Company: HCTI
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001213900-25-109581
Chunk: 160

Company: Healthcare Triangle, Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 2
Chunk 160
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revenue.

Gross Margin

In the current period, the gross margin generated
by the Company has been reduced to 18% and 13% in the 3 months and 9 months ended September 30, 2025, as compared to 30% and 27% in the
3 months and 9 months ended September 30, 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 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.

35

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