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Item 9A. Controls and Procedures

2022-03-14 compared with 2021-02-25 · 1775 added, 1663 removed, 308 unchanged (92% of the section changed)

1 unchanged sentence

of Disclosure Controls and Procedures

management, with the participation of our Chief Executive Officer and Chief Financial Officer, based on the 2013 Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), evaluated the effectiveness

of our disclosure controls and procedures as of December 31, 2020 as required by Rules 13a-15(b) and 15d-15(b) of the Exchange

The term “disclosure controls and procedures,”

as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange

Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by

a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within

the time periods specified in the SEC’s rules and forms.

controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be

disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s

management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable

assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship

of possible controls and procedures.

management, with the participation of our Chief Executive Officer and Chief Financial Officer, based on the Internal Control-Integrated

Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), evaluated

the effectiveness of our disclosure controls and procedures as of December 31, 2021 as required by Rules 13a-15(b) and 15d-15(b) of the

Exchange Act.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange

Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company

in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods

specified in the SEC’s rules and forms.

controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed

by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management,

including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving

their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and

on the evaluation of our disclosure controls and procedures, as of December 31, 2021, our Chief Executive Officer and Chief Financial

Officer concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S.

Officer concluded that, as of such date, our disclosure controls and procedures were not effective due to the material weakness in our

internal control over financial reporting described below.

However, our management, including our Chief Executive Officer and Chief Financial

Officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the consolidated

financial statements in this Annual report on Form 10-K fairly present, in all material respects, our consolidated financial condition,

results of operations and cash flows for the periods presented in accordance with U.S.

generally accepted accounting principles.

Management’s

Additionally,

the identified material weakness did not result in any restatements of our previously filed consolidated financial statements or disclosures

for any period.

Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is

defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act.

Internal control over financial reporting is a process designed to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for

external reporting purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and

fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that

our receipts and expenditures are being made only in accordance with authorizations of our management;

and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have

a material effect on the financial statements.

is required to base its assessment on the effectiveness of our internal control over financial reporting on a suitable, recognized

control framework.

Management has utilized the criteria established in COSO to evaluate the effectiveness of internal control

over financial reporting.

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined

in Rule 13a-15(f) and 15d-15(f) of the Exchange Act.

Internal control over financial reporting is a process designed to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes

in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions

of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements

in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance

with authorizations of our management;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

is required to base its assessment on the effectiveness of our internal control over financial reporting on a suitable, recognized control

Management has utilized the criteria established in COSO to evaluate the effectiveness of internal control over financial

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that

there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not

be prevented or detected on a timely basis.

management has performed its assessment according to the guidelines established by COSO.

Management excluded Meridian from its

assessment of internal controls over financial reporting, the most recent acquisition, as it was not possible to conduct an assessment

of the acquired business’s internal control over financial reporting in the period between the commencement date and the

date of management’s assessment.

During 2020, the revenue recorded by the Company for Meridian was approximately $21.5 million.

Based on the assessment, management has concluded that our system of internal control over financial reporting, as of December

31, 2020, is effective.

of its inherent limitations, our internal controls over financial

reporting provide reasonable, not absolute, assurance that the financial statements and footnotes thereto are free of material

In addition, no internal control structure can provide absolute assurance that all instances of fraud have been detected.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal

Management excluded medSR from its assessment of internal controls over financial reporting,

our most recent acquisition, as it was not possible to conduct an assessment of the acquired

business’s internal control over financial reporting in the period between the commencement

date and the date of management’s assessment.

During 2021, the revenue recorded by

the Company for medSR was approximately $15.9 million and the assets acquired were approximately

$21.1 million, including goodwill.

identified a material weakness in our internal control over financial reporting related to the proper implementation of controls

over the precision of management’s review of certain assumptions relating to a non-routine transaction.

weakness did not result in any identified misstatements to the financial statements as filed, and there were no changes to

previously released financial results.

However, based on this material weakness, our management concluded that as of December 31,

2021, the Company’s internal control over financial reporting was not effective.

has analyzed the material weakness described above and performed additional analysis and procedures in preparing our consolidated financial

We have concluded that our consolidated financial statements fairly present, in all material respects, our financial condition,

results of operations and cash flows at and for the periods presented.

of its inherent limitations, our internal controls over financial reporting provide reasonable, not absolute, assurance that the financial

statements and footnotes thereto are free of material error.

In addition, no internal control structure can provide absolute assurance

that all instances of fraud have been detected.

Also, projections of any evaluation of effectiveness to future periods are subject to

the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and

procedures may deteriorate.

Thornton, LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual

Report on Form 10-K and, as part of their audit, has issued their attestation report, included herein, on the effectiveness of our internal

control over financial reporting.

Management’s report was not subject to attestation by the Company’s registered public

accounting firm pursuant to the rules of the SEC that permit the Company to provide only management’s report in this Annual

Report on Form 10-K.

Plan for Existing Material Weakness

management is committed to remediation of the material weakness described above.

The material weakness was due to a lack of controls

over the completeness and accuracy of key inputs related to the measurement of a non-routine transaction.

Controls will be added to

increase the precision of review of the key inputs used for such transactions.

It is our belief that these added controls will

effectively remediate the existing material weakness.

The material weakness will not be considered remediated, however, until the

controls are designed, implemented, and operate for a sufficient period of time and management has concluded, through testing, that

these controls are operating effectively.

We expect that the remediation of this material weakness will be completed prior to the

in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the

quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control

over financial reporting.

are taking actions to remediate the material weakness relating to our internal control over financial reporting, as described above.

Except as otherwise described herein, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f)

of the Exchange Act) during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspection

Directors, Executive Officers and Corporate Governance

required by this item will be included in our definitive Proxy Statement for the 2021 Meeting of Shareholders which will be filed

within 120 days of the end of our fiscal year ended December 31, 2020 (“2021 Proxy Statement”) and is incorporated

herein by reference.

required by this item will be included in our definitive Proxy Statement for the 2022 Meeting of Shareholders which will be filed within

120 days of the end of our fiscal year ended December 31, 2021 (“2022 Proxy Statement”) and is incorporated herein by reference.

Executive Compensation

5 unchanged sentences

Principal Accountant Fees and Services

required by this item will be included in our 2021 Proxy Statement and is incorporated herein by reference.

required by this item will be included in the 2022 Proxy Statement and is incorporated herein by reference.

Exhibits and Financial Statement Schedules

following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial

(i) Consolidated

Balance Sheets as of December 31, 2021 and 2020

(ii) Consolidated

Statements of Operations for the years ended December 31, 2021 and 2020

Statements of Comprehensive Loss for the years ended December 31, 2020 and 2019

Statements of Shareholders’

Equity for the years ended December 31, 2020 and 2019

(iii) Consolidated

Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020

(iv) Consolidated

Statements of Shareholders’ Equity for the years ended December 31, 2021 and 2020

(v) Consolidated

Statements of Cash Flows for the years ended December 31, 2021 and 2020

to Consolidated Financial Statements

(2) Financial

Statement Schedules

are no Financial Statement Schedules filed as part of this Annual Report on Form 10-K, as the required information is not

applicable or is included in the Notes to Consolidated Financial Statements.

Assignment Agreement dated October 3, 2016, by and between the Company, The Prudential Insurance Company of America, and Prudential Retirement Insurance and Annuity Company (filed as Exhibit 10.1 to the Company’s Form 8-K filed on October 5, 2016, and incorporated herein by reference).

Strict Foreclosure Agreement dated October 3, 2016, by and between MTBC Acquisition, Corp., MediGain, LLC and Millennium Practice Management Associates, LLC (filed as Exhibit 10.2 to the Company’s Form 8-K filed on October 5, 2016, and incorporated herein by reference).

Transition Services Agreement dated October 3, 2016, by and between MTBC Acquisition, Corp., MediGain, LLC and Millennium Practice Management Associates, LLC (filed as Exhibit 10.3 to the Company’s Form 8-K filed on October 5, 2016, and incorporated herein by reference).

First Amendment to Assignment Agreement dated January 3, 2017, by and between the Company, The Prudential Insurance Company of America, and Prudential Retirement Insurance and Annuity Company (filed as Exhibit 2.1 to the Company’s Form 8-K filed on January 6, 2017, and incorporated herein by reference).

Second Amendment to Assignment Agreement dated January 23, 2017, by and between the Company, The Prudential Insurance Company of America, and Prudential Retirement Insurance and Annuity Company (filed as Exhibit 2.1 to the Company’s Form 8-K filed on January 24, 2017, and incorporated herein by reference).

are no Financial Statement Schedules filed as part of this Annual Report on Form 10-K, as the required information is not applicable

or is included in the Notes to Consolidated Financial Statements.

Asset Purchase Agreement dated June 25, 2018, by and between MTBC, and Orion Healthcorp, Inc.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on July 2, 2018, and incorporated herein by reference).

Transition Services Agreement dated June 25, 2018, by and between MTBC, and Orion Healthcorp, Inc.

(filed as Exhibit 2.29 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Asset Purchase Agreement dated March 27, 2019, by and between MTBC-Med, Inc., and Etransmedia Technology, Inc., et.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on March 28, 2019, and incorporated herein by reference).

Amended and Restated Asset Purchase Agreement dated April 3, 2019, by and between MTBC-Med, Inc., and Etransmedia Technology, Inc., et.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on April 4, 2019, and incorporated herein by reference).

Agreement and Plan of Merger by and among MTBC, Inc., MTBC Merger Sub, Inc., CareCloud Corporation and Runway Growth Credit Fund Inc., as the Seller’s representative dated January 8, 2020 (filed as Exhibit 2.1 to the Company’s Form 8-K filed on January 8, 2020, and incorporated herein by reference).

Escrow Agreement dated January 8, 2020 by and among MTBC, Inc., Runway Growth Credit Fund., Inc.

and TD Bank (filed as Exhibit 10.17 to the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Stock Purchase Agreement dated June 16, 2020 by and among MTBC, Inc., Origin Holdings, Inc., Meridian Billing Management Co., Origin Holdings, Inc., and GMM II Holdings, LLC, (filed as Exhibit 2.1 to the Company’s Form 8-K on June 17, 2020, and incorporated herein by reference).

Amended and Restated Certificate of Incorporation of the Company dated April 4, 2014 (filed as Exhibit 3.1 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Certificate of Amendment of Certificate of Incorporation of the Company dated June 28, 2016 (filed as Exhibit 3.2 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company dated June 18, 2018 (filed as Exhibit 3.6 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company dated February 6, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on February 7, 2019 and incorporated herein by reference).

Certificate of Amendment of Amended and Restated Certificate of Incorporation of MTBC, Inc.

dated June 25, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on June 25, 2019 and incorporated herein by reference).

Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated July 6, 2016 (filed as Exhibit 3.3 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

First Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated September 15, 2017 (filed as Exhibit 3.4 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Second Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated March 23, 2018 (filed as Exhibit 3.5 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Third Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated September 25, 2018 (filed as Exhibit 3.7 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by reference).

Fourth Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated January 9, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on January 28, 2020, and incorporated herein by reference).

Fifth Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated May 19, 2020 (filed as Exhibit 3.2 to the Company’s Form 8-K filed on May 21, 2020, and incorporated herein by reference).

Sixth Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock dated July 9, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on July 9, 2020, and incorporated herein by reference).

Amended and Restated By-laws of the Company (filed as Exhibit 3.2 to the Company’s Amendment No.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on March 28, 2019, and incorporated herein by reference).

and Restated Asset Purchase Agreement dated April 3, 2019, by and between MTBC-Med, Inc., and Etransmedia Technology, Inc., et.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on April 4, 2019, and incorporated herein by reference).

and Plan of Merger by and among MTBC, Inc., MTBC Merger Sub, Inc., CareCloud Corporation and Runway Growth Credit Fund Inc., as the

Seller’s representative dated January 8, 2020 (filed as Exhibit 2.1 to the Company’s Form 8-K filed on January 8, 2020,

and incorporated herein by reference).

Agreement dated January 8, 2020 by and among MTBC, Inc., Runway Growth Credit Fund., Inc.

and TD Bank (filed as Exhibit 10.17 to

the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Purchase Agreement dated June 16, 2020 by and among MTBC, Inc., Origin Holdings, Inc., Meridian Billing Management Co., Origin Holdings,

Inc., and GMM II Holdings, LLC, (filed as Exhibit 2.1 to the Company’s Form 8-K on June 17, 2020, and incorporated herein by

and Stock Purchase Agreement by and among CareCloud Acquisition.

Corp., MedMatica Consulting Associates, Inc., and Jerold Howell

dated June 1, 2021 (filed as Exhibit 2.1 to the Company’s Form 8-K filed on June 2, 2021, and incorporated herein by

Non-Competition

and Non-Solicitation Agreement by and among Santa Rosa Consulting, Inc., SureTest Holdings, LLC, Laura O’Toole, Mark

Scruggs, Raleigh Brewer, Thomas Watford, and CareCloud Acquisition, Corp., dated June 1, 2021 (filed as Exhibit 2.2 to the Company’s

Form 8-K filed on June 2, 2021, and incorporated herein by reference).

Services Agreement by and among CareCloud Acquisition, Corp., MedMatica Consulting Associates, Inc., and Jerold Howell, dated June

1, 2021 (filed as Exhibit 2.3 to the Company’s Form 8-K filed on June 2, 2021 and incorporated herein by reference).

and Restated Certificate of Incorporation of the Company dated April 4, 2014 (filed as Exhibit 3.1 to the Company’s Form S-1

filed on September 25, 2018 and incorporated herein by reference).

of Amendment of Certificate of Incorporation of the Company dated June 28, 2016 (filed as

Exhibit 3.2 to the Company’s Form S-1 filed on September 25, 2018 and incorporated

herein by reference).

of Amendment of Amended and Restated Certificate of Incorporation of the Company dated June 18, 2018 (filed as Exhibit 3.6 to the

Company’s Form S-1 filed on September 25, 2018 and incorporated herein by reference).

of Amendment of Amended and Restated Certificate of Incorporation of the Company dated February

6, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on February 7, 2019 and

incorporated herein by reference).

of Amendment of Amended and Restated Certificate of Incorporation of MTBC, Inc.

25, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K filed on June 25, 2019 and

incorporated herein by reference).

and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock

dated July 6, 2016 (filed as Exhibit 3.3 to the Company’s Form S-1 filed on September 25, 2018, and incorporated herein by

Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual

Preferred Stock dated September 15, 2017 (filed as Exhibit 3.4 to the Company’s Form S-1 filed on September 25, 2018, and incorporated

herein by reference).

Seventh Amendment to Amended and Restated Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock (filed as exhibit 3.1 to the Company’s Form 8-K filed January 31, 2022 and incorporated herein by reference).

Certificate of Designations, Preferences and Rights of 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock (filed as exhibit 3.2 to the Company’s Form 8-K filed January 31, 2022 and incorporated herein by reference).

Amended and Restated By-laws of the Company (filed as Exhibit 3.2 to the Company’s Amendment No.

1 to Form S-1 filed on April 7, 2014, and incorporated herein by reference).

Form of common stock certificate of the Company (filed as Exhibit 4.1 to Amendment No.

2 to the Company’s Form S-1 filed on May 7, 2014, and incorporated herein by reference).

Form of stock certificate of the 11% Series A Cumulative Redeemable Perpetual Preferred Stock (filed as Exhibit 4.2 to Amendment No.

2 to the Company’s Form S-1 on October 19, 2015, and incorporated herein by reference).

Warrant to Purchase Stock dated as of October 13, 2017 issued by the Company to Silicon Valley Bank (filed as Exhibit 10.2 to the Company’s Form 8-K filed on October 16, 2017, and incorporated herein by reference).

Warrant to Purchase Stock issued by the Company on September 20, 2018 to Silicon Valley Bank (filed as Exhibit 10.2 to the Company’s Form 8-K filed on September 20, 2018, and incorporated herein by reference).

2 to the Company’s Form S-1 on October 19, 2015, and incorporated herein by reference).

Form of stock certificate of the 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock (filed as Exhibit 4.3 to the Company’s Form 8-A on January 31, 2022 and incorporated herein by reference).

Warrant to Purchase Stock issued by the Company on January 8, 2020 to Runway Growth Credit Fund Inc.

(filed as Exhibit 4.5 to the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Warrant to Purchase Stock issued by the Company on January 8, 2020 to Runway Growth Credit Fund Inc.

(filed as Exhibit 4.6 to the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Form of Warrant to Purchase Stock issued by the Company on June 16, 2020 with respect to the Meridian transaction (filed as Exhibit 4.7 to the Company’s Form S-1 filed on August 20, 2020, and incorporated herein by reference).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

(filed as Exhibit 4.6 to the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 4.8 to the Company’s Form 10-K on February 25, 2021 and incorporated herein by reference).

Form of Indemnification Agreement between the Company and each of its directors and executive officers (filed as Exhibit 10.1 to Amendment No.

2 to the Company’s Form S-1 filed on May 7, 2014, and incorporated herein by reference).

Amended and Restated Equity Incentive Plan of the Company (filed as Appendix B to the Company’s Proxy Statement on Schedule 14A filed on February 10, 2017, and incorporated herein by reference).

First Amendment to the Amended and Restated Equity Incentive Plan of the Company (filed as Exhibit 10.16 to the Company’s Form 10-Q filed on August 8, 2018, and incorporated herein by reference).

2 to the Company’s Form S-1 filed on May 7, 2014, and incorporated herein by reference).

Amended and Restated Equity Incentive Plan of the Company (filed as Appendix B to the Company’s Proxy Statement on Schedule 14A filed on February 10, 2017, and incorporated herein by reference).

First Amendment to the Amended and Restated Equity Incentive Plan of the Company (filed as Exhibit 10.16 to the Company’s Form 10-Q filed on August 8, 2018, and incorporated herein by reference).

Second Amendment to MTBC, Inc.

Amended and Restated Equity Incentive Plan (filed as Exhibit 3.1 to the Company’s Form 8-K filed on May 21, 2020, and incorporated herein by reference).

Form of Restricted Stock Unit Agreement under Amended and Restated Equity Incentive Plan (filed as Exhibit 10.3 to Amendment No.

1 to the Company’s Form S-1 filed on April 7, 2014, and incorporated herein by reference).

Form of Restricted Stock Award Agreement under the Amended and Restated Equity Incentive Plan (filed as Exhibit 10.12 to the Company’s Form 10-K filed on March 24, 2016, and incorporated herein by reference).

Lease between Company and Mahmud Haq with respect to offices located at 7 Clyde Road, Somerset, NJ 08873 (filed as Exhibit 10.4 to the Company’s Form S-1 filed on December 20, 2013, and incorporated herein by reference).

Employment Agreement between the Company and Mahmud Haq dated as of May 1, 2018 (filed as Exhibit 10.1 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

Employment Agreement between the Company and Stephen Snyder dated as of May 1, 2018 (filed as Exhibit 10.2 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

1 to the Company’s Form S-1 filed on April 7, 2014, and incorporated herein by reference).

Employment Agreement between the Company and Mahmud Haq dated as of May 1, 2018 (filed as Exhibit 10.1 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

Employment Agreement between the Company and Stephen Snyder dated as of March 23, 2021 (filed as Exhibit 10.1 to the Company’s Form 8-K filed on March 24, 2021, and incorporated herein by reference).

Employment Agreement between the Company and A.

Hadi Chaudhry dated as of May 1, 2018 (filed as Exhibit 10.3 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

Employment Agreement between the Company and Bill Korn dated as of May 1, 2018 (filed as Exhibit 10.4 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

Hadi Chaudhry dated as of March 23, 2021 (filed as Exhibit 10.2 to the Company’s Form 8-K filed on March 24, 2021, and incorporated herein by reference).

Employment Agreement between the Company and Bill Korn dated as of May 1, 2018 (filed as Exhibit 10.4 to the Company’s Form 8-K filed on May 7, 2018, and incorporated herein by reference).

Loan and Security Agreement dated as of October 13, 2017 between Medical Transcription Billing, Corp., MTBC Acquisition, Corp.

and Silicon Valley Bank (filed as Exhibit 10.1 to the Company’s Form 8-K filed on October 16, 2017, and incorporated herein by reference).

J oinder and First Loan Modification Agreement dated as of September 20, 2018 between Medical Transcription Billing, Corp., MTBC Acquisition, Corp., MTBC Health, Inc.

and Silicon Valley Bank (filed as Exhibit 10.1 to the Company’s Form 8-K filed on October 16, 2017, and incorporated herein by reference).

Joinder and First Loan Modification Agreement dated as of September 20, 2018 between Medical Transcription Billing, Corp., MTBC Acquisition, Corp., MTBC Health, Inc.

and MTBC Practice Management, Corp.

and Silicon Valley Bank (filed as Exhibit 10.1 to the Company’s Form 8-K filed on September 20, 2018, and incorporated herein by reference).

Second Loan Modification Agreement dated November 15, 2019, by and between the Company and SVB (filed as Exhibit 1.1 to the Company’s Form 8-K filed on November 21, 2019, and incorporated herein by reference).

and Silicon Valley Bank (filed as Exhibit 10.1 to the Company’s Form 8-K filed on September 20, 2018, and incorporated herein by reference).

Joinder and Third Loan Modification Agreement dated as of February 28, 2020 between MTBC, Inc., MTBC Acquisition Corp., MTBC Health, Inc.

and MTBC Practice Management Corp., MTBC-Med, Inc., CareCloud Corporation and Silicon Valley Bank (filed as Exhibit 10.16 to the Company’s Form 10-K filed on February 28, 2020, and incorporated herein by reference).

Joinder and Fourth Loan Modification Agreement dated September 21, 2020, by and between the Company and SVB (filed as Exhibit 1.1 to the Company’s Form 8-K filed on September 25, 2020, and incorporated herein by reference).

Asset Purchase Agreement dated March 27, 2019, by and between MTBC-Med, Inc., and Etransmedia Technology, Inc., et.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on March 28, 2019, and incorporated herein by reference).

Amended and Restated Asset Purchase Agreement dated April 3, 2019, by and between MTBC-Med, Inc., and Etransmedia Technology, Inc., et.

(filed as Exhibit 10.1 to the Company’s Form 8-K filed on April 4, 2019, and incorporated herein by reference).

Underwriting Agreement dated July 16, 2020 by and between the Company and B.

Joinder and Fifth Loan Modification Agreement dated September 21, 2021, by and between the Company and SVB (filed as Exhibit 10.1 to the Company’s Form 8-K filed on September 22, 2021 and incorporated herein by reference).

Joinder and Sixth Loan modification Agreement dated January 27, 2022, by and between the Company and SVB.

Underwriting Agreement dated January 28, 2022 by and between the Company and B.

Riley FBR, Inc.

as representative of several underwriters names therein (filed as Exhibit 1.1 to the Company’s Form 8-K filed on July 17, 2020, and incorporated herein by reference).

as representative of several underwriters named therein (filed as Exhibit 1.1 to the Company’s Form 8-K filed on January 31, 2022, and incorporated herein by reference).

List of subsidiaries.

Consent of Grant Thornton LLP.

Certification of the Company’s Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.

Certification of the Company’s Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.

Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C.

Certification of the Company’s Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.

Certification of the Company’s Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), of the Securities Exchange Act of 1934, as amended.

Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

6 unchanged sentences

Indicates management contract or compensatory plan or arrangement.

certifications on Exhibit 32 hereto are deemed not “filed”

for purposes of Section 18 of the Securities and Exchange

certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Securities and Exchange

Act of 1934, as amended, or otherwise subject to the liability of that Section.

1 unchanged sentence

by reference into any filing under the Securities Act or the Exchange Act.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

Stephen Snyder

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

Hadi Chaudhry

Executive Officer

February 25, 2021

March 14, 2022

Financial Officer

February 25, 2021

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the Registrant and in the capacities and on the dates indicated:

March 14, 2022

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

Registrant and in the capacities and on the dates indicated:

Chairman and Director

Stephen Snyder

Executive Officer and Director

Financial Officer

Accounting Officer

Hadi Chaudhry

Executive Officer, President and Director

Financial Officer

Accounting Officer

Stephen Snyder

Lawrence Sharnak

1 unchanged sentence

to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm Grant Thornton, LLP (PCAOB

ID Number 248 )

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations for the years ended December 31, 2020 and 2019

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2020 and 2019

Consolidated Statements of Shareholders’

Equity for the years ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019

Notes to Consolidated Financial Statements

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the years ended December 31, 2021 and 2020

Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020

Statements of Shareholders’ Equity for the years ended December 31, 2021 and 2020

Statements of Cash Flows for the years ended December 31, 2021 and 2020

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

on the financial statements

have audited the accompanying consolidated balance sheets of MTBC, Inc.

(a Delaware corporation) and subsidiaries (the “Company”)

as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, changes in shareholders’

have audited the accompanying consolidated balance sheets of CareCloud, Inc.

(a Delaware corporation) and subsidiaries (the “Company”)

as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, changes in shareholders’

equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the

United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal

Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”),

and our report dated March 14, 2022 expressed an adverse opinion.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or

disclosures to which it relates.

of certain Intangible Assets associated with the acquisitions of Meridian Billing Management Co.

and CareCloud Corporation

described further in Note 3 to the consolidated financial statements, the Company completed the acquisitions of Meridian Billing

Management Co.

and CareCloud Corporation (collectively, the “Acquisitions”) during the year ended December 31, 2020.

These transactions were accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”)

805, Business Combinations, which resulted in the identification and recognition of certain intangible assets.

assets consisted primarily of customer relationships and technology (collectively, “the identifiable intangible assets”).

The Company used a discounted cash flow model to measure the customer relationship intangible assets and a relief from royalty

model to measure the technology acquired.

We identified valuation of identifiable intangible assets associated with these acquisitions

as a critical audit matter.

principal considerations for our determination that the valuation of the identifiable intangible assets is a critical audit matter

is the complexity and high degree of subjectivity associated with auditing the Company’s fair value of identifiable intangible

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

audit matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are

not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts

or disclosures to which it relates.

of certain intangible assets

described further in Note 3 to the consolidated financial statements, the Company completed the acquisition of Medmatica Consulting Associates,

(“medSR”), during the year ended December 31, 2021.

This transaction was accounted for as a business combination in

accordance with ASC 805, Business Combinations, which resulted in the identification and recognition of customer relationships (“the

identifiable intangible assets”).

The Company used a discounted cash flow model to measure the customer relationship intangible

We identified the valuation of the identifiable intangible assets associated with this acquisition as a critical audit matter.

principal considerations for our determination that the valuation of the identifiable intangible assets as a critical audit matter is

the complexity and high degree of subjectivity associated with auditing the Company’s fair value of the identifiable intangible

The significant assumptions used to estimate the fair value of the identifiable intangible assets include certain assumptions

that form the basis of the future net cash flows, such as assumed growth rates, discount rate, economic lives, royalty

rates and customer attrition.

These significant assumptions are forward looking and consider anticipated market conditions, which,

in turn, requires subjective auditor judgement.

that form the basis of the future net cash flows such as assumed growth rates, discount rate, economic lives, and customer attrition.

These significant assumptions are forward looking and consider anticipated market conditions, which in turn, requires subjective auditor

audit procedures related to the valuation of intangible assets included the following, among others:

tested the significant assumptions used within the discounted cash flow model to estimate the fair value of the identifiable

intangible assets which included certain assumptions such as assumed growth rates and economic lives as compared to historical

involved valuation professionals with specialized skills and knowledge who assisted in evaluating the appropriateness of the

selected valuation methodology for the identifiable intangible assets and evaluating the reasonableness of certain significant

assumptions used, including discount rates, economic lives, royalty rates, and customer attrition.

evaluated whether assumptions used were reasonable by considering past performance of similar assets, market data, current

market forecasts, and whether such assumptions were consistent with evidence obtained in other areas of the audit.

evaluated the design and tested the operating effectiveness of the Company’s controls over the valuation of the identifiable

intangible assets.

This included testing controls over the estimation process supporting the recognition and measurement of identified

intangible assets and contingent consideration, including management’s evaluation of underlying assumptions and estimates used

to determine the fair value.

involved valuation professionals with specialized skills and knowledge who assisted in evaluating the appropriateness of the selected

valuation methodology for the identifiable intangible assets and evaluating the reasonableness of certain significant assumptions

used, including assumed growth rates, discount rate, and customer attrition.

evaluated whether significant assumptions used, including assumed growth rates, discount rate, economic lives, and customer attrition,

were reasonable by considering past performance of similar assets, market data, current market forecasts, and whether such assumptions

were consistent with evidence obtained in other areas of the audit.

of contingent consideration

described further in Note 3 to the consolidated financial statements, the purchase price of medSR also included contingent consideration

that is fair valued as of the acquisition date based on certain profitability and revenue targets being achieved.

The Company performed

the initial valuation of the contingent consideration upon the acquisition date as well as performed a re-measurement of the contingent

consideration as of the December 31, 2021.

The Company used a Monte Carlo simulation model to estimate the fair value of the contingent

consideration earnout.

We identified the valuation of the contingent consideration as a critical audit matter.

principal considerations for our determination that the valuation of the initial measurement and subsequent re-measurement of contingent

consideration as a critical audit matter is the complexity and high degree of subjectivity associated with auditing the Company’s

fair value of the contingent consideration due to the complexity of the Monte Carlo simulation model and related assumptions used.

significant assumptions and estimates include the probability the Company will achieve a specified range

of revenue, profitability levels, and volatility.

These significant assumptions are forward looking and consider anticipated market

conditions, which in turn, requires subjective auditor judgement.

audit procedures related to the valuation of contingent consideration included the following, among others:

involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the appropriateness of the selected

valuation methodology and evaluating the reasonableness of certain significant assumptions used to estimate the fair value of the

contingent consideration, which include the probability the Company will achieve a specified range of revenue and profitability levels

and volatility.

evaluated whether assumptions used, including the probability the Company will achieve a specified range of revenue and profitability

levels, by considering past performance of similar assets, market data, current market forecasts, and whether such assumptions were

consistent with evidence obtained in other areas of the audit.

GRANT THORNTON LLP

have served as the Company’s auditor since 2015.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

of Directors and Shareholders

on internal control over financial reporting

have audited the internal control over financial reporting of CareCloud, Inc.

(a Delaware corporation) and subsidiaries (the “Company”)

as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee

of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, because of the effect of the material weakness

described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective

internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated

Framework issued by COSO.

material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there

is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

The material weakness was due to a lack of controls over the completeness

and accuracy of key inputs related to the measurement of a non-routine transaction.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the consolidated financial statements of the Company as of and for the year ended December 31, 2021.

The material weakness identified

above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial

statements, and this report does not affect our report dated March 14, 2021which expressed an unqualified opinion on those financial

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment

of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal

Control Over Financial Reporting (“Management’s Report”).

Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required

to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,

testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other

procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial

reporting of medSR, Inc.

(“medSR”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues

constituting $21.1 million and $15.9 million, respectively, of the related consolidated financial statement amounts as of and for the

year ended December 31, 2021.

As indicated in Management’s Report, medSR was acquired during 2021.

Management’s assertion

on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting

and limitations of internal control over financial reporting

company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance

with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

GRANT THORNTON LLP

BALANCE SHEETS

1 unchanged sentence

in thousands, except share and per share amounts)

receivable - net

assets - related party

expenses and other current assets

current assets

Accounts receivable, net

Contract asset

Current assets - related party

Prepaid expenses and other current assets

Total current assets

Property and equipment - net

Operating lease right-of-use assets

Intangible assets - net

LIABILITIES AND SHAREHOLDERS’

and equipment - net

lease right-of-use assets

AND SHAREHOLDERS’ EQUITY

lease liability (current portion)

revenue (current portion)

liability to related party

payroll taxes

payable (current portion)

consideration (current portion)

Consideration

current liabilities

Accounts payable

Accrued compensation

Accrued expenses

Operating lease liability (current portion)

Deferred revenue (current portion)

Accrued liability to related party

Deferred payroll taxes

Notes payable (current portion)

Dividend payable

Total current liabilities

Notes payable

Deferred payroll taxes

Operating lease liability

Deferred revenue

Deferred tax liability

Total liabilities

COMMITMENTS AND CONTINGENCIES (NOTE 11)

SHAREHOLDERS’

Preferred stock, $0.001 par value - authorized 7,000,000 shares at December 31, 2020 and December 31, 2019;

issued and outstanding 5,475,279 and 2,539,325 shares at December 31, 2020 and December 31, 2019, respectively

Common stock, $0.001 par value - authorized 29,000,000 shares at December 31, 2020 and December 31, 2019;

issued 14,121,044 and 12,978,485 shares at December 31, 2020 and December 31, 2019, respectively;

13,380,245 and 12,237,686 shares outstanding at December 31, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

under line of credit

payroll taxes

lease liability

tax liability

AND CONTINGENCIES (NOTE 11)

SHAREHOLDERS’

stock, $ 0.001 par value - authorized 7,000,000 shares at December 31, 2021 and December 31, 2020;

issued and outstanding 5,299,227

and 5,475,279 shares at December 31, 2021 and December 31, 2020, respectively

stock, $ 0.001 par value - authorized 29,000,000 shares at December 31, 2021 and December 31, 2020;

issued 15,657,641 and 14,121,044

shares at December 31, 2021 and December 31, 2020, respectively;

14,916,842 and 13,380,245 shares outstanding at December 31, 2021

and December 31, 2020, respectively

paid-in capital

other comprehensive loss

740,799 common shares held in treasury, at cost at December 31, 2021 and December 31, 2020

Total shareholders’

TOTAL LIABILITIES AND SHAREHOLDERS’

shareholders’ equity

LIABILITIES AND SHAREHOLDERS’ EQUITY

notes to consolidated financial statements.

2 unchanged sentences

in thousands, except share and per share amounts)

operating costs

and marketing

and administrative

and development

in contingent consideration

and amortization

on lease termination, impairment and unoccupied lease charges

operating expenses

Direct operating costs

Selling and marketing

General and administrative

Research and development

Change in contingent consideration

Depreciation and amortization

Restructuring, impairment and unoccupied lease charges

Total operating expenses

OPERATING (LOSS) INCOME

Interest income

Interest expense

Other income (expense) - net

INCOME (LOSS)

(expense) income - net

(LOSS) BEFORE PROVISION FOR INCOME TAXES

Income tax provision

Preferred stock dividend

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

Net loss per common share:

tax provision

INCOME (LOSS)

stock dividend

LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

loss per common share:

basic and diluted

Weighted-average common shares used to compute basic and diluted loss per share

Weighted-average

common shares used to compute basic and diluted loss per share

notes to consolidated financial statements.

STATEMENTS OF COMPREHENSIVE LOSS

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

in thousands)

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX

Foreign currency translation adjustment (a)

COMPREHENSIVE LOSS

No tax effect has been recorded as the Company recorded a valuation allowance against the tax benefit from its foreign currency

translation adjustments.

INCOME (LOSS)

COMPREHENSIVE LOSS, NET OF TAX

currency translation adjustment (a)

COMPREHENSIVE

INCOME (LOSS)

tax effect has been recorded as the Company recorded a valuation allowance against the tax benefit from its foreign currency translation

notes to consolidated financial statements.

STATEMENTS OF SHAREHOLDERS’

STATEMENTS OF SHAREHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

in thousands, except for number of shares)

Shareholders’

Comprehensive

Balance - January 1, 2019

Foreign currency translation

Issuance of stock under

the equity incentive plan

Issuance of preferred

stock, net of fees and expenses

Stock-based compensation,

net of cash settlements

Tax withholding obligations

on stock issued to employees

Other Comprehensive

Treasury (Common)

Shareholders’

- January 1, 2020

currency translation adjustment

of stock under the equity incentive plan

of shares held in escrow

of shares held in escrow , shares

of contingent liability

of common stock

of common stock , shares

of preferred stock, net of fees and expenses

of preferred stock in connection with the CareCloud and Meridian acquisitions

of warrants in connection with the CareCloud and Meridian acquisitions

of common stock warrants

compensation, net of cash settlements

withholding obligations on stock issued to employees

stock dividends

Balance - December

Balance - January 1, 2020

Foreign currency translation

Issuance of stock under

the equity incentive plan

Issuance of preferred

stock, net of fees and expenses

Issuance of preferred

stock in connection with the CareCloud and Meridian acquisitions

Issuance of warrants

in connection with the CareCloud and Meridian acquisitions

Exercise of common stock warrants

Stock-based compensation,

net of cash settlements

- December 31, 2020

- January 1, 2021

income (loss)

currency translation adjustment

of stock under the equity incentive plan

of shares held in escrow

of contingent liability

of common stock

of common stock warrants

compensation, net of cash settlements

stock dividends

Balance - December

- December 31, 2021

all years presented, the preferred stock dividends were paid monthly at the rate of $2.75 per share per annum.

3 unchanged sentences

in thousands)

OPERATING ACTIVITIES:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

Lease amortization

Deferred revenue

Provision for doubtful accounts

(Benefit) provision for deferred income taxes

Foreign exchange (gain) loss

Interest accretion

income (loss)

to reconcile net income (loss) to net cash provided by (used in) operating activities:

and amortization

for doubtful accounts

(benefit) for deferred income taxes

exchange gain

(Gain) on sale of assets

Stock-based compensation expense

Change in contingent consideration

Changes in operating assets and liabilities, net of businesses acquired:

Accounts receivable

Contract asset

Accounts payable and other liabilities

Net cash (used in) provided by operating activities

INVESTING ACTIVITIES:

Purchase of property and equipment

Capitalized software

Cash paid for acquisitions (net)

Net cash used in investing activities

FINANCING ACTIVITIES:

Preferred stock dividends paid

Settlement of tax withholding obligations on stock issued to employees

Repayments of notes payable, net

Contingent consideration payments

Proceeds from exercise of warrants

Net proceeds from issuance of preferred stock

Proceeds from line of credit

Repayments of line of credit

Settlement of contingent obligation

Other financing activities

Net cash provided by financing activities

EFFECT OF EXCHANGE RATE CHANGES ON CASH

NET INCREASE IN CASH

CASH - beginning of the period

CASH - end of the period

SUPPLEMENTAL NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:

Preferred stock issued in connection with CareCloud and Meridian acquisitions

Vehicle financing obtained

Dividends declared, not paid

Purchase of prepaid insurance through assumption of note

Warrants issued

Escrow recorded as indemnification asset and offsetting accrual

SUPPLEMENTAL INFORMATION - Cash paid during the year for:

compensation expense

in contingent consideration

in operating assets and liabilities, net of businesses acquired:

payable and other liabilities

cash provided by (used in) operating activities

of property and equipment

paid for acquisitions (net)

cash used in investing activities

stock dividends paid

of tax withholding obligations on stock issued to employees

of notes payable, net

from exercise of warrants

from issuance of common stock, net of expenses

from line of credit

of contingent obligation

from issuance of preferred stock, net of expenses

cash (used in) provided by financing activities

OF EXCHANGE RATE CHANGES ON CASH

(DECREASE) INCREASE IN CASH

- beginning of the period

AND RESTRICTED CASH - end of the year

NONCASH INVESTING AND FINANCING ACTIVITIES:

stock (cancelled) issued in connection with an acquisition

consideration at fair value at acquisition date

financing obtained

declared, not paid

of prepaid insurance with assumption of note

recorded as indemnification asset and offsetting accrual

INFORMATION - Cash paid during the year for:

notes to consolidated financial statements.

2 unchanged sentences

ORGANIZATION AND BUSINESS

MTBC, Inc., (“MTBC”

and together with its consolidated subsidiaries, the “Company”, “we”, “us”

and/or “our”) is a healthcare information technology company that offers an integrated suite of proprietary cloud-based electronic

health records and practice management solutions, together with related business services, to healthcare providers.

The Company’s

Inc., formerly MTBC, Inc.

(“CareCloud”, and together with its consolidated subsidiaries, the “Company,” “we,”

“us” and/or “our”) is a healthcare information technology company that provides a full suite of proprietary cloud-based

solutions, together with related business services, to healthcare providers and hospitals throughout the United States.

The Company’s

integrated services are designed to help customers increase revenues, streamline workflows and make better business and clinical decisions,

while reducing administrative burdens and operating costs.

The Company’s services include full-scale revenue cycle management, comprehensive

practice management services, electronic health records, patient experience management solutions and other technology-driven practice

management services for private and hospital-employed healthcare providers.

MTBC has its corporate offices in Somerset, New Jersey and

maintains client support teams throughout the U.S., in our Pakistan Offices and in Sri Lanka.

was founded in 1999 and incorporated under the laws of the State of Delaware in 2001.

In 2004, MTBC formed MTBC Private Limited

(or “MTBC Pvt.

Ltd.”), a 99.9% majority-owned subsidiary of MTBC based in Pakistan.

The remaining 0.01% of the shares

is owned by the founder and Executive Chairman of MTBC.

In 2016, MTBC formed MTBC Acquisition Corp.

(“MAC”),

a Delaware corporation, in connection with its acquisition of substantially all of the assets of MediGain, LLC and its subsidiary,

Millennium Practice Management Associates, LLC (together “MediGain”).

MAC has a wholly owned subsidiary in Sri Lanka,

RCM MediGain Colombo, Pvt.

In May 2018, MTBC formed MTBC Health, Inc.

(“MHI”) and MTBC Practice Management, Corp.

(“MPM”), each a Delaware corporation in connection MTBC’s acquisition of substantially all of the revenue cycle

management, practice management and group purchasing organization assets of Orion Healthcorp, Inc.

and 13 of its affiliates (together,

“Orion”).

MHI is a direct, wholly owned subsidiary of MTBC, and was formed to own and operate the revenue cycle management

and group purchasing organization businesses acquired from Orion.

MPM is a wholly owned subsidiary of MHI and was formed to own

and operate the practice management business acquired from Orion.

March 2019, MTBC formed MTBC-Med, Inc.

(“MED”), a Delaware corporation, in connection with its acquisition of substantially

all of the assets of Etransmedia Technology, Inc.

and its subsidiaries (“Etransmedia”).

In January 2020, MTBC purchased

CareCloud Corporation (“CareCloud”).

In June 2020, MTBC purchased Meridian Billing Management Co.

(“MBM”)

Our Software-as-a-Service (“SaaS”) platform includes revenue cycle

management (“RCM”), practice management (“PM”), electronic health record (“EHR”), business intelligence,

telehealth, patient experience management (“PXM”) solutions and complementary software tools and business services for high-performance

medical groups and health systems.

CareCloud has its corporate offices in Somerset, New Jersey and maintains client support teams throughout

the U.S., and offshore offices in Pakistan and Azad Jammu and Kashmir, a region administered by Pakistan (the “Pakistan Offices”),

and in Sri Lanka.

was founded in 1999 under the name Medical Transcription Billing, Corp.

and incorporated under the laws of the State of Delaware in 2001.

In 2004, the Company formed MTBC Private Limited (or “MTBC Pvt.

Ltd.”), a 99.9 %

majority-owned subsidiary of CareCloud based in Pakistan.

The remaining 0.1 %

of the shares of MTBC Pvt.

by the founder and Executive Chairman of CareCloud.

In 2016, the Company formed MTBC Acquisition Corp.

(“MAC”), a Delaware

corporation, in connection with its acquisition of substantially all of the assets of MediGain, LLC and its subsidiary, Millennium Practice

Management Associates, LLC (together “MediGain”).

MAC has a wholly owned subsidiary in Sri Lanka, RCM MediGain Colombo, Pvt.

In May 2018, the Company formed CareCloud Practice Management, Corp.

(“CPM”), a Delaware corporation, to operate the

medical practice management business acquired from Orion Healthcorp.

January 2020, the Company purchased CareCloud Corporation, a company whose name we took.

That company is now known as CareCloud Health,

In June 2020, the Company purchased Meridian Billing Management Co.

and its affiliate Origin Holdings, Inc.

(collectively “Meridian”

and sometimes referred to as “Meridian Medical

Management”).

During the first quarter of 2020, a New Jersey corporation, talkMD

Clinicians, PA (“talkMD”), was formed by the wife of the Executive Chairman, who is a licensed physician, to provide

telehealth services.

talkMD was determined to be a variable interest entity (“VIE”) for financial reporting purposes

because the entity will be controlled by the Company.

As of December 31, 2020, talkMD had not yet commenced operations or had any

transactions or agreements with the Company or otherwise.

(collectively “Meridian” and sometimes referred to as “Meridian Medical Management”).

March 2021, the Company formed a new wholly-owned subsidiary, CareCloud Acquisition, Corp.

In June 2021, CAC purchased

certain assets and assumed certain liabilities of MedMatica Consulting Associates Inc., (“MedMatica”) and purchased the stock

of Santa Rosa Staffing, Inc., (“SRS”).

The assets and liabilities of MedMatica were merged into SRS and the company was renamed

SIGNIFICANT ACCOUNTING POLICIES

of Consolidation —

The accompanying consolidated financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”) and include the operating results and financial

condition of MTBC, its wholly-owned subsidiaries;

MAC, MHI, MPM, MED (since April 1, 2019), its majority-owned subsidiary MTBC

Ltd, MED (since April 2019), CareCloud (since January 2020), Meridian Medical Management (since June 2020) and the subsidiary

in Sri Lanka.

of Consolidation — The accompanying consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) and include the operating results and financial condition of

CareCloud, its wholly-owned subsidiaries;

MAC, CPM, its majority-owned subsidiary MTBC Pvt.

Ltd, CCH (since January 2020), Meridian Medical

Management (since June 2020), medSR (since June 2021) and the subsidiary in Sri Lanka.

The non-controlling interest of MTBC Pvt.

is inconsequential to the consolidated financial statements.

intercompany accounts and transactions have been eliminated in consolidation.

Reporting —

The Company views its operations as comprising two operating segments, Healthcare IT and Practice Management.

The chief operating decision maker (“CODM”) monitors and reviews financial information at these segment levels for

assessing operating results and the allocation of resources.

of Estimates —

The preparation of consolidated financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial

statements, as well as the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions

made by management include, but are not limited to:

(1) impairment of long-lived assets, (2) depreciable lives of assets, (3)

allowance for doubtful accounts, (4) contingent consideration, (5) estimates of variable consideration related to the contract

asset, (6) fair value of identifiable purchased tangible and intangible assets, including determination of expected customer life,

(7) stock-based compensation, and (8) estimating lease terms and incremental borrowing rates.

Actual results could significantly

differ from those estimates.

Recognition —

We derive revenue from eight primary sources:

(1) revenue cycle management services, (2) SaaS solutions,

(3) professional services, (4) ancillary services, (5) group purchasing services, (6) printing and mailing services, (7) clearinghouse

and EDI (electronic data interchange) services and (8) practice management services.

All of our revenue arrangements are based

on contracts with customers.

Most of our contracts with customers contain single performance obligations, although certain contracts

do contain multiple performance obligations where we perform more than one service for the same customer.

We account for individual

performance obligations separately if they are distinct within the context of the contract.

For contracts where we provide multiple

services such as where we perform multiple ancillary services, each service represents its own performance obligation.

or transaction prices are based on the contractual price for the service.

All intercompany accounts and transactions have been eliminated in consolidation.

Reporting — The Company views its operations as comprising two operating segments, Healthcare IT and Practice Management.

chief operating decision maker (“CODM”) monitors and reviews financial information at these segment levels for assessing

operating results and the allocation of resources.

of Estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, as well

as the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions made by management

include, but are not limited to:

(1) impairment of long-lived assets, (2) depreciable lives of assets, (3) allowance for doubtful accounts,

(4) contingent consideration, (5) estimates of variable consideration related to the contract asset, (6) fair value of identifiable purchased

tangible and intangible assets, including determination of expected customer life, (7) stock-based compensation, and (8) estimating lease

terms and incremental borrowing rates.

Actual results could significantly differ from those estimates.

Recognition — We derive revenue from five

primary sources:

(1) technology-enabled business solutions, (2) professional services, (3) printing and mailing services, (4) group purchasing

services and (5) medical practice management services.

All of our revenue arrangements are based on contracts with customers.

our contracts with customers contain single performance obligations, although certain contracts do contain multiple performance obligations

where we perform more than one service for the same customer.

We account for individual performance obligations separately if they are

distinct within the context of the contract.

For contracts where we provide multiple services such as where we perform multiple ancillary

services, each service represents its own performance obligation.

Selling or transaction prices are based on the contractual prices for

each service at its stand-alone selling price.

five-step approach is applied in the recognition of revenue under ASC 606:

(1) identify the contract with a customer, (2) identify

the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance

obligations in the contract, and (5) recognize revenue when we satisfy a performance obligation.

(1) identify the contract with a customer, (2) identify the

performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations

in the contract, and (5) recognize revenue when we satisfy a performance obligation.

we believe that our approach to estimates and judgments is reasonable, actual results could differ, and we may be exposed to increases

or decreases in revenue that could be material.

Our estimates of variable consideration may prove to be inaccurate, in which case

we may have understated or overstated the revenue recognized in a reporting period.

The amount of variable consideration recognized

to date that remains subject to estimation is included within the contract asset within the consolidated balance sheet.

of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on

the date of transfer of control of the services to the customer.

Since payment terms are less than a year, we have elected the

practical expedient and do not assess whether a customer contract has a significant financing component.

Company’s revenue arrangements generally do not include a general right of refund for services provided (See Note 9, Revenue,

for additional information).

Operating Costs —

Direct operating costs consist primarily of salaries and benefits related to personnel who provide

services to clients and at our managed medical practices, claims processing costs, medical supplies at our managed practices and

other direct costs related to the Company’s services.

Costs associated with the implementation of new clients are expensed

The reported amounts of direct operating costs include allocated amounts for rent expense and overhead costs.

and Marketing Expenses —

Selling and marketing expenses consist primarily of compensation and benefits, travel and advertising

Our estimates of variable consideration may prove to be inaccurate, in which case we

may have understated or overstated the revenue recognized in a reporting period.

The amount of variable consideration recognized to date

that remains subject to estimation is included within the contract asset within the consolidated balance sheet.

of invoices is due as specified in the underlying customer agreement, typically 30 days from the invoice date, which occurs on the date

of transfer of control of the services to the customer.

Since payment terms are less than a year, we have elected the practical expedient

and do not assess whether a customer contract has a significant financing component.

Company’s revenue arrangements generally do not include a general right of refund for services provided (See Note 9, Revenue, for

additional information).

Operating Costs — Direct operating costs consist primarily of salaries and benefits related to personnel who provide services

to clients and at our managed medical practices, claims processing costs, medical supplies at our managed practices and other direct

costs related to the Company’s services.

Costs associated with the implementation of new clients are expensed as incurred.

reported amounts of direct operating costs include allocated amounts for rent expense and overhead costs.

and Marketing Expenses — Selling and marketing expenses consist primarily of compensation and benefits, travel and advertising

expenses and are expensed as incurred.

The Company incurred approximately $2.1 million and $810,000 of advertising costs for the

The Company incurred approximately $ 3.9 million and $ 2.1 million of advertising costs for the

years ended December 31, 2021 and 2020, respectively.

and Development Expenses —

Research and development expenses consist primarily of personnel-related costs incurred performing

and Development Expenses — Research and development expenses consist primarily of personnel-related costs incurred performing

market research, analyzing proposed products and developing new products.

Software Costs —

The Company capitalizes certain development costs incurred in connection with its internal-use software.

Costs incurred in the preliminary stages of development are expensed as incurred.

Once an application has reached the development

stage, internal and external costs, if direct, are capitalized until the software is substantially complete and ready for its

intended use.

Capitalization ceases upon completion of all substantial testing.

The Company also capitalizes costs related to

specific upgrades and enhancements when it is probable that the expenditures will result in additional functionality.

costs are recorded as part of intangible assets in the accompanying consolidated balance sheets.

Maintenance and training costs

are expensed as incurred.

Internal use software is amortized on a straight line basis over its estimated useful life, generally

Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events

or changes in circumstances occur that could impact the recoverability of these assets.

During the years ended December 31, 2020

and 2019, the Company capitalized approximately $5.2 million and $538,000, respectively, of salaries and payroll-related costs

of employees and consultants who devoted time to the development of customer related projects.

Receivable —

Accounts receivable are stated at their net realizable value.

Accounts receivable are presented on the

consolidated balance sheet net of an allowance for doubtful accounts, which is established based on reviews of the accounts receivable

aging, an assessment of the customers’

history and current creditworthiness and the probability of collection.

are written off when it is determined that collection of the outstanding balance is no longer probable.

Software Costs — The Company capitalizes certain

development costs incurred in connection with its internal-use software.

Costs incurred in the preliminary stages of development are

expensed as incurred.

Once an application has reached the development stage, internal and external costs, if direct, are capitalized

until the software is substantially complete and ready for its intended use.

Capitalization ceases upon completion of all substantial

The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditures will

result in additional functionality.

Capitalized costs are recorded as part of intangible assets in the accompanying consolidated balance

Maintenance and training costs are expensed as incurred.

Internal use software is amortized on a straight line basis over its

estimated useful life, generally three years.

Management evaluates the useful lives of these assets on an annual basis and tests for

impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

During the years ended

December 31, 2021 and 2020, the Company capitalized approximately $ 7.6

million and $ 5.2

million, respectively, primarily consisting of

salaries and payroll-related costs of employees and consultants who devoted time to the development of internal-use software projects.

Receivable — Accounts receivable are stated at their net realizable value.

Accounts receivable are presented on the consolidated

balance sheet net of an allowance for doubtful accounts, which is established based on reviews of the accounts receivable aging, an assessment

of the customers’ history and current creditworthiness and the probability of collection.

Accounts are written off when it is determined

that collection of the outstanding balance is no longer probable.

movement in the allowance for doubtful accounts for the years ended December 31, 2021 and 2020 was as follows:

Year ended December 31,

SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

ended December 31,

in thousands)

Beginning balance

Ending balance

and Equipment —

Property and equipment are stated at cost, less accumulated depreciation.

Depreciation is calculated

using the straight-line basis over the estimated useful lives of the assets ranging from three to five years.

Ordinary maintenance

and repairs are expensed as incurred.

Depreciation for computers is calculated over three years, while remaining assets (except

leasehold improvements) are depreciated over five years.

The Company amortizes leasehold improvements over the lesser of the lease

term or the remaining economic life of those assets.

Generally, the lease term is the base lease term plus certain renewal option

periods for which renewal is reasonably certain and for which failure to exercise the renewal option would result in an economic

penalty to the Company.

Assets —

Intangible assets include customer relationships, covenants not-to-compete acquired in connection with acquisitions,

and Equipment — Property and equipment are

stated at cost, less accumulated depreciation.

Depreciation is calculated using the straight-line basis over the estimated useful lives

of the assets ranging from three to five years.

Ordinary maintenance and repairs are expensed as incurred.

Depreciation for computers

is calculated over three years, while the remaining assets (except leasehold improvements) are depreciated over five years.

Company amortizes leasehold improvements over the lesser of the lease term or the remaining economic life of those assets.

the lease term is the base lease term plus certain renewal option periods for which renewal is reasonably certain and for which failure

to exercise the renewal option would result in an economic penalty to the Company.

Assets — Intangible assets include customer relationships, covenants not-to-compete acquired in connection with acquisitions,

software purchase and development costs and trademarks acquired.

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Amortization for intangible assets related

to the group purchasing organization and practice management is recorded on a straight line basis over four and twelve years,

respectively.

of Long-Lived Assets —

The Company reviews its long-lived assets for impairment whenever changes in circumstances indicate

to the group purchasing organization and practice management is recorded on a straight line basis over four and twelve years, respectively.

of Long-Lived Assets — The Company reviews its long-lived assets for impairment whenever changes in circumstances indicate

that the carrying value of an asset may not be recoverable.

If the sum of undiscounted expected future cash flows is less than

the carrying amount of the asset group, the Company will recognize an impairment loss based on the fair value of the asset.

If the sum of undiscounted expected future cash flows is less than the carrying

amount of the asset group, the Company will recognize an impairment loss based on the fair value of the asset.

was no impairment of internal-use software costs, intangible assets or property and equipment during the years ended December 31, 2021

31, 2020 and 2019, other than the impairment recorded on one right-of-use (“ROU”) asset of approximately $298,000

and $170,000 for the year ended December 31, 2020 and 2019, respectively.

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses

and 2020, other than the impairment recorded on right-of-use (“ROU”) assets of approximately $ 68,000 and $ 298,000 for the

years ended December 31, 2021 and 2020, respectively.

In addition, during the year ended December 31, 2021 the Company recorded approximately

$ 774,000 of impairment charges on a vendor contract.

— Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired.

The Company tests goodwill for impairment annually as of October 31 st , referred to as the annual test date.

Conditions that could trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change

to the Company in certain agreements, significant underperformance relative to historical or projected future operating results,

loss of customer relationships, an economic downturn in customers’

industries, or increased competition.

Impairment testing

for goodwill is performed at the reporting-unit level.

The Company has determined that its business consists of two operating

segments and two reporting units.

No impairment charges were recorded during the years ended December 31, 2020 or 2019.

Stock —

Treasury stock is recorded at cost and represents shares repurchased by the Company.

No shares were repurchased

or issued from treasury stock during the years ended December 31, 2020 and 2019.

Compensation —

The Company recognizes compensation for all share-based payments granted based on the grant date fair

Conditions that

could trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change to the Company in certain

agreements, significant underperformance relative to historical or projected future operating results, loss of customer relationships,

an economic downturn in customers’ industries, or increased competition.

Impairment testing for goodwill is performed at the reporting-unit

The Company has determined that its business consists of two operating segments and two reporting units.

No impairment charges

were recorded during the years ended December 31, 2021 or 2020.

Stock — Treasury stock is recorded at cost and represents shares repurchased by the Company.

No shares were repurchased or

issued from treasury stock during the years ended December 31, 2021 and 2020.

Compensation — The Company recognizes compensation for all share-based payments granted based on the grant date fair value.

Compensation expense is generally recognized on a straight-line basis over the vesting period.

The Company does not estimate

forfeitures in recognizing the expense for share-based payments, as historical forfeiture rates have not been significant.

restricted stock units (“RSUs”) classified as equity, the market price of our common stock on the date of grant is

used in recording the fair value of the award.

For RSUs classified as a liability, the earned amount is marked to market based

on the end-of-period common stock price.

Combinations —

The Company accounts for business combinations under the provisions of ASC 805, Business Combinations ,

The Company does not estimate forfeitures

in recognizing the expense for share-based payments, as historical forfeiture rates have not been significant.

restricted stock units (“RSUs”) classified as equity, the market price of our common stock on the date of grant is used in

recording the fair value of the award.

For RSUs classified as a liability, the earned amount is marked to market based on the end-of-period

common stock price.

Combinations — The Company accounts for business combinations under the provisions of ASC 805, Business Combinations ,

which requires that the acquisition method of accounting be used for all business combinations.

Assets acquired and liabilities

assumed are recorded at the date of acquisition at their respective fair values.

ASC 805 also specifies criteria that intangible

assets acquired in a business combination must be recognized and reported apart from goodwill.

Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible

assets acquired in a business combination.

Acquisition-related expenses are recognized separately from the business combinations

and are expensed as incurred.

If the business combination provides

for contingent consideration, the Company records the contingent consideration at fair value at the acquisition date with changes

in the fair value recorded through earnings.

Assets acquired and liabilities assumed

are recorded at the date of acquisition at their respective fair values.

ASC 805 also specifies criteria that intangible assets acquired

in a business combination must be recognized and reported apart from goodwill.

Goodwill represents the excess purchase price over the

fair value of the tangible net assets and intangible assets acquired in a business combination.

Acquisition-related expenses are recognized

separately from the business combinations and are expensed as incurred.

If the business combination provides for contingent consideration,

the Company records the contingent consideration at fair value at the acquisition date with changes in the fair value recorded through

costs are expensed as incurred.

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and administrative expenses in the consolidated statements of operations.

Taxes —

The Company accounts for income taxes under the asset and liability method, which requires the recognition of

deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated

financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences between the

financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences

are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations

in the period that includes the enactment date.

Taxes — The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred

tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax

bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

effect of a change in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment

Company records net deferred tax assets to the extent that these assets will more likely than not be realized.

2 unchanged sentences

projected future taxable income, tax planning strategies, and results of recent operations.

A valuation allowance would be recorded

to reduce deferred income tax assets when it is determined that it is more likely than not that the Company would not be able

to realize its deferred income tax assets in the future in excess of their net recorded amount.

Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more

likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions

that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater

than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

At December 31, 2020 and 2019,

the Company did not have any uncertain tax positions that required recognition.

Interest and penalties related to uncertain tax

positions are recognized in income tax expense.

For the years ended December 31, 2020 and 2019, the Company did not recognize

any penalties or interest related to unrecognized tax benefits in its consolidated financial statements.

Dividends are recorded when declared by the Company’s Board of Directors.

The Board of Directors has declared

monthly dividends on the Series A Preferred Stock (“Preferred Stock”) through February 2021.

Preferred Stock dividends

are charged against paid in capital because the Company does not have sufficient retained earnings.

The Company is prohibited

from paying dividends on its common stock without the prior written consent of its lender, Silicon Valley Bank (“SVB”).

Revenue —

Deferred revenue primarily consists of payments received in advance of the revenue recognition criteria being

Deferred revenue includes certain deferred implementation services fees that are recognized as revenue ratably over the longer

of the life of the agreement or the estimated expected customer life, which is currently estimated to be three years.

revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining

portion is recorded as non-current.

At the time of customer termination, any unrecognized service fees associated with implementation

services are recognized as revenue.

Value Measurements —

ASC 820, Fair Value Measurement , requires the disclosure of fair value information about

financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

Company follows a fair value measurement hierarchy to measure financial instruments.

The fair value of the Company’s financial

instruments is measured using inputs from the three levels of the fair value hierarchy as follows:

are unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability

to access at the measurement date.

are directly or indirectly observable, which include quoted prices for similar assets and liabilities in active markets, quoted

prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that

are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market

data by correlation or other means.

A valuation allowance would be recorded to

reduce deferred income tax assets when it is determined that it is more likely than not that the Company would not be able to realize

its deferred income tax assets in the future in excess of their net recorded amount.

Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more likely

than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that

meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50

percent likely to be realized upon ultimate settlement with the related tax authority.

At December 31, 2021 and 2020, the Company did

not have any uncertain tax positions that required recognition.

Interest and penalties related to uncertain tax positions are recognized

in income tax expense.

For the years ended December 31, 2021 and 2020, the Company did not recognize any penalties or interest related

to unrecognized tax benefits in its consolidated financial statements.

— Dividends are recorded when declared by the Company’s Board of Directors.

The Board of Directors has declared monthly

dividends on the Series A Preferred Stock through February 2022 and also declared a monthly dividend on the Series B Preferred Stock

for stockholders of record February 28, 2022.

Preferred Stock dividends are charged against paid in capital because the Company does

not have sufficient retained earnings.

The Company is prohibited from paying dividends on its common stock without the prior written

consent of its lender, Silicon Valley Bank (“SVB”).

Revenue — Deferred revenue primarily consists of payments received in advance of the revenue recognition criteria being met.

Deferred revenue includes certain deferred implementation services fees that are recognized as revenue ratably over the longer of the

life of the agreement or the estimated expected customer life, which is currently estimated to be three years.

Deferred revenue that

will be recognized during the succeeding 12-month period is recorded as current deferred revenue and the remaining portion is recorded

as non-current.

At the time of customer termination, any unrecognized service fees associated with implementation services are recognized

Value Measurements — ASC 820, Fair Value Measurement , requires the disclosure of fair value information about financial

instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.

The Company follows

a fair value measurement hierarchy to measure financial instruments.

The fair value of the Company’s financial instruments is measured

using inputs from the three levels of the fair value hierarchy as follows:

are unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access

at the measurement date.

are directly or indirectly observable, which include quoted prices for similar assets and liabilities in active markets, quoted prices

for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable

for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or

are unobservable inputs that are used to measure fair value to the extent observable inputs are not available.

Company’s contingent consideration is a Level 3 liability and is measured at fair value at the end of each reporting period.

The Company has certain financial instruments that are not measured at fair value on a recurring basis.

These financial instruments

are subject to fair value adjustments only in certain circumstances and include cash, accounts receivable, accounts payable and

accrued expenses, borrowings under term loans and line of credit, and notes payable.

Due to the short term nature of these financial

instruments and that the borrowings, with the exception of the payable to the managed practices (see Note 8) bear interest at

prevailing market rates, the carrying value approximates the fair value.

Currency Translation —

The financial statements of the Company’s foreign subsidiaries are translated from their

functional currency into U.S.

dollars, the Company’s functional currency.

All foreign currency assets and liabilities are

translated at the period-end exchange rate, and all revenue and expenses are translated at transaction date exchange rates.

effects of translating the financial statements of the foreign subsidiaries into U.S.

dollars are reported as a cumulative translation

adjustment, a separate component of accumulated other comprehensive loss in the consolidated statements of shareholders’

equity, except for transactions related to the intercompany receivable for which transaction adjustments are recorded in the consolidated

statements of operations as they are not deemed to be permanently reinvested.

Foreign currency transaction gains/losses are reported

as a component of other income –

net in the consolidated statements of operations and amounted to a gain of approximately

$14,000 and a loss of approximately $827,000 for the years ended December 31, 2020 and 2019, respectively.

Restructuring,

Impairment and Unoccupied Lease Charges —

Restructuring charges represent the remaining lease costs for a facility no

longer used by the Company as the employees were transferred to another Company facility.

Impairment charges represent charges

recorded for a leased facility no longer being used by the Company.

Unoccupied lease charges represent the portion of lease and

related costs for vacant space not being utilized by the Company.

The Company is marketing both the unused facilities and the

unused space for sub-lease.

In February 2021, the Company was able to settle one lease obligation.

Accounting Pronouncements —

From time to time, new accounting pronouncements are issued by the Financial Accounting

Standards Board (“FASB”) and are adopted by us as of the specified effective date.

Unless otherwise discussed, we

believe that the impact of recently adopted and recently issued accounting pronouncements will not have a material impact on our

consolidated financial position, results of operations and cash flows.

June 2016, the FASB issued ASU 2016-13, Financial Instruments –

Credit Losses:

Measurement of Credit Losses on Financial

The guidance in Accounting Standards Update (“ASU”) 2016-13 replaces the incurred loss impairment

methodology under current GAAP.

The new impairment model requires immediate recognition of estimated credit losses expected to

occur for most financial assets and certain other instruments.

Company’s contingent consideration is a Level 3 liability and is measured at fair value at the end of each reporting period.

Company has certain financial instruments that are not measured at fair value on a recurring basis.

These financial instruments are subject

to fair value adjustments only in certain circumstances and include cash, accounts receivable, accounts payable and accrued expenses,

borrowings under term loans and line of credit, and notes payable.

Due to the short term nature of these financial instruments and that

the borrowings bear interest at prevailing market rates, the carrying value approximates the fair value.

Currency Translation — The financial statements of the Company’s foreign subsidiaries are translated from their functional

currency into U.S.

dollars, the Company’s functional currency.

All foreign currency assets and liabilities are translated at the

period-end exchange rate, and all revenue and expenses are translated at transaction date exchange rates.

The effects of translating

the financial statements of the foreign subsidiaries into U.S.

dollars are reported as a cumulative translation adjustment, a separate

component of accumulated other comprehensive loss in the consolidated statements of shareholders’ equity, except for transactions

related to the intercompany receivable for which transaction adjustments are recorded in the consolidated statements of operations as

they are not deemed to be permanently reinvested.

Foreign currency transaction gains/losses are reported as a component of other income

– net in the consolidated statements of operations and amounted to gains of approximately $ 16,000 and $ 14,000 for the years ended

December 31, 2021 and 2020, respectively.

on Lease Termination, Impairment and Unoccupied Lease Charges — Loss on lease termination represents the write-off of leasehold

improvements as the result of early lease terminations.

Impairment charges represent charges recorded for leased facilities no longer

being used by the Company.

Unoccupied lease charges represent the portion of lease and related costs for that portion of the space that

is vacated and not being utilized by the Company.

The Company is marketing the unused space for sub-lease.

The Company was able to turn

back to the landlord one of the unused facilities effective January 1, 2022.

Accounting Pronouncements — From time to time, new accounting pronouncements are issued by the Financial Accounting Standards

Board (“FASB”) and are adopted by us as of the specified effective date.

Unless otherwise discussed, we believe that the

impact of recently adopted and recently issued accounting pronouncements will not have a material impact on our consolidated financial

position, results of operations and cash flows.

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments.

The guidance in Accounting Standards Update (“ASU”) 2016-13 replaces the incurred loss impairment methodology under current

The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets

and certain other instruments.

It will apply to all entities.

For trade receivables, loans and

held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses.

This may result in the

earlier recognition of credit losses.

In November, the FASB issued ASU No.

2019-10, which delays this standard’s effective

date for SEC smaller reporting companies to the fiscal years beginning on or after December 15, 2022.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842).

The new standard requires organizations that have leased

assets, referred to as “lessees,”

to recognize on the balance sheet the assets and liabilities that represent the

rights and obligations created by those leases, respectively.

Under the new guidance, a lessee is required to recognize assets

and liabilities for leases with lease terms of more than 12 months.

Consistent with current GAAP, the recognition, measurement

and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a

finance or operating lease.

However, unlike current GAAP which requires only capital leases to be recognized on the balance sheet,

the new ASU requires both types of leases to be recognized on the balance sheet.

The FASB has subsequently issued further ASU’s

related to the standard providing additional practical expedients and an optional transition method allowing entities to not recast

comparative periods.

The amendments in ASU No.

2016-02 are now effective.

adopted the standard on January 1, 2019 using the optional transition adjustment method.

As part of the adoption of ASC 842, we

performed an assessment of the impact that the new lease recognition standard has on the consolidated financial statements.

of our leases, which consist of facility and equipment leases, have been classified as operating leases.

The Company does not

have any financing leases.

We adopted the requirements of the new standard without restating the prior periods.

There was no impact

to the accumulated deficit as of the date of adoption.

For leases in place at the transition date, we adopted the package of practical

expedients that allows us to not reassess:

(1) whether any expired or existing contracts are or contain leases, (2) lease classification

for any expired or existing leases and (3) initial direct costs for any expired or existing leases.

have also adopted the practical expedients that allow us to treat the lease and non-lease components of our leases as a single

component for our facility leases.

We elected the short-term lease recognition exemption for all leases that qualify.

for those leases that qualify, we did not recognize ROU asset or lease liabilities as part of the transition adjustment.

January 1, 2019, the impact on the consolidated assets was approximately $4.2 million and the impact on the consolidated liabilities

was approximately $4.4 million.

The adoption of ASC 842 did not have a material effect on the Company’s results of operations,

stockholders’

equity, or statement of cash flows.

February 14, 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification

of Certain Tax Effects from Accumulated Other Comprehensive Income.

These amendments provide financial statement preparers

with an option to reclassify standard tax effects within accumulated other comprehensive income to retained earnings in each period

in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded.

Company adopted this guidance effective January 1, 2019.

There was no impact on the consolidated financial statements as a result

of this standard.

June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting .

This ASU simplifies

the accounting for nonemployee share-based payments by aligning it with the accounting for share-based payments to employees,

with exceptions.

Under this guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date,

which may lower their cost and reduce volatility in the income statement.

Awards to nonemployees are measured by estimating the

fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value

of the equity instruments issued, whichever can be measured more reliably.

Entities need to consider the probability that a performance

condition will be satisfied when an award contains such condition.

The Company adopted this guidance effective January 1, 2019.

There was no impact on the consolidated financial statements as a result of this standard.

For trade receivables, loans and held-to-maturity debt securities, entities

will be required to estimate lifetime expected credit losses.

This may result in the earlier recognition of credit losses.

the FASB issued ASU No.

2019-10, which delays this standard’s effective date for SEC smaller reporting companies to the fiscal

years beginning on or after December 15, 2022.

The Company is in the process of determining if this update will have a significant impact

on the consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

This ASU simplifies accounting

for income taxes to reduce complexity in the accounting standards.

The amendments consist of the removal of certain exceptions

to the general principles of ASC 740 and some additional simplifications.

The amendments are not required to be implemented until

2021 for public entities.

The Company is in the process of investigating if this update will have a significant impact on the

consolidated financial statements.

August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

This ASU simplifies the accounting for certain

financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s

This ASU simplifies accounting for income

taxes to reduce complexity in the accounting standards.

The amendments consist of the removal of certain exceptions to the general principles

of ASC 740 and some additional simplifications.

The amendments are not required to be implemented until 2021 for public entities.

The Company is in the process of

investigating if this update will have a significant impact on the consolidated financial statements.

June 16, 2020, MTBC entered into a Stock Purchase Agreement with Meridian Billing Management Co., a Vermont corporation, Origin

Holdings, Inc., a Delaware corporation and GMM II Holdings, LLC, a Delaware limited liability company (“Seller”),

pursuant to which MTBC purchased all of the issued and outstanding capital stock of Meridian from the Seller.

Meridian is in the

business of providing medical billing, revenue cycle management, electronic medical records, medical coding and related services.

These revenues have been included in the Company’s Healthcare IT segment.

The acquisition has been accounted for as a business

total consideration paid at closing was $11.9 million, net of cash received, 200,000 shares of the Company’s Preferred Stock

plus warrants to purchase 2,250,000 shares of the Company’s common stock, with an exercise price per share of $7.50 and

a term of two years.

The Company also assumed Meridian’s negative net working capital and certain long-term lease liabilities

where the leased space is either not being utilized or was to be vacated shortly, with an aggregate value of approximately $4.8

Company adopted this guidance effective January 1, 2021.

There was no impact on the consolidated financial statements as a result of

this standard.

August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and

Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

This ASU simplifies the accounting for certain financial

instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own

The amendments are not required to be implemented until 2022 for public entities.

The Company is in the process of investigating

if this update will have a significant impact on the consolidated financial statements.

October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers.

The amendments in

this update require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business

The amendments are effective for public business entities for fiscal years beginning after December 15, 2022.

is in the process of determining if this update will have a significant impact on the consolidated financial statements.

June 1, 2021, CAC entered into an Asset and Stock Purchase Agreement (“Purchase Agreement”) with MedMatica and its sole shareholder.

Pursuant to the Purchase Agreement, CAC acquired (i) all of the issued and outstanding capital stock of SRS, a Delaware corporation,

and (ii) all of the MedMatica assets that were used in MedMatica’s and SRS’ business.

Certain MedMatica liabilities were

also assumed under the Purchase Agreement.

The total cash consideration was $ 10 million plus a working capital adjustment of approximately

$ 3.8 million.

The Purchase Agreement also provides that if during the 18-month period commencing on June 1, 2021 (the “Earn-Out

Period”), certain EBITDA and revenue targets with respect to the assets and capital stock purchased under the Purchase Agreement

are achieved, then CAC shall pay MedMatica an earn-out up to a maximum of $ 8 million.

Further, if during the Earn-Out Period, certain

additional and increased EBITDA and revenue targets with respect to the assets and capital stock purchased under the Purchase Agreement

are achieved, then CAC shall pay MedMatica an additional earn-out, up to a maximum of $ 5 million.

and SRS are in the business of providing a broad range of specialty consulting services to hospitals and large healthcare groups, including

certain consulting services related to healthcare IT application services and implementations, medical practice management, and revenue

cycle management.

The acquisition has been accounted for as a business combination.

summary of the total consideration is as follows:

Meridian Purchase Price

OF TOTAL CONSIDERATION ON BUSINESS CONSIDERATION

Purchase Price

($ in thousands)

Amounts held in escrow

Contingent consideration

Preferred stock

Total purchase price

the Preferred Stock consideration, 100,000 shares were held in escrow for up to one month pending completion of technical migration

and customer acceptance.

The shares held in escrow were released on August 3, 2020.

Company’s Preferred Stock and warrants issued as part of the acquisition consideration were issued in a transaction exempt

from registration under the Securities Act of 1933, as amended (the “Securities Act”).

The warrants were valued using

the Black-Scholes method.

The Company registered for resale under the Securities Act the Preferred Stock and the common stock

underlying the warrants.

During 2020, 593,349 warrants were exercised at $7.50 each.

Meridian acquisition added additional clients to the Company’s customer base, along with additional technology, most notably

a widely used business intelligence solution and robotic process automation.

Similar to previous acquisitions, Meridian broadened

the Company’s presence in the healthcare information technology industry through expansion of its customer base, both geographically

and to an increasing number of larger health systems, and by increasing available customer relationship resources and specialized

trained staff.

Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired and liabilities assumed

from Meridian.

The following table summarizes the preliminary purchase price allocation.

The Company expects to finalize the purchase

price allocation during the first or second quarter of 2021 and is finalizing the projections and the valuation of the acquired

assets and assumed liabilities.

The preliminary purchase price allocation for Meridian is summarized as follows:

Company engaged a third party valuation specialist to assist the Company in valuing the assets acquired and liabilities assumed from

The following table summarizes the purchase price allocation.

The Company finalized the purchase price allocation during the

fourth quarter of 2021.

purchase price allocation for medSR is summarized as follows:

OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

in thousands)

Accounts receivable

Prepaid expenses

Contract asset

Property and equipment

and equipment

Operating lease right-of-use assets

Customer relationships

Accounts payable

Accrued expenses & compensation

Deferred revenue

Operating lease liabilities

relationships

long term assets

expenses & compensation

lease liabilities

Other current liabilities

Total preliminary purchase price allocation

acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected

to be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by

these intangibles.

The goodwill from this acquisition is not deductible for income tax purposes and represents the Company’s

ability to have an expanded local presence in additional markets and operational synergies that we expect to achieve that would

not be available to other market participants.

Current loan payable

purchase price allocation

acquired accounts receivable is recorded at fair value, which represents amounts that have subsequently been paid or were expected to

be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by these intangibles.

The goodwill represents the Company’s ability to have an expanded local presence in additional markets and operational synergies

that we expect to achieve that would not be available to other market participants.

The goodwill from this acquisition is deductible

ratably for income tax purposes over fifteen years.

The purchase agreement provides that if revenue and EBITDA over the next 18 months

exceeds certain specified amounts, there will be an earn-out payment to the seller equal to such excess, up to $ 13 million.

It was estimated

that the probable payment was approximately $ 5.6 million as of the acquisition date and this amount has been recorded as part of the

purchase price allocation as contingent consideration.

At December 31, 2021, the Company determined that the fair value of the contingent

consideration was approximately $ 1.5 million, based in part on the actual operating results for the seven months since the acquisition.

The difference has been recorded as a change in contingent consideration in the consolidated statements of operations.

part of the acquisition, $ 1.5

million of the purchase price was held in escrow,

which represented $ 500,000

to be paid upon the achievement of agreed-upon

revenue and backlog milestones, and the balance to be held for up to 18

months to satisfy certain indemnification obligations.

During the third quarter, the initial portion of the escrow was settled whereby $ 250,000

was paid to the seller and $ 250,000

was offset against the working capital adjustment.

An additional $ 71,000

that was held in escrow was also paid.

The balance of the $ 1 .0

million escrow is included in consideration payable

and restricted cash in the consolidated balance sheet at December 31, 2021.

Approximately $ 12.3

million in cash was paid at closing.

weighted-average amortization period of the acquired intangible assets is approximately three years.

earned from the clients obtained from the Meridian acquisition was approximately $21.5 million for the year ended December 31,

January 8, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CareCloud

Corporation, a Delaware corporation (“CareCloud”), MTBC Merger Sub, Inc., a Delaware corporation and wholly-owned

subsidiary of the Company (“Merger Sub”) and Runway Growth Credit Fund Inc.

(“Runway”), solely in its

capacity as a seller representative, pursuant to which Merger Sub merged with and into CareCloud (the “Merger”), with

CareCloud surviving as a wholly-owned subsidiary of the Company.

The Merger became effective simultaneously with the execution

of the Merger Agreement.

The revenues related to CareCloud have been included in the Company’s Healthcare IT segment.

acquisition has been accounted for as a business combination.

total consideration for the Merger included approximately $11.9 million paid in cash at closing, the assumption of a working capital

deficiency of approximately $5.1 million and 760,000 shares of the Company’s Preferred Stock.

The Merger Agreement provides

that if CareCloud’s 2020 revenues exceed $36 million, there will be an earn-out payment to the seller equal to such excess,

up to $3 million.

Based on the 2020 revenues, no earn-out payment was required.

Additional consideration included warrants to

purchase 2,000,000 shares of the Company’s common stock, 1,000,000 of which have an exercise price per share of $7.50 and

a term of two years, and the other 1,000,000 warrants have an exercise price per share of $10.00 and a term of three years.

earned from the clients obtained from the medSR acquisition on June 1, 2021 was approximately $ 15.9 million for

the year ended December 31, 2021.

medSR acquisition added additional clients to the Company’s customer base and, similar to previous acquisitions, broadened the

Company’s presence in the healthcare information technology industry through expansion of its customer base and by increasing available

customer relationship resources and specialized trained staff.

June 16, 2020, the Company entered into a Stock Purchase Agreement with Meridian Billing Management Co., a Vermont corporation, Origin

Holdings, Inc., a Delaware corporation and GMM II Holdings, LLC, a Delaware limited liability company (“Seller”), pursuant

to which the Company purchased all of the issued and outstanding capital stock of Meridian from the Seller.

Meridian is in the business

of providing medical billing, revenue cycle management, electronic medical records, medical coding and related services.

These revenues

have been included in the Company’s Healthcare IT segment.

The acquisition has been accounted for as a business combination.

total consideration paid at closing was $ 11.9 million, net of cash received, 200,000 shares of the Company’s Series A Preferred

Stock plus warrants to purchase 2,250,000 shares of the Company’s common stock, with an exercise price per share of $ 7.50 and a

term of two years .

The Company also assumed Meridian’s negative net working capital and certain long-term lease liabilities where

the leased space is either not being utilized or was to be vacated shortly, with an aggregate value of approximately $ 4.8 million.

summary of the total consideration is as follows:

CareCloud Purchase Price

Purchase Price

in thousands)

Preferred stock

Contingent consideration

Total purchase price

the Preferred Stock consideration, 160,000 shares were placed in escrow for up to 24 months, and an additional 100,000 shares

were placed in escrow for up to 18 months, in both cases, to satisfy indemnification obligations of the seller for losses arising

from certain specified contingent liabilities.

Shares net of such losses will be released upon the joint instruction of the Company

and Runway in accordance with the applicable escrow terms.

Such shares are entitled to the monthly dividend, which will be paid

when, and if, the shares are released.

The Company accrues the dividend monthly on the Preferred Stock held in escrow.

July 2020, it was determined that 55,726 shares of the Preferred Stock would be released from escrow and cancelled since one of

the contingent liabilities was settled for the amount of the cancelled shares.

This included a cash payment of approximately $1.3

Dividends previously accrued on these shares of $102,000 were reversed as of June 30, 2020, since the amounts will not

need to be paid.

The remaining shares continue to be held in escrow.

Company’s Preferred Stock and warrants issued as part of the Merger consideration were issued in a transaction exempt from

registration under the Securities Act of 1933, as amended (the “Securities Act”).

purchase price

the Series A Preferred Stock consideration, 100,000 shares were held in escrow for up to one month pending completion of technical migration

and customer acceptance.

The shares held in escrow were released on August 3, 2020.

Company’s Series A Preferred Stock and warrants issued as part of the acquisition consideration were issued in a transaction exempt

from registration under the Securities Act of 1933, as amended (the “Securities Act”).

The warrants were valued using the

Black-Scholes method.

The Company registered for resale under the Securities Act the Preferred Stock and the securities underlying

The Company registered for resale under the Securities Act the Series A Preferred Stock and the common stock underlying

the warrants.

CareCloud acquisition added additional clients to the Company’s customer base.

The Company acquired CareCloud’s software

technology and related business, of which certain elements are currently subject to a civil regulatory investigation.

to previous acquisitions, this transaction broadened the Company’s presence in the healthcare information technology industry

through geographic expansion of its customer base and by increasing available customer relationship resources and specialized

trained staff.

Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired and liabilities assumed

from CareCloud.

The following table summarizes the purchase price allocation:

During 2020, 593,349 warrants

were exercised at $ 7.50 each.

Meridian acquisition added additional clients to the Company’s customer base, along with additional technology, most notably a

widely used business intelligence solution and robotic process automation.

Similar to previous acquisitions, Meridian broadened the Company’s

presence in the healthcare information technology industry through expansion of its customer base, both geographically and to an increasing

number of larger health systems, and by increasing available customer relationship resources and specialized trained staff.

Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired and liabilities assumed from

The purchase price allocation for Meridian is summarized as follows:

in thousands)

Accounts receivable

Prepaid expenses

Contract asset

Property and equipment

Operating lease right-of-use assets

Customer relationships

Other long term assets

Accounts payable

Accrued expenses

Current loan payable

Operating lease liabilities

Deferred revenue

Total purchase price allocation

acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected

to be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by

these intangibles.

The goodwill from this acquisition is not deductible for income tax purposes and represents the Company’s

ability to have an expanded local presence in additional markets and operational synergies that we expect to achieve that would

not be available to other market participants.

and equipment

lease right-of-use assets

relationships

expenses & compensation

lease liabilities

current liabilities

purchase price allocation

acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected to

be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by these intangibles.

The goodwill from this acquisition is not deductible for income tax purposes and represents the Company’s ability to have an expanded

local presence in additional markets and operational synergies that we expect to achieve that would not be available to other market

participants.

weighted-average amortization period of the acquired intangible assets is approximately three years.

earned from the clients obtained from the CareCloud acquisition was approximately $31.7 million during the year ended December

April 3, 2019, the Company executed an asset purchase agreement (“APA”) to acquire substantially all of the assets

of Etransmedia.

The purchase price was $1.6 million and the assumption of certain liabilities, excluding acquisition-related costs

of approximately $125,000.

Per the APA, the acquisition had an effective date of April 1, 2019.

earned from the clients obtained from the Meridian acquisition was approximately $ 36.1

million and $ 21.5

million for the years ended December 31, 2021

and 2020, respectively.

January 8, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CareCloud Corporation,

a Delaware corporation (“CareCloud Corp.”), MTBC Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of

the Company (“Merger Sub”) and Runway Growth Credit Fund Inc.

(“Runway”), solely in its capacity as a seller

representative, pursuant to which Merger Sub merged with and into CareCloud Corp.

(the “Merger”), with CareCloud Corp.

as a wholly-owned subsidiary of the Company.

The Merger became effective simultaneously with the execution of the Merger Agreement.

revenues related to CareCloud Corp.

have been included in the Company’s Healthcare IT segment.

The acquisition has been accounted

for as a business combination.

Etransmedia acquisition added additional clients to the Company’s customer base and, similar to previous acquisitions, broadened

the Company’s presence in the healthcare information technology industry through geographic expansion of its customer base

and by increasing available customer relationship resources and specialized trained staff.

purchase price allocation for Etransmedia was performed by the Company and is summarized as follows:

total consideration for the Merger included approximately $ 11.9 million paid in cash at closing, the assumption of a working capital

deficiency of approximately $ 5.1 million and 760,000 shares of the Company’s Series A Preferred Stock.

The Merger Agreement provides

that if CareCloud Corp.’s 2020 revenues exceed $36 million, there will be an earn-out payment to the seller equal to such excess,

up to $3 million .

Based on the 2020 revenues, no earn-out payment was required.

Additional consideration included warrants to purchase

2,000,000 shares of the Company’s common stock, 1,000,000 of which had an exercise price per share of $ 7.50 and a term of two years ,

and the other 1,000,000 warrants have an exercise price per share of $ 10.00 and a term of three years .

summary of the total consideration is as follows:

Purchase Price

in thousands)

Customer relationships

Accounts receivable

Contract asset

Operating lease right-of-use assets

Property and equipment

Operating lease liabilities

Accrued expenses

acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected

to be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by

these intangibles.

The goodwill from this acquisition is deductible ratably for income tax purposes over fifteen years and represents

the Company’s ability to have an expanded local presence in additional markets and operational synergies that we expect

to achieve that would not be available to other market participants.

consideration

purchase price

the Series A Preferred Stock consideration, 160,000 shares were placed in escrow for up to 24

months , and an additional 100,000 shares were placed in escrow for up to 18 months , in both cases, to satisfy indemnification obligations

of the seller for losses arising from certain specified contingent liabilities.

The escrowed shares net of such losses were released

upon the joint instruction of the Company and Runway in accordance with the applicable escrow terms.

Such shares were entitled to the

monthly dividend, which was to be paid when, and if, the shares were released.

The Company had accrued the dividend monthly on the Series

A Preferred Stock held in escrow.

Due to the settlement of the obligation in April 2021, accrued dividends of $ 513,000 relating

to the 160,000 shares held in escrow were reversed during the first quarter of 2021.

The shares held in escrow were forfeited to cover

the cost of the settlement.

was determined that 55,822 shares of the Series A Preferred Stock would be released from escrow

and cancelled since one of the contingent liabilities was settled for the amount of the cancelled shares.

This included a cash payment

of approximately $ 1.3 million.

Dividends previously accrued on these shares of $ 102,000 were reversed as of June 30, 2020, since the

amounts will not need to be paid.

The remaining shares held in escrow have been released.

Company’s Series A Preferred Stock and warrants issued as part of the Merger consideration were issued in a transaction exempt

from registration under the Securities Act of 1933, as amended (the “Securities Act”).

The warrants were valued using the

Black-Scholes method.

The Company registered for resale under the Securities Act the Preferred Stock and the securities underlying the

CareCloud acquisition added additional clients to the Company’s customer base.

The Company acquired CareCloud’s software

technology and related business, of which certain elements were subject to a civil regulatory investigation and were subsequently settled.

Similar to previous acquisitions, this transaction broadened the Company’s presence in the healthcare information technology industry

through geographic expansion of its customer base and by increasing available customer relationship resources and specialized trained

Company engaged a third-party valuation specialist to assist the Company in valuing the assets acquired and liabilities assumed from

CareCloud Corp.

The following table summarizes the purchase price allocation:

in thousands)

and equipment

lease right-of-use assets

relationships

long term assets

expenses & compensation

lease liabilities

purchase price allocation

acquired accounts receivable are recorded at fair value which represents amounts that have subsequently been paid or are expected to

be paid by clients.

The fair value of customer relationships was based on the estimated discounted cash flows generated by these intangibles.

The goodwill from this acquisition is not deductible for income tax purposes and represents the Company’s ability to have an expanded

local presence in additional markets and operational synergies that we expect to achieve that would not be available to other market

participants.

weighted-average amortization period of the acquired intangible assets is approximately three years.

earned from the clients obtained from the Etransmedia acquisition was approximately $3.9 million during the year ended December

earned from the clients obtained from the CCH acquisition was approximately $ 35.3 million and $ 31.7 million during the years ended December

31, 2021 and 2020, respectively.

forma financial information (Unaudited)

unaudited pro forma information below represents the condensed consolidated results of operations as if the Etransmedia, CareCloud

and Meridian acquisitions occurred on January 1, 2019.

The pro forma information has been included for comparative purposes and

is not indicative of results of operations that the Company would have had if the acquisitions occurred on the above date, nor

is it necessarily indicative of future results.

The unaudited pro forma information reflects material, non-recurring pro forma

adjustments directly attributable to the business combinations.

The difference between the actual revenue and the pro forma revenue

for the year ended December 31, 2020 is approximately $17.6 million of additional revenue recorded by Meridian as well as approximately

$617,000 recorded by CareCloud prior to their acquisitions by MTBC.

The difference between the actual revenue and the pro forma

revenue for the year ended December 31, 2019 is approximately $50.8 million of additional revenue recorded by Meridian, $33.4

million of revenue recorded by CareCloud and $2.1 million of revenue recorded by Etransmedia prior to their acquisition by MTBC.

Year ended December 31,

unaudited pro forma information below represents the consolidated results of operations as if the CCH, Meridian and medSR

acquisitions occurred on January 1, 2020.

The pro forma information has been included for comparative purposes and is not indicative

of results of operations that the Company would have had if the acquisitions occurred on the above date, nor is it necessarily

indicative of future results.

The unaudited pro forma information reflects material, non-recurring pro forma adjustments directly

attributable to the business combinations.

The difference between the actual revenue and the pro forma revenue is approximately

million of additional revenue primarily recorded by medSR for the year ended December 31, 2021 and reflected as a pro forma

adjustment below.

Other differences arise from amortizing purchased intangibles using the double declining balance

OF BUSINESS ACQUISITION PRO FORMA INFORMATION

Ended December 31,

in thousands except per share amounts)

Total revenue

Net loss attributable to common shareholders

Net loss per common share

GOODWILL AND Intangible Assets –

income (loss)

loss attributable to common shareholders

loss per common share

GOODWILL AND INTANGIBLE ASSETS – NET

consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired.

The following

is the summary of the changes to the carrying amount of goodwill for the years ended December 31, 2020 and 2019:

Year ended December 31,

The following is

the summary of the changes to the carrying amount of goodwill for the years ended December 31, 2021 and 2020:

OF INTANGIBLE ASSETS AND GOODWILL

ended December 31,

in thousands)

Beginning gross balance

Ending gross balance

December 31, 2020, and 2019, approximately $90,000 of goodwill was allocated to the Practice Management segment and the balance

was allocated to the Healthcare IT segment.

gross balance

Acquisitions,

net of adjustments

gross balance

December 31, 2021, and 2020, approximately $ 90,000 of goodwill was allocated to the Practice Management segment and the balance was allocated

to the Healthcare IT segment.

is a summary of intangible asset activity for the years ended December 31, 2021 and 2020:

Other Intangible

OF FINITE-LIVED INTANGIBLE ASSETS

Relationships

in thousands)

Balance, January 1, 2020

Capitalized software costs

Other intangible assets

Translation loss

Allocation from 2020 acquisitions

Balance, December 31, 2020

ACCUMULATED AMORTIZATION

Balance, January 1, 2020

Amortization expense

Balance, December 31, 2020

Net book value

Balance, January 1, 2019

Capitalized software costs

Translation loss

Allocation from 2019 acquisition

Balance, December 31, 2019

ACCUMULATED AMORTIZATION

Balance, January 1, 2019

Amortization expense

Balance, December 31, 2019

Net book value

January 1, 2021

software costs

intangible assets

from 2021 acquisitions

December 31, 2021

January 1, 2021

December 31, 2021

January 1, 2020

software costs

intangible assets

from 2020 acquisitions

December 31, 2020

January 1, 2020

December 31, 2020

intangible assets primarily represent software costs.

Amortization expense was approximately $8.6 million and $2.1 million for

the years ended December 31, 2020 and 2019, respectively.

The weighted-average amortization period is four years.

Amortization expense was approximately $ 10.3 million

and $ 8.6 million for the years ended December 31, 2021 and 2020, respectively.

The weighted-average amortization period is three

of December 31, 2021, future amortization expense scheduled to be expensed is as follows:

OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

in thousands)

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and equipment consisted of the following:

Year ended December 31,

OF PROPERTY AND EQUIPMENT

ended December 31,

in thousands)

Computer equipment

Office furniture and equipment

Transportation equipment

Leasehold improvements

Assets not placed in service

Total property and equipment

Less accumulated depreciation

Property and equipment –

expense was approximately $1.4 million and $909,000 for the years ended December 31, 2020 and 2019, respectively.

furniture and equipment

Transportation

not placed in service

property and equipment

accumulated depreciation

and equipment – net

expense was approximately $ 1.9 million and $ 1.4 million for the years ended December 31, 2021 and 2020, respectively.

CONCENTRATIONS

Risks —

As of December 31, 2020 and 2019, the Company held cash of approximately $1.4 million and $1.0 million, respectively,

in the name of its subsidiaries, at banks in Pakistan and Sri Lanka.

The banking systems in these countries do not provide deposit

insurance coverage.

Additionally, from time to time, the Company maintains cash balances at financial institutions in the United

States in excess of federal insurance limits.

Risks — As of December 31, 2021 and 2020, the Company held cash of approximately $ 1.7 million

and $ 1.4 million, respectively, in the name of its subsidiaries, at banks in Pakistan and Sri Lanka.

The banking systems in these

countries do not provide deposit insurance coverage.

Additionally, from time to time, the Company maintains cash balances at financial

institutions in the United States in excess of federal insurance limits.

The Company has not experienced any losses on such accounts.

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of credit risk with respect to trade accounts receivable are managed by periodic credit evaluations of customers.

does not require collateral for outstanding trade accounts receivable.

As of December 31, 2020, two customers individually accounted

for approximately 10% and 6% of accounts receivable, respectively.

The Company does not

require collateral for outstanding trade accounts receivable.

As of December 31, 2021, two customers

each individually accounted for approximately 5 % of accounts receivable.

As of December 31, 2020, two customers individually accounted

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one customer with sales of approximately 9 % and 7 % of total revenue, respectively.

Risks —

The Company’s offices in Islamabad and Bagh, Pakistan, and Colombo, Sri Lanka conduct significant back-office

Risks — The Company’s offices in Islamabad and Bagh, Pakistan, and Colombo, Sri Lanka conduct significant back-office

operations for the Company.

The Company has no revenue earned outside of the United States.

The office in Bagh is located in a

different territory of Pakistan from the Islamabad office.

The Bagh office was opened in 2009 for the purpose of providing operational

support and operating as a backup to the Islamabad office.

The Company’s operations outside the United States are subject

to special considerations and significant risks not typically associated with companies in the United States.

The Company’s

business, financial condition and results of operations may be influenced by the political, economic, and legal environment in

the countries in which it operates and by the general state of these countries’

The Company’s results may

be adversely affected by, among other things, changes in governmental policies with respect to laws and regulations, changes in

local countries’

telecommunications industries, regulatory rules and policies, anti-inflationary measures, currency conversion

and remittance, and rates and methods of taxation.

amounts of net assets located outside the United States were approximately $4.5 million and $1.7 million as of December 31, 2020

and 2019, respectively.

These balances exclude intercompany receivables of approximately $5.6 million and $7.1 million as of December

31, 2020 and 2019, respectively.

The following is a summary of the net assets located outside the United States as of December

31, 2020 and 2019:

Year ended December 31,

The office in Bagh is located in a different

territory of Pakistan from the Islamabad office known as Azad Jammu and Kashmir.

The Bagh office was opened in 2009 for the purpose of

providing operational support and operating as a backup to the Islamabad office.

The Company’s operations outside the United States

are subject to special considerations and significant risks not typically associated with companies in the United States.

The Company’s

business, financial condition and results of operations may be influenced by the political, economic, and legal environment in the countries

in which it operates and by the general state of these countries’ economies.

The Company’s results may be adversely affected

by, among other things, changes in governmental policies with respect to laws and regulations, changes in local countries’ telecommunications

industries, regulatory rules and policies, anti-inflationary measures, currency conversion and remittance, and rates and methods of taxation.

amounts of net assets located outside the United States were approximately $ 7.2

million and $ 4.5 million as of December 31, 2021 and 2020, respectively.

These balances exclude intercompany

receivables of approximately $ 4.1 million and $ 5.6 million as of December 31, 2021 and

2020, respectively.

The following is a summary of the net assets located outside the United States as of December 31, 2021 and 2020:

OF CONCENTRATION OF RISK, BY GEOGRAPHICAL RISKS FACTOR

in thousands)

Current assets

Non-current assets

Current liabilities

Non-current liabilities

NET LOSS PER COMMON SHARE

following table reconciles the weighted-average shares outstanding for basic and diluted net loss per common share for the years

ended December 31, 2020 and 2019:

following table reconciles the weighted-average shares outstanding for basic and diluted net loss per common share for the years ended

December 31, 2021 and 2020:

OF LOSSES PER SHARE, BASIC AND DILUTED

in thousands, except share and per share amounts)

Basic and Diluted:

Net loss attributable to common shareholders

Weighted-average common shares used to compute basic and diluted loss per share

Net loss attributable to common shareholders per share - Basic and Diluted

unvested restricted stock units (“RSUs”) and unexercised warrants have been excluded from the above calculations as

they were anti-dilutive.

loss attributable to common shareholders

Weighted-average

common shares used to compute basic and diluted loss per share

loss attributable to common shareholders per share - basic and diluted

unvested restricted stock units (“RSUs”) and unexercised warrants have been excluded from the above calculations as they

were anti-dilutive.

Vested RSUs, vested restricted shares and exercised warrants have been included in the above calculations.

During October 2017, the Company opened a revolving line of credit from Silicon Valley Bank (“SVB”) under

a three-year agreement which replaced the previous credit facility from Opus.

The SVB credit facility is a secured revolving line

of credit where borrowings are based on a formula of 200% of repeatable revenue adjusted by an annualized attrition rate as defined

in the credit agreement.

During the third quarter of 2018, the credit line was increased from $5 million to $10 million and the

term was extended for an additional year.

As of December 31, 2020, and 2019, there were no borrowings under the credit facility.

During October 2017, the Company opened a revolving line of credit from Silicon Valley Bank (“SVB”) under a three-year

agreement which replaced the previous credit facility from Opus.

The SVB credit facility is a secured revolving line of credit where

borrowings are based on a formula of 200 %

of repeatable revenue adjusted by an annualized attrition rate as defined in the credit agreement.

During the third quarter of 2018,

the credit line was increased from $ 5 million

to $ 10 million

and the term was extended for an additional year and during the third quarter of 2021, the credit line was further increased to

and the term was extended for another year.

As of December 31, 2021, there was $ 8 million

outstanding on the line of credit.

Subsequent to the year-end, the credit line was repaid.

At December 31, 2020, there were no borrowings

under the credit facility.

Interest on the SVB revolving line of credit is currently charged at the prime rate plus 1.50 %.

There is also a fee of one-half

of 1% annually for the unused portion of the credit line.

The debt is secured by all of the Company’s domestic assets and

is also a fee of one-half of 1% annually for the unused portion of the credit line .

The debt is secured by all of the Company’s domestic assets and 65 %

of the shares in its offshore subsidiaries.

Future acquisitions are subject to approval by SVB.

connection with the original SVB debt agreement, the Company paid SVB approximately $50,000 of fees upfront and issued warrants

for SVB to purchase 125,000 shares of its common stock, and committed to pay an annual anniversary fee of $50,000 a year.

on the terms in the original SVB credit agreement, these warrants have a strike price equal to $3.92.

They have a five-year exercise

window and net exercise rights, and were valued at $3.12 per warrant.

As a result of the revision in the SVB credit line, which

increased the credit line from $5 million to $10 million and reduced the interest rate by 25 basis points, the Company paid approximately

$50,000 of fees upfront and issued an additional 28,489 warrants, with a strike price equal to $5.26, a five-year exercise window

and net exercise rights.

Future acquisitions are subject to approval by

connection with the original SVB debt agreement, the Company paid SVB approximately $ 50,000 of fees upfront and issued warrants for SVB

to purchase 125,000 shares of its common stock, and committed to pay an annual anniversary fee of $ 50,000 a year.

Based on the terms

in the original SVB credit agreement, these warrants have a strike price equal to $ 3.92 .

They have a five -year exercise window and net

exercise rights, and were valued at $ 3.12 per warrant.

As a result of the revision in the SVB credit line, which increased the credit

line from $ 5 million to $ 10 million and reduced the interest rate by 25 basis points, the Company paid approximately $ 50,000 of fees

upfront and issued an additional 28,489 warrants, with a strike price equal to $ 5.26 , a five -year exercise window and net exercise rights.

The additional warrants were valued at $ 3.58 per warrant.

The SVB credit agreement contains various covenants

and conditions governing the revolving line of credit.

These covenants include a minimum level of adjusted EBITDA and a minimum

liquidity ratio.

At December 31, 2020 and 2019, the Company was in compliance with all covenants.

November 2019, the Company modified its loan agreement with SVB, which adjusted the required monthly EBITDA amounts and does not

require the Company to comply with financial covenants as long as there have been no borrowings on the revolving credit line for

the prior six months.

The SVB credit agreement contains various covenants and conditions governing

the revolving line of credit.

These covenants include a minimum level of adjusted EBITDA and a minimum liquidity ratio.

At December 31,

2021 and 2020, the Company was in compliance with all covenants.

November 2019, the Company modified its loan agreement with SVB, which adjusted the required monthly EBITDA amounts and does not require

the Company to comply with financial covenants as long as there have been no borrowings on the revolving credit line for the prior six

September 2020, the agreement with SVB was modified to include CareCloud and Meridian as borrowers.

The annual covenants were

set for the following year.

Financing Notes —

The Company financed certain vehicle purchases both in the United States and in Pakistan.

financing notes have three to six year terms and were issued at current market rates.

Financing —

The Company finances certain insurance purchases over the term of the policy life.

The interest rate charged

to Managed Practices —

As a result of the Orion acquisition, the Company assumed a payable to the managed practices

at that time of $236,000, which is non-interest bearing.

As of December 31, 2020, the balance was $26,000.

During September 2021, the agreement

with SVB was modified to include CAC and medSR as borrowers.

Financing Notes — The Company financed certain vehicle purchases both in the United States and in Pakistan.

The vehicle financing

notes have three to six year terms and were issued at current market rates.

Financing — The Company finances certain insurance purchases over the term of the policy life.

The interest rate charged is

of the outstanding notes payable and other obligations as of December 31, 2021 are as follows:

Year ending December 31

Vehicle Financing Notes

Insurance Financing

Payable to Managed Practices

OF MATURITIES OF LONG-TERM DEBT

Line of Credit*

Financing Notes

($ in thousands)

The line of credit was repaid after year-end.

Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers .

All revenue is recognized

as our performance obligations are satisfied.

A performance obligation is a promise in a contract to transfer a distinct good

or service to a customer, and is the unit of account under ASC 606.

The Company recognizes revenue when the revenue cycle management

services begin on the medical billing claims, which is generally upon receipt of the claim from the provider.

For revenue cycle

management services, the Company estimates the value of the consideration it will earn over the remaining contractual period as

our services are provided and recognizes the fees over the term;

this estimation involves predicting the amounts our clients will

ultimately collect associated with the services they provided.

Certain significant estimates, such as payment-to-charge ratios,

effective billing rates and the estimated contractual payment periods are required to measure revenue cycle management revenue

All revenue is recognized as our

performance obligations are satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service to

a customer, and is the unit of account under ASC 606.

Company recognizes revenue when the revenue cycle management services begin on the medical billing claims, which is generally upon receipt

of the claim from the provider.

For revenue cycle management services, the Company estimates the value of the consideration it will earn

over the remaining contractual period as our services are provided and recognizes the fees over the term;

this estimation involves predicting

the amounts our clients will ultimately collect associated with the services they provided.

Certain significant estimates, such as payment-to-charge

ratios, effective billing rates and the estimated contractual payment periods are required to measure revenue cycle management revenue

under the new standard.

The timing of the revenue recognition of our other revenue streams were not materially impacted by the

adoption of ASC 606.

of our current contracts with customers contain a single performance obligation.

For contracts where we provide multiple services,

such as where we perform multiple ancillary services, each service represents its own performance obligation.

Selling prices are

based on the contractual price for the service.

apply the portfolio approach as permitted by ASC 606 as a practical expedient to contracts with similar characteristics and we

use estimates and assumptions when accounting for those portfolios.

Our contracts generally include standard commercial payment

We have no significant obligations for refunds, warranties or similar obligations and our revenue does not include taxes

collected from our customers.

For contracts where we provide multiple services, such

as where we perform multiple ancillary services, each service represents its own performance obligation.

The standalone selling prices

are based on the contractual price for the service.

apply the portfolio approach as permitted by ASC 606 as a practical expedient to contracts with similar characteristics and we use estimates

and assumptions when accounting for those portfolios.

Our contracts generally include standard commercial payment terms.

We have no significant

obligations for refunds, warranties or similar obligations and our revenue does not include taxes collected from our customers.

Disaggregation

of Revenue from Contracts with Customers

derive revenue from eight primary sources:

(1) revenue cycle management services, (2) SaaS solutions, (3) professional services,

(4) ancillary services, (5) group purchasing services, (6) printing and mailing services, (7) clearinghouse and EDI (electronic

data interchange) services and (8) practice management services.

derive revenue from five primary sources:

(1) Technology-enabled business solutions, (2) professional services, (3) printing and mailing

services, (4) group purchasing services and (5) medical practice management services.

following table represents a disaggregation of revenue for the years ended December 31, 2021 and 2020:

Year Ended December 31,

Healthcare IT:

OF DISAGGREGATION OF REVENUE

Ended December 31,

in thousands)

Revenue cycle management services

SaaS solutions

Professional services

Ancillary services

Group purchasing services

Printing and mailing services

Clearinghouse and EDI services

Technology-enabled

business solutions

and mailing services

purchasing services

Practice Management:

practice management services

cycle management services:

Revenue cycle management services are the recurring process of submitting and following up on claims with health insurance companies in

order for the healthcare providers to receive payment for the services they rendered.

Technology-enabled

business solutions:

derived on an on-going basis from our technology-enabled solutions is typically billed as a percentage of payments collected by

our customers.

The fee for our services includes the ability to use our EHR and practice management software as well as RCM as part of

the bundled fee.

cycle management services are the recurring process of submitting and following up on claims with health insurance companies in order

for the healthcare providers to receive payment for the services they rendered.

The Company typically invoices customers on a monthly

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The fee for these services

typically includes use of practice management software and related tools (on a software-as-a-service (“SaaS”) basis), electronic

health records (on a SaaS basis), medical billing services and use of mobile health solutions.

We consider the services to be one performance

obligation since the promises are not distinct in the context of the contract.

The performance obligation consists of a series of distinct

services that are substantially the same and have the same periodic pattern of transfer to our customers.

In many cases, our clients may terminate their agreements with 90 days’

notice without cause, thereby limiting the term in which

we have enforceable rights and obligations, although this time period can vary between clients.

Our payment terms are normally net 30

Although our contracts typically have stated terms of one or more years, under ASC 606 our contracts are considered month-to-month

and accordingly, there is no financing component.

For the majority of our revenue cycle management contracts, the total transaction price is variable because our obligation is to process

typically includes use of practice management software and related tools (on a SaaS basis), electronic health records (on a SaaS

basis), medical billing services and use of mobile health solutions.

We consider the services to be one performance obligation since

the promises are not distinct in the context of the contract.

The performance obligation consists of a series of distinct services that

are substantially the same and have the same periodic pattern of transfer to our customers.

many cases, our clients may terminate their agreements with 90 days’ notice without cause, thereby limiting the term in which we

have enforceable rights and obligations, although this time period can vary between clients.

Our payment terms are normally net 30 days.

Although our contracts typically have stated terms of one or more years, under ASC 606 our contracts are considered month-to-month and

accordingly, there is no financing component.

the majority of our revenue cycle management contracts, the total transaction price is variable because our obligation is to process

an unknown quantity of claims, as and when requested by our customers over the contract period.

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revenue recognized will not occur when the uncertainty associated with variable consideration is subsequently resolved.

Estimates to determine

variable consideration such as payment to charge ratios, effective billing rates, and the estimated contractual payment periods are updated

at each reporting date.

determine variable consideration such as payment to charge ratios, effective billing rates, and the estimated contractual payment periods

are updated at each reporting date.

Revenue is recognized over the performance period using the input method.

Our proprietary, cloud-based practice management application automates the labor-intensive workflow of a medical office in a unified and

proprietary, cloud-based practice management application automates the labor-intensive workflow of a medical office in a unified and

streamlined SaaS platform.

The Company has a large number of clients who utilize the Company’s practice management software, electronic

health records software, patient experience management solutions, business intelligence software and/or robotic process automation software

on a SaaS basis, but who do not utilize the Company’s revenue cycle management services.

SaaS fees may be fixed based on the number of providers, or may be variable.

revenue streams:

also provides implementation and professional services to clearinghouse and other customers and records revenue monthly on a time

and materials or a fixed rate basis.

This is a separate performance obligation from the clearinghouse and recurring EDI services

provided, for which the Company receives and records monthly fees.

The performance obligation is satisfied over time as the implementation

or professional services are rendered.

services represent services such as coding and transcription that are rendered in connection with the delivery of revenue cycle

management and related medical services.

The Company invoices customers monthly, based on the actual amount of services performed

at the agreed upon rate in the contract.

These services are only offered to revenue cycle management customers.

These services

do not represent a material right because the services are optional to the customer and customers electing these services are

charged the same price for those services as if they were on a standalone basis.

Each individual coding or transcription transaction

processed represents a performance obligation, which is satisfied over time as that individual service is rendered.

Company provides group purchasing services which enable medical providers to purchase various vaccines directly from selected

pharmaceutical companies at a discounted price.

Currently, there are approximately 4,000 medical providers who are members of

Revenue is recognized as the vaccine shipments are made to the medical providers.

Fees from the pharmaceutical companies

are paid either quarterly or annually and the Company adjusts its revenue accrual at the time of payment.

The Company makes significant

judgments regarding the variable consideration which we expect to be entitled to for the group purchasing services which includes

the anticipated shipments to the members enrolled in the program, anticipated volumes of purchases made by the members, and the

changes in the number of members.

The amounts recorded are constrained by estimates of decreases in shipments and loss of members

to avoid a significant revenue reversal in the subsequent period.

The only performance obligation is to provide the pharmaceutical

companies with the medical providers who want to become members in order to purchase vaccines.

The performance obligation is satisfied

once the medical provider agrees to purchase a specific quantity of vaccines and the medical provider’s information is forwarded

to the vaccine suppliers.

The Company records a contract asset for revenue earned and not paid as the ultimate payment is conditioned

on achieving certain volume thresholds.

Company provides printing and mailing services for both revenue cycle management customers and a non- revenue cycle management

customer, and invoices on a monthly basis based on the number of prints, the agreed-upon rate per print and the postage incurred.

The performance obligation is satisfied once the printing and mailing is completed.

on a SaaS basis, but who do not utilize the Company’s revenue cycle management services.

SaaS fees may be fixed based on the number

of providers, or may be variable.

medical billing clearinghouse service takes claim information from customers, checks the claims for errors and sends this information

2 unchanged sentences

the agreed-upon rate in the agreement.

This service is provided to medical practices and providers to medical practices who are

not revenue cycle management customers.

This service is provided to medical practices and providers to medical practices who are not revenue

cycle management customers.

The performance obligation is satisfied once the relevant submissions are completed.

all of the above revenue streams other than group purchasing services, revenue is recognized over time, which is typically one

month or less, which closely matches the point in time that the customer simultaneously receives and consumes the benefits provided

by the Company.

services such as coding and transcription are rendered in connection with the delivery of revenue cycle management and related medical

The Company invoices customers monthly, based on the actual amount of services performed at the agreed-upon rate in the contract.

These services are only offered to revenue cycle management customers.

These services do not represent a material right because the services

are optional to the customer and customers electing these services are charged the same price for those services as if they were on a

standalone basis.

Each individual coding or transcription transaction processed represents a performance obligation, which is satisfied

over time as that individual service is rendered.

professional services include an extensive set of services including EHR vendor-agnostic optimization and activation, project management,

IT transformation consulting, process improvement, training, education and staffing for large healthcare organizations including health

systems and hospitals.

Revenue is recorded monthly on a time and materials or a fixed rate basis.

This is a separate performance obligation

from any RCM or SaaS services provided, for which the Company receives and records monthly fees.

The performance obligation is satisfied

over time as the professional services are rendered.

and mailing services:

Company provides printing and mailing services for both revenue cycle management customers and a non- revenue cycle management customer,

and invoices on a monthly basis based on the number of prints, the agreed-upon rate per print and the postage incurred.

The performance

obligation is satisfied once the printing and mailing is completed.

purchasing services:

Company provides group purchasing services which enable medical providers to purchase various vaccines directly from selected pharmaceutical

companies at a discounted price.

Currently, there are approximately 4,000 medical providers who

are members of the program.

Revenue is recognized as the vaccine shipments are made to the medical providers.

Fees from the pharmaceutical

companies are paid either quarterly or annually and the Company adjusts its revenue accrual at the time of payment.

The Company makes

significant judgments regarding the variable consideration which we expect to be entitled to for the group purchasing services which

includes the anticipated shipments to the members enrolled in the program, anticipated volumes of purchases made by the members, and

the changes in the number of members.

The amounts recorded are constrained by estimates of decreases in shipments and loss of members

to avoid a significant revenue reversal in the subsequent period.

The only performance obligation is to provide the pharmaceutical companies

with the medical providers who want to become members in order to purchase vaccines.

The performance obligation is satisfied once the

medical provider agrees to purchase a specific quantity of vaccines and the medical provider’s information is forwarded to the

vaccine suppliers.

The Company records a contract asset for revenue earned and not paid as the ultimate payment is conditioned on achieving

certain volume thresholds.

all of the above revenue streams other than group purchasing services, revenue is recognized over time, which is typically one month

or less, which closely matches the point in time that the customer simultaneously receives and consumes the benefits provided by the

For the group purchasing services, revenue is recognized at a point in time.

Each service is substantially the

same and has the same periodic pattern of transfer to the customer.

Each of the services provided above is considered a separate

performance obligation.

Each service is substantially the same and has

the same periodic pattern of transfer to the customer.

Each of the services provided above is considered a separate performance obligation.

management services:

Company also provides practice management services under long-term management service agreements to three medical practices.

provide the medical practices with the nurses, administrative support, facilities, supplies, equipment, marketing, RCM, accounting,

and other non-clinical services needed to efficiently operate their practices.

Revenue is recognized as the services are provided

to the medical practices.

Company also provides practice management services under long-term management service agreements to three medical

We provide the medical practices with the nurses, administrative support, facilities, supplies, equipment, marketing, RCM,

accounting, and other non-clinical services needed to efficiently operate their practices.

Revenue is recognized as the services are

provided to the medical practices.

Revenue recorded in the consolidated statements of operations represents the reimbursement of costs

paid by the Company for the practices and the management fee earned each month for managing the practice.

The management fee is

based on either a fixed fee or a percentage of the net operating income.

The management fee is based

on either a fixed fee or a percentage of the net operating income.

Company assumes all financial risk for the performance of the managed medical practices.

Revenue is impacted by the amount of

the costs incurred by the practices and their operating income.

The gross billing of the practices is impacted by billing rates,

changes in current procedural terminology code reimbursement and collection trends which in turn impacts the management fee that

the Company is entitled to.

Revenue is impacted by the amount of the costs

incurred by the practices and their operating income.

The gross billing of the practices is impacted by billing rates, changes in current

procedural terminology code reimbursement and collection trends which in turn impacts the management fee that the Company is entitled

Billing rates are reviewed at least annually and adjusted based on current insurer reimbursement practices.

The performance obligation is satisfied as the management services are provided.

contracts for practice management services have approximately an additional 20 years remaining and are only cancellable under

very limited circumstances.

The Company receives a management fee each month for managing the day-to-day business operations of

each medical group as a fixed fee or a percentage payment of the net operating income which is included in revenue in the consolidated

statements of operations.

practice management services obligations consist of a series of distinct services that are substantially the same and have the

same periodic pattern of transfer to our customers.

Revenue is recognized over time, however for reporting and convenience purposes,

the management fee is computed at each month end.

The performance

obligation is satisfied as the management services are provided.

contracts for practice management services have approximately an additional 20 years remaining and are only cancellable under very limited

circumstances.

The Company receives a management fee each month for managing the day-to-day business operations of each medical group

as a fixed fee or a percentage payment of the net operating income which is included in revenue in the consolidated statements of operations.

practice management services obligations consist of a series of distinct services that are substantially the same and have the same periodic

pattern of transfer to our customers.

Revenue is recognized over time, however for reporting and convenience purposes, the management

fee is computed at each month end.

about contract balances:

of December 31, 2021, the estimated revenue expected to be recognized in the future related to the remaining revenue cycle management

performance obligations outstanding was approximately $3.7 million.

We expect to recognize substantially all of the revenue for

the remaining performance obligations over the next three months.

Approximately $355,000 of the contract asset represents revenue

earned, not paid, from the group purchasing services.

performance obligations outstanding was approximately $ 4.3

to recognize substantially all of the revenue for the remaining performance obligations over the next three

Approximately $ 376,000

of the contract asset represents

revenue earned, not paid, from the group purchasing

that we are entitled to collect under the applicable contract are recorded as accounts receivable.

Invoicing is performed at the

end of each month when the services have been provided.

The contract asset includes our right to payment for services already

transferred to a customer when the right to payment is conditional on something other than the passage of time.

For example, contracts

for revenue cycle management services where we recognize revenue over time but do not have a contractual right to payment until

the customer receives payment of their claim from the insurance provider.

The contract asset also includes the revenue accrued,

not received, for the group purchasing services.

Invoicing is performed at the end

of each month when the services have been provided.

The contract asset includes our right to payment for services already transferred

to a customer when the right to payment is conditional on something other than the passage of time.

For example, contracts for revenue

cycle management services where we recognize revenue over time but do not have a contractual right to payment until the customer receives

payment of their claim from the insurance provider.

The contract asset also includes the revenue accrued, not received, for the group

purchasing services.

in the contract asset are recorded as adjustments to net revenue.

The changes primarily result from providing services to revenue

cycle management customers that result in additional consideration and are offset by our right to payment for services becoming

unconditional and changes in the revenue accrued for the group purchasing services.

The contract asset for our group purchasing

services is reduced when we receive payments from vaccine manufacturers and is increased for revenue earned, not received.

opening and closing balances of the Company’s accounts receivable, contract asset and deferred revenue are as follows:

Accounts Receivable, Net

Contract Asset

Deferred Revenue (current)

Deferred Revenue (long term)

The changes primarily result from providing services to revenue cycle

management customers that result in additional consideration and are offset by our right to payment for services becoming unconditional

and changes in the revenue accrued for the group purchasing services.

The contract asset for our group purchasing services is reduced

when we receive payments from vaccine manufacturers and is increased for revenue earned, not received.

The opening and closing balances

of the Company’s accounts receivable, contract asset and deferred revenue are as follows:

OF ACCOUNTS RECEIVABLE, CONTRACT ASSET AND DEFERRED REVENUE

in thousands)

Balance as of January 1, 2020

CareCloud acquisition

Meridian acquisition

(Decrease) increase, net

Balance as of December 31, 2020

Balance as of January 1, 2019

Etransmedia acquisition

Decrease, net

Balance as of December 31, 2019

sales incentive plans include commissions payable to employees and third parties at the time of initial contract execution that

are capitalized as incremental costs to obtain a contract.

The capitalized commissions are amortized over the period the related

services are transferred.

As we do not offer commissions on contract renewals, we have determined the amortization period to be

the estimated client life, which is three years.

Deferred commissions were approximately $970,000 and $29,000 at December 31,

2020 and 2019, respectively, and are included in the Other Assets amounts in the consolidated balance sheets.

SHAREHOLDERS’

Board of Directors of the Company previously approved stock repurchase programs.

as of January 1, 2021

increase, net

as of December 31, 2021

as of January 1, 2020

increase, net

as of December 31, 2020

sales incentive plans include commissions payable to employees and third parties at the time of initial contract execution that are capitalized

as incremental costs to obtain a contract.

The capitalized commissions are amortized over the period the related services are transferred.

As we do not offer commissions on contract renewals, we have determined the amortization period to be the estimated client life, which

is three years.

Deferred commissions were approximately $ 931,000

and $ 970,000

31, 2021 and 2020, respectively, and are included in the Other Assets amounts in the consolidated balance

SHAREHOLDERS’ EQUITY

Board of Directors of the Company previously approved common stock repurchase programs.

The last program expired January

a result of these stock repurchases, the Company has 740,799 shares held as treasury stock at an aggregate cost of $662,000.

were no common stock offerings during 2020 and 2019.

of our common stock are entitled to one vote for each share held on all matters properly submitted to a vote of shareholders on

which holders of common stock are entitled to vote.

Holders of common stocks are entitled to receive dividends only at times and

amounts as determined by the Board of Directors.

The common stock is not entitled to pre-emptive rights, and is not subject to

conversion, redemption or sinking fund provisions.

the year ended December 31, 2020, the Company completed two public offerings totaling 1,932,000 shares of its Preferred Stock

at $25 per share, raising net proceeds of approximately $44.5 million after underwriting commissions and other directly attributable

the year ended December 31, 2019, the Company completed a public offering of 373,000 shares of its Preferred Stock at the prevailing

market price, raising net proceeds of approximately $9.6 million after underwriting commissions and other directly attributable

on the Preferred Stock of $2.75 annually per share are cumulative from the date of issue and are payable each month when, as and

if declared by the Company’s Board of Directors.

As of December 31, 2020, the Board of Directors has declared monthly dividends

on the Preferred Stock payable through February 2021.

November 4, 2020, the Company may redeem, at its option, the Preferred Stock, in whole or in part, at a cash redemption price

of $25.00 per share, plus all accrued and unpaid dividends to, but not including, the redemption date.

The Preferred Stock has

no stated maturity, is not subject to any sinking fund or other mandatory redemption, and is not convertible into or exchangeable

for any of the Company’s other securities.

Holders of the Preferred Stock have no voting rights except for limited voting

rights if dividends payable on the Preferred Stock are in arrears for eighteen or more consecutive or non-consecutive monthly

dividend periods.

If the Company were to liquidate, dissolve or wind up, the holders of the Preferred Stock will have the right

to receive $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the date of payment, before any

payment is made to the holders of the common stock.

The Preferred Stock is listed on the Nasdaq Global Market under the trading

symbol “MTBCP.”

Company has issued 6,603,489 warrants for its common stock, of which 4,010,140 remained outstanding at December 31, 2020.

2,000,000 warrants previously issued at a $5.00 exercise price expired in May 2018.

The outstanding warrants consist of 100,000

warrants at a $5.00 exercise price which will expire in September 2022, 125,000 warrants at a $3.92 exercise price which will

expire in October 2022, 100,000 warrants at a $5.00 exercise price which will expire in July 2023, 28,489 warrants at a $5.26

exercise price which will expire in September 2023, 1,000,000 warrants at a $7.50 exercise price which will expire in January

2022, 1,000,000 warrants at a $10.00 exercise price which will expire in January 2023 and 2,250,000 warrants at a $7.50 exercise

price which will expire in June 2022.

During 2020, 593,349 warrants were exercised at the $7.50 exercise price.

Subsequent to

December 31, 2020, 858,000 warrants were exercised at the $7.50 exercise price.

As a result of these stock repurchases,

the Company has 740,799

common shares held as treasury stock at an aggregate

cost of $ 662,000 .

Company has the right to sell up to $ 50

million of its common stock

using an “at-the-market” facility (“ATM”).

The underwriter receives 3 %

of the gross proceeds.

During the year ended December

31, 2021, the Company sold 346,389

shares of common

stock under its ATM and received net proceeds of approximately $ 2.7

There were no common stock offerings during 2020.

of our common stock are entitled to one vote for each share held on all matters properly submitted to a vote of shareholders on which

holders of common stock are entitled to vote.

Holders of common stocks are entitled to receive dividends only at times and amounts as

determined by the Board of Directors.

The common stock is not entitled to pre-emptive rights, and is not subject to conversion, redemption

or sinking fund provisions.

the year ended December 31, 2021, the Company cancelled 215,822

shares of preferred

stock that were held in escrow from the CCH acquisition as the matters related to the escrow were settled in cash.

on the Series A Preferred Stock of $ 2.75 annually per share are cumulative from the date of issue and are payable each month when, as

and if declared by the Company’s Board of Directors.

As of December 31, 2021, the Board of Directors has declared monthly dividends on the Series A Preferred

Stock payable through February 2022.

November 4, 2020, the Company may redeem, at its option, the Series A Preferred Stock, in whole

or in part, at a cash redemption price of $ 25.00 per share, plus all accrued and unpaid dividends to, but not including, the redemption

The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund

or other mandatory redemption, and is not convertible into or exchangeable for any of the Company’s other securities.

the Series A Preferred Stock have no voting rights except for limited voting rights if dividends

payable on the Series A Preferred Stock are in arrears for eighteen or more consecutive or non-consecutive

monthly dividend periods.

If the Company were to liquidate, dissolve or wind up, the holders of the Series

A Preferred Stock will have the right to receive $ 25.00 per share, plus any accumulated and unpaid dividends to, but not including,

the date of payment, before any payment is made to the holders of the common stock.

The Series A Preferred

Stock is listed on the Nasdaq Global Market under the trading symbol “MTBCP.”

Company has issued 6,603,489

warrants for its common stock,

of which 3,152,140

remained outstanding at December

warrants previously issued

exercise price expired in

The outstanding warrants

consist of 1,000,000

warrants at a $ 7.50

exercise price which expired in January

2022 , 798,651

warrants at a $ 7.50

exercise price which will expire in June

2022 , 100,000

warrants at a $ 5.00

exercise price which will

expire in September

2022 , 125,000

warrants at a $ 3.92

exercise price which will expire in October

2022 , 1,000,000

warrants at a $ 10.00

exercise price which will expire in January

2023 , 100,000

warrants at a $ 5.00

exercise price which will expire in July

2023 , and 28,489

warrants at a $ 5.26

exercise price which will expire in September

During the years ended December 31, 2021

and 2020, 858,000

warrants, respectively were exercised at a $ 7.50

exercise price for total proceeds of approximately

and $ 4,450,000 ,

respectively.

Company incurs common and preferred stock offering costs which consist principally of professional fees, primarily legal and accounting,

1 unchanged sentence

In connection with the 2021 and 2020 equity offerings, the Company incurred

approximately $205,000 and $110,000, respectively, of such costs, excluding underwriting commissions and placement agent fees.

approximately $ 223,000

and $ 330,000 ,

respectively, of such costs, excluding underwriting

commissions and placement agent fees which are recorded in additional paid-in capital in the consolidated balance sheets.

COMMITMENTS AND CONTINGENCIES

Proceedings —

On April 4, 2017, Randolph Pain Relief and Wellness Center (“RPRWC”) filed an arbitration

demand with the American Arbitration Association (the “Arbitration”) seeking to arbitrate claims against MTBC, Inc.

(“MTBC”) and MTBC Acquisition Corp.

(“MAC”).

The claims relate solely to services provided by Millennium

Practice Management Associates, Inc.

(“MPMA”), a subsidiary of MediGain, LLC, pursuant to a billing services agreement

that contains an arbitration provision.

MTBC and MAC jointly moved in the Superior Court of New Jersey, Chancery Division, Somerset

County (the “Chancery Court”) to enjoin the Arbitration on the grounds that neither were a party to the billing services

On May 30, 2018, the Chancery Court denied that motion and MTBC and MAC appealed.

The Chancery Court ordered the Arbitration

stayed pending the appeal.

On April 23, 2019, the Appellate Division reversed the Chancery Court’s ruling that MTBC is required to participate in the Arbitration

and remanded the case for further proceedings before the Chancery Court on that issue.

The Appellate Division upheld the Chancery Court’s

ruling that MAC was required to participate in the Arbitration.

The parties completed discovery in the remanded matter, and both MTBC

and RPRWC filed cross-motions for summary judgement in their favor.

On February 6, 2020, the Chancery Court denied RPRWC’s motion

for summary judgment and granted MTBC’s motion for summary judgment, holding that MTBC cannot be compelled to participate in the

RPRWC has informed MTBC that it does not intend to appeal the Chancery Court’s ruling and that it intends to move forward

solely against MAC in the Arbitration.

On March 25, 2020, the Chancery Court lifted the stay of arbitration relative to RPRWC and MAC.

Due to conflicting information provided by RPRWC, it is unclear what the extent of the claimed damages are in this matter which at this

time appear to be entirely speculative.

According to its arbitration demand, RPRWC seeks compensatory damages of $6.6 million, plus costs,

for MPMA’s alleged breach of the billing services agreement.

On June 12, 2020, in response to a directive from the arbitrator, RPRWC

disclosed a statement of damages to MAC in which it increased its alleged damages from $6.6 million and costs to $20 million and costs.

On July 24, 2020, RPRWC disclosed a declaration to MAC, in which RPRWC estimates its damages to be approximately $11 million plus costs.

MAC intends to vigorously defend against RPRWC’s claims.

If RPRWC is successful in the Arbitration, MTBC and MAC anticipate the

award would be substantially less than the amount claimed.

Through the CareCloud transaction, we acquired its software technology and

related business, of which certain elements are currently subject to a civil investigation to determine compliance with certain federal

regulatory requirements pre-acquisition.

The Company has continued to cooperate with the inquiry as CareCloud has historically done since

the commencement of the investigation in July of 2018.

This element was considered as part of the transaction and we believe that the

continued investigation will have no material impact on our consolidated financial statements, and that we have properly protected ourselves

from liability through the negotiated structure of the transaction.

Specifically, $4 million of the transaction’s consideration

Proceedings — On May 30, 2018, the Superior Court of New Jersey, Chancery Division, Somerset County (the “Chancery Court”)

denied the Company’s and MTBC Acquisition Corp.’s (“MAC”) request to enjoin an arbitration proceeding demanded

by Randolph Pain Relief and Wellness Center (“RPRWC”) related to RCM services provided by parties unaffiliated with the Company

On June 15, 2018, the Company and MAC filed an appeal of the Chancery Court’s decision with the New Jersey Superior Court,

Appellate Division.

On July 19, 2018, the Chancery Court ordered that the arbitration be stayed pending the Company’s and MAC’s

On appeal, the Company and MAC contended they were never party to the billing services agreement giving rise to the arbitration

claim, did not assume the obligations of Millennium Practice Management Associates, Inc.

(“MPMA”) under such agreement, and

any agreement to arbitrate disputes arising under such agreement did not apply to the Company or MAC as RPRWC terminated the agreement

before the APA took effect.

On January 30, 2019, the parties conducted oral arguments before the Appellate Court.

April 23, 2019, the Appellate Division affirmed in part and reversed in part the trial court’s order.

The Appellate Division upheld

the portion of the trial court’s order requiring MAC to participate in the arbitration based on the trial court’s finding

that MAC had assumed MPMA’s contractual responsibilities.

The Appellate Division reversed the trial court’s order requiring

the Company to participate in the arbitration on the grounds that insufficient facts had been provided by RPRWC from which the court

could conclude the Company was required to participate in the arbitration.

As a result, the Appellate Division remanded the issue of

whether Company is required to participate in the arbitration back to the trial court for further proceedings.

parties completed discovery in the remanded matter on November 29, 2019, and thereafter both the Company and RPRWC filed cross-motions

for summary judgment in their favor.

On February 6, 2020, the Chancery Court denied RPRWC’s motion for summary judgment and granted

the Company’s cross-motion for summary judgment.

The Chancery Court held that the Company cannot be compelled to participate in

the Arbitration.

RPRWC has informed the Company that it does not intend to appeal the Chancery Court’s ruling and that it intends

to move forward solely against MAC.

On March 25, 2020, the Chancery Court lifted the stay of arbitration relative to RPWC and MAC.

its arbitration demand RPRWC alleges that MPMA, a subsidiary of MediGain, LLC, breached the terms of the billing services agreement the

parties had entered into and sought compensatory damages of $ 6.6 million and costs.

May 28, 2020, the arbitrator handling the matter conducted a scheduling conference with the parties in order to establish deadlines for

the parties to exchange discovery requests and responses.

During the conference the arbitrator directed RPRWC to produce statement of

damages on which it bases its claim.

RPRWC disclosed its statement of damages to MAC on June 12, 2020.

RPRWC’s June 12, 2020 statement

of damages increased its alleged damages from $ 6.6 million and costs to $ 20 million and costs.

On July 24, 2020, RPRWC disclosed a declaration

to MAC, in which RPRWC estimates its damages to be approximately $ 11 million plus costs.

At this time, RPRWC has not provided any evidence

to support its increased claim for damages.

RPRWC recently served expert reports in this matter.

Plaintiff’s expert analyzed only

a minute portion of the claims alleged to have been mishandled and then extrapolated damages to be in the range of $ 9.8 million to $ 10.8 million;

however, this is unrealistically based on an alleged 90-100% collection rate on charges.

MAC is preparing rebuttal expert reports

to be submitted shortly.

Currently, the arbitration hearing is scheduled for April 2022.

the allegations of breach of contract made by RPRWC are the subject of the ongoing legal proceedings, MAC believes RPRWC’s allegations

lack merit on numerous grounds.

The Company and MAC plan to vigorously defend against RPRWC’s claim and in the event of a loss,

if any, they anticipate the loss to be substantially less than the amount claimed.

the CCH transaction, we acquired its software technology and related business, of which certain elements were, at the time of the acquisition,

subject to a civil investigation to determine pre-acquisition compliance with certain federal regulatory requirements.

Following the

closing of the transaction, the Company continued to cooperate with the inquiry as CCH had historically done since the commencement of

the investigation in July of 2018.

This element was considered as part of the transaction as $ 4 million of the transaction’s consideration

was held in escrow for the resolution of this investigation.

Based on the Company’s discussions with the U.S.

Department of Justice,

we believe that $3.8 million is a reasonable estimate to resolve this investigation, in addition to an estimated $400,000 in additional

costs and fees.

The Company has accrued $4.2 million dollars to resolve this investigation, of which up to $4 million is the escrow, which

has been recorded as an indemnification asset which is included in the consolidated balance sheet in prepaid expenses and other current

assets with an offsetting amount in accrued expenses.

The Company currently believes that any potential settlement will be substantially

within the range covered by the escrowed funds.

However, the outcome cannot yet be determined.

From time to time, we may become involved in other legal proceedings arising in the ordinary course of our business.

The Company accrued $ 4.2 million to resolve this investigation, including

the $ 4 million in escrow, which was recorded as an indemnification asset which is included in the condensed consolidated balance sheets

at December 31, 2020 in prepaid expenses and other current assets with an offsetting amount in accrued expenses.

The Company settled

the obligation in April 2021 substantially within the range covered by the escrowed funds.

time to time, we may become involved in other legal proceedings arising in the ordinary course of our business.

Including the proceedings

described above, we are not presently a party to any legal proceedings that, in the opinion of our management, would individually or taken

together have a material adverse effect on our business, consolidated results of operations, financial position or cash flows of the Company.

described above, we are not presently a party to any legal proceedings that, in the opinion of our management, would individually or

taken together have a material adverse effect on our business, consolidated results of operations, financial position or cash flows of

determine if an arrangement is a lease at inception.

Operating leases are included in operating lease ROU assets, current operating

lease liability and non-current operating lease liability in our consolidated balance sheets as of December 31, 2020 and 2019.

We have operating leases for office and temporary living space as well as for some

office equipment.

Operating leases are included in operating lease ROU assets, current operating lease liability and non-current operating

lease liability in our consolidated balance sheets as of December 31, 2021 and 2020.

The Company does not have any finance leases.

assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make

lease payments arising from the lease.

ROU assets and liabilities are recognized at the lease commencement date based on the estimated

present value of lease payments over the lease term.

use our estimated incremental borrowing rates, which are derived from information available at the lease commencement date, in

determining the present value of lease payments.

For leases in existence at the adoption of ASC 842, we used the incremental borrowing

rate as of January 1, 2019.

We give consideration to our bank financing arrangements, geographical location and collateralization

of assets when calculating our incremental borrowing rates.

assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease

payments arising from the lease.

ROU assets and liabilities are recognized at the lease commencement date based on the estimated present

value of lease payments over the lease term.

most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rates, which are derived from information

available at the lease commencement date, in determining the present value of lease payments.

We give consideration to our bank financing

arrangements, geographical location and collateralization of assets when calculating our incremental borrowing rates.

lease terms include options to extend the lease when it is reasonably certain that we will exercise that option.

Leases with a

term of less than 12 months are not recorded in the consolidated balance sheets.

Our lease agreements do not contain any residual

value guarantees.

Leases with a term of

less than 12 months are not recorded in the consolidated balance sheets.

Our lease agreements do not contain any residual value guarantees.

For real estate leases, we account for the lease and non-lease components as a single lease component.

leases include escalation clauses and termination options that are factored in the determination of the lease payments when appropriate.

Some leases include escalation

clauses and termination options that are factored in the determination of the lease payments when appropriate.

a lease is modified after the effective date, the operating lease ROU asset and liability is re-measured using the current incremental

1 unchanged sentence

We review our incremental borrowing rate for our portfolio of leases on a quarterly basis.

During the years ended

December 31, 2020 and 2019, lease impairment of approximately $298,000 and $170,000 was recorded since the Company is no longer

using certain leased facilities and is currently in the process of subleasing the space.

Restructuring charges of approximately

$49,000 were recorded in the year ended December 31, 2019 which represent the remaining lease costs for another leased facility

that was closed and the employees were transferred to another Company facility.

There were no restructuring charges in the year

ended December 31, 2020.

lease all of our facilities and some equipment.

Lease expense is included in direct operating costs and general and administrative

expenses in the consolidated statements of operations based on the nature of the expense.

As of December 31, 2020, we had 38 leased

properties, five in Practice Management and 33 in Healthcare IT, with remaining terms ranging from less than one year to five

Our lease terms are determined taking into account lease renewal options, the Company’s anticipated operating plans

and leases that are on a month-to-month basis.

We also have some related party leases –

During the years ended December

31, 2021 and 2020, lease impairment of approximately $ 68,000 and $ 298,000 , respectively was recorded since the Company is no longer using

certain leased facilities and is currently in the process of trying to sublease one of the spaces.

There were no restructuring charges

in the years ended December 31, 2021 and 2020, respectively.

expense is included in direct operating costs and general and administrative expenses in the consolidated statements of operations based

on the nature of the expense.

As of December 31, 2021, we had 37 leased properties, seven in Practice Management and 30 in Healthcare

IT, with remaining terms ranging from less than one year to fifteen years.

Our lease terms are determined taking into account lease renewal

options, the Company’s anticipated operating plans and leases that are on a month-to-month basis.

We also have some related party

leases – see Note 13.

components of lease expense were as follows:

OF LEASE EXPENSE

in thousands)

Operating lease cost

Short-term lease cost

Variable lease cost

Total- net lease cost

Short-term lease cost represents leases that

were not capitalized as the lease term as of the later of January 1, 2019 or the beginning of the lease was less than 12 months.

net lease cost

lease cost represents leases that were not capitalized as the lease term as of the later of January 1, 2021 or the beginning of the lease

was less than 12 months.

Variable lease costs include utilities, real estate taxes and common area maintenance costs.

balance sheet information related to leases was as follows:

December 31, 2020

December 31, 2019

Operating leases:

OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

in thousands)

Operating lease ROU assets, net

Current operating lease liabilities

Non-current operating lease liabilities

Total operating lease liabilities

Operating leases:

Asset lease expense

Foreign exchange loss

ROU assets, net

Weighted average remaining lease term (in years):

Operating leases

Weighted average discount rate:

Operating leases

lease ROU assets, net

operating lease liabilities

lease expense

exchange loss

average remaining lease term (in years):

average discount rate:

leases, Weighted

average discount rate

cash flow and other information related to leases was as follows:

SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES

in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in exchange for lease liabilities:

Operating leases, net of impairment and terminations

paid for amounts included in the measurement of lease liabilities:

cash flows from operating leases

assets obtained in exchange for lease liabilities:

leases, net of impairment and terminations

of lease liabilities are as follows:

Operating leases - Year ending December 31,

OF MATURITIES OF LEASE LIABILITIES

leases - Years ending December 31,

in thousands)

Total lease payments

lease payments

imputed interest

Total lease obligations

lease obligations

current obligations

Long-term lease obligations

of December 31, 2020, we have two operating lease commitments that have not yet commenced with an aggregate gross lease liability

of approximately $1.6 million.

lease obligations

RELATED PARTIES

Company had sales to a related party, a physician who is the wife of the Executive Chairman.

Revenues from this customer were

approximately $17,000 for the year ended December 31, 2020 and approximately $21,000 for the year ended December 31, 2019.

of both December 31, 2020 and 2019, the accounts receivable balance due from this customer was approximately $2,000 and is included

in accounts receivable in the consolidated balance sheets.

Company is a party to a nonexclusive aircraft dry lease agreement with Kashmir Air, Inc.

(“KAI”), which is owned by

the Executive Chairman.

The Company recorded expense of approximately $120,000 and $137,000, for the years ended December 31,

2020 and 2019, respectively.

As of both December 31, 2020 and 2019, the Company had liabilities outstanding to KAI of approximately

$1,000, which are included in accrued liability to related party in the consolidated balance sheets.

The original aircraft lease

expired on March 31, 2019 and was not included in the ROU asset at January 1, 2019.

A lease for a different aircraft at the same

lease rate was entered into as of April 1, 2019 and has been included in the ROU asset and operating lease liabilities at December

Revenues from this customer were approximately

$ 23,000 for the year ended December 31, 2021 and approximately

$ 17,000 for the year ended December 31, 2020 .

As of December 31, 2021 and 2020, the accounts receivable

balance due from this customer was approximately $ 3,000 and $ 2,000 respectively, an d is included in accounts receivable in the

consolidated balance sheets.

Company was a party to a nonexclusive aircraft dry lease agreement with Kashmir Air, Inc.

(“KAI”), which is owned by the

Executive Chairman.

The Company recorded an expense of approximately $ 80,000 and $ 120,000 for the years ended December 31, 2021 and 2020,

respectively.

As of December 31, 2021, the Company had no liability outstanding to KAI as compared to liability of approximately $ 1,000

as of December 31, 2020, which was included in accrued liability to related party in the consolidated balance sheet.

The lease for the

aircraft was renewed as of April 1, 2021 and terminated on August 31, 2021 and has been included in the ROU asset and operating lease

liability on December 31, 2020.

As a result of the lease termination, the Company incurred a loss of approximately $ 185,000

which has been included in loss on lease termination, impairment and unoccupied lease charges in the

December 31, 2021 consolidated statement of operations.

Company leases its corporate offices in New Jersey, its temporary housing for its foreign visitors, a printing and mailing facility,

its backup operations center in Bagh, Pakistan and an apartment for temporary housing in Dubai, the UAE, from the Executive

The related party rent expense for the years ended December 31, 2021 and 2020 was approximately $ 186,000

and $ 185,000 ,

Company leases its corporate offices in New Jersey, its temporary housing for its foreign visitors, an office/storage facility

and its backup operations center in Bagh, Pakistan, from the Executive Chairman.

The related party rent expense for the years

ended December 31, 2020 and 2019 was approximately $185,000 and $192,000, respectively, and is included in direct operating costs

and general and administrative expense in the consolidated statements of operations.

During the year ended December 31, 2020,

the Company spent approximately $554,000 to upgrade two of the leased facilities.

Current assets-related party in the consolidated

balance sheets includes security deposits and prepaid rent related to the leases of the Company’s corporate offices in the

amount of $13,000 for both the years ended December 31, 2020 and 2019.

respectively, and is included in direct operating costs and general and administrative expense in the consolidated statements of operations.

During the year ended December 31, 2021, the Company spent approximately $ 2 .0

million to upgrade the related party leased facilities and the leased aircraft.

Current assets-related party in the consolidated balance

sheets includes security deposits and prepaid rent related to the leases of the Company’s corporate offices in the amount of approximately

for both the years ended December 31, 2021 and

On October 15, 2021, the Company entered into a one-year lease agreement with the Executive Chairman

for an apartment for temporary housing in Dubai.

in the ROU asset at December 31, 2021 is approximately $ 483,000 applicable to the related party leases.

Included in the current

and non-current operating lease liability at December 31, 2020 is approximately $202,000 and $92,000, respectively, applicable

to the related party leases.

Included in the current and non-current

operating lease liability at December 31, 2021 is approximately $ 174,000 and $ 305,000 , respectively, applicable to the related party

in the ROU asset at December 31, 2020 is approximately $ 283,000 applicable to the related party leases.

Included in the current

and non-current operating lease liability at December 31, 2019 is approximately $275,000 and $298,000, respectively, applicable

to the related party leases.

the first quarter of 2020, talkMD Clinicians, PA, a New Jersey corporation was formed to provide telehealth services.

is owned by the wife of the Executive Chairman since an entity providing medical services must be owned by a physician.

did not have any transactions with this entity during the year ended December 31, 2020.

Included in the current and non-current

operating lease liability at December 31, 2020 is approximately $ 202,000 and $ 92,000 , respectively, applicable to the related party leases.

2020, a New Jersey corporation, talkMD Clinicians, PA (“talkMD”), was formed by the wife of the Executive Chairman, who is

a licensed physician, to provide telehealth services.

talkMD was determined to be a variable interest entity (“VIE”) for

financial reporting purposes because the entity will be controlled by the Company.

As of December 31, 2021, talkMD had not yet commenced

During the year ended December 31, 2021, the Company made arrangements to have the income tax returns prepared for talkMD

and will advance the funds for the required taxes.

The aggregate amount advanced was approximately $ 3,500 .

EMPLOYEE BENEFIT PLANS

1 unchanged sentence

employees who have completed one month of service.

The plans provide for

matching contributions by the Company for employees of MTBC, Inc.

and most U.S.

subsidiaries, although there is no match for MPM

Employer contributions to the plans for the years ended December 31, 2020 and 2019 were approximately $641,000 and

The plans provide for matching

contributions by the Company for employees of the Company and most U.S.

subsidiaries, although there is no match for CPM employees.

contributions to the plans for the years ended December 31, 2021 and 2020 were approximately $ 697,000 and $ 641,000 ,

respectively.

Additionally,

the Company has a defined contribution retirement plan covering all employees located in our Pakistan Offices who have

completed three months of service.

The plan provides for monthly contributions by the Company which are equal to 10% of

qualified employees’

basic monthly compensation.

The Company’s contributions for the years ended December 31,

2020 and 2019 were approximately $341,000 and $245,000, respectively.

the Company has a defined contribution retirement plan covering all employees located in our Pakistan Offices who have completed three

months of service.

The plan provides for monthly contributions by the Company which are equal to 10% of qualified employees’ basic

monthly compensation.

The Company’s contributions for the years ended December 31, 2021 and 2020 were approximately

$ 479,000 and $ 341,000 , respectively.

Company maintains a defined contribution retirement plan covering all employees in Sri Lanka.

The employee and employer contribute 8 %

8% and 12%, respectively, of the employee’s gross salary.

The Company’s contribution for the year ended December 31,

2020 and 2019 was approximately $37,000 and $40,000, respectively.

The contributions are required to be deposited with the Employees’

Provident Fund Organization, a government owned entity.

and 12 %, respectively, of the employee’s gross salary.

The Company’s contribution for the years ended December 31, 2021 and

2020 was approximately $ 35,000 and $ 37,000 , respectively .

The contributions are required to be

deposited with the Employees’ Provident Fund Organization, a government owned entity.

STOCK-BASED COMPENSATION

April 2014, the Company adopted the Medical Transcription Billing, Corp.

2014 Equity Incentive Plan (the “2014 Plan”),

reserving a total of 1,351,000 shares of common stock for grants to employees, officers, directors and consultants.

the 2014 Plan was amended whereby an additional 1,500,000 shares of common stock and 100,000 shares of Preferred Stock were added

to the plan for future issuance.

During 2018, an additional 200,000 shares of Preferred Stock was added to the plan for future

During 2020, an additional 2,000,000 shares of common stock and an additional 300,000 shares of Preferred Stock were

added to the 2014 Plan for future issuance.

The 2014 Plan was amended and restated on April 14, 2017 (the “Amended and Restated

Equity Incentive Plan”).

As of December 31, 2020, 1,718,012 shares of common stock and 370,075 shares of Preferred Stock

are available for grant.

Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights,

restricted stock, RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation

Committee of the Board of Directors including unrestricted stock grants.

equity based RSUs contain a provision in which the units shall immediately vest and become converted into common shares at the

rate of one common share per RSU, immediately after a change in control, as defined in the award agreement.

2019, 180,000 RSUs of common stock were granted to employees and independent contractors to vest at different dates during the

years 2019 and 2020.

Included therein were 72,000 RSUs of common stock granted over two years equally to the four outside members

of the Board of Directors with 25% of the shares vesting every six months.

2020, 788,955 RSUs of common stock were granted to employees and independent contractors to vest at different dates during the

year 2020 and 2021.

Included therein were 32,000 RSUs of common stock granted over two years equally to the four outside members

of the Board of Directors with 25% of the shares vesting every six months.

following table summarizes the RSU and restricted stock transactions related to the common and Preferred Stock under the Amended

and Restated Incentive Plan for the years ended December 31, 2020 and 2019:

Preferred Stock

Outstanding and unvested shares at January 1, 2020

Outstanding and unvested shares at December 31, 2020

Outstanding and unvested shares at January 1, 2019

Outstanding and unvested shares at December 31, 2019

2014 Equity Incentive Plan (the “2014 Plan”), reserving

a total of 1,351,000 shares of common stock for grants to employees, officers, directors and consultants.

During 2017, the 2014 Plan

was amended whereby an additional 1,500,000 shares of common stock and 100,000 shares of Series A Preferred Stock were added to the plan

for future issuance.

During 2018, an additional 200,000 shares of Series A Preferred Stock was added to the plan for future issuance.

During 2020, an additional 2,000,000 shares of common stock and an additional 300,000 shares of Series A Preferred Stock were added to

the 2014 Plan for future issuance.

The 2014 Plan was amended and restated on April 14, 2017 (the “Amended and Restated Equity Incentive

As of December 31, 2021, 1,191,383 shares of common stock and 320,065 shares of Series A Preferred Stock are available

Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock,

RSUs, performance stock and cash-settled awards and other stock-based awards in the discretion of the Compensation Committee of the Board

of Directors including unrestricted stock grants.

equity based RSUs contain a provision in which the units shall immediately vest and become converted into common shares at the rate of

one common share per RSU, immediately after a change in control, as defined in the award agreement.

2020, 788,955 RSUs of common stock were granted to employees and independent contractors to vest at different dates during the years

2020 and 2021.

Included therein were 32,000 RSUs of common stock granted over two years equally to the four outside members of the Board

of Directors with 25 % of the shares vesting every six months.

2021, 628,361 RSUs of common stock were granted to employees and independent contractors to vest at different dates during the years

2021, 2022 and 2023.

Included therein were 44,000 RSUs of common stock granted over two years equally to the four outside members of

the Board of Directors with 25 % of the shares vesting every six months.

following table summarizes the RSU and restricted stock transactions related to the common and Preferred Stock under the Amended and

Restated Incentive Plan for the years ended December 31, 2021 and 2020:

DISCLOSURE OF SHARE-BASED COMPENSATION ARRANGEMENTS BY SHARE-BASED PAYMENT AWARD

and unvested shares at January 1, 2021

and unvested shares at December 31, 2021

and unvested shares at January 1, 2020

and unvested shares at December 31, 2020

of December 31, 2021, and 2020, there was approximately $ 3.7 million and $ 2.5 million, respectively, of total unrecognized compensation

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cost related to the Preferred Stock RSUs.

the total outstanding and unvested common stock RSUs at December 31, 2020, 369,435 RSUs are classified as equity and 13,000 RSUs

are classified as a liability.

the total outstanding and unvested common stock RSUs at December 31, 2021, 331,039 RSUs are classified as equity and 87,000 RSUs are

classified as a liability.

All of the Preferred Stock RSUs are classified as equity.

following table summarizes the share activity during the years ended December 31, 2021 and 2020 and the amount of common and preferred

Shares available for grant at December 31, 2020:

Preferred Stock

Shares available for grant at January 1, 2020

Additional shares available for grant

RSUs forfeited

Shares available for grant at December 31, 2020

Shares available for grant at January 1, 2019

RSUs forfeited

Shares available for grant at December 31, 2019

liability for the cash-settled awards was approximately $976,000 and $741,000 at December 31, 2020 and 2019, respectively, and

is included in accrued compensation in the consolidated balance sheets.

During the years ended December 31, 2020 and 2019, approximately

$61,000 and $184,000, respectively, was paid in connection with the cash-settled awards.

both 2020 and 2019, the Compensation Committee approved executive bonuses to be paid in 44,000 shares of Preferred Stock, with

the final number of shares and the amount based on specified performance criteria being achieved during 2020 and 2019.

and 2019, 19,579 and 4,746 shares of Preferred Stock were granted as performance bonuses and in lieu of sales commissions, respectively.

Stock-based compensation expense recorded during 2020 and 2019 for these awards was approximately $1.6 million and $1.3 million,

respectively, based on the fair value of the Preferred Shares on the grant date.

During January 2021 and January 2020, the Compensation

Committee determined that the financial objectives were attained and all of the performance bonus shares were issued.

shares available for grant at December 31, 2021 and 2020:

SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK UNITS AWARD ACTIVITY

available for grant at January 1, 2021

available for grant at December 31, 2021

available for grant at January 1, 2020

shares available for grant

available for grant at December 31, 2020

liability for the cash-settled awards and accrued payroll taxes on equity awards was approximately $ 1 .0 million

and $ 976,000 at December 31, 2021 and 2020, respectively, and is included in accrued compensation in

the consolidated balance sheets.

During the years ended December 31, 2021 and 2020, approximately $ 97,000 and $ 61,000 , respectively,

was paid in connection with the cash-settled awards.

A Preferred Stock

2021 and 2020, the Compensation Committee approved executive bonuses to be paid in 34,000 shares and 44,000 of Series A Preferred Stock,

respectively, with the final number of shares and the amount based on specified performance criteria being achieved during 2021 and 2020.

In 2021 and 2020, 16,010 and 19,579 shares of Series A Preferred Stock were granted as performance bonuses and in lieu of sales commissions,

respectively.

Stock-based compensation expense recorded during 2021 and 2020 for these awards was approximately $ 1.5 million and $ 1.6

million, respectively, based on the fair value of the Series A Preferred Shares on the grant date.

During February 2022 and January 2021,

the Compensation Committee determined that the financial objectives were attained and all of the performance bonus shares were issued.

compensation expense

Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award.

For stock awards classified as equity the market price of our common stock or Preferred Stock on the date of grant is used in

recording the fair value of the award.

For stock awards classified as a liability, the earned amount is marked to market based

on the end of period common stock price.

The weighted average grant date fair value of the common stock price in connection with

the RSUs classified as equity was $6.20 and $4.87 for the years ended December 31, 2020 and 2019, respectively.

The weighted average

grant date fair value of the Preferred Stock in connection with the RSUs was $27.06 and $26.77 for the years ended December 31,

2020 and 2019, respectively.

The following table summarizes the components of stock-based compensation expense for the years ended

December 31, 2020 and 2019:

Stock-based compensation included in the

Year ended December 31,

consolidated statements of operations:

awards classified as equity the market price of our common stock or Series A Preferred Stock on the date of grant is used in recording

the fair value of the award.

For stock awards classified as a liability, the earned amount is marked to market based on the end of period

common stock price.

The weighted average grant date fair value of the common stock price in connection with the RSUs classified as equity

was $ 9.16 and $ 6.20 for the years ended December 31, 2021 and 2020, respectively.

The weighted average grant date fair value of the Series

A Preferred Stock in connection with the RSUs was $ 28.52 and $ 27.06 for the years ended December 31, 2021 and 2020, respectively.

following table summarizes the components of stock-based compensation expense for the years ended December 31, 2021 and 2020:

SCHEDULE OF EMPLOYEE SERVICE SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS

compensation included in the

ended December 31,

statements of operations:

in thousands)

Direct operating costs

General and administrative

Research and development

Selling and marketing

Total stock-based compensation expense

the years ended December 31, 2020 and 2019, the Company estimated its income tax provision based upon the annual pre-tax loss.

Although the Company is forecasting a return to profitability, it incurred cumulative losses which make realization of a deferred

tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance has been recorded against all federal

and state deferred tax assets as of December 31, 2020 and December 31, 2019, with the exception of a net deferred tax liability

relating to the amortization of intangibles for tax purposes.

of December 31, 2017, the accumulated undistributed earnings and profits (“E&P”) of our foreign affiliates became

taxable in the U.S.

operating costs

and administrative

and development

and marketing

stock-based compensation expense

the years ended December 31, 2021 and 2020, the Company estimated its income tax provision based upon the annual pre-tax income

Although the Company reported GAAP earnings in 2021, it incurred losses historically and there is uncertainty

regarding future US taxable income, which makes realization of a deferred tax asset difficult to support in accordance

with ASC 740.

Accordingly, a valuation allowance has been recorded against all federal and state deferred tax assets as of December

31, 2021 and December 31, 2020, with the exception of a net deferred tax liability relating to the amortization of intangibles for

tax purposes.

of December 31, 2017, the accumulated undistributed earnings and profits (“E&P”) of our foreign affiliates became taxable

under Section 965.

This accumulated foreign E&P was absorbed against our U.S.

net operating losses and,

hence, no transition tax was paid.

From January 1, 2018 forward, the annual adjusted earnings and profits of our foreign affiliates

pass through to the U.S.

as federal and state taxable income under the Global Intangible Low-Taxed Income (“GILTI”)

regime - passed as part of the 2017 Tax Cuts & Jobs Act.

For the tax years ended December 31, 2020 and 2019, the net GILTI

from our foreign affiliates was absorbed against our current year U.S.

net operating losses and, hence, no transition

tax was paid.

From January 1, 2018 forward, the annual adjusted earnings and profits of our foreign affiliates pass through to the U.S.

as federal and state taxable income under the Global Intangible Low-Taxed Income (“GILTI”) regime - passed as part of the

2017 Tax Cuts & Jobs Act.

For the tax years ended December 31, 2021 and 2020, the net GILTI from our foreign affiliates was absorbed

against our current year U.S.

consolidated loss.

For state tax purposes, the Company’s

foreign earnings may be taxable depending on each individual state’s legislative stance on the recent tax reform legislation.

The activity in the deferred tax valuation allowance was as follows for the years ended December 31, 2020 and 2019:

Year ended December 31,

For state tax purposes, the Company’s foreign earnings may be taxable depending

on each individual state’s legislative stance on the recent tax reform legislation.

The activity in the deferred tax valuation

allowance was as follows for the years ended December 31, 2021 and 2020:

SCHEDULE OF DEFERRED TAX VALUATION ALLOWANCE

ended December 31,

in thousands)

Beginning balance

Impact of acquisitions

of acquisitions

Adjustments/true-ups

Ending balance

adjustments/true-ups for 2019 primarily represent the deferred tax effect of the Company’s adoption of ASC 606.

additional valuation allowances needed to be provided.

Since a full valuation allowance is recorded on the Company’s deferred

tax assets, there was no effect on the Company’s consolidated balance sheet.

loss before tax for financial reporting purposes during the years ended December 31, 2020 and 2019 consisted of the following:

Year ended December 31,

adjustments/true-ups for 2021 represents adjustments to the basis of the intangible assets from the 2020 acquisitions and the

effect of the net operating loss carryback and other adjustments.

income (loss) before tax for financial reporting purposes during the years ended December 31, 2021 and 2020 consisted of the following:

SCHEDULE OF INCOME BEFORE INCOME TAX, DOMESTIC AND FOREIGN

ended December 31,

in thousands)

United States

provision for income taxes for the years ended December 31, 2020 and 2019 consisted of the following:

Year ended December 31,

provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

ended December 31,

in thousands)

Total income tax provision

components of the Company’s deferred income taxes as of December 31, 2020 and 2019 are as follows:

income tax provision

components of the Company’s deferred income taxes as of December 31, 2021 and 2020 are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

in thousands)

for doubtful accounts

and intangible assets

net operating loss (“NOL”) carryforwards

163(j) interest limitation

based compensation

606 - Section 481(A) adjustment

842 - ROU asset

balance translation adjustment

267 limitation

payroll taxes

842 - Lease liability

deferred tax assets

Allowance for doubtful accounts

Deferred revenue

Property and intangible assets

State net operating loss (“NOL”) carryforwards

Federal net operating loss (“NOL”) carryforwards

Section 163(j) interest limitation

Cumulative translation adjustment

Stock based compensation

ASC 606 - Section 481(A) adjustment

ASC 842 - ROU asset

Prepaid commissions

Section 267 limitation

Deferred payroll taxes

Credit carryovers

ASC 842 - Lease liability

Valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Goodwill amortization

Net deferred tax liability

income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their

tax bases, as well as from net operating loss carryforwards.

Deferred income tax assets represent amounts available to reduce

income taxes payable on taxable income in future years.

tax liabilities:

deferred tax liability

income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax

bases, as well as from net operating loss carryforwards.

Deferred income tax assets represent amounts available to reduce income taxes

payable on taxable income in future years.

Company has recorded goodwill as a result of its acquisitions.

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For tax purposes, goodwill from asset acquisitions is tax deductible and amortized over 15 years.

As such, deferred income tax

expense and a deferred tax liability arise as a result of the tax-deductibility of this indefinitely lived asset (also known as

a naked credit).

The resulting deferred tax liability, which is expected to continue to increase over the amortization period,

will have an indefinite life.

As a result of the Company incurring tax losses for 2020 and 2019 which have an indefinite life

under the recent tax reform legislation, the federal deferred tax liability resulting from the amortization of goodwill was offset

against these indefinite federal operating net loss deferred tax assets to the extent allowable.

This resulted in a deferred tax

benefit of approximately $84,000 in 2020.

The remaining deferred tax liability could remain on the Company’s consolidated

As such, deferred income tax expense

and a deferred tax liability arise as a result of the tax-deductibility of this indefinitely lived asset (also known as a naked credit).

The resulting deferred tax liability, which is expected to continue to increase over the amortization period, will have an indefinite

As a result of the Company incurring tax losses for 2021 and 2020 which have an indefinite life under the recent tax reform legislation,

the federal deferred tax liability resulting from the amortization of goodwill was offset against these indefinite federal operating

net loss deferred tax assets to the extent allowable.

The remaining deferred tax liability could remain on the Company’s consolidated

balance sheet indefinitely unless there is an impairment of goodwill (for financial reporting purposes) or a portion of the business

to the fact that the aforementioned deferred tax liability could have an indefinite life, it is not netted against the Company’s

deferred tax assets when determining the required valuation allowance in accordance with ASC 740 guidelines.

Doing so would result

in the understatement of the valuation allowance and related deferred income tax expense.

reconciliation of the federal statutory income tax rate (21%) for 2020 and 2019 to the Company’s effective income tax rate

(determined in dollars) for the years ended December 31, 2020 and 2019 is as follows:

Year ended December 31,

Doing so would result in

the understatement of the valuation allowance and related deferred income tax expense.

reconciliation of the federal statutory income tax rate ( 21 %) for 2021 and 2020 to the Company’s effective income tax rate (determined

in dollars) for the years ended December 31, 2021 and 2020 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

ended December 31,

in thousands)

Federal benefit at statutory rate

Increase (decrease) in income taxes resulting from:

State tax expense, net of federal benefit

Non-deductible items

Impact of foreign operations

Subpart F GILTI inclusion

Stock based compensation

Change in contingent consideration

Deferred true-up

Valuation allowance

Total income tax provision

provision (benefit) at statutory rate

(decrease) in income taxes resulting from:

tax expense, net of federal benefit

Non-deductible

of foreign operations

F GILTI inclusion

based compensation

in contingent consideration

income tax provision

December 31, 2021 and 2020, the Company did not record any uncertain tax positions based on the technical merits.

tabular roll forward was excluded and there has been no accrued interest and penalties.

The Company is subject to taxation in

the United States, various states, Pakistan and Sri Lanka.

As of December 31, 2020, tax years 2017 through 2019 remain open to

examination in the United States by major taxing jurisdictions in which the Company is subject to tax.

The Pakistan Federal Board

of Revenue issued a tax holiday, which precludes the Pakistan subsidiary from being subject to income taxes through June 2025.

It is the Company’s policy that any assessed penalties and interest on uncertain tax positions would be charged to income

Pakistan tax holiday does not have a significant impact on the Company’s effective tax rate as all of its earnings in Pakistan

have been fully included in the U.S.

Therefore, a tabular

roll forward was excluded and there has been no accrued interest and penalties.

The Company is subject to taxation in the United States,

various states, Pakistan and Sri Lanka.

As of December 31, 2021, tax years 2018 through 2020 remain open to examination in the United

States by major taxing jurisdictions in which the Company is subject to tax.

The Pakistan Federal Board of Revenue allows a tax credit

against earnings from IT activities, which precludes the Pakistan subsidiary from being subject to income taxes.

It is the Company’s

policy that any assessed penalties and interest on uncertain tax positions would be charged to income tax expense.

Pakistan tax credit does not have a significant impact on the Company’s effective tax rate as all of its earnings in Pakistan have

been fully included in the U.S.

federal tax rate of 21 % for 2021 and 2020.

The Pakistan statutory corporate tax rate is 29%

before consideration of the aforementioned tax holiday.

As of December 31, 2020, the Company has a

total federal NOL carry forward of approximately $270.9 million of which approximately $198.8 million will expire between 2029

and 2037, and the balance of approximately $72.1 million has an indefinite life.

Out of the total federal NOL carry forward,

approximately $237.6 million is from the CareCloud and Meridian acquisitions and is subject to the federal Section 382 NOL annual

usage limitations.

The Company has state NOL carry forwards of approximately $161.0 million, of which $85.8 million relates to

the State of New Jersey.

The Pakistan statutory corporate tax rate is 29 % before consideration

of the aforementioned tax credit.

of December 31, 2021, the Company has a total federal NOL carry forward of approximately $ 274.5 million of which approximately $ 198.8

million will expire between 2034 and 2037 , and the balance of approximately $ 75.7 million has an indefinite life.

Out of the total federal

NOL carry forward, approximately $ 237.6 million is from the CareCloud and Meridian acquisitions and is subject to the federal Section

382 NOL annual usage limitations.

The Company has state NOL carry forwards of approximately $ 212.1 million, of which $ 86.5 million relates

to the State of New Jersey.

These NOLs expire between 2034 and 2040.

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which results in there being no U.S.

assets or liabilities recorded on the consolidated balances sheet, other than the deferred tax liability related to the amortization

deferred tax assets

or liabilities recorded on the consolidated balance sheets, other than the deferred tax liability related to the amortization of goodwill.

Appropriations Act was signed into law on December 27, 2020 and contains many tax-related provisions.

Some of the more notable

provisions are (1) clarifying the tax treatment of expenses paid with Paycheck Protection Program (PPP) loan proceeds, (2) temporarily

providing for a 100% deduction of business meal expenses, (3) modifying the Employee Retention Tax Credit previously enacted under

the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), (4) extending the repayment period of certain deferred payroll

taxes, and (5) extending the tax credits available to employers under the Families First Coronavirus Response Act (FFCRA) and

Section 45S of the Internal Revenue Code of 1986, as amended (the Code) for employer-paid family and medical leave.

believes these new provisions will not have a significant impact on the consolidated financial statements.

OTHER (EXPENSE) INCOME –

income (expense) - net for the years ended December 31, 2020 and 2019 consisted of the following:

Year Ended December 31,

Some of the more notable provisions

are (1) clarifying the tax treatment of expenses paid with Paycheck Protection Program (PPP) loan proceeds, (2) temporarily providing

for a 100% deduction of business meal expenses, (3) modifying the Employee Retention Tax Credit previously enacted under the Coronavirus

Aid, Relief, and Economic Security Act (CARES Act), (4) extending the repayment period of certain deferred payroll taxes, and (5) extending

the tax credits available to employers under the Families First Coronavirus Response Act (FFCRA) and Section 45S of the Internal Revenue

Code of 1986, as amended (the Code) for employer-paid family and medical leave.

The Company believes these new provisions will not have

a significant impact on the consolidated financial statements.

OTHER (EXPENSE) INCOME – NET

(expense) income - net for the years ended December 31, 2021 and 2020 consisted of the following:

SCHEDULE OF OTHER (EXPENSE) INCOME - NET

Ended December 31,

in thousands)

Foreign exchange gain (loss)

Other (expense) income

Other income (expense) - net

exchange gains

(expense) income - net

currency transaction gains and losses primarily result from transactions in foreign currencies other than the functional currency.

These transaction gains and losses are recorded in the consolidated statements of operations related to the recurring measurement

and settlement of such transactions.

transaction gains and losses are recorded in the consolidated statements of operations related to the recurring measurement and settlement

of such transactions.

SEGMENT REPORTING

our Chief Executive Officer and Executive Chairman serve as the CODM, organize the Company, manage resource allocations and measure

performance among two operating and reportable segments:

our Chief Executive Officer and Executive Chairman serve as the CODM, organize the Company, manage resource allocations and measure performance

among two operating and reportable segments:

(i) Healthcare IT and (ii) Practice Management.

Healthcare IT segment includes revenue cycle management and other services.

The Practice Management segment includes the management

of three medical practices.

The Practice Management segment includes the management of

three medical practices.

Each segment is considered a reporting unit.

The CODM evaluates financial performance of the business

units on the basis of revenue and direct operating costs excluding unallocated amounts, which are mainly corporate overhead costs.

Our CODM does not evaluate operating segments using asset or liability information.

The accounting policies of the segments are

the same as those disclosed in the summary of significant accounting policies.

The following tables present revenues, operating

expenses and operating income (loss) by reportable segment for the years ended December 31, 2020 and 2019:

Year Ended December 31, 2020

The CODM evaluates financial performance of the business units

on the basis of revenue and direct operating costs excluding unallocated amounts, which are mainly corporate overhead costs.

does not evaluate operating segments using asset or liability information.

The accounting policies of the segments are the same as those

disclosed in the summary of significant accounting policies.

The following tables present revenues, operating expenses and operating

income (loss) by reportable segment for the years ended December 31, 2021 and 2020:

SCHEDULE OF REVENUES, OPERATING EXPENSES AND OPERATING INCOME (LOSS) BY REPORTABLE SEGMENT

Ended December 31, 2021

in thousands)

Healthcare IT

Unallocated Corporate

Practice Management

operating costs

and marketing

and administrative

and development

in contingent consideration

and amortization

on lease termination, impairment and unoccupied lease charges

operating expenses

Direct operating costs

Selling and marketing

General and administrative

Research and development

Change in contingent consideration

Depreciation and amortization

Impairment and unoccupied lease charges

Total operating expenses

Operating (loss) income

Year Ended December 31, 2019

income (loss)

Ended December 31, 2020

in thousands)

Healthcare IT

Unallocated Corporate

Practice Management

operating costs

and marketing

and administrative

and development

in contingent consideration

and amortization

and unoccupied lease charges

operating expenses

Direct operating costs

Selling and marketing

General and administrative

Research and development

Change in contingent consideration

Depreciation and amortization

Restructuring and impairment charges

Total operating expenses

Operating income (loss)

(loss) income

FAIR VALUE OF FINANCIAL INSTRUMENTS

of December 31, 2020, and December 31, 2019, the carrying amounts of accounts receivable, accounts payable and accrued expenses

approximated their estimated fair values because of the short term nature of these financial instruments.

Value Measurements-Level 2

notes payable are carried at cost and approximate fair value since the interest rates being charged approximate market rates.

As a result, the Company categorizes these borrowings as Level 2 in the fair value hierarchy.

Consideration

Company’s contingent consideration is a Level 3 liability.

The fair value of the contingent consideration is primarily driven

by changes in revenue estimates related to the acquisitions, the passage of time and the associated discount rate.

2020 and 2019, the contingent consideration liability was fully settled.

following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair

value using significant unobservable inputs (Level 3):

Fair Value Measurement at Reporting Date Using Significant

Unobservable Inputs, Level 3

Year ended December 31,

value measurements are based upon observable and unobservable inputs.

Observable inputs reflect market data obtained from independent

sources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information.

We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair values

of assets and liabilities required to be measured at fair value are categorized based upon the level of judgement associated with the

inputs used to measure their value in one of the following three categories:

Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

We held no Level 1 financial instruments

at December 31, 2021 or December 31, 2020.

Quoted prices for similar instruments in active markets with inputs that are observable, either directly or indirectly.

2 financial instruments include notes payable which are carried at cost and approximate fair value since the interest rates being charged

approximate market rates.

Unobservable inputs are significant to the fair value of the asset or liability, and include situations where there is little, if

any, market activity for the asset or liability.

Our Level 3 instruments include the fair value of contingent consideration related

to completed acquisitions.

The fair value at December 31, 2021 is based on discounted cash flow analysis reflecting the likelihood of

achieving specified performance measure or events and captures the contractual nature of the contingencies, the passage of time and the

associated discount rate.

As of December 31, 2021, the contingent consideration is valued using a Monte Carlo simulation model.

following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value

using significant unobservable inputs (Level 3):

OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION

Value Measurement at Reporting Date Using Significant Unobservable Inputs, Level 3

Ended December 31,

in thousands)

Balance - January 1,

Change in fair value

Balance - December 31,

in fair value

- December 31,

SUBSEQUENT EVENTS

January 1, 2021, MHI and MED were merged into MTBC, and MBM was merged into Origin Holdings, Inc.

Accordingly, MHI, MED and MBM

no longer exist as of that date.

Simultaneously with the merger, the name of Origin Holdings, Inc.

was changed to Meridian Medical

Management, Inc.

The Company entered into a lease in

Ohio for a newly built 8,000 square feet pediatric office in February 2021 with a lease term of 15 years.

Also, in February 2021,

the Company was able to settle one of the lease obligations assumed in connection with the Meridian acquisition for an amount that

approximated the remaining lease liability.

Additionally, in February 2021, the

Company’s Board of Directors approved changing the name of the Company to CareCloud, Inc.

January and early February 2022, the Company issued 1,100,810

shares of 8.75 %

Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”) raising net proceeds after expenses

of approximately $ 25.5

The Series B Preferred Stock is listed

on the Nasdaq Global Market under the symbol “MTBCO.” Dividends on the Series B Preferred Stock

of approximately $ 2.19

annually per share are cumulative

from the date of issue and are payable each month when, as and if declared by the Company’s Board of Directors.

During February 2022, the Board of Directors declared the monthly dividend on the Series B Preferred Stock for February 2022.

on February 15, 2024 and prior to February 15, 2025, we may redeem, at our option, the Series B Preferred Stock, in whole or in part,

at a cash redemption price of $ 25.75 per share, plus all accrued and unpaid dividends to, but not including, the redemption date.

or after February 15, 2025 and prior to February 15, 2026, we may redeem, at our option, the Series B Preferred Stock, in whole or in

part, at a cash redemption price of $ 25.50 per share, plus all accrued and unpaid dividends to, but not including, the redemption date.

On or after February 15, 2026 and prior to February 15, 2027, we may redeem, at our option, the Series B Preferred Stock, in whole or

in part, at a cash redemption price of $ 25.25 per share, plus all accrued and unpaid dividends to, but not including, the redemption

On or after February 15, 2027, we may redeem, at our option, the Series B Preferred Stock, in whole or in part, at a cash redemption

price of $ 25.00 per share, plus all accrued and unpaid dividends to, but not including, the redemption date.

January 2022, our agreement with SVB was modified to allow for the payment of dividends on the Company’s Series B Preferred Stock,

to use a portion of the offering to redeem a portion of the Series A Preferred Stock that is outstanding and to allow for the potential

exchange of shares of Series A Preferred Stock for Series B Preferred Stock.

February 2022, the Company entered into an “at-the-market” facility.

The underwriter receives 3 %

of the gross proceeds.

Through March 11, the Company sold 49,562 shares of Series B Preferred Stock under this facility and received

net proceeds of approximately $ 1.2 million.

during February 2022, the Company began the process of redeeming its Series A Preferred Stock by issuing a notice of its intent to redeem

shares of Series A Preferred Stock for $ 25.00

per share, plus all accrued and unpaid dividends

to, but not including, the redemption date on March 18, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures