentiated solutions, enabled by our intellectual property and delivered as a service, provide advanced analytics, data science applications, and data aggregation in these highly regulated environments in a more compliant, secure, and cost-effective manner to our customers.

Our deep expertise in healthcare technology allows us to reinforce our clients’ progress by accelerating their innovation. Our healthcare IT services include Electronic Health Records (EHR) and software implementation, optimization, extension to community partners, as well as application managed services, and backup and disaster recovery capabilities on public cloud. Our 24x7 managed services are used by hospitals and health systems, payers, Life Sciences, and biotech organizations in their effort to improve health outcomes and deliver deeper, more meaningful patient and consumer experiences. Through our services, our customers achieve a return on investment in their technology by delivering measurable improvements. Combined with our software and solutions, our services provide clients with an end-to-end partnership for their technology innovation.

Our Business Model

The majority of our revenue is generated by the AI powered Customer Engagement segment following the Company’s acquisition of Teyame 360 S.L. (“Teyame”) and Datono Mediacion S.L. (“Datono”) effective January 1, 2026, followed by the revenue earned through our full time employees who provide Software Services and Managed Services and Support to our clients in the Healthcare and Life Sciences industry. Our Software Services include strategic advisory, implementation and development services, and Managed Services and Support include post implementation support and cloud hosting.

Key Factors of Success

We believe that our future growth, market adoption, success, and the long-term value creation associated Teyame following the acquisition by Healthcare Triangle, Inc. (HCTI) will depend on several strategic, operational and technological factors. These factors represent significant opportunities that management must successfully address in order to realize the expected benefits of the acquisition and accelerate the combined company’s growth trajectory.

Investment in scaling the business

We need to continuously invest in sales, and marketing to promote our solutions to new and existing customers in various geographies, and other operational and administrative functions in systems, controls and governance to support our expected growth and our transition to a public company. We anticipate that our employee strength will increase over time because of such investments.

On June 16, 2025 (the “Closing date”), Healthcare Triangle, Inc. through its wholly owned subsidiary Quantum Nexus Inc. (the “Company”) and Niyama Healthcare, Inc., a Delaware corporation, a provider of Mental Health and Hospital Information Systems technology, across India, Southeast Asia, and Europe (the “Seller”) entered into an Asset and Stock Transfer Agreement (the “Agreement”). Pursuant to the Agreement, the Company agreed to purchase from the Seller the Transferred Assets (comprising of contracts, intellectual property and related assets), and (ii) the Seller’s 100% shareholder equity interest in Ezovion Solutions Private Limited, Chennai, India - Hospital Information Systems SaaS Provider as Seller’s Equity (the “Transferred Equity”), as a whole and as a going concern in exchange for the Purchase Price (as defined below).

The total fair value of consideration transferred on the Acquisition Date was approximately $6,095, consisting of the following:

	●	Cash paid at closing and within 120 days after closing: $1,494

	●	Fair value of equity consideration (1,388,041 pre-reverse-split restricted common shares issued): $4,601

	●	Fair value of contingent consideration (earn-out): $0

The deferred cash payment was discounted to present value using a market-based discount rate. The earn-out has been provisionally valued at nil based on initial probability-weighted revenue forecasts. This amount is subject to revision within the measurement period ending June 16, 2026, as management finalizes its assessment of the earn-out targets and market-based inputs.

The cash consideration includes: (i) $3,000 paid during 2025 pursuant to an advance agreement dated December 3, 2025, (ii) $6,000 paid during January, 2026, (iii) $3,200 paid during April, 2026, and (iv) $2,800 payable on the earlier of the conditions being met as outlined in the Share Purchase Agreement, or six months from the date of the Share Purchase Agreement (but in no event prior to April 29, 2026).

The final determination of the fair values, purchase consideration, related income tax impacts and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined.

Successful Integration of Teyame into the Healthcare Triangle

A critical factor to the success of the acquisition will be Healthcare Triangle’s ability to effectively integrate Teyame’s operations, technology platforms, people, and the go-to-market strategy into HCTI’s broader healthcare operations. The integration process includes aligning product development roadmap, simplifying operational processes, consolidating administrative functions, and creating a combined portfolio of customer impacting solutions.

Healthcare Triangle expects the acquisition to enhance its capabilities in artificial intelligence-driven healthcare technologies, automation, data analytics, and intelligent workflow management. Successful integration will depend on maintaining operational continuity, retaining key personnel and customers, and minimizing disruptions during the transition period.

In addition, the integration of Teyame’s AI-driven capabilities with HCTI’s cloud infrastructure, data platforms, and healthcare technology services is expected to create cross-functional synergies that may improve scalability, customer engagement, and long-term recurring revenue opportunities.

Cross-selling and customer expansion opportunities

The acquisition enables Healthcare Triangle to cross-sell Teyame’s solutions into its existing customer base while simultaneously introducing HCTI’s broader portfolio of cloud, cybersecurity, managed services and data engineering to Teyame’s customers.

These combined customer relationships may increase enterprise engagements and enhance our data, analytics and automation offerings. Healthcare organizations increasingly prefer integrated technology partners capable of delivering end-to-end digital transformation solutions, and the acquisition may strengthen HCTI’s ability to provide such comprehensive offerings.

Future growth will depend on the Company’s ability to execute coordinated sales and marketing initiatives, demonstrate measurable value to customers, and maintain high customer retention and satisfaction levels.

Adoption of Artificial Intelligence (AI) and enhancement of our Healthcare Technology capabilities

The acquisition of Teyame is expected to accelerate the pace of innovation and strengthen HCTI’s strategic position within the rapidly growing healthcare artificial intelligence market. Through the acquisition, HCTI intends to expand its scalable AI-driven capabilities and enhance its portfolio of solutions focused on clinical workflow optimization, patient engagement, operational efficiency, predictive analytics, and intelligent automation.

As healthcare organizations increasingly adopt AI-enabled technologies to improve clinical outcomes, care delivery, streamline operations, and enhance decision-making, HCTI believes the combined technology solutions will support the expansion of differentiated service offerings across hospitals, health systems, and life sciences organizations. The acquisition is also expected to enhance HCTI’s ability to integrate advanced analytics, automation, and data-driven intelligence into its broader healthcare technology ecosystem.

The Company’s future success will depend on its ability to continuously enhance product functionality, maintain technological relevance in a rapidly evolving healthcare environment, and deliver measurable clinical, operational, and financial outcomes for customers. HCTI believes these capabilities will be important drivers of customer adoption, long-term retention, recurring revenue growth, and overall market expansion.

Adoption of our solutions by new and existing customers

We believe that our ability to increase our customer base will enable us to drive growth. Most of our customers initially deploy our solutions within a division or geography and may only initially deploy a limited set of our available solutions. Our future growth is dependent upon our existing customers’ continued success and renewals of our solutions agreements, deployment of our solutions to additional divisions or geographies, and the purchase of subscriptions to additional solutions. Our growth is also dependent on the adoption of our solutions by new customers. Our customers are large organizations who typically have long procurement cycles which may lead to declines in the pace of our new customer additions.

Subscription services adoption

The key factor to our success in generating substantial recurring subscription revenues in future will be our ability to successfully market and persuade new customers to adopt our Software as a Service (“SaaS”) offerings. We are in the early stages of marketing our SaaS offerings such as DataEz, CloudEz and Readabl.AI, and do not yet have enough information about our competition or customer acceptance to determine whether or not recurring subscription revenue from these offerings will have a material impact on our revenue growth.

Mix of solutions and software services revenues

Another factor to our success is the ability to sell our solutions to the existing software services customers. During the initial period of deployment by a customer, we generally provide a greater number of services including advisory, implementation and training. At the same time, many of our customers have historically purchased our solutions after the deployment. Hence, the proportion of total revenues for a customer associated with software services is relatively high during the initial deployment period. While our software services help our customers achieve measurable improvements and make them stickier, they have lower gross margins than solution-based revenue. Over time, we expect the revenues to shift towards recurring and subscription-based revenues.

Components of Results of Operations

Revenues

During the quarter ended June 30, 2026 and 2025, the Company generated revenues of approximately $9.19 million compared to revenue of $3.56 million respectively which represents an increase of $5.63 million or 158% compared to the previous year comparative quarter.

We provide our services and manage our business under these operating segments:

	●	Software Services

	●	Managed Services and Support

	●	Customer Engagement Services

	●	Corporate and Others

Software Services

The Company earns revenue primarily through the sale of software services that is generated from providing strategic advisory, implementation, and development services. The Company enters into Statement of Work (SOW) which provides for service obligations that need to be fulfilled as agreed with the customer. The majority of our software services arrangements are billed on a time and materials basis, and revenues are recognized over time based on time incurred and contractually agreed upon rates. Certain software services revenues are billed on a fixed fee basis and revenues are typically recognized over time as the services are delivered based on time incurred and customer acceptance. We recognize revenue when we have the right to invoice the customer using the allowable practical expedient under ASC 606-10-55-18 since the right to invoice the customer corresponds with the performance obligations completed.

Managed Services and Support

Managed Services and Support include post implementation support and cloud hosting. Managed Services and Support are a distinct performance obligation. Revenue for Managed Services and Support is recognized ratably over the life of the contract.

Customer Engagement Services

Consideration under Customer Engagement Services arrangements is generally based on either a fee for each completed and validated outcome or an agreed hourly rate for services provided.

Revenue is presented net of estimated cancellations, penalties and other adjustments to the extent such amounts represent adjustments to the transaction price under the applicable customer contracts.

Corporate and Others

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 in full in the period in which the loss becomes probable and estimable.

Cost of Revenue

Cost of revenue consists primarily of employee-related costs associated with the rendering of our services, including salaries, benefits and stock-based compensation expense, the cost of subcontractors, travel costs, cloud hosting charges and allocated overhead the cost of providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due to the direct labor costs and costs of subcontractors. Our business and operational models are designed to be highly scalable and leverage variable costs to support revenue-generating activities.

While we may grow our headcount overtime to capitalize on our market opportunities, we believe our increased investment in automation, electronic health record integration capabilities, and economies of scale in our operating model, will position us to grow our platform solutions revenue at a greater rate than our cost of revenue.

Gross Margin

The gross margin generated by the Company has increased to 22% in the quarter ended June 30, 2026, as compared to 14% in the quarter ended June 30, 2025, respectively.

The Customer Engagement Services segment generated $1.64 million in segment gross profit at a gross margin of approximately 26%, above the Company’s historical margin profile and consistent with the segment’s performance in the first quarter. The continued strength of this segment was the single largest driver of the Company’s overall gross margin expansion, to 22% in the quarter ended June 30, 2026, from 14% in the quarter ended June 30, 2025.

Going forward, we expect the gross margin to continue to increase, as new contracts are being negotiated at higher margins and as a result, we expect future profit margins to increase materially over the next few quarters.

Operating Expenses

Research and Development

Research and development expense (majorly our investment in innovation) consists primarily of employee-related expenses, including salaries, benefits, incentives, employment taxes, severance, and equity compensation costs for our software developers, engineers, analysts, project managers, and other employees engaged in the development and enhancement of our cloud-based platform applications. Research and development expenses also include certain third-party consulting fees. Our research and development expense excludes any depreciation and amortization.

We expect to continue our focus on developing new product offerings and enhancing our existing product offerings. As a result, we expect our future research and development expense to increase in absolute dollars, although it may vary from period to period as a percentage of revenue.

Sales and Marketing

Sales and marketing expense consists primarily of employee-related expenses, including salaries, benefits, commissions, travel, discretionary incentive compensation, employment taxes, severance, and equity compensation costs for our employees engaged in sales, sales support, business development, and marketing. Sales and marketing expense also includes operating expenses for marketing programs, research, trade shows, and brand messages, and public relations costs.

We expect our future sales and marketing expenses to continue to increase in absolute dollar terms as we strategically invest to expand our business, although it may vary from period to period as a percentage of total revenues.

General and Administrative

Our general and administrative expenses consist primarily of employee-related expenses including salaries, benefits, discretionary incentive compensation, employment taxes, severance, and stock-based compensation expenses, for employees who are responsible for management information systems, administration, human resources, finance, legal, and executive management. The general and administrative expenses also include occupancy expenses (including rent, utilities, and facilities maintenance), professional fees, consulting fees, insurance, travel, contingent consideration, transaction costs, integration costs, and other expenses. Our general and administrative expenses exclude depreciation and amortization.

In the nearest future, we expect our general and administrative expenses to continue to increase to support business growth. Over the long term, we expect general and administrative expenses to decrease as a percentage of revenue.

Depreciation and Amortization Expenses

Our depreciation and amortization expense consists primarily of depreciation of fixed assets, amortization of customer relationship and capitalized software development costs, and amortization of intangible assets. We expect our depreciation and amortization expense to increase as we continue to invest and expand our business organically and through acquisitions.

Other Income (Expense), Net

Other income (expense), net consists of finance cost and gains or losses on foreign currency.

Deferred Revenues

Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the revenue recognition criteria are met.

Results of Operations

The following tables set forth selected unaudited condensed consolidated statements of operations and comprehensive loss data and such data as a percentage of total revenues for each of the periods indicated:

	Quarter ended June 30,
	2026			% Sales			2025			% Sales

Revenue	$	9,193			100	%	$	3,558			100	%
Less:
Cost of revenue (exclusive of depreciation /amortization)		7,126			78	%		3,064			86	%
Sales and marketing		720			8	%		616			17	%
General and administrative		4,821			52	%		1,182			33	%
Research and development		51			1	%		55			2	%
Bad debts expense		17			0	%		-			0	%
Depreciation and amortization		529			6	%		-			0	%
Other income		(438	)		(5	)%		(13	)		(0	)%
Changes in fair value		652			7	%		-			0	%
Interest expense		89			1	%		21			1	%
Forex loss		17			0	%		-			0	%
Net loss	$	(4,391	)		(48	)%	$	(1,367	)		(38	)%

Revenue from operations

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Revenue	$	9,193	$	3,558	$	5,635		158	%

Revenue increased by $5.6 million, or 158% to $9.2 million for the quarter ended June 30, 2026, as compared to $3.6 million for the quarter ended June 30, 2025. Revenue from Customer Engagement Services, and Corporate and Others increased in the current quarter, while revenue from Software Services and Managed Services and Support decreased.

Our top 5 customers accounted for 55% of the revenue in quarter ended June 30, 2026, and 58% during quarter ended June 30, 2025, respectively.

The following table has the breakdown of our revenues for the quarter ended June 30, 2026, and 2025 for each of our top 5 customers.

Top Five Customers Revenue for quarter ended June 30, 2026 and 2025.

(In thousands, except percentages)

	Quarter ended June 30, 2026						Quarter ended June 30, 2025
Customer	Amount			% of Revenue			Amount		% of Revenue
Customer 1	$	2,378	*		26	%	$	707		20	%
Customer 2		836	*		9	%		668		19	%
Customer 3		676	*		7	%		337		9	%
Customer 4		667	*		7	%		245		7	%
Customer 5	$	588			6	%	$	112		3	%

(*)	acquired as part of business combination during the period ended June 30, 2026.

The following table provides details of Customer 1 revenue by operating segments:

	Quarter ended June 30,				Changes
	2026		2025		Amount			%

Software services	$	-	$	702	$	(702	)		(100	)%
Customer engagement services		2,378		-		2,378			100	%
Managed services and support		-		5		(5	)		(100	)%
Total Revenue	$	2,378	$	707	$	1,671			236	%

Total revenue from Customer 1 increased by $1.67 million, or 236% to $2.38 million for the quarter ended June 30, 2026, as compared to $0.71 million for the quarter ended June 30, 2025. Software Services revenue decreased by $0.70 million or 100% to nil for the quarter ended June 30, 2026, as compared to $0.70 million for the quarter ended June 30, 2025. Customer engagement services revenue increased by $2.38 million, or 100% to $2.38 million for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025. Managed Services and Support revenue decreased by $0.005 million, or 100% to nil for the quarter ended June 30, 2026, as compared to $0.005 million for the quarter ended June 30, 2025.

Cost of Revenue (exclusive of depreciation/amortization)

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Cost of revenue (exclusive of depreciation/amortization)	$	7,126	$	3,064	$	4,062		133	%

Cost of revenue, excluding depreciation and amortization, increased by $4.1 million, or 133%, to $7.1 million for the quarter ended June 30, 2026, as compared to $3.1 million for the quarter ended June 30, 2025.

Research and Development

	Quarter ended June 30,				Changes
	2026		2025		Amount			%

Research and development	$	51	$	55	$	(4	)		(7	)%

Research and Development expenses decreased by 7% to $0.05 million for the quarter ended June 30, 2026, as compared to $0.05 million for the quarter ended June 30, 2025.

Sales and Marketing

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Sales and marketing	$	720	$	616	$	104		17	%

Sales and Marketing expenses increased by $0.1 million, or 17% to $0.7 million for the quarter ended June 30, 2026, as compared to $0.6 million for the quarter ended June 30, 2025.

Sales and Marketing expenses for the quarters ended June 30, 2026, and 2025, were $720 and $616, of which advertisement expenses were $495 and $236 respectively.

General and Administrative

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

General and administrative	$	4,821	$	1,182	$	3,639		308	%

General and Administrative expenses increased by $3.6 million, or 308% to $4.8 million for the quarter ended June 30, 2026, as compared to $1.2 million for the quarter ended June 30, 2025.

Depreciation and Amortization

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Depreciation and amortization	$	529	$	-	$	529		100	%

Depreciation and Amortization expenses increased by $0.5 million, or 100% to $0.5 million for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025.

Interest Expense

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Interest expense	$	89	$	21	$	68		324	%

Interest expenses increased by $0.07 million, or 324% to $0.09 million for the quarter ended June 30, 2026, as compared to $0.02 million for the quarter ended June 30, 2025.

Other income

	Quarter ended June 30,				Changes
	2026		2025		Amount		%

Other income	$	438	$	13	$	425		3,269	%

Other income increased by $0.43 million, or 3,269% to $0.44 million for the quarter ended June 30, 2026, as compared to $0.01 million for the quarter ended June 30, 2025.

Changes in fair value

	Quarter ended
	June 30,
	(In thousands)				Changes
	2026		2025		Amount		%
Changes in fair value	$	652	$	-	$	652		100	%

Changes in fair value increased by $0.7 million, or 100% to $0.7 million for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025.

Forex loss

	Quarter ended
	June 30,
	(In thousands)				Changes
	2026		2025		Amount		%
Forex loss	$	17	$	-	$	17		100	%

Forex loss increased by $0.01 million, or 100% to $0.01 million for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025.

Revenue, Cost of Revenue and Operating Profit by Operating Segment

We manage and report our business under four operating segments which are Software Services, Managed Services and Support, Customer Engagement Services, and Corporate and Others.

	Quarter ended June 30,				Changes
	2026		2025		Amount			%
Software services	$	1,546	$	2,145	$	(599	)		(28	)%
Managed services and support		1,266		1,343		(77	)		(6	)%
Customer engagement services^(*)		6,309		-		6,309			100	%
Corporate and others		72		70		2			3	%
Revenue	$	9,193	$	3,558	$	5,635			158	%

Revenue from Software services decreased by $0.6 million, or 28% to $1.55 million for the quarter ended June 30, 2026, as compared to $2.14 million for the quarter ended June 30, 2025. Revenue from Managed services and support decreased by $0.07 million, or 6% to $1.27 million for the quarter ended June 30, 2026, as compared to $1.34 million for the quarter ended June 30, 2025. Revenue from Customer engagement services increased by 100% to $6.31 million for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025. Revenue from Corporate and others increased by 3% to $0.07 million for the quarter ended June 30, 2026, as compared to $0.07 million for the quarter ended June 30, 2025.

Factors affecting revenues of Software Services, and Managed Services and Support

Our strategy is to achieve meaningful long-term revenue growth through sales of Managed Services and Support to existing and new clients within our target market. In order to increase our cross-selling opportunity between our operating segments and realize long time revenue growth, our focus has shifted more towards Managed Services and Support which is of recurring nature when compared to Software Services segment which is of non-recurring nature. This also helps in retaining existing customers by leveraging our Managed Services and Support and Platform Services as a growth agent. This renewed focus on driving demand for subscription and platform-based model will help us in expanding our customer base and enhance customer retention which is a challenge for our existing Software Services segment. Software Services contracts are driven by Time and Material and on-site employees delivering services at customers location.

Cost of Revenue

	Quarter ended June 30,				Changes
	2026		2025		Amount			%

Software services	$	1,254	$	1,775	$	(521	)		(29	)%
Managed services and support		991		1,055		(64	)		(6	)%
Customer engagement services		4,666		-		4,666			100	%
Corporate and others		215		234		(19	)		(8	)%
Cost of revenue	$	7,126	$	3,064	$	4,062			133	%

Cost of revenue from Software services decreased by $0.52 million, or 29% to $1.25 million for the quarter ended June 30, 2026, as compared to $1.78 million for the quarter ended June 30, 2025. Cost of revenue from Managed Services and Support decreased by $0.06 million, or 6% to $0.99 million for the quarter ended June 30, 2026, as compared to $1.06 million for the quarter ended June 30, 2025. Cost of revenue from Customer engagement services increased by $4.67 million, or 100% for the quarter ended June 30, 2026, as compared to nil for the quarter ended June 30, 2025. Cost of revenue from corporate and others decreased by $0.02 million, or 8% to $0.21 million for the quarter ended June 30, 2026, as compared to $0.23 million for the quarter ended June 30, 2025.

Segment operating results by reportable segments were as follows:

Operating results by Operating Segment

Three months ended June 30, 2026
	Software Services			Managed Services			Customer Engagement Services*			Corporate and Others			Total
Revenue	$	1,546		$	1,266		$	6,309		$	72		$	9,193
Less:
Cost of revenue		(1,254	)		(991	)		(4,666	)		(215	)		(7,126	)
Segmental gross profit / (loss)		292			275			1,643			(143	)		2,067
Sales and marketing		(115	)		(87	)		(28	)		(490	)		(720	)
General and administrative		(311	)		(99	)		(1,726	)		(2,685	)		(4,821	)
Research and development		-			-			6			(57	)		(51	)
Bad debts		(17	)		-			-			-			(17	)
Segmental profit / (loss)		(151	)		89			(105	)		(3,375	)		(3,542	)
Interest expenses		-			-			(79	)		(10	)		(89	)
Depreciation and amortization		(167	)		(137	)		(217	)		(8	)		(529	)
Other income		-			-			357			81			438
Forex loss		-			-			-			(17	)		(17	)
Changes in Fair Value		-			-			-			(652	)		(652	)
Loss before income taxes		(318	)		(48	)		(44	)		(3,981	)		(4,391	)
Income tax		-			-			(24	)		-			(24	)
Loss after income taxes	$	(318	)	$	(48	)	$	(68	)	$	(3,981	)	$	(4,415	)

(*)	Acquired as part of business combination during the period ended June 30, 2026.

Quarter ended June 30, 2025
Particulars	Software Services			Managed Services			Corporate and others			Total
Revenue	$	2,145		$	1,343		$	70		$	3,558
Less:
Cost of revenue		(1,775	)		(1,055	)		(234	)		(3,064	)
Segmental gross profit / (loss)		370			288			(164	)		494
Sales and marketing		(177	)		(111	)		(328	)		(616	)
General and administrative		(104	)		(65	)		(1,013	)		(1,182	)
Research and development		-			-			(55	)		(55	)
Segmental profit / (loss)		89			112			(1,560	)		(1,359	)
Interest expenses		-			-			(21	)		(21	)
Depreciation and amortization		-			-			-			-
Other income		-			-			13			13
Profit / (loss) before income taxes		89			112			(1,568	)		(1,367	)
Income tax		-			-			-			-
Profit / (loss) after income taxes	$	89		$	112		$	(1,568	)	$	(1,367	)

Due from related parties:

On January 1, 2025, the Company entered into a Master Service Agreement with SecureKloud Technologies Inc. (“SKI”) and SecureKloud Technologies Limited (“SKL”). The initial term of the agreement is twenty-four months, which is extendable based on mutual consent. As per the Master Services Agreement, SKI and SKL provide technical resources according to the statement of work from the Company. Pricing is determined using a cost-plus model, with a markup of 18% on cost, to ensure that the transactions comply with the arm’s length principle in accordance with the applicable transfer pricing regulations.

As of June 30, 2026, and December 31, 2025, the balances outstanding are $3,260, and $3,826 respectively. The balances are unsecured, non-interest bearing and are expected to be settled in the ordinary course of business, as outlined below:

$60 was advanced to Healthcare Triangle (Pvt.) Ltd. (a subsidiary of SecureKloud) for provision of certain services to the Company.

Related party transactions:

Following are the transactions with related parties during the periods presented:

Related Parties	Nature of transactions	Quarter ended June 30, 2026		Quarter ended June 30, 2025
SecureKloud Technologies Limited, India	Services received and paid	$	-	$	563
	Amounts advanced		-		407
Healthcare Triangle (Pvt.) Limited, India	Services received and paid		542		-
	Amounts advanced		60		-
SecureKloud Technologies, Inc.	Services received and paid		-		49
	Amounts advanced		-		832
	Services rendered		-		-
	Amounts collected by related party on behalf of the Company		-		75
Blockedge Technologies, Inc.	Services rendered		-		30
	Services received and paid		60		-
	Amounts advanced		-		91
Key management personnel	Remuneration		337		276
Board of Directors	Compensation	$	55	$	55

Liquidity and Capital Resources

Liquidity

The current ratio measures a company’s ability to pay off its current liabilities (payable within one year) with its total current assets such as cash, accounts receivable, and inventories. The Company’s current ratio, as at June 30, 2026 is 0.6 compared to 1.03 as at December 31, 2025.

The Company’s current debt equity ratio, as at June 30, 2026 financial statement is 0.27, compared to 1.08 as at December 31, 2025.

The Company does not have inventory and hence the quick ratio is the same as the current ratio.

Sources of Liquidity

	As of June 30, 2026		As of June 30, 2025

Cash and cash equivalents	$	1,906	$	3,228

As of June 30, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $1.91 million. We have financed our operations primarily through financing activity and operating cash flows. We believe our existing cash and cash equivalents generated from operations and financing activities will be sufficient to meet our working capital over the next 12 months. Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the expansion of sales and marketing activities and the ongoing investments in platform development.

Cash Flows

The following table presents a summary of our consolidated cash flows provided by / (used in) operating, investing, and financing activities for the periods indicated:

	Six months ended June 30, 2026			Six months ended June 30, 2025

Cash flows used in operating activities	$	(7,697	)	$	(8,192	)
Cash flows used in investing activities		(9,244	)		(603	)
Cash flows provided by financing activities		11,192			12,003
Cumulative translation adjustment		30			—
Net (decrease) / increase in cash and cash equivalents	$	(5,719	)	$	3,208

Operating Activities

Net cash used in operating activities during the six months ended June 30, 2026, was $(7.70) million compared to $(8.19) million for the six months ended June 30, 2025.

Investing Activities

Net cash used in investing activities was $(9.20) million for the six months ended June 30, 2026, compared to $(0.6) million for the six months ended June 30, 2025.

Financing Activities

Cash inflow from financing activities was $11.19 million for the six months ended June 30, 2026, compared to a net inflow of $12 million for the six months ended June 30, 2025.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes as defined by Item 303(a)(4) of SEC Regulation S-K, as of June 30, 2026.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We did not have investments and do not utilize derivative financial instruments to manage our interest rate risks.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to the Chief Operating Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We, under the supervision of and with the participation of our management, including our Chief Operating Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Operating Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2026.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in routine litigation that arises in the ordinary course of business. We are not currently involved in any claim outside the ordinary course of business that is material to our financial condition or results of operations.

Item 1A. Risk Factors.

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K, filed with the SEC on April 16, 2026. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information

During the six months ended June 30, 2026, no director or officer adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, in each case as defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

Exhibit No.		Description
31.1*		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Principal Executive Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of the Chief Financial Officer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**		Inline XBRL Instance Document.
101.SCH**		Inline XBRL Taxonomy Extension Schema Document.
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document).

*	Filed herewith.

**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HEALTHCARE TRIANGLE, INC.

Date: August 13, 2026	/s/ Sujatha Ramesh
	Sujatha Ramesh
	Board Director and Chief Operating Officer
	(Principal executive officer)

Date: August 13, 2026	/s/ David Ayanoglou
	David Ayanoglou
	Chief Financial Officer
	(Principal financial officer)