HEALTHCARE TRIANGLE, INC. 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 report. 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 "Special Note Regarding Forward-Looking Statements" and "Risk Factors".
Overview
Healthcare Triangle, Inc. 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 onOctober 29, 2019 , as aNevada corporation and then converted into aDelaware corporation onApril 24, 2020 , to provide IT and data services to the Healthcare and Life Sciences ("HCLS") industry. The business commenced onJanuary 1, 2020 , after the Parent transferred its s Life Sciences business to us. As ofDecember 31, 2022 , we had a total of 51 full time employees, 225 sub-contractors, including 122 certified cloud engineers, 107 Epic Certified EHR experts and 17 MEDITECH Certified EHR experts. Many of the senior management team and the members of our board of directors hold advanced degrees and some are leading experts in software development, regulatory science, and market access. During the twelve months endedDecember 31, 2022 , we generated revenues of approximately$45.9 million compared to revenue of$35.2 million for the twelve months endedDecember 31, 2021 , which represents an increase of$10.6 million or 30% compared to the previous year. 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, AI/ML, IoT, 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 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. 41 Our Business Model The majority of our revenue is generated by our full-time employees/consultants 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. Our CloudEz and DataEz platforms became commercially available to deploy under solution delivery model in 2019 and Readabl.AI platform from last quarter of 2020. While these platforms are commercially available, we continue to upgrade them on a regular basis. We are in the early stages of marketing CloudEz, DataEz and Readabl.AI as our SaaS offerings on a subscription basis, which we expect will provide us with recurring revenues. We do not yet have enough information about our competition or customer acceptance of our SaaS offerings to determine whether or not recurring subscription revenue will have a material impact on our revenue growth.
Impacts of the COVID-19 Pandemic
The COVID-19 pandemic has had, and is likely to continue to have, a severe and unprecedented impact on the world and on our business. Measures to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face events, "shelter in place" health orders and travel restrictions have had a significant effect on certain of our business operations. In response to these business disruptions, which include a transition to remote working, reducing certain of our discretionary expenditures and eliminating non-essential travel particularly with respect to COVID-19 impacted operation and complying with health and safety guidelines to protect employees, contractors, and customers.
The Company reported sequential growth in revenue in 2022; There has been no
major impact on account of COVID-19 during the quarter ended
The Company has obtained necessary funding to manage our short-term working
capital requirements. The Company has not altered any credit terms with its
customers and the realization from the customers have generally been on time.
The Company has been able to service its debt and other obligations on time.
There has been no material impact on the operational liquidity and capital
resources on account of COVID-19.
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Key Factors of Success
We believe that our future growth, success, and performance are dependent on
many factors, including those mentioned below. While these factors present
significant opportunities for us, they also represent the challenges that we
must successfully address in order to grow our business and improve our results
of operations.
Investment in scaling the business
We need to continuously invest in research and development to build new solutions, 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 because of these investments.
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 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
We provide our services and manage our business under these operating segments:
• Software Services • Managed Services and Support • Platform Services 43 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 rateably over the life of the contract. Platform Services
Platform Services from CloudEz, DataEz and Readabl.AI are offered as a solution delivery model till 2021. We have launched our platforms as Software as a Service (SaaS) on a subscription model.
The revenue from solutions delivery model contains a series of separately identifiable and distinct services that represent performance obligations that are satisfied over time. During the periods presented the company generated Platform revenue on solution delivery model only, which is non-recurring revenue.
Our SaaS agreements will be generally non-cancellable during the term, although customers typically will have the right to terminate their agreements for cause in the event of material breach. SaaS revenues will be recognized rateably over the respective non-cancellable subscription term because of the continuous transfer of control to the customer. Our subscription arrangements will be considered service contracts, and the customer will not have the right to take possession of the software Segment
wise revenue breakup. 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. 44 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 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 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 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.
Unbilled accounts receivable
Unbilled accounts receivable is a contract asset related to the delivery of our professional services for which the related billings will occur in a future period. Unbilled receivables are classified as accounts receivable on the consolidated balance sheet.
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Although we believe that our approach to estimates and judgments regarding revenue recognition is reasonable, actual results could differ and we may be exposed to increases or decreases in revenue that could be material.
Provision for Income Taxes
Provision for income taxes consists of federal and state income taxes inthe United States , including deferred income taxes reflecting the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes.
Pay check Protection Program
OnFebruary 9, 2021 , we received a PPP loan pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") amounting to$1.06 million . The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The unforgiven portion of the PPP loan is payable over five years at an interest rate of 1%, with a deferral of payments for the first six months. The Company has utilized the proceeds for purposes in line with the terms of the PPP.
Results of Operations
The following tables set forth selected consolidated statements of operations
data and such data as a percentage of total revenues for each of the periods
indicated:
Twelve Months Ended
December 31,
(In thousands)
2022 % of Sales 2021 % of Sales
Revenue $ 45,886 100 % $ 35,270 100 %
Cost of Revenue (exclusive
of depreciation
/amortization) 34,591 75 % 24,748 70 %
Research and Development 5,953 13 % 5,257 15 %
Sales and Marketing 6,650 14 % 4,761 13 %
General and Administrative 5,734 12 % 4,440 13 %
Depreciation and
Amortization 3,374 7 % 1,422 4 %
Other income (1,081) 2 % - 0 %
Interest expense 212 0 % 567 2 %
Income taxes 63 0 % 24 0 %
Net (loss) $ (9,610) (21) % $ (5,949 ) (17) %
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Twelve Months Ended
Revenue from operations
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Revenue $ 45,886 $ 35,270 $ 10,616 30 %
Revenue increased by$10.6 million , or 30% to$45.9 million for the twelve months endedDecember 31, 2022 , as compared to$35.2 million for the twelve months endedDecember 31, 2021 . Revenue from Software Services increased on acquisition ofDevcool Inc. The Software Services are typically short-term engagements to provide software consulting and development services, which do not require continual third-party maintenance. Managed Services and Support such as IT cloud hosting and support call for services on a continuous basis and allow for strengthening of client relationships which can lead to additional engagements from the client. Therefore, the Company is determined to focus on increasing the Managed Services & Support and Platform Services revenue to enhance our relationship and long-term engagement with our customers. We have made additional investments in Sales & Marketing and Research & Development to grow Managed Services & Support and Platform Services revenue. We expect this trend to continue and have a net positive impact on overall results of the
operations. 47
Our top 5 customers accounted for 72% of revenue during the twelve months ended
The following table has the breakdown of our revenues for the twelve months
ended
Top Five Customers' Revenue for Twelve months ended
Customer Amount(In thousands) % of Revenue Customer 1 $ 17,768 39 % Customer 2 5,598 12 % Customer 3 4,676 10 % Customer 4 3,698 8 % Customer 5 $ 1,585 3 %
Top Five Customers' Revenue for Twelve months ended
Customer Amount(In thousands) % of Revenue
Customer 1 $ 12,678 36 %
Customer 2 3,214 9 %
Customer 3 2,907 8 %
Customer 4 2,675 8 %
Customer 5 $ 1,799 5 %
The following table provides details of Customer 1 revenue by operating
segments:
Twelve Months Ended December 31, Changes
(In thousands)
2022 2021 Amount %
Software Services $ 14,519 $ 13,480 $ 1,039 8 %
Managed Services and Support 3,249 3,138 111 4 %
Platform Services - - - %
Total Revenue $ 17,768 $ 16,618 $ 1,150 7 %
Revenue from Customer 1 increased by$1 million , or 8% to$17.7 million for the twelve months endedDecember 31, 2022 , as compared to$16.6 million for the twelve months endedDecember 31, 2021 . Software Services revenue increased by$1 million or 8% to$14.5 million for the twelve months endedDecember 31, 2022 , as compared to$13.5 million for the twelve months endedDecember 31, 2021 . Managed Services and Support revenue increased by$0.1 million , or 4% to$3.2 million for the twelve months endedDecember 31, 2022 , as compared to$3.1 million for the twelve months endedDecember 31, 2021 . 48
Cost of Revenue (exclusive of depreciation /amortization)
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Cost of Revenue (exclusive of
depreciation /amortization) $ 34,591 $ 24,748 $ 9,843 40 %
Cost of revenue, excluding depreciation and amortization increased by $9.8
million , or 40%, to $34.6 million for the twelve months ended December 31, 2022 ,
as compared to $24.8 million for the twelve months ended December 31, 2021 . The
increase was mainly due to an increase in operational expenses related to
delivery of software services.
Research and Development
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Research and Development $ 5,953 $ 5,257 $ 696 13 %
Research and Development expenses increased by
Sales and Marketing
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Sales and Marketing $ 6,650 $ 4,761 $ 1,889 40 %
Sales and Marketing expenses increased by $1.9 million , or 40% to $6.7 million
for the twelve months ended December 31, 2022 , as compared to $4.8 million for
the twelve months ended December 31, 2021 , this is primarily due to additional
investments in Sales and Marketing.
General and Administrative
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
General and Administrative $ 5,734 $ 4,440 $ 1,293 29 %
General and Administrative expenses increased by $1.3 million , or 29 % to $5.7
million for the twelve months ended December 31, 2022 , as compared to $4.4
million for the twelve months ended December 31, 2021 , this is primarily due to
increase in general liability insurance cost on account of becoming a public
company.
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Depreciation and amortization
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Depreciation and amortization
Depreciation and amortization expenses increased by$1.9 million , or 137% to$3.3 million for the twelve months endedDecember 31, 2022 , as compared to$1.4 million for the twelve months endedDecember 31, 2021 , this is mainly on account amortization from acquisition ofDevcool Inc. Interest expense Twelve Months Ended December 31, Changes (In thousands) 2022 2021 Amount % Interest expense$ 212 $ 567 $ (355) (63) %
Interest expenses decreased by$0.4 million , or 63% to$0.2 million for the twelve months endedDecember 31, 2022 , as compared to$0.6 million for the twelve months endedDecember 31, 2021 , this is primarily due to interest on convertible note in 2021 this was subsequently converted into equity at the time of IPO. The interest expenses during the current year represents interest on factoring facility availed during the current year.
Provision for Income Taxes
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Income tax $ 63 $ 24 $ 39 163 %
Income tax increased by
Revenue, Cost of Revenue and Operating Profit by Operating Segment
Twelve Months Ended
December 31, Changes
(In thousands)
2022 2021 Amount %
Software Services $ 25,883 $ 12,430 $ 13,453 108 %
Managed Services and Support 15,178 19,003 (3,825 ) (20 )%
Platform Services 4,825 3,837 988 75 %
Revenue $ 45,886 $ 35,270 $ 10,616 30 %
We currently provide our services and manage our business under three operating
segments which are Software Services, Managed Services and Support and Platform
Services.
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Revenue from Software Services increased by$13.5 million , or 108% to$25.8 million for the twelve months endedDecember 31, 2022 , as compared to$12.4 million for the twelve months endedDecember 31, 2021 . Income from Software services increased on account of the acquisition ofDevcool Inc. The total number of customers serviced during the twelve months endedDecember 31, 2022 , increased to 53 from 48 for the twelve months endedDecember 31, 2021 . Revenue from Managed Services and Support decreased by$3.8 million , or 20% to$15.2 million for the twelve months endedDecember 31, 2022 , as compared to$19 million for the twelve months endedDecember 31, 2021 . The revenue from Managed Services and Support revenue has decreased on account of the decrease in revenue from hosting services. Revenue from Platform Services increased by$0.1 million , or 26% to$4.8 million for the twelve months endedDecember 31, 2022 , as compared to$3.8 million for the twelve months endedDecember 31, 2021 .
Factors affecting revenues of Software Services, Managed Services and Support and Platform Services
Our strategy is to achieve meaningful long-term revenue growth through sales of
Managed Services and Support and Platform Services 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 and Platform Services
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.
Our CloudEz, DataEz and Readabl.ai platforms are getting more traction, and this
will lead to increase in revenue from platform services. We have made additional
investments in Sales & Marketing and Research & Development to grow Managed
Services & Support and Platform Services revenue. We expect this trend to
continue and have a net positive impact on overall results of operations.
Cost of Revenue
Twelve Months Ended December 31, Changes
(In thousands)
2022 2021 Amount %
Software Services $ 20,533 $ 9,031 $ 11,502 127 %Managed Services and Support 10,697 14,094
(3,397 ) (24 )% Platform Services 3,361 1,623 1,738 107 % Cost of Revenue$ 34,591 $ 24,748 $ 9,843 40 %
Cost of Revenue from Software Services increased by$11.5 million , or 127% to$20.5 million for the twelve months endedDecember 31, 2022 , as compared to$9 million for the twelve months endedDecember 31, 2021 . The increase in cost of Software Services is due to increase in Software Services revenue. Cost of Revenue from Managed Services and Support decreased by$3.4 million , or 24% to$10.7 million for the twelve months endedDecember 31, 2022 , as compared to$14.1 million for the twelve months endedDecember 31, 2021 . The decrease is on account of the decrease in cloud hosting revenue. Cost of Revenue from Platform Services increased by$1.7 million , or 107% to$3.3 million for the twelve months endedDecember 31, 2022 , as compared to$1.6 million for the twelve months endedDecember 31, 2021 . 51
Segment operating profits by reportable segment were as follows:
Twelve Months Ended December 31, Changes
(In thousands)
2022 2021 Amount %
Software Services $ (1,381 ) $ 1,769 $ (3,150 ) (178 )%
Managed Services and Support 4,481 4,909 (428 ) (9 )%
Platform Services (4,489 ) (3,043 ) (1,446 ) (48 )%
Total segment operating profit (loss) (1,389 ) 3,635 (5,024 ) (138 )%
Less: unallocated costs 9,025 8,993 32 (0 )%
Income from operations (10,414 ) (5,358 ) (5,056 ) (94 )%
Other Income 1,081 - 1,081 100 %
Interest expense 211 567 (356 ) 63 %
Net (loss) before income tax $ (9,546 ) $ (5,925 ) $ 3,621 (61 )%
Operating loss from Software Services increased by $3.2 million , or 178% to
$(1.4) million for the twelve months ended December 31, 2022 , as compared to
$1.8 million for the twelve months ended December 31, 2021 . Operating profit
from Managed Services and Support decreased by $0.4 million , or 9% to $4.4
million for the twelve months ended December 31, 2022 , as compared to $4.9
million for the twelve months ended December 31, 2021 . Operating loss from
Platform Services increased by $1.4 million , or 48 % to $(4.5) million for the
twelve months ended December 31, 2022 , as compared to $(3.1) million for the
twelve months ended December 31, 2021 Liquidity and Capital Resources
As of As of
December 31, December 31,
2022 2021
(In thousands)
Cash and cash equivalents $ 1,341 $ 1,770
Total cash, cash equivalents and short-term
investments $ 1,341 $ 1,770
As of As of
December 31, December 31,
2022 2021
(In thousands)
Cash flows used in operating activities
(3,319 ) (7,629 )
Cash flows provided by financing activities 5,490 15,108
Net increase in cash and cash equivalents $ (429 ) $ 367
As of
We have financed our operations primarily through financing activity and operating cash flows. We believe our existing cash, cash equivalents and short-term investments generated from operations 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. 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 higher the ratio, the better the company's liquidity position. A good current ratio is between 1.2 to 2, which means that a business has 2 times more current assets than liabilities to covers its debts. The Company's current ratio, based on the twelve months endedDecember 31, 2022 financial statement is 1.3, compared to 1.9 for the financial year endedDecember 31, 2021 . 52
The Company's current debt equity ratio, based on the twelve months ended
The Company does not have inventory and hence the quick ratio is the same as current ratio.
Sources of Liquidity As ofDecember 31, 2022 , our principal sources of liquidity consisted of cash and cash equivalents of$1.3 million . We believe that our cash and cash equivalents as ofDecember 31, 2022 , and the future operating cash flows of the entity will provide adequate resources to fund ongoing cash requirements for the next twelve months. If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we may be required to obtain additional sources of funds through additional operational improvements, capital market transactions, asset sales or financing from third parties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would have reasonable terms.
Operating Activities
Net cash used in operating activities was$(2.6) million for the twelve months endedDecember 31, 2022 , and net cash used from operations was$(7.1) million for the twelve months endedDecember 31, 2021 .
Investing Activities
Net cash used in investing activities was$3.3 million for the twelve months endedDecember 31, 2022 , and$7.6 million for the twelve months endedDecember 31, 2021 . Financing Activities
Cash flows from financing activities was
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 ofDecember 31, 2022 .
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