Company: HCTI
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076686
Chunk: 113

Company: Healthcare Triangle, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 113
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 our operating model, will position us to grow our platform solutions revenue at a greater rate than our cost of
revenue.

In the current period, the gross margin generated
by the Company has been reduced to 14% and 11% in the 3 months and 6 months ended June 30th, 2025,  as compared to 30%
and 27% in the 3 months and 6 months ended June 30th, 2024, respectively.  This is due to the acquisition and onboarding
of the SecureKloud contracts, which had been negotiated at lower margins prior to the acquisition.  Going forward, all new contracts
are being negotiated at higher margins and as a result we expect that 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.

34

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