Company: HCTI
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001213900-25-045994
Chunk: 75

Company: Healthcare Triangle, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 75
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-50 a common-control transaction
does not meet the definition of a business combination because there is no change in control over the net assets. The accounting for these
transactions are addressed in the “Transactions Between Entities Under Common Control”. The net assets are derecognized by
the transferring entity and recognized by the receiving entity at the historical cost of the parent of the entities under common control.
Any difference between the proceeds transferred or received and the carrying amounts of the net assets is recognized in equity in the
transferring and receiving entities’ separate financial statements and eliminated in consolidation. The change in accounting principle
is applied retroactively for all periods presented.

We account for business combinations using the
acquisition method, which requires the identification of the acquirer, the determination of the acquisition date and the allocation of
the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including
any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values.

Goodwill represents the excess of the purchase
price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible
assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs
are incurred. The results of operations of acquired businesses are included in our condensed consolidated financial statements from the
date of effective control.

Valuation of Contingent Earn-out Consideration.

Acquisitions may include contingent consideration
payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is
required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial
projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable,
however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent
consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will
be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration
obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates
and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Any changes in the estimated
fair value of contingent consideration may have a material