Company: HCTI
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001213900-25-045994
Chunk: 16

Company: Healthcare Triangle, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level
3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1—Inputs are observable and reflect
quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices
included within Level 1 that are observable, either directly or indirectly.

Level 3—Inputs that are unobservable

Money market funds and U.S. treasury securities
are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market
observable inputs. Other debt securities and investments are classified within Level 2 if the investments are valued using model driven
valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative
pricing sources with reasonable levels of price transparency. In connection with the acquisition of Devcool, Inc., the Company recognized
a liability on the acquisition date for the estimated fair value of the contingent consideration based on the probability of achieving
certain milestones pursuant to the acquisition agreement. The fair value measurement of the contingent consideration is based on significant
unobservable inputs and management judgment; therefore, it is categorized under Level 3 at the balance sheet date in the table below. 

14

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

Stock-Based Compensation

The Company accounts for stock-based awards to
employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based
transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of
the fair value of the stock options over the instruments vesting period. Options awarded to purchase shares of common stock issued to
non-employees do not need to be remeasured as per ASU 2018-07 principles.

The Company adopted the “2020 Stock Incentive
Plan” (Plan). The Company has reserved 4,000,000 shares of the Company’s Common stock.

Income taxes

The provision for income taxes was determined
using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences
expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents
income taxes