Company: HCTI
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001213900-25-045994
Chunk: 90

Company: Healthcare Triangle, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 90
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 most critical of which, prior to our IPO, was the estimated fair value of common
stock. The assumptions used in our option pricing model represent our best estimates. These estimates involve inherent uncertainties and
the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation expense
could be materially different in the future. The resulting fair value, net of actual forfeitures, is recognized on a straight-line basis
over the period during which an employee is required to provide service in exchange for the award.

These assumptions used in the Black-Scholes option
pricing model, other than the fair value of our common stock, are estimated as follows:

    ●
    Expected volatility. Since a public market for our common stock did not exist prior to our IPO in October 2021 and, therefore, we do not have an extensive trading history of our common stock, we estimated the expected volatility based on the volatility of similar publicly-held entities (guideline companies) over a period equivalent to the expected term of the awards. In evaluating the similarity of guideline companies to us, we considered factors such as industry, stage of life cycle, size, and financial leverage. We intend to continue to consistently apply this process using the same or similar guideline companies to estimate the expected volatility until sufficient historical information regarding the volatility of the share price of our common stock becomes available.

    ●
    Expected term. We estimate the expected term using the simplified method, as we do not have sufficient historical exercise activity to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. The simplified method calculates the average period the stock options are expected to remain outstanding as the midpoint between the vesting date and the contractual expiration date of the award.

    ●
    Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for maturities corresponding with the expected term of the option.

   ● Expected dividend yield. We have never declared or paid any dividends and do not presently plan to pay dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero. 

23

HEALTHCARE TRIANGLE, INC.

Notes To Condensed Consolidated Financial Statements

(Unaudited)

(In thousands except share and per share data)

We are required to estimate the fair value of
the common stock underlying our stock-based awards when performing fair value calculations

Historically for all periods prior to our IPO,
given the absence of a public